OPPENHEIMER CAPITAL L P /DE/, S-1, 1997-11-05

OPPENHEIMER CAPITAL L P /DE/
S-1, 1997-11-05
INVESTORS, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1997

REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

OPPENHEIMER CAPITAL, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 8290 13-3412614
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

------------------------

800 NEWPORT CENTER DRIVE, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(714) 717-7022
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

KENNETH M. POOVEY, ESQUIRE
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
OPPENHEIMER CAPITAL, L.P.
800 NEWPORT CENTER DRIVE, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(714) 717-7022
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

------------------------

COPY TO:

DAVID C. FLATTUM, ESQUIRE
LATHAM & WATKINS
650 TOWN CENTER DRIVE
COSTA MESA, CA 92626
(714) 540-1235

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
December 31, 1997

If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
======================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units of limited partnership
interest........................ 13,588,764 $30.3125(2) $411,909,409 $124,822
======================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2) Pursuant to Rule 457(f)(1) and 457(c), the value of the Partnership Units
has been calculated by reference to the $30.3125 average of the low ($30)
and high ($30 5/8) price of Class A LP Units of Limited Partner Interest in
PIMCO Advisors L.P. (which will be exchanged for Units of Limited Partner
Interest in Oppenheimer Capital, L.P. on a one-for-one basis) quoted on the
New York Stock Exchange Composite Tape on November 4, 1997.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

================================================================================
<PAGE> 2

[PIMCO ADVISORS LETTERHEAD]

November 5, 1997

Dear PIMCO Advisors Unitholder:

As you may know, we recently announced a combination of the businesses of
PIMCO Advisors and Oppenheimer Capital. In the combination, Oppenheimer Capital,
L.P. ("Opcap LP"), a New York Stock Exchange listed partnership, will receive
26.1 million PIMCO Advisors units in exchange for its interest in Oppenheimer
Capital. As a result of the merger, Oppenheimer Capital will become a
wholly-owned subsidiary of PIMCO Advisors, and Opcap LP's publicly traded
limited partner units will become an indirect investment in PIMCO Advisors.

You may also know that due to recent legislation, publicly traded
partnerships like PIMCO Advisors and Opcap LP will be subject to a tax on their
gross income from active businesses after December 31, 1997.

Pursuant to the provisions of our partnership agreement, the public
ownership of PIMCO Advisors and Opcap LP are being combined into a single
entity. In the restructuring, all of your limited partner interests in PIMCO
Advisors will be contributed to Opcap LP, and you will be issued an equal number
of Opcap LP limited partner units. The primary purposes of the Restructuring are
to (i) consolidate the public ownership of PIMCO Advisors into one entity,
thereby substantially reducing administrative burdens and costs, increasing
liquidity and eliminating confusion in the marketplace and (ii) allow PIMCO
Advisors to become a private partnership, which will not be subject to a tax on
its gross income from active businesses.

Because each Opcap LP limited partner unit represents an indirect
investment in one PIMCO Advisors unit, your economic interest in the PIMCO
Advisors business will not be altered or diminished in any way. Also, since our
general partner will remain the controlling general partner of both
partnerships, the restructuring will not result in a change in the management of
your investment. The restructuring enables PIMCO Advisors to not be subject to
the new tax, while allowing you to retain a publicly-traded investment in the
PIMCO Advisors business (although Opcap LP, as a publicly traded partnership,
will be subject to the new tax, as PIMCO Advisors would have been).

You do not need to take any action for the Restructuring to occur and you
are not being asked to vote on any items. On December 31, 1997, you will
automatically become a limited partner of Opcap LP and cease to be a limited
partner of PIMCO Advisors. Instructions for surrendering your PIMCO Advisors
unit certificates in exchange for Opcap LP unit certificates are included in the
accompanying Prospectus.

The Restructuring is intended to be a tax-free transaction for holders of
PIMCO Advisors units. You should, however, consult your tax advisor regarding
the tax consequences of the Restructuring that may affect you.

The accompanying Prospectus gives detailed information about Opcap LP and
the Restructuring. We encourage you to read it carefully.

Sincerely yours,

William D. Cvengros
Chief Executive Officer
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

PROSPECTUS

OPPENHEIMER CAPITAL, L.P.
800 NEWPORT CENTER DRIVE, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660

ISSUANCE OF 13,588,764 UNITS OF LIMITED PARTNER INTEREST OF
OPPENHEIMER CAPITAL, L.P. TO UNITHOLDERS OF PIMCO ADVISORS L.P.

This Prospectus is being furnished to the Public Unitholders (as defined in
the partnership agreement of PIMCO Advisors L.P. ("PIMCO Advisors")) of Class A
Units of limited partner interest ("PIMCO Advisors LP Units") in PIMCO Advisors
in connection with the restructuring (the "Restructuring") of the public
ownership of PIMCO Advisors. As of December 31, 1997 (the "Effective Date"), all
PIMCO Advisors LP Units held by Public Unitholders will be contributed by the
general partners of PIMCO Advisors, on behalf of each Public Unitholder, to
Oppenheimer Capital, L.P. (the "Partnership") in return for the issuance to the
Public Unitholders of an equal number of units of limited partner interest in
the Partnership ("Partnership Units"). This action is being taken pursuant to
the power granted by PIMCO Advisors' Amended and Restated Agreement of Limited
Partnership (the "PIMCO Advisors Partnership Agreement").

The Partnership is a Delaware limited partnership which holds general
partner units ("PIMCO Advisors GP Units") in PIMCO Advisors. Each Partnership
Unit represents an indirect investment in one PIMCO Advisors GP Unit. PIMCO
Advisors GP Units are entitled to the same economic benefits as PIMCO Advisors
LP Units. Accordingly, after the Restructuring, Public Unitholders will hold the
same economic interest in PIMCO Advisors as they did before the transaction.
Following the Effective Date, all trading in the PIMCO Advisors LP Units on the
New York Stock Exchange ("NYSE") will cease, and thereafter the Partnership
Units will be the sole publicly-traded investment in the PIMCO Advisors
business.

On the Effective Date, Public Unitholders will automatically cease to be
limited partners of PIMCO Advisors and will become limited partners of the
Partnership. Thereafter, Public Unitholders of record on the Effective Date may
receive certificates representing Partnership Units upon surrender of their
PIMCO Advisors LP Unit certificates in accordance with the instructions provided
herein. Public Unitholders will receive one Partnership Unit for each PIMCO
Advisors LP Unit they hold on the Effective Date. Non-public Unitholders (as
defined in the PIMCO Advisors Partnership Agreement) will maintain a direct
interest in PIMCO Advisors.

Partnership Units are expected to be traded on the NYSE under the symbol
"OCC" until the Effective Date and under the symbol "PA" thereafter. PIMCO
Advisors' LP Units are expected to be traded on the NYSE until the Effective
Date under the symbol "PA." On November 4, 1997, the closing sale prices for the
Partnership Units and PIMCO Advisors LP Units on the NYSE were $52 3/16 and
$30 3/8, respectively.

WE CALL YOUR ATTENTION TO THE FACTORS SPECIFIED UNDER THE CAPTION "RISK
FACTORS AND OTHER IMPORTANT CONSIDERATIONS" ON PAGE 5, WHICH ADDRESS CERTAIN
CONSIDERATIONS RELATING TO AN INVESTMENT IN THE PARTNERSHIP.

NO VOTE OF UNITHOLDERS IS REQUIRED IN CONNECTION WITH THE RESTRUCTURING. NO
PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED NOT TO SEND A PROXY.

No person is authorized to give any information or to make any
representation not contained in the Prospectus, and any information or
representation not contained herein must not be relied upon as having been
authorized by PIMCO Advisors or the Partnership. This Prospectus does not
constitute an offer of any securities other than the registered securities to
which it relates, and does not constitute a solicitation of a consent or an
offer to sell to any person in any jurisdiction in which it is unlawful to make
such an offer or solicitation. Neither the delivery of this Prospectus nor any
sales made hereunder shall, under any circumstances, create any implication that
there has been no change in the assets, properties or affairs of PIMCO Advisors
or the Partnership since the date hereof or that information set forth herein is
correct as of any time subsequent.
------------------------

THE SECURITIES ISSUABLE PURSUANT TO THIS PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------

The date of this Prospectus is , 1997
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY...............................................................................
RISK FACTORS AND OTHER IMPORTANT CONSIDERATIONS.......................................
Risks Relating to Ownership of PIMCO Advisors through the Partnership...............
Other Risks.........................................................................
THE RESTRUCTURING.....................................................................
Introduction........................................................................
Terms of the Restructuring..........................................................
Reasons for the Restructuring.......................................................
Effects of the Restructuring........................................................
Existing Economic Interests of the Partners.........................................
Interests of Certain Persons in the Restructuring...................................
Authority of the General Partner to Effect the Restructuring........................
Background of the Restructuring.....................................................
Accounting Treatment................................................................
Issuance of Partnership Unit Certificates...........................................
Fairness Opinion....................................................................
UNAUDITED PRO FORMA STATEMENTS OF THE OPPENHEIMER CAPITAL L.P. AND PIMCO ADVISORS
L.P.................................................................................
THE PARTNERSHIP.......................................................................
BUSINESS OF THE PARTNERSHIP...........................................................
Overview............................................................................
General.............................................................................
Primary Markets and Strategy for Growth.............................................
Investment Management Firms.........................................................
Partnership Mutual Funds............................................................
Regulation..........................................................................
Competition.........................................................................
Properties..........................................................................
Legal Proceedings...................................................................
MANAGEMENT OF THE PARTNERSHIP.........................................................
Management of the Partnership.......................................................
Management of PIMCO Advisors........................................................
Executive Compensation..............................................................
Compensation of Board Members.......................................................
Compensation of General Partner.....................................................
Compensation Pursuant to Contract...................................................
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions........................................................................
Oppenheimer Capital, L.P. 1997 Unit Incentive Plan..................................
Description of the PIMCO Advisors Deferred Compensation Plan........................
Federal Income Tax Consequences Associated with The Deferred Compensation Plan......
RELATIONSHIP BETWEEN THE PARTNERSHIP AND PIMCO ADVISORS...............................
Operating Agreement.................................................................
Expense Reimbursement...............................................................
CERTAIN RELATIONSHIPS AND TRANSACTIONS................................................
PGP Indebtedness....................................................................
Withdrawal and Removal of a General Partner of PIMCO Advisors.......................
</TABLE>

i
<PAGE> 5

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Indemnification.....................................................................
Contribution Agreement..............................................................
SELECTED CONSOLIDATED FINANCIAL DATA OF OPPENHEIMER CAPITAL, L.P......................
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPPENHEIMER CAPITAL, L.P............................................................
OPPENHEIMER CAPITAL.................................................................
SELECTED CONSOLIDATED FINANCIAL DATA OF PIMCO ADVISORS................................
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF PIMCO ADVISORS...................................................................
Overview............................................................................
Results of Operations...............................................................
Capital Resources and Liquidity.....................................................
Economic Factors....................................................................
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE PARTNERSHIP.....
DESCRIPTION OF PARTNERSHIP UNITS......................................................
CERTAIN FEDERAL INCOME TAX CONSEQUENCES...............................................
Tax Consequences of the Restructuring...............................................
Tax Allocations.....................................................................
Tax Classification of the Partnership...............................................
Disposition of Partnership Units....................................................
Tax-Exempt Entities Foreign Investors and Registered Investment Companies...........
Backup Withholding..................................................................
Certain Additional Tax Considerations for Holders of Partnership Units..............
LEGAL MATTERS.........................................................................
EXPERTS...............................................................................
AVAILABLE INFORMATION.................................................................
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS............................................
</TABLE>

ii
<PAGE> 6

SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere or incorporated by reference
in this Prospectus and the Annexes hereto. Unitholders are urged to read this
Prospectus and the Annexes in their entirety and should carefully consider the
information set forth under the heading "Risk Factors and Other Considerations."
Unless otherwise indicated, all unit information assumes completion of the
Oppenheimer Capital Merger and the 1.67-for-one split of the Partnership's units
described in "The Partnership" and the constitution of the Management Board
described in "Management of the Partnership."

THE PARTNERSHIP

The Partnership is a Delaware limited partnership which holds 26.1 million
units of general partner interest ("PIMCO Advisor GP Units") in PIMCO Advisors,
representing an approximately 23.9% interest in PIMCO Advisors.

PIMCO Advisors is one of the nation's largest investment management firms
with approximately $190 billion of assets under management at November 30, 1997.
PIMCO Advisors offers a broad range of investment management services and styles
to institutional and retail investors, combining the fixed income-oriented
investment management operations of Pacific Investment Management Company with
the equity-oriented operations of Oppenheimer Capital ("Oppenheimer Capital")
and five smaller affiliated domestic and international equity investment
management firms. PIMCO Advisors provides investment management services
primarily to (i) large institutional clients through separate accounts, (ii)
smaller institutional clients and financial intermediaries through the
institutional share classes of the PIMCO Funds (described below) and (iii)
retail investors through the retail share classes of the PIMCO Funds, which are
sold principally through broker-dealers.

PIMCO Advisors' strategy is to pursue growth by marketing the investment
management expertise, performance record and reputation of its seven
institutional investment management firms (the "Investment Management Firms").
The Investment Management Firms are six Delaware partnerships: Pacific
Investment Management Company ("Pacific Investment Management"), Oppenheimer
Capital, Columbus Circle Investors ("CCI"), Cadence Capital Management
("Cadence"), NFJ Investment Group ("NFJ") and Parametric Portfolio Associates
("Parametric"); and one United Kingdom limited partnership, Blairlogie Capital
Management ("Blairlogie").

The seven Investment Management Firms are structured as separate
subsidiaries. PIMCO Advisors believes this decentralized structure enables the
Investment Management Firms to implement their own distinct investment
strategies and philosophies, providing financial and other incentives for the
managers of each of the firms to render superior performance and client service.
The Managing Directors of the Investment Management Firms have a significant
profits interest in their respective Investment Management Firms, and a number
of them hold substantial direct and indirect economic interests in PIMCO
Advisors.

The Partnership's business results from the November 1997 merger of
Oppenheimer Capital with a subsidiary of PIMCO Advisors (the "Oppenheimer
Capital Merger"). Prior to the Oppenheimer Capital Merger, the Partnership's
only asset was an approximately 68% interest in Oppenheimer Capital. In the
Oppenheimer Capital Merger, PIMCO Advisers acquired from the Partnership the
approximately 68% general partner interest it did not own, as a result of which
Oppenheimer Capital became a wholly-owned subsidiary of PIMCO Advisors and the
Partnership received 26.1 million PIMCO Advisors GP Units.

PIMCO Partners, G.P. ("PGP") is the sole general partner of the Partnership
and is the controlling general partner of PIMCO Advisors, through its direct
general partner interest in PIMCO Advisors as well as through its control as
general partner of the Partnership, which is the other general partner of PIMCO
Advisors.

1
<PAGE> 7

THE RESTRUCTURING

<TABLE>
<S> <C>
The Restructuring.................... Under the authority conferred by the PIMCO Advisors
Partnership Agreement, the general partners, on
behalf of each Public Unitholder, will contribute
the PIMCO Advisors LP Units held by the Public
Unitholders to the Partnership. In exchange for the
PIMCO Advisors LP Units, the Partnership will
distribute an equal number of Partnership Units to
the Public Unitholders. Each Partnership Unit
represents an indirect investment in a single PIMCO
Advisors Unit. Accordingly, Public Unitholders will
continue to hold the same economic interest in PIMCO
Advisors as they did before the Restructuring.
Nonpublic Unitholders will maintain a direct
interest in PIMCO Advisors.
Distribution Ratio................... Each Public Unitholder will receive one Partnership
Unit for each PIMCO Advisors LP Unit held as of the
Effective Date.
Effective Date....................... Close of business on December 31, 1997.
Total Number of Partnership Units to
be Distributed.................... 13,588,764 million Partnership Units.
Trading Market....................... Partnership Units are listed for trading on the NYSE
under the symbol "OCC."
Risk Factors......................... Unitholders are referred to the matters discussed in
"Risk Factors and Other Considerations."
Primary Purposes of the The primary purposes of the Restructuring are to (i)
Restructuring..................... consolidate the public ownership of PIMCO Advisors
into one entity, thereby substantially reducing
administrative burdens and costs, increasing
liquidity and eliminating confusion in the
marketplace and (ii) allow PIMCO Advisors to become
a private partnership, which will not be subject to
a tax on its gross income from active businesses.
See "The Restructuring -- Reasons for the
Restructuring."
Tax Consequences..................... The Restructuring is intended to be a tax-free
transaction for the Public Unitholders. Public
Unitholders are, however, encouraged to seek the
advice of their tax counsel to determine whether
there are any tax consequences that affect them. See
"Certain Federal Income Tax Consequences."
Relationship with PIMCO Advisors..... Following the Restructuring, the Partnership will
remain a general partner of PIMCO Advisors. The
relationship between the Partnership and PIMCO
Advisors will be governed by the PIMCO Advisors
Partnership Agreement and an operating agreement
(the "Operating Agreement") between the two
partnerships which will, among other things,
maintain a one-for-one exchange ratio between the LP
Units and the PIMCO Advisors Units based on the
number of PIMCO Advisors Units owned by the
Partnership (excluding the PIMCO Advisors Units
underlying the general partner interest in the
Partnership), and provide for certain exchange
rights and registration rights for partners of PIMCO
Advisors. See "Relationship Between the Partnership
and PIMCO Advisors -- Operating Agreement."
Distribution Policy.................. The Partnership will make quarterly distributions of
available cash on each Partnership Unit. The
distributions on each Partnership Unit will
generally be equal in amount to the distributions
received on the underlying PIMCO Advisors GP Units
held by the Partnership less any applicable taxes.
</TABLE>

2
<PAGE> 8

STRUCTURE

[CHART]

3
<PAGE> 9

SUMMARY CONSOLIDATED FINANCIAL DATA OF OPPENHEIMER CAPITAL, L.P.

The following table sets forth selected financial data of the Partnership
and Oppenheimer Capital for the three months ended July 31, 1997 and 1996, and
each of the five years ended April 30, 1997. This information should be read in
conjunction with the Consolidated Financial Statements and the related notes
thereto included elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Oppenheimer
Capital, L.P."

<TABLE>
<CAPTION>
OPPENHEIMER CAPITAL, L.P.
-----------------------------------------------------------------------------------
FOR THE THREE
MONTHS
ENDED JULY 31, FOR THE YEARS ENDED APRIL 30,
------------------- -----------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------- ------- -------- -------- ------- ------- -------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................... $19,585 $12,280 $56,046(1) $61,316(1) $34,282 $35,091 $30,022
Expenses............................... 685 685 2,720 2,720 3,461 4,038 3,704
------- ------- ------- ------- ------- ------- -------
Net income............................. $18,900 $11,595 $53,326(1) $58,596(1) $30,821 $31,053 $26,318
------- ------- ------- ------- ------- ------- -------
Net income per unit.................... 1.21(3) 0.75 3.44(1) 3.81(1) 2.02 2.04 1.74
Distributions declared per unit........ 0.95 0.65 3.50(2) 3.175(2) 2.175 2.1375 1.9375
Weighted average number of units
outstanding.......................... $15,427 $15,363 $15,367 $15,244 $15,136 $15,043 $15,009
======= ======= ======= ======= ======= ======= =======
</TABLE>

Financial condition data at:

<TABLE>
<CAPTION>
APRIL 30,
JULY 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets........................... $118,313 $116,149 $110,099 $96,633 $98,116 $98,365
Total liabilities...................... 14,806 17,858 12,713 10,321 10,319 9,683
-------- -------- -------- ------- ------- -------
Partners' capital...................... $103,507 $ 98,291 $ 97,386 $86,312 $87,797 $88,682
</TABLE>

- ---------------
(1) Includes revenues and a gain on Quest sale of $1.8 million, or $.12 per unit
in fiscal 1997 and $17.7 million, or $1.15 per unit in fiscal 1996.

(2) Includes a special distribution related to the Quest sale of $.10 per unit
in fiscal 1997 and $.55 in fiscal 1996.

(3) Includes revenues and a gain on Quest sale of $2.8 million, or $.18 per
unit.

<TABLE>
<CAPTION>
OPPENHEIMER CAPITAL
-------------------------------------------------------------------------------
FOR THE THREE
MONTHS
ENDED JULY 31, FOR THE YEARS ENDED APRIL 30,
------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------- ------- -------- -------- -------- -------- -------
(UNAUDITED) (AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................................... $55,043 $41,075 $181,974 $158,215 $129,912 $112,290 $94,733
Expenses................................... 30,302 23,441 103,064 95,551 83,066 64,683 54,707
------- ------- -------- -------- -------- -------- -------
Operating Income........................... 24,741 17,634 78,910 62,664 46,846 47,607 40,026
Gain on Quest sale(1)...................... 4,374 -- 2,806 27,725 -- -- --
------- ------- -------- -------- -------- -------- -------
Income before income taxes and minority
interest................................. $29,115 $17,634 $ 81,716 $ 90,389 $ 46,846 $ 47,607 $40,026
------- ------- -------- -------- -------- -------- -------
Assets under management at period end (in
Billions)................................ $ 60.8 $ 40.4 $ 51.2 $ 40.6 $ 31.8 $ 29.4 $ 26.4
======= ======= ======== ======== ======== ======== =======
</TABLE>

Financial condition data at:

<TABLE>
<CAPTION>
APRIL 30,
JULY 31, --------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets............................... $103,055 $93,019 $76,338 $56,129 $43,034 $37,677
Total liabilities.......................... 54,356 53,044 41,462 41,582 30,557 27,830
Minority interest.......................... 396 277 174 87 25 18
-------- ------- ------- ------- ------- -------
Partners' capital.......................... $ 48,303 $39,698 $34,702 $14,460 $12,452 $ 9,829
======== ======= ======= ======= ======= =======
</TABLE>

- ---------------

(1) Reflects the gain realized by Oppenheimer Capital on the sale of the
investment advisory and other contracts and business relationship for its
twelve Quest for Value mutual funds to Oppenheimer Funds, Inc., on November
22, 1995.

4
<PAGE> 10

SUMMARY CONSOLIDATED FINANCIAL DATA OF PIMCO ADVISORS

The following table sets forth selected financial data of PIMCO Advisors
for the nine months ended September 30, 1997 and 1996, and each of the five
years ended December 31, 1996. PIMCO Advisors and its subsidiaries were formed
on November 15, 1994, when PFAMCo merged certain of its investment management
businesses and substantially all of its assets (the "PFAMCo Group") into Thomson
Advisory Group L.P. ("TAG L.P."). Under generally accepted accounting
principles, the Consolidation is accounted for as an acquisition of TAG L.P. by
PFAMCo Group, even though the legal form was the reverse. Therefore, the
historical financial statements include the operations of PFAMCo Group, in its
corporate form, prior to the Consolidation and the combined results of PIMCO
Advisors, in its partnership form, for the period since the Consolidation. This
information should be read in conjunction with the Consolidated Financial
Statements and the related notes thereto included elsewhere in this Prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations of PIMCO Advisors."

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
--------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total revenues...................... $344,210 $287,161 $392,024 $323,014 $180,263 $165,856 $120,155
Operating expenses.................. 232,572 190,975 261,978 215,271 145,220 131,447 93,011
Amortization of intangibles, options
and restricted units.............. 31,000 30,852 41,171 42,723 6,202
-------- -------- -------- -------- -------- -------- --------
Operating income.................... 80,638 65,334 88,875 65,020 28,841 34,409 27,144
Other income, net................... 3,249 2,401 3,454 3,964 1,083 864 1,115
-------- -------- -------- -------- -------- -------- --------
Income before income tax expense.... 83,887 67,735 92,329 68,984 29,924 35,273 28,259
Income tax expense.................. 1,226 834 1,201 517 10,669 15,556 11,405
-------- -------- -------- -------- -------- -------- --------
Net income.......................... $ 82,661 $ 66,901 $ 91,128 $ 68,467 $ 19,255 $ 19,717 $ 16,854
======== ======== ======== ======== ======== ======== ========
Net income allocated to:
General Partner and Class A
Limited Partner units........... $ 45,329 $ 39,421 $ 52,916 $ 46,655 $ 4,976
Class B Limited Partner units..... 37,332 27,480 38,212 21,812 1,128
Pre-Consolidation................. -- -- -- -- 13,151
-------- -------- -------- -------- --------
Total............................... $ 82,661 $ 66,901 $ 91,128 $ 68,467 $ 19,255
======== ======== ======== ======== ========
NET INCOME PER UNIT(1):
General Partner and Class A Limited
Partner units..................... $ 1.06 $ 0.96 $ 1.29 $ 1.16 $ 0.12
Class B Limited Partner units....... $ 1.06 $ 0.76 $ 1.05 $ 0.59 $ 0.03
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING (POST-CONSOLIDATION):
Units outstanding:
General Partner................... 800 800 800 800 800
Class A Limited Partner........... 40,146 40,132 40,135 40,108 40,018
Class B Limited Partner........... 32,983 32,961 32,961 32,961 32,961
-------- -------- -------- -------- --------
Total............................... 73,929 73,893 73,896 73,869 73,779
Weighted average effect of unit
options........................... 3,906 2,915 3,119 1,684 984
-------- -------- -------- -------- --------
Total............................... 77,835 76,808 77,015 75,553 74,763
======== ======== ======== ======== ========
DIVIDENDS/DISTRIBUTIONS............. $104,042 $ 97,560 $131,604 $ 89,613 $ 24,384 $ 22,158 $ 12,950
======== ======== ======== ======== ======== ======== ========
FINANCIAL CONDITION AT END OF
PERIOD:
Total assets(2)..................... $365,728 $373,545 $358,500 $369,592 $379,708 $ 70,388 $ 43,189
Total liabilities................... 86,752 68,802 62,257 38,035 34,179 44,567 17,686
-------- -------- -------- -------- -------- -------- --------
Total Partners' Capital............. $278,976 $304,743 $296,243 $331,557 $345,529 $ 25,821 $ 25,503
======== ======== ======== ======== ======== ======== ========
</TABLE>

5
<PAGE> 11

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER STATISTICS:
Assets under management (in
millions)......................... $130,632 $104,540 $110,022 $ 95,182 $ 72,175 $ 57,182 $ 43,737
Operating Profit Available for
Distribution(1)................... 113,830 97,763 132,314 111,205 12,306 -- --
Cash flows provided by operating
activities........................ 112,502 119,882 140,446 86,921 25,852 23,620 9,309
Cash flows provided by (used in)
investing activities.............. (16,598) (2,983) (2,446) (17,771) 22,401 (436) (1,149)
Cash flows used in financing
activities........................ (104,042) (97,560) (131,604) (89,238) (2,549) (14,900) (15,800)
</TABLE>

- ---------------
(1) Computed on earnings following the Consolidation. Operating Profit Available
for Distribution is defined by the PIMCO Advisors Partnership Agreement as
the sum of net income plus non-cash charges from the amortization of
intangible assets, non-cash compensation expenses arising from option and
restricted unit plans, and losses of any subsidiary which is not a
flow-through entity for tax purposes.

(2) Upon completion of the Consolidation, approximately $284.9 million of
intangible asset were created. [See Note 3 in the Notes to the Consolidated
Financial Statements.]

(3) Stockholders' equity before consolidation.

Note: The information above should be read in connection with Management's
Discussion and Analysis of Financial Condition and Results of Operations
of PIMCO Advisors and the Consolidated Financial Statements and related
notes appearing elsewhere in this document.

6
<PAGE> 12

RISK FACTORS AND OTHER IMPORTANT CONSIDERATIONS

Each Public Unitholder should carefully read this entire Prospectus,
including the Exhibits and the documents incorporated herein by reference, and
should give particular attention to the considerations discussed below.

When used in this Prospectus, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "intend" and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), regarding events, conditions and financial trends that may affect the
Partnership's future plans of operations, business strategy, results of
operations and financial position. Prospective investors are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors. Factors that could cause or contribute to such differences include, but
are not limited to, those described below, under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
Prospectus.

RISKS RELATING TO OWNERSHIP OF PIMCO ADVISORS THROUGH THE PARTNERSHIP

The Partnership's operating income is derived from its investment in PIMCO
Advisors GP Units. Therefore, an investment in the Partnership Units will
effectively involve the same risks as the Public Unitholders' current investment
in PIMCO Advisors LP Units. These risks include the following:

RELIANCE ON KEY PERSONNEL AND PROFIT-SHARING PAYMENTS

The ability of PIMCO Advisors and the Investment Management Firms to
attract and retain clients is dependent to a large extent on their ability to
attract and retain key employees, including skilled portfolio managers. Certain
of PIMCO Advisors' employees are responsible for significant client
relationships. In particular, PIMCO Advisors depends, to a significant extent,
on the services of William H. Gross of Pacific Investment Management, George
Long of Oppenheimer Capital and David B. Breed of Cadence. Mr. Gross is one of
the best-known fixed income portfolio managers in the United States, and the
loss of his services could have a material adverse effect on PIMCO Advisors. In
order to help retain these and other key personnel, each of the Investment
Management Firms has a substantial profit-sharing plan for its senior
management. Oppenheimer Capital maintains a benefit plan for its senior
management which offers a significant profits interest in the performance of the
Investment Management Firm. The other Investment Management Firms reserve a
substantial percentage of their adjusted net book income for profit-sharing
payments (45% in the case of Pacific Investment Management and CCI, and in the
case of the other Investment Management Firms, 15% of the first $3.0 million of
such income, 25% of the next $2.0 million of such income, 40% of the next $5.0
million of such income and 45% of such income in excess of $10 million). These
profit-sharing payments significantly reduce the amount of the Investment
Management Firms' profits that is distributed to PIMCO Advisors and becomes
available for distribution to unitholders of PIMCO Advisors and indirectly to
unitholders of the Partnership. There can be no assurance that key personnel
will be retained.

COMPETITION

The investment management business is highly competitive. PIMCO Advisors
and its Investment Management Firms compete with a large number of other
domestic and foreign investment management firms, commercial banks, insurance
companies, broker-dealers and other financial services providers. Some of the
financial services companies with which the firms compete have greater
resources, assets under management and administration than PIMCO Advisors and
the Investment Management Firms and offer a broader array of investment products
and services.

7
<PAGE> 13

Management Firms to compete with other investment management firms is also
dependent, in part, on the relative attractiveness of their investment
philosophies and methods under prevailing market conditions. There are
relatively few barriers to entry by new investment management firms in the
institutional managed accounts business, which increases competitive pressure.

FACTORS AFFECTING FEE REVENUES

General Considerations

Investment management agreements between Investment Management Firms and
their clients typically provide for fees based on a percentage of the assets
under management, determined at least quarterly and valued at current market
levels. The percentage of the fee applicable to a particular classification of
assets under management is a function of several factors. For example,
investments or strategies which have a higher degree of risk and uncertainty
command a higher percentage fee. Therefore, significant fluctuations in
securities prices or in the investment patterns of clients that result in shifts
in assets under management can have a material effect on PIMCO Advisors'
consolidated revenues and profitability. Such fluctuations in asset valuations
and client investment patterns may be affected by overall economic conditions
and other factors influencing the capital markets and the net sales of mutual
fund shares generally, including interest rate fluctuations. Virtually all of
PIMCO Advisors' revenues are derived from investment management agreements with
clients that are terminable at any time or upon 30 to 60 days' notice, as is the
case generally in the investment management industry. Any termination of
agreements representing a significant portion of assets under management could
have an adverse impact on PIMCO Advisors' results of operations. The investment
management business is highly competitive and fees vary among investment
managers. Some of the Investment Management Firms' fees are higher than those of
many investment managers relative to the average size of accounts under
management. Each Investment Management Firm's ability to maintain its fee
structure in the competitive environment is dependent to a large extent on the
ability of its investment managers to provide clients with service and
investment returns that will cause clients to be willing to pay those fees.
There can be no assurance that the Investment Management Firms will be able to
retain their clients or sustain their fee structures in the future.

Reliance on Performance-Based Fees

Approximately 4.5% and 4.1% of PIMCO Advisors' revenues (as adjusted to
combine with the revenues of Oppenheimer Capital) for the years ended December
31, 1996 and December 31, 1995, respectively, were derived from
performance-based fees. Most of these revenues are attributable to Pacific
Investment Management's operations. To earn a performance-based fee with respect
to an account, the relevant Investment Management Firm must generally outperform
a specific benchmark over a particular period. Performance-based fee
arrangements make revenues more volatile, but also provide an opportunity to
earn higher fees than could be obtained under fee arrangements based solely on a
percentage of assets under management. Pacific Investment Management's
StocksPLUS(R) product, which accounted for $11.3 billion of assets under
management at September 30, 1997, is subject to a performance-based fee schedule
in which under-performance relative to the S&P 500 over a particular time period
results in no fees being paid by clients, while superior performance results in
incentive fees that are not subject to a cap. In addition to the StocksPLUS
accounts, several large fixed income accounts aggregating approximately $10.9
billion at September 30, 1997, also have performance-based fee arrangements.
Pacific Investment Management's performance-based fee arrangements, including
the StocksPLUS fee arrangement, can materially affect Pacific Investment
Management's revenues, and thus those of PIMCO Advisors, from period to period.

8
<PAGE> 14

USE OF DERIVATIVES

The use of derivatives by investors has received national attention in
recent years because of losses suffered on investments in derivatives. The
Investment Management Firms, from which PIMCO Advisors obtains its operating
income, have used derivatives and plan to continue using derivatives in the
future. In particular, Pacific Investment Management has used derivatives since
1980 in various ways, principally to manage portfolio risk and exploit market
inefficiencies.

OTHER RISKS

LACK OF PARTICIPATION IN MANAGEMENT; VOTING

As the sole general partner of the Partnership and the general partner with
a controlling interest in PIMCO Advisors, PGP has ultimate control over the
operations of the Partnership and PIMCO Advisors. Limited partners of the
Partnership have only limited voting rights on matters affecting the
Partnership's business and have no right to participate in the management of the
Partnership or PIMCO Advisors. Public Unitholders have no voting rights
regarding the selection of management boards of the Partnership. If PGP resigned
or was removed as general partner and the limited partners of the Partnership
elected to continue the operations of the Partnership, its successor would be
elected by holders of a majority of Partnership Units outstanding. A vote of
holders of 80% or more of the Partnership Units is required to remove PGP as
general partner of the Partnership, and PGP and its affiliates may vote their
Partnership Units, if any, with respect to removal. However, even if PGP were
removed as general partner of the Partnership, such removal would not affect its
status as the controlling general partner of PIMCO Advisors.

CASH DISTRIBUTIONS

Distributions to limited partners of the Partnership will be dependent upon
distributions by PIMCO Advisors, which, in turn, are dependent upon the
Operating Profit Available for Distribution of PIMCO Advisors. Operating Profit
Available for Distribution is defined in the PIMCO Advisors Partnership
Agreement as the sum of (i) the net income of PIMCO Advisors for such quarter
determined in accordance with generally accepted accounting principles; (ii)
certain non-cash charges resulting from the amortization of goodwill and certain
other intangible assets and non-cash compensation expenses related to options
and restricted units and (iii) losses of any subsidiary which is not a
flow-through entity for tax purposes. Neither PGP nor any of its affiliates is
obligated to guaranty or support any such distributions.

THE RESTRUCTURING

INTRODUCTION

Due to recent legislation, certain publicly traded limited partnerships,
including PIMCO Advisors and the Partnership, will be subject to a tax on their
gross income from active businesses after December 31, 1997, unless their
partnership interests cease to be publicly traded by such date. The limited
partner units in both PIMCO Advisors and the Partnership are currently publicly
traded, and they represent the same economic interest in the business of PIMCO
Advisors. In order to consolidate the public ownership of PIMCO Advisors in one
entity and to prevent PIMCO Advisors from being subject to such a tax, the
general partners of PIMCO Advisors will effect the Restructuring by, pursuant to
authority granted in the PIMCO Advisors Partnership Agreement, contributing, on
behalf of the Public Unitholders, all of the PIMCO Advisors units held by Public
Unitholders to the Partnership effective as of December 31, 1997. In the
Restructuring, the Public Unitholders will receive one Partnership LP Unit for
each PIMCO Advisors unit contributed on their behalf. Each Partnership LP Unit
will have one underlying PIMCO Advisors unit. Accordingly, Public Unitholders
will continue to hold the same economic interest in PIMCO Advisors as they did
before the Restructuring. The general partners have expressly been granted
authority to effect the Restructuring under the PIMCO Advisors Partnership
Agreement.

9
<PAGE> 15

TERMS OF THE RESTRUCTURING

TIMING

The Restructuring is expected to occur on December 31, 1997. Failure to
effect the Restructuring on or prior to the Effective Date in the absence of a
change in the applicable tax laws would result in PIMCO Advisors being subject
to a tax on certain of its gross income for part or all of the 1998 taxable
year.

CONTRIBUTION OF PUBLICLY OWNED UNITS TO THE PARTNERSHIP

Effective as of the close of business on the Effective Date, all of the
PIMCO Advisors LP Units held of record by a Public Unitholder will be
contributed to the Partnership. The general partners have the authority to
effect this contribution pursuant to Section 16.1 of the PIMCO Advisors
Partnership Agreement. See "-- Authority of General Partner to Effect the
Restructuring." Upon contribution of the PIMCO Advisors LP Units to the
Partnership, the units will be reclassified as PIMCO Advisors GP Units in
accordance with the PIMCO Advisors Partnership Agreement. In exchange for each
contributed PIMCO Advisors LP Unit, the Partnership will issue one Partnership
Unit to the Public Unitholder whose unit is contributed. The Partnership Units
are listed on the NYSE. The general partners of PIMCO Advisors, on behalf of the
Public Unitholders, will take all actions necessary for the Public Unitholders
to be admitted as limited partners of the Partnership. Following the Effective
Date, all trading in the PIMCO Advisors LP Units on the NYSE will cease, and
thereafter the Partnership Units will be the sole publicly-traded investment in
the PIMCO Advisors business.

CONTINUING RELATIONSHIP WITH PIMCO ADVISORS

In connection with the Restructuring, the Partnership and PIMCO Advisors
will enter into an Operating Agreement which will govern the ongoing
relationship of the Partnership and PIMCO Advisors, and provide, among other
things, that: (i) the Partnership will maintain one or more equity-based
incentive compensation plans for the benefit of employees and other persons
rendering services to PIMCO Advisors and its subsidiaries, (ii) the Partnership
will not issue Partnership securities or engage in certain transactions without
the consent of the management board of PIMCO Advisors, (iii) the Partnership
will offer the Nonpublic Unitholders (as defined below) a limited right to
exchange some or all of their PIMCO Advisors LP Units for Partnership Units at
specified times each year and (iv) at PIMCO Advisors' request, the Partnership
will use its best efforts to issue and sell Partnership securities and, at the
time of completion of such sale, contribute the net proceeds to PIMCO Advisors
in exchange for PIMCO Advisors GP Units. A Nonpublic Unitholder is defined as
(i) PGP or any general partner or former general partner admitted under the
PIMCO Advisors Partnership Agreement, (ii) Cadence, Parametric, PIMCO Partners,
LLC or NFJ, (iii) any subsidiary of Pacific Mutual Holding Company, (iv) any
executive officer of PIMCO Advisors or managing director of an Investment
Management Company or any entity in which such individual is a controlling
shareholder, general partner, manager or trustee, or (v) any person designated
as a Nonpublic Unitholder in a written action of the general partners of PIMCO
Advisors.

REASONS FOR THE RESTRUCTURING

GENERAL

PGP has determined to effect the Restructuring at this time to (i) to
consolidate the public ownership interests in the business of PIMCO Advisors
into one entity and (ii) prevent PIMCO Advisors from being subject to an annual
3.5% federal tax on its gross income from active businesses after December 31,
1997 (and similar taxes imposed by states in which PIMCO Advisors is subject to
such taxes).

CONSOLIDATION OF PUBLIC OWNERSHIP INTO THE PARTNERSHIP

Both PIMCO Advisors units and Partnership Units represent an investment in
the business of PIMCO Advisors and both are currently publicly traded on the
NYSE. PGP believes that consolidating all of the public ownership of PIMCO
Advisors into the Partnership through the Restructuring should substantially

10
<PAGE> 16

reduce administrative burdens and costs, increase liquidity and eliminate
confusion in the marketplace, thereby making the Partnership Units a more
attractive to investors.

PRESERVATION OF PARTNERSHIP TAXATION FOR NONPUBLIC UNITHOLDERS

Under current law, PIMCO Advisors will be subject to a federal tax on its
gross income from active businesses after December 31, 1997, unless PIMCO
Advisors' limited partner interests cease to be publicly traded prior to that
time (and may be subject to similar taxes imposed by states in which PIMCO
Advisors is subject to such taxes). By effecting the Restructuring, PGP intends
to preserve the current tax treatment of PIMCO Advisors for its Nonpublic
Unitholders by terminating the public trading of PIMCO Advisors' limited
partnership interests.

EFFECTS OF THE RESTRUCTURING

PUBLIC UNITHOLDERS WILL BECOME LIMITED PARTNERS OF THE PARTNERSHIP

As a result of the Restructuring, the Public Unitholders will cease to be
limited partners of PIMCO Advisors and will become limited partners of the
Partnership. As limited partners of the Partnership, their rights will be
governed by the Amended and Restated Agreement of Limited Partnership of
Oppenheimer Capital, L.P., rather than the PIMCO Advisors Partnership Agreement.
See "Description of Partnership Units." The sole business of the Partnership
after the Restructuring will continue to be that of holding PIMCO Advisors GP
Units, and each Partnership Unit will represent an indirect investment in a
single PIMCO Advisors unit. Accordingly, Public Unitholders will continue to
hold the same economic interest in PIMCO Advisors as they did before the
transaction. Nonpublic Unitholders will remain limited partners in PIMCO
Advisors after the Restructuring.

EFFECT ON DISTRIBUTIONS

As a publicly traded partnership, the Partnership will be subject to a tax
on its gross income from active businesses after December 31, 1997. Accordingly,
distributions on the Partnership Units will be less than the distributions
received by the Partnership on the PIMCO Advisors GP Units owned by it.

MANAGEMENT AND CONTROL OF THE PARTNERSHIP

PGP is the controlling general partner of PIMCO Advisors and the sole
general partner of the Partnership. Accordingly, after the Restructuring, Public
Unitholders will continue to hold interests in an entity controlled by PGP. No
change in management of the Partnership is expected to result from the
Restructuring.

PIMCO ADVISORS NOT SUBJECT TO TAX

As a result of the Restructuring, PIMCO Advisors is expected to be treated
as a non-publicly-traded partnership for tax purposes. Accordingly, Nonpublic
Unitholders will continue to receive distributions from PIMCO Advisors without
any reduction for taxes on gross income.

TAX CONSEQUENCES OF THE RESTRUCTURING TO UNITHOLDERS

The exchange of PIMCO Advisors units for Partnership Units will be treated
for federal income tax purposes as a contribution of property to a partnership
in exchange for an interest in the Partnership. As such, under Section 721 of
the Internal Revenue Code of 1986, as amended (the "Code"), no gain or loss will
be recognized by the exchanging party or the Partnership on the exchange. The
exchanging party will have a tax basis in its Partnership Units equal to the tax
basis such party had in the surrendered PIMCO Advisors units and will have a
holding period for the Partnership Units that includes the holding period that
it had for the surrendered PIMCO Advisors units. Furthermore, the Partnership
will have a tax basis in the contributed PIMCO Advisors units equal to the tax
basis of such PIMCO Advisors units in the hands of the exchanging party and will
have a holding period for the PIMCO Advisors units that includes the holding
period for such

11
<PAGE> 17

PIMCO Advisors units in the hands of the exchanging party. See "Certain Federal
Income Tax Consequences."

EXISTING ECONOMIC INTERESTS OF THE PARTNERS

Interests in PIMCO Advisors are divided into units of limited partner
interest and units of general partner interest (collectively "PIMCO Advisors
Units"). General partner units are held only by general partners of PIMCO
Advisors, but have the same economic rights as PIMCO Advisors LP Units,
including rights to distributions as limited partner units. Limited and general
partner units of PIMCO Advisors are, until March 1, 1998, further divided into
Class A units and Class B units. Prior to December 31, 1997, the Class A units
have a priority right to distributions over Class B Units, as described below.
After March 1, 1998, the distinction between Class A units and Class B units
will terminate automatically in accordance with the PIMCO Advisors Partnership
Agreement and PIMCO Advisors Class A units and Class B units will therefore
represent identical interests in PIMCO Advisors.

INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING

The Nonpublic Unitholders, including PGP and certain members of the
Management Board of PIMCO Advisors (the "PIMCO Advisors Management Board"), have
an interest in the Restructuring because, as contemplated by the PIMCO Advisors
Partnership Agreement, it will preserve non-publicly-traded partnership tax
treatment for their investment in PIMCO Advisors. Under current law, PIMCO
Advisors will be subject to a tax on its gross income after December 31, 1997,
unless PIMCO Advisors' limited partner interests cease to be publicly traded
prior to such time. After the Restructuring, the Public Unitholders will own
interests in a publicly-traded partnership that is subject to a tax on its gross
income after December 31, 1997. The Nonpublic Unitholders will continue to hold
their interests in PIMCO Advisors, which will not be subject to such a gross
income tax.

AUTHORITY OF THE GENERAL PARTNER TO EFFECT THE RESTRUCTURING

In order to protect Nonpublic Unitholders from an Adverse Partnership Tax
Consequence, the PIMCO Advisors Partnership Agreement confers on the general
partners broad authority to effect one or more restructurings of PIMCO Advisors
to prevent a change in the partnership tax status of PIMCO Advisors. An Adverse
Partnership Tax Consequence is defined in the PIMCO Advisors Partnership
Agreement as PIMCO Advisors (i) being treated as an association taxable as a
corporation, (ii) being reconstituted as a corporation, (iii) otherwise becoming
subject to federal taxation on its income or (iv) the occurrence of another
event which would have caused any of (i), (ii) or (iii) to occur but for the
occurrence of a restructuring of the public ownership of PIMCO Advisors.

Section 16.1 of the PIMCO Advisors Partnership Agreement provides that the
general partners may take all such actions necessary or appropriate in
connection with, or in anticipation of, a restructuring of PIMCO Advisors,
without consent of or other action on the part of any other unitholder and
whether or not such actions or omissions may treat Public Unitholders
differently than Nonpublic Unitholders or result in different and more favorable
treatment of the Nonpublic Unitholders. The PIMCO Advisors Partnership Agreement
provides no appraisal or similar rights to any Unitholder with respect to any
restructuring, nor does it require that the general partners obtain an opinion
as to the fairness of any restructuring to the Public Unitholders.

BACKGROUND OF THE GENERAL PARTNERS' RESTRUCTURING AUTHORITY

At the time of PIMCO Advisors' organization in 1987, its publicly traded
master limited partnership ("MLP") form offered important tax advantages because
there was no federal income tax at the partnership level. In December 1987,
however, Congress passed the Revenue Act of 1987, one of the provisions of which
provided that MLPs, with certain exceptions not applicable to PIMCO Advisors,
would be taxed for federal income tax purposes as corporations. The tax status
of MLPs existing on December 17, 1987 was "grandfathered" until December 31,
1997. In August 1997, Congress passed the Taxpayer Relief Act of 1997, which
provided, among other things, that any previously-grandfathered MLP may elect to
continue its

12
<PAGE> 18

partnership status as an "electing 1987 partnership," but will be subject to a
tax on its gross income from active businesses after December 31, 1997.

PIMCO Advisors' current organizational structure (other than its ownership
of Oppenheimer Capital) results from the Consolidation in 1994 (the
"Consolidation") of the investment advisory businesses of certain subsidiaries
of Pacific Financial Asset Management Corporation ("PFAMCo"), i.e. Pacific
Investment Management, Cadence, Parametric, NFJ and Blairlogie, with the
investment advisory and mutual fund distribution businesses, including CCI,
formerly conducted under the name of Thomson Advisory Group L.P., and its
affiliate Thomson Investor Services Inc. As part of the Consolidation, PGP
replaced TAG as the general partner of PIMCO Advisors.

Concurrent with their approval of the Consolidation, the limited partners
of PIMCO Advisors expressly approved amendments to the partnership agreement of
PIMCO Advisors which, among other things, conferred on the general partners
broad authority to effect one or more restructurings of PIMCO Advisors to
prevent an adverse change in the partnership tax treatment of the Nonpublic
Unitholders. The amendments to the partnership agreement also modified the
fiduciary duties of the general partners, including expressly relieving the
general partners of any fiduciary or other duties or liabilities to PIMCO
Advisors or any Unitholder for any actions taken or omitted to be taken in good
faith and without recklessness with respect to any restructuring,
notwithstanding that such actions or omissions may treat Public Unitholders
differently than Nonpublic Unitholders and result in more favorable treatment of
the Nonpublic Unitholders.

ACCOUNTING TREATMENT

The issuance of new Partnership Units in exchange for PIMCO Advisors units
does not create a new basis of accounting since the entities share a common
general partner. In accordance with generally accepted accounting principles,
the Partnership's investment and capital accounts will be increased by the
amount representing the book value of the PIMCO Advisors units contributed.
There will be no accounting recognition given for the exchange in the financial
statements of PIMCO Advisors.

ISSUANCE OF PARTNERSHIP UNIT CERTIFICATES

As of the Effective Date, the Public Unitholders will become limited
partners of the Partnership and cease to be limited partners of PIMCO Advisors.
The PIMCO Advisors LP Units held by Public Unitholders on the Effective Date
will on that date be transferred to the Partnership on the books of the transfer
agent of PIMCO Advisors and reclassified as PIMCO Advisors GP Units in
accordance with the PIMCO Advisors Partnership Agreement. Because the general
partners of PIMCO Advisors will effect the transfer of the Public Unitholders'
units on behalf of the Public Unitholders pursuant to the authority granted to
the general partners by the PIMCO Advisors Partnership Agreement, the Public
Unitholders do not need to take any action for the transfer to occur.

Public Unitholders may exchange the certificates which prior to the
Effective Date represented PIMCO Advisors LP Units for certificates representing
Partnership Units by completing the letter of transmittal attached to this
Prospectus and mailing the letter of transmittal, along with their certificates,
to the address indicated in the letter of transmittal.

UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

Overview of Transactions:

The pro forma condensed financial statements present the effects on the
Partnership and PIMCO Advisors of three significant events identified herein as
the Opgroup Transaction, the Opcap Merger and the Restructuring.

The Opgroup Transaction: On November 4, 1997 PIMCO Advisors and Oppenheimer
Group Inc. ("Opgroup") announced the completion of the acquisition by PIMCO
Advisors of 100% of the outstanding common stock of Opgroup in exchange for 2.1
million PIMCO Advisors Class A LP Units and the rights to exchange up to $230
million of already existing term notes for an additional 6.9 million PIMCO
Advisors Class A LP Units at a rate of $33 1/3 per unit. At that date Opgroup
owned various assets including an approximate 32.4% interest in Oppenheimer
Capital, the 1% general partner interest in the Partnership, which owned the
remaining 67.6% interest in Oppenheimer Capital, and the advisory contracts for
eight closed end

13
<PAGE> 19

mutual funds. Immediately following the acquisition PIMCO Advisors split the 1%
general partner interest in the Partnership into a .01% general partner interest
and a .99% limited partner interest, and sold the general partner interest to
PGP for $80,000, its approximate book value. As explained further in Note 1 the
purchase method of accounting was used by PIMCO Advisors to record the
acquisition of Opgroup. These transactions have no accounting impact on the
Partnership.

The Oppenheimer Capital Merger: In the merger, Oppenheimer Capital merged
with a transitory limited partnership subsidiary of PIMCO Advisors, with the
Partnership receiving approximately 26.1 million PIMCO Advisors Class A LP units
of PIMCO Advisors, representing an approximate 25% ownership of PIMCO Advisors.
This transaction involving entities under common control was accounted for using
the book values at PIMCO Advisors. PIMCO Advisors reclassified the amount
representing the non-controlling interest into partners capital. The Partnership
recorded as its investment in PIMCO Advisors an amount representing the book
value of PIMCO Advisors units received. Prior to the merger the Partnership
split its units, the effect of which was to align the economic interests of
PIMCO Advisors and the Partnership. This split has no accounting impact;
however, the units outstanding have been reflected in all per unit computations
for the Partnership.

The Restructuring: On December 31, 1997 the approximately 13.6 million
PIMCO Advisors Class A LP Units held by Public Unitholders of PIMCO Advisors
will be contributed to the Partnership in exchange for an equal number of
Partnership units. This transaction will be recorded by the Partnership at the
amount representing the book value of the PIMCO Advisors Class A LP Units
contributed. The Restructuring has no accounting impact on PIMCO Advisors.

Other: The historical financial information of Oppenheimer Capital, Opgroup
and the Partnership are presented herein based upon calendar year results and
balances since these entities will change to a calendar year end. Previously
Oppenheimer Capital, Opgroup and the Partnership have utilized a fiscal year end
of April 30.

Book value per unit is based upon units outstanding exclusive of the
dilutive effects of options, and deferred unit awards.

OPPENHEIMER CAPITAL, L.P.

Because the Public Unitholders will be receiving units of the Partnership
the following pro forma condensed financial statements of the Partnership as of
September 30, 1997 and for the nine months then ended, and for the year ended
December 31, 1996 give effect to the Oppenheimer Capital Merger and the
Restructuring transactions described above The pro forma condensed statement of
financial condition has been prepared as though the Oppenheimer Capital Merger
and the Restructuring had been effected on September 30, 1997 and the condensed
statements of operations have been prepared as though the Oppenheimer Capital
Merger and the Restructuring had been effected on January 1, 1996.

The pro forma information is presented for illustrative purposes and does
not purport to be indicative of the results which would have been obtained had
the transactions been effected on the assumed dates, nor is the information
intended to be indicative of the results which may occur in the future. The
accompanying Notes should be read for a description of the principal assumptions
made in the preparation of the pro forma information. Management believes that
the assumptions used in the preparation of the pro forma information are
reasonable.

14
<PAGE> 20

OPPENHEIMER CAPITAL, L.P.

PRO FORMA CONDENSED STATEMENT OF FINANCIAL CONDITION
AS OF SEPTEMBER 30, 1997

ASSETS

<TABLE>
<CAPTION>
OPPENHEIMER
CAPITAL PRO FORMA
OPPENHEIMER MERGER (NOTE RESTRUCTURING POST
CAPITAL, 2) PRO FORMA (NOTE 3) RESTRUCTURING
L.P. ADJUSTMENTS POST MERGER ADJUSTMENTS AND MERGER
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash and cash
equivalents.............. $ 101,000 $ -- $ 101,000 $ -- $ 101,000
Distribution receivable.... 14,050,000 -- 14,050,000 -- 14,050,000
Investment in operating
partnership.............. 32,640,000 250,358,955 282,998,955 147,599,023 430,597,978
Intangible assets, net..... 38,653,000 (38,653,000) -- -- --
Note receivable............ 32,193,000 (32,193,000) -- -- --
Other assets............... 676,000 -- 676,000 -- 676,000
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS.......... $118,313,000 $179,512,955 $297,825,955 $147,599,023 $445,424,978
============ ============ ============ ============ ============

LIABILITIES AND CAPITAL

Distribution payable....... $ 14,806,000 $ -- $ 14,806,000 $ -- $ 14,806,000
------------ ------------ ------------ ------------ ------------
Total
Liabilities.... 14,806,000 -- 14,806,000 -- 14,806,000
------------ ------------ ------------ ------------ ------------
Partners capital........... 103,507,000 179,512,955 283,019,955 147,599,023 430,618,978
------------ ------------ ------------ ------------ ------------
Total capital......... 103,507,000 179,512,955 283,019,955 147,599,023 430,618,978
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES AND
CAPITAL............. $118,313,000 $179,512,955 $297,825,955 $147,599,023 $445,424,978
============ ============ ============ ============ ============
Book Value per Unit
Outstanding.............. $ 3.97 $ 10.86 $ 10.86
============ ============ ============
</TABLE>

See accompanying Notes to Pro Forma Condensed Financial Statements.

15
<PAGE> 21

OPPENHEIMER CAPITAL, L.P.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
OPPENHEIMER PRO FORMA
OPPENHEIMER CAPITAL MERGER RESTRUCTURING POST
CAPITAL, (NOTE 2) PRO FORMA (NOTE 3) RESTRUCTURING
L.P. ADJUSTMENTS POST MERGER ADJUSTMENTS AND MERGER
----------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES
Equity in earnings of
operating partnership.... $41,389,363 $ (13,008,752) $28,380,611 $ 13,663,481 $ 42,044,092
Interest.................... 2,448,000 (2,448,000) -- -- --
----------- ------------ ----------- ----------- -----------
Total Revenues...... 43,837,363 (15,456,752) 28,380,611 13,663,481 42,044,092
----------- ------------ ----------- ----------- -----------
EXPENSES
Amortization of intangibles,
deferred compensation.... 1,956,000 (1,956,000 -- -- --
Other....................... 97,920 (97,920) -- -- --
----------- ------------ ----------- ----------- -----------
Total Expenses...... 2,053,920 (2,053,920) -- -- --
----------- ------------ ----------- ----------- -----------
Income before income tax
expense.................. 41,783,443 (13,402,832) 28,380,611 13,663,481 42,044,092
Income tax expense (note
5)....................... -- -- -- -- --
----------- ------------ ----------- ----------- -----------
NET INCOME.................... $41,783,443 $ (13,402,832) $28,380,611 $ 13,663,481 $ 42,044,092
=========== ============ =========== =========== ===========
Earnings per unit............. $ 1.48 $ 1.01 $ 1.01
=========== =========== ===========
Cash flow per unit............ $ 1.80 $ 1.73 $ 1.73
=========== =========== ===========
Units outstanding -- adjusted
for split
GP units.................... 26,054 -- 26,054 -- 26,054
LP units.................... 26,028,359 -- 26,028,359 13,588,764 39,617,123
Dilutive effect of options
and awards............... 2,171,000 -- 2,171,000 -- 2,171,000
----------- ------------ ----------- ----------- -----------
Total............... 28,225,414 -- 28,225,414 13,588,764 41,814,178
=========== ============ =========== =========== ===========
</TABLE>

See accompanying Notes to Pro Forma Condensed Financial Statements.

16
<PAGE> 22

OPPENHEIMER CAPITAL, L.P.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
OPPENHEIMER PRO FORMA
OPPENHEIMER CAPITAL MERGER RESTRUCTURING POST
CAPITAL, (NOTE 2) PRO FORMA (NOTE 3) RESTRUCTURING
L.P. ADJUSTMENTS POST MERGER ADJUSTMENTS AND MERGER
----------- -------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES
Equity in earnings of operating
partnership...................... $40,125,810 $ (12,609,942) $27,515,868 $13,247,162 $ 40,763,030
Interest............................ 3,264,000 (3,264,000) -- -- --
----------- ------------ ----------- ----------- -----------
Total Revenues.............. 43,389,810 (15,873,942) 27,515,868 13,247,162 40,763,030
----------- ------------ ----------- ----------- -----------
EXPENSES
Amortization of intangibles,
deferred compensation............ 3,912,000 (3,912,000) -- -- --
Other............................... 130,560 (130,560) -- -- --
----------- ------------ ----------- ----------- -----------
Total Expenses.............. 4,042,560 (4,042,560) -- -- --
----------- ------------ ----------- ----------- -----------
Income before income tax expense.... 39,347,250 (11,831,382) 27,515,868 13,247,162 40,763,030
Income tax expense (note 5)......... -- -- -- --
----------- ------------ ----------- ----------- -----------
NET INCOME............................ $39,347,250 $ (11,831,382) $27,515,868 $13,247,162 $ 40,763,030
=========== ============ =========== =========== ===========
Earnings per unit..................... $ 1.39 $ 0.97 $ 0.97
=========== =========== ===========
Cash flow per unit.................... $ 1.87 $ 1.92 $ 1.92
=========== =========== ===========
Units outstanding -- adjusted for
split
GP units............................ 26,054 -- 26,054 -- 26,054
LP units............................ 26,028,359 -- 26,028,359 13,588,764 39,617,123
Dilutive effect of options and
awards........................... 2,171,000 2,171,000 2,171,000
----------- ------------ ----------- ----------- -----------
Total....................... 28,225,414 -- 28,225,414 13,588,764 41,814,178
=========== ============ =========== =========== ===========
</TABLE>

See accompanying Notes to Pro Forma Condensed Financial Statements.

17
<PAGE> 23

PIMCO ADVISORS

The following pro forma condensed financial statements of PIMCO Advisors as
of September 30, 1997 and for the nine months then ended, and for the year ended
December 31, 1996 give effect to the Opgroup Transaction and the Oppenheimer
Capital Merger transactions described above. The pro forma condensed statement
of financial condition has been prepared as though the Opgroup Transaction and
the Oppenheimer Capital Merger had been effected on September 30, 1997 and the
condensed statements of operations have been prepared as though the Opgroup
Transaction and the Oppenheimer Capital Merger had been effected on January 1,
1996.

The pro forma information is presented for illustrative purposes and does
not purport to be indicative of the results which would have been obtained had
the transactions been effected on the assumed dates, nor is the information
intended to be indicative of the results which may occur in the future following
completion of the transactions. The accompanying Notes should be read for a
description of the principal assumptions made in the preparation of the pro
forma information. Management believes that the assumptions used in the
preparation of the pro forma information are reasonable.

PIMCO ADVISORS L.P.

PRO FORMA CONDENSED STATEMENT OF FINANCIAL CONDITION
AS OF SEPTEMBER 30, 1997

ASSETS

<TABLE>
<CAPTION>
OPGROUP
PIMCO TRANSACTION PRO FORMA POST OPCAP MERGER
ADVISORS OPPENHEIMER (NOTE 1) OPGROUP (NOTE 2) PRO FORMA POST
L.P. GROUP, INC. ADJUSTMENTS TRANSACTION ADJUSTMENTS MERGER
------------ ------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents.... $ 33,172,652 $ 34,245,574 $ (32,193,000) $ 35,225,226 $ 32,193,000 $ 67,418,226
Fees receivable.............. 81,617,543 47,180,390 -- 128,797,933 -- 128,797,933
Short term investments....... 24,934,892 3,440,224 -- 28,375,116 -- 28,375,116
Intangible assets, net....... 180,815,838 1,196,100 838,618,536 1,020,630,474 -- 1,020,630,474
Fixed assets, net............ 10,801,603 3,682,175 -- 14,483,778 -- 14,483,778
Other assets................. 34,385,585 3,381,092 -- 37,766,677 -- 37,766,677
------------ ------------- ------------ --------------- ------------- ---------------
TOTAL ASSETS............. $365,728,113 $ 93,125,555 $ 806,425,536 $1,265,279,204 $ 32,193,000 $1,297,472,204
============ ============= ============ =============== ============= ===============
LIABILITIES AND CAPITAL
Accounts payable, accrued
expenses and other......... $ 24,187,295 $ 9,118,651 $ -- $ 33,305,946 $ -- $ 33,305,946
Accrued compensation......... 53,085,409 16,517,311 -- 69,602,720 -- 69,602,720
Other non current
liabilities................ 9,479,234 263,198,378 (262,193,000) 10,484,612 -- 10,484,612
------------ ------------- ------------ --------------- ------------- ---------------
Total Liabilities........ 86,751,938 288,834,340 (262,193,000) 113,393,278 -- 113,393,278
------------ ------------- ------------ --------------- ------------- ---------------
Non-controlling interest in
subsidiary................. -- 45,063,146 532,933,617 577,996,763 (577,996,763) --
------------ ------------- ------------ --------------- ------------- ---------------

Partners capital............. 286,063,032 (172,765,681) 535,684,919 648,982,270 610,189,763 1,259,172,033
Unamortized compensation..... (7,086,857) (68,006,250) -- (75,093,107) -- (75,093,107)
------------ ------------- ------------ --------------- ------------- ---------------
Total Capital............ 278,976,175 (240,771,931) 535,684,919 573,889,163 610,189,763 1,184,078,926
------------ ------------- ------------ --------------- ------------- ---------------
TOTAL LIABILITIES AND
CAPITAL................ $365,728,113 $ 93,125,555 $ 806,425,536 $1,265,279,204 $ 32,193,000 $1,297,472,204
============ ============= ============ =============== ============= ===============
Book Value per Unit
Outstanding................ $ 3.77 $ 6.92 $ 10.86
============ =============== ===============
</TABLE>

See accompanying Notes to Pro Forma Condensed Financial Statements.

18
<PAGE> 24

PIMCO ADVISORS L.P.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
OPGROUP OPCAP
PIMCO TRANSACTION MERGER
ADVISORS OPPENHEIMER (NOTE 1) PRO FORMA (NOTE 2) PRO FORMA
L.P. GROUP, INC. ADJUSTMENTS POST ACQUISITION ADJUSTMENTS POST MERGER
------------ ------------ ------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Investment advisory
fees................... $302,240,609 $159,924,705 $ -- $462,165,314 $ -- $462,165,314
Distribution and servicing
fees................... 40,316,623 3,983,566 -- 44,300,189 -- 44,300,189
Other income.............. 1,652,823 -- 1,652,823 -- 1,652,823
------------ ------------ ------------ ------------ ------------ ------------
Total Revenues.... 344,210,055 163,908,271 -- 508,118,326 -- 508,118,326
------------ ------------ ------------ ------------ ------------ ------------
EXPENSES
Compensation and
benefits............... 151,560,373 67,973,079 -- 219,533,452 -- 219,533,452
Amortization of
intangibles, deferred
compensation........... 30,999,737 10,281,739 31,448,195 72,729,671 -- 72,729,671
Commissions............... 32,188,873 -- -- 32,188,873 -- 32,188,873
Other..................... 45,574,214 18,104,988 -- 63,679,202 -- 63,679,202
Non controlling
interest............... -- 41,652,072 (19,985,011) 21,667,061 (21,667,061) --
------------ ------------ ------------ ------------ ------------ ------------
Total Expenses.... 260,323,197 138,011,878 11,463,184 409,798,259 (21,667,061) 388,131,198
------------ ------------ ------------ ------------ ------------ ------------
Income before income tax
expense................ 83,886,858 25,896,393 (11,463,184) 98,320,067 21,667,061 119,997,128
Income tax expense........ 1,225,610 3,038,553 -- 4,264,163 -- 4,264,163
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME.................. $ 82,661,248 $ 22,857,840 $(11,463,184) $ 94,055,904 $ 21,667,061 $115,722,965
============ ============ ============ ============ ============ ============

Earnings per unit (note
4)........................ $ 1.06 $ 1.08 $ 1.01
============ ============ ============
Units outstanding
GP units.................. 800,000 -- -- 800,000 -- 800,000
Class A LP units.......... 40,146,155 -- 9,019,608 49,165,763 26,054,414 75,220,177
Class B LP units.......... 32,992,531 -- -- 32,992,531 -- 32,992,531
Dilutive effect of options
and awards............. 3,906,437 -- -- 3,906,437 2,171,000 6,077,437
------------ ------------ ------------ ------------ ------------ ------------
Total............. 77,845,123 -- 9,019,608 86,864,731 28,225,414 115,090,145
============ ============ ============ ============ ============ ============
</TABLE>

See accompanying Notes to Pro Forma Condensed Financial Statements.

19
<PAGE> 25

PIMCO ADVISORS L.P.

PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
OPGROUP OPCAP
PIMCO TRANSACTION PRO FORMA MERGER
ADVISORS OPPENHEIMER (NOTE 1) POST (NOTE 2) PRO FORMA
L.P. GROUP, INC. ADJUSTMENTS ACQUISITION ADJUSTMENTS POST MERGER
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Investment advisory
fees................. $342,707,775 $176,561,199 $ -- $519,268,974 $ -- $519,268,974
Distribution and
servicing fees....... 48,182,499 4,265,670 -- 52,448,169 -- 52,448,169
Other income............ 1,134,108 -- -- 1,134,108 -- 1,134,108
------------ ------------ ------------ ------------ ------------ ------------
Total
Revenues...... 392,024,382 180,826,869 -- 572,851,251 -- 572,851,251
------------ ------------ ------------ ------------ ------------ ------------
EXPENSES
Compensation and
benefits............. 173,526,137 73,424,810 -- 246,950,947 -- 246,950,947
Amortization of
intangibles, deferred
compensation......... 41,171,400 13,714,578 41,930,927 96,816,905 -- 96,816,905
Commissions............. 37,738,954 -- -- 37,738,954 -- 37,738,954
Other................... 47,258,294 27,881,901 -- 75,140,195 -- 75,140,195
Non controlling
interest............. -- 40,361,521 (26,646,681) 13,714,840 (13,714,840) --
------------ ------------ ------------ ------------ ------------ ------------
Total
Expenses...... 299,694,785 155,382,810 15,284,246 470,361,841 (13,714,840) 456,647,001
------------ ------------ ------------ ------------ ------------ ------------
Income before income
taxes expense........ 92,329,597 25,444,059 (15,284,246) 102,489,410 13,714,840 116,204,250
Income tax expense...... 1,201,417 2,805,887 -- 4,007,304 -- 4,007,304
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME................ $ 91,128,180 $ 22,638,172 $(15,284,246) $ 98,482,106 $ 13,714,840 $112,196,946
============ ============ ============ ============ ============ ============
Earnings per unit (note
4)...................... $ 1.17 $ 1.13 $ 0.97
============ ============ ============
Units outstanding
GP units................ 800,000 -- -- 800,000 -- 800,000
Class A LP units........ 40,146,155 -- 9,019,608 49,165,763 26,054,414 75,220,177
Class B LP units........ 32,992,531 -- -- 32,992,531 -- 32,992,531
Dilutive effect of
options and awards... 3,906,437 -- -- 3,906,437 2,171,000 6,077,437
------------ ------------ ------------ ------------ ------------ ------------
Total........... 77,845,123 -- 9,019,608 86,864,731 28,225,414 115,090,145
============ ============ ============ ============ ============ ============
</TABLE>

See accompanying Notes to Pro Forma Condensed Financial Statements.

20
<PAGE> 26

OPPENHEIMER CAPITAL, L.P. AND PIMCO ADVISORS L.P.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS

1. THE OPGROUP TRANSACTION

In its acquisition accounting PIMCO Advisors recorded the net assets
acquired at the fair value of the consideration given, including the assumption
of $230 million of debt payable to Opgroup's former shareholders, assumption of
a $32.2 million note payable to the Partnership and the issuance of 2.1 million
units of PIMCO Advisors Class A LP Units. The pro forma adjustments assume that
the $230 million of debt is exchanged for 6.9 million PIMCO Advisors Class A LP
Units because the cash flow applicable to the units is expected to be higher in
the aggregate than the cash flow from interest on the debt and because such
presentation results in the most conservative presentation of earnings per unit
based on cash flow applicable to Units compared to interest payable on debt.
Immediately following the closing Opgroup repaid the $32.2 million note,
utilizing a cash advance from PIMCO Advisors. Thus the Opgroup Transaction
Adjustments reflect a reduction in cash of $32.2 million, a reduction in debt of
$262.2 million and an increase to Partners capital of $230 million for these
transactions.

Because PIMCO Advisors exercises effective control over Oppenheimer Capital
as its sole general partner, consolidation accounting is used and the
non-controlling interest in this subsidiary was recorded at $578.0 million,
consistent with the values established for PIMCO Advisor's interest in
Oppenheimer Capital. The adjustment amount of $532.9 million reflects the
elimination of the historical $45.1 million value of the interest carried in
Opgroup's statements for this non-controlling interest. The adjustment to
increase Partners capital by $535.7 million results from the exchange of the
$230.0 million of debt discussed above; $64.9 million of value associated with
the issuance of the 2.1 million PIMCO Advisors Class A LP Units; and the
assumption of Opgroup's negative net assets of $240.8 million. The adjustment to
intangibles of $838.6 million reflects the elimination of $1.1 million of
existing intangibles bringing the total intangibles arising from the Opgroup
Transaction to $839.7 million.

These intangibles will be allocated to the value of the businesses
acquired--$32.2 million allocable to the advisory contracts and $807.5 million
to the Oppenheimer Capital business. Management believes the expected life of
each of these intangibles exceeds the 20 year amortization life to be used for
financial statement purposes, which will result in the aggregate annual charge
of $41.9 million reflected in the adjustments to the pro forma statements of
operations. The non-controlling interests share of this increased amortization
amount is also shown as adjustments. PIMCO Advisors will continually evaluate
the recoverability of the intangible balances by assessing whether the
amortization of the balances over their remaining life can be recovered through
expected undiscounted cash flows from future operations of the acquired
businesses.

At the time of the transaction, key management of Oppenheimer Capital were
awarded the equivalent of 2,171,000 PIMCO Advisors Class A LP Units with an
aggregate value of $68 million. These units will be received upon vesting on the
third, fourth and fifth anniversaries of the closing. The cost will be amortized
to compensation expense over a five year period.

2. THE OPPENHEIMER CAPITAL MERGER

For PIMCO Advisors: The adjustments to the statement of financial condition
reflect the contribution of available cash at the Partnership arising from the
aforementioned repayment of the $32.2 million note and the contribution of the
non controlling interest in Oppenheimer Capital at the book value of $578.0
million, to PIMCO Advisors in exchange for an equivalent market value of PIMCO
Advisors units--approximately 26.1 million PIMCO Advisors Class A LP Units. The
aggregate book value of the assets contributed of $610.2 million represents the
adjustment to Partners capital. The adjustments to the statements of operations
eliminate the portion of the net earnings previously allocated to the
non-controlling interest.

For the Partnership: The adjustments to the statement of financial
condition reflect the receipt of 26.1 million PIMCO Advisors Class A LP Units
from PIMCO Advisors in replacement of its investment in

21
<PAGE> 27

OPPENHEIMER CAPITAL, L.P. AND PIMCO ADVISORS L.P.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (CONTINUED)

Oppenheimer Capital and related intangible assets and the cash received from the
repayment of the $32.2 million note. The adjustment of $179.5 million to
Partners capital reflects establishing the investment in PIMCO Advisors at
$283.0 million (the proportionate amount of PIMCO Advisors' Partners capital).
The adjustments to the statements of operations eliminate the amounts previously
recorded as equity in earnings from Oppenheimer Capital and in replacement
thereof record a proportionate share of PIMCO Advisors' pro forma earnings. The
adjustments also eliminate the interest income and related taxes associated with
the note which was paid off, and amortization of intangibles that no longer
exist.

3. THE RESTRUCTURING OF PIMCO ADVISORS

The adjustment of $147.6 million to the investment in operating partnership
represents the Partnership's increased ownership by virtue of its receipt of
13.6 million PIMCO Advisors Class A LP Units, or approximately 12%, of PIMCO
Advisors recorded at the per unit book value of PIMCO Advisors. The Partnership
will issue an equal number of its units to the contributing partners of PIMCO
Advisors and Partners capital reflects the increase associated with that
issuance.

The adjustments to the statements of operations of the Partnership reflect
the inclusion of an approximate 12% additional interest in the pro forma results
of operations of PIMCO Advisors, representing the proportionate ownership of the
new interests contributed.

4. RECOGNITION OF PROPORTIONATE EARNINGS OF PIMCO ADVISORS

Subsequent to December 31, 1997, Class A and Class B limited partnership
units of PIMCO Advisors will participate as one class in earnings and
distribution rights. Accordingly, the historical priority of the PIMCO Advisors
Class A LP Units will no longer exist. The pro forma post-Oppenheimer
Transaction and pro forma post-Oppenheimer Capital Merger results reflect
treatment of all units on an equal basis and thus a blended distribution and
earnings per unit at the PIMCO Advisors level as will be utilized in reporting
the results of operations for any unitholder in the future. In addition, all
calculations are based upon the number of

22
<PAGE> 28

OPPENHEIMER CAPITAL, L.P. AND PIMCO ADVISORS L.P.

NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (CONTINUED)

units outstanding and the dilutive effects of options as of September 30, 1997.
As a result, the pro forma earnings per unit and distributions per unit at PIMCO
Advisors, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 SEPTEMBER 30, 1997
------------------------- -----------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
------------- --------- ----------- ---------
<S> <C> <C> <C> <C>
CLASS A UNITS
PIMCO Advisors
Earnings per unit....................... $1.29 $1.17 $1.06 $1.06
Distributions per unit.................. $1.88 $1.79 $1.54 $1.54
PIMCO Advisors after the Opgroup
Transaction
Earnings per unit....................... $1.13 $1.08
Distributions per unit.................. $1.92 $1.69
PIMCO Advisors after the Opgroup
Transaction and the Oppenheimer Capital
Merger
Earnings per unit....................... $0.97 $1.01
Distributions per unit.................. $1.92 $1.73

CLASS B UNITS
PIMCO Advisors
Earnings per unit....................... $1.05 $1.17 $1.06 $1.06
Distributions per unit.................. $1.68 $1.79 $1.54 $1.54
PIMCO Advisors after the Opgroup
Transaction
Earnings per unit....................... $1.13 $1.08
Distributions per unit.................. $1.92 $1.69
PIMCO Advisors after the Opgroup
Transaction and the Oppenheimer Capital
Merger
Earnings per unit....................... $0.97 $1.01
Distributions per unit.................. $1.92 $1.73
</TABLE>

5. PROVISION FOR FEDERAL TAX ON PUBLICLY TRADED PARTNERSHIPS

In August 1997, tax legislation was passed which permits publicly traded
partnerships to elect to continue to be treated as partnerships for tax
purposes. For those partnerships so electing, including the Partnership,
commencing in 1998 there will be imposed a tax of 3.5% on gross income derived
from active businesses of the Partnership and any partnerships in which it holds
an interest. Preliminary indications are that most state tax jurisdictions will
conform to the federal legislation, imposing a state level tax of approximately
1% calculated in the same manner as the federal assessment. The accompanying pro
forma financial information has not been adjusted to reflect the imposition of
these taxes assuming they had been in effect during the periods presented. It is
expected, however, that cash flow available for distribution would have been
reduced by approximately 11% because of these taxes.

23
<PAGE> 29

THE PARTNERSHIP

GENERAL

The Partnership is a Delaware limited partnership which holds 26.1 million
PIMCO Advisors GP Units, representing an approximately 23.9% interest in PIMCO
Advisors.

PIMCO Advisors is one of the nation's largest investment management firms
with approximately $190 billion of assets under management at November 5, 1997.
PIMCO Advisors offers a broad range of investment management services and styles
to institutional and retail investors, combining the fixed income-oriented
investment management operations of Pacific Investment Management, the
equity-oriented operations of recently-acquired Oppenheimer Capital and five
smaller affiliated domestic and international equity investment management firms
and mutual fund operations. PIMCO Advisors provides investment management
services primarily to (i) large institutional clients through separate accounts,
(ii) smaller institutional clients and financial intermediaries through the
institutional share classes of the PIMCO Funds (described below) and (iii)
retail investors through the retail share classes of the PIMCO Funds, which are
sold principally through broker-dealers.

PIMCO Advisors' strategy is to pursue growth by marketing the investment
management expertise, performance record and reputation of its seven Investment
Management Firms. The Investment Management Firms are six Delaware partnerships:
Pacific Investment Management, Oppenheimer Capital, CCI, Cadence, NFJ and
Parametric; and one United Kingdom limited partnership, Blairlogie.

The seven Investment Management Firms are structured as separate
subsidiaries. PIMCO Advisors believes this decentralized structure enables the
Investment Management Firms to implement their own distinct investment
strategies and philosophies, providing financial and other incentives for the
managers of each of the firms to render superior performance and client service.
The Managing Directors of the Investment Management Firms have a significant
profits interest in their respective Investment Management Firms, as well as
substantial economic interests in PIMCO Advisors.

The Partnership's business results from the November 1997 merger of
Oppenheimer Capital with a subsidiary of PIMCO Advisors. Prior to November 1997,
the Partnership's only significant asset was an approximately 68% interest in
Oppenheimer Capital. In the Oppenheimer Capital Merger, Oppenheimer Capital
became a wholly-owned subsidiary of PIMCO Advisors and the Partnership received
26.1 million PIMCO Advisors GP Units.

PGP is the sole general partner of the Partnership and is the controlling
general partner of PIMCO Advisors, through its direct general partner interest
as well as through its control of the other general partner of PIMCO Advisors,
the Partnership.

The Partnership's principal offices are located at 800 Newport Center
Drive, Newport Beach, California 92660. The Partnership's telephone number is
(714) 717-7022.

RECENT DEVELOPMENTS

The Opgroup Transaction. On November 4, 1997, PIMCO Advisors acquired the
investment advisory assets of Opgroup, including: a 32% managing general partner
interest in Oppenheimer Capital, the one percent general partner interest in the
Partnership and one percent general partner interests in four subsidiaries of
Oppenheimer Capital and Value Advisors LLC, a newly formed limited liability
company holding eight closed-end investment fund management contracts formerly
held by Advantage Advisors, Inc. As consideration for these assets, the Opgroup
stockholders received 2,119,608 PIMCO Advisors Class A LP Units, rights (the
"Opgroup Exchange Rights") to acquire up to 6,900,690 additional Class A LP
Units at $33 1/3 per unit upon exchange of 6% Senior Notes due December 1, 2037
of Opgroup (the "Opgroup Notes") and rights to require PIMCO Advisors to
re-purchase some or all of these units for $25.50 per unit (the "Opgroup Put
Rights") (the "Opgroup Transaction").

24
<PAGE> 30

PIMCO Advisors' acquisition of Opgroup's investment advisory assets in the
Opgroup Transaction was accomplished as follows:

(i) Immediately prior to the transaction, Opgroup redeemed certain
shares of its outstanding stock in exchange for (A) $244 million in
available cash, (B) $150 million in Opgroup Notes and (C) an $80 million
face amount Certificate of Long-Term Indemnity Indebtedness, which is
reduced upon the occurrence of certain indemnity obligations with respect
to the investment management assets. The Opgroup Notes are limited in
recourse to the assets of Opgroup.

(ii) Following the redemption, a newly-formed, wholly-owned limited
liability company subsidiary of PIMCO Advisors merged with and into
Opgroup. In the merger, Opgroup became a subsidiary of PIMCO Advisors, and
the Opgroup Stockholders received 2,119,608 PIMCO Advisors Class A LP
Units, the Opgroup Exchange Rights, and the Opgroup Put Rights. The Opgroup
stockholders also received certain registration rights with respect to
these units. See "Certain Relationships and Transactions."

(iii) Immediately following the merger, Opgroup, then a subsidiary of
PIMCO Advisors, caused its subsidiary Opfin to contribute (i) the ownership
of Value Advisors LLC and the one percent general partner interest in the
Partnership to PIMCO Advisors, and then (ii) Opfin's 34% managing general
partner interest in Oppenheimer Capital and the one percent general partner
interests in four subsidiaries of Oppenheimer Capital to Value Advisors LLC
(then a subsidiary of PIMCO Advisors). In exchange for these contributions,
Opfin received 6,000,000 PIMCO Advisors Class C units of limited partner
interest in PIMCO Advisors ("Class C LP Units"). Each Class C LP Unit is
entitled to the same proportionate share of profits, losses and
distributions as a Class A LP Unit, but with a maximum distribution of
$3.00 per year, or $0.75 per quarter subject to a catch-up on an annual
basis. In connection with this transaction, the Partnership adopted an
amendment to its partnership agreement converting the one percent general
partner interest into a one-one hundredth of one percent general partner
interest, with the remaining interest converted to Partnership LP Units.
PIMCO Advisors then sold the general partner interest in the Partnership to
PGP for $80,000. In addition, PIMCO Advisors loaned $35 million to Opgroup,
and Opgroup used this loan to retire the indebtedness owed by Opfin to the
Partnership (the "Opfin Debt").

25
<PAGE> 31

The Opgroup Transaction is depicted in the following diagrams:

[CHART]

26
<PAGE> 32

[CHART]

27
<PAGE> 33

The Oppenheimer Capital Merger. In November 1997, Oppenheimer Capital
merged with a transitory limited partnership subsidiary of PIMCO Advisors, with
Oppenheimer Capital surviving (the "Oppenheimer Capital Merger"). As a result of
the Oppenheimer Capital Merger, Oppenheimer Capital became a wholly-owned
subsidiary of PIMCO Advisors, and the Partnership (the other general partner of
Oppenheimer Capital prior to the Oppenheimer Capital Merger), received an
aggregate of 26.1 million PIMCO Advisors GP Units and was admitted as a general
partner of PIMCO Advisors. Immediately following the Oppenheimer Capital Merger,
PGP, as the general partner of the Partnership, caused a 1.67 for one split of
the Partnership Units having the effect that each Partnership Unit outstanding
after the unit split represents an economic interest in one PIMCO Advisors GP
Unit (after taking account of the .3 million PIMCO Advisors GP Units underlying
the general partner interest in the Partnership held by PGP). Also, immediately
following the merger, the Partnership used the $32.2 million received upon
repayment of the Opfin Debt to acquire 1.1 million additional PIMCO Advisors
Units.

[CHART]

28
<PAGE> 34

BUSINESS OF THE PARTNERSHIP

OVERVIEW

The Partnership is a holding company which owns 26.1 million PIMCO Advisors
GP Units, representing an approximately 23.9% interest in PIMCO Advisors. PIMCO
Advisors is one of the nation's largest publicly traded investment management
firms with approximately $190 billion of assets under management at November 5,
1997. PIMCO Advisors business is conducted principally through the seven
Investment Management Firms, which are subsidiaries of PIMCO Advisors.

GENERAL

The table below sets forth the assets under management of PIMCO Advisors
and its seven Investment Management Firms at the dates indicated:

<TABLE>
<CAPTION>
ASSETS UNDER MANAGEMENT (IN MILLIONS)
----------------------------------------------------------------------
AT AT DECEMBER 31,
SEPTEMBER 30, ----------------------------------------------------
1997 1996 1995 1994 1993(2) 1992(2)
-------------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Pacific Investment
Management.................. $108,531 $ 88,147 $76,371 $56,883 $53,001 $41,249
Oppenheimer Capital...........
Columbus Circle Investors..... 11,462 14,159 12,670 10,304 9,848 8,070
Cadence Capital Management.... 4,929 3,229 2,393 1,762 1,647 940
Parametric Portfolio
Associates.................. 2,519 2,001 1,569 1,546 1,385 932
NFJ Investment Group.......... 2,271 1,743 1,455 1,072 966 534
Blairlogie Capital
Management.................. 875 673 645 479 97 --
Other(1)...................... 45 70 79 129 1,194 2,630
------- -------- ------- ------- ------- -------
Total............... $130,632 $110,022 $95,182 $72,175 $68,138 $54,355
======= ======== ======= ======= ======= =======
</TABLE>

- ---------------
(1) Includes assets under management not advised or subadvised by the Investment
Management Firms. For years ended December 31, 1992 and 1993, includes
assets invested in the Cash Accumulation Trust, a money market fund, which
is currently subadvised by Columbus Circle Investors.

(2) Pro forma as if the consolidation of PIMCO Advisors had occurred on January
1, 1993.

The table below sets forth the aggregate assets under management of PIMCO
Advisors and the Investment Management Firms (other than Oppenheimer Capital) by
investment type:

<TABLE>
<CAPTION>
ASSETS UNDER MANAGEMENT (IN MILLIONS)
--------------------------------------------------
AT AT DECEMBER 31,
SEPTEMBER 30, --------------------------------
1997 1996 1995 1994
------------- -------- ------- -------
<S> <C> <C> <C> <C>
Institutional Separate Accounts
Fixed Income................................. $ 71,394 $ 57,295 $50,264 $38,778
Equity....................................... 19,056 18,075 16,248 12,461
Institutional Mutual Funds(1)
Fixed Income................................. 22,565 19,592 16,732 11,830
Equity....................................... 5,728 5,077 3,768 2,515
Retail Mutual Funds
Fixed Income................................. 3,215 2,541 2,043 1,744
Equity....................................... 7,939 6,728 5,486 4,055
Retail Money Market............................ 735 714 641 792
-------- ------- ------- -------
Total................................ $ 130,632 $110,022 $95,182 $72,175
======== ======= ======= =======
</TABLE>

- ---------------
(1) Includes assets managed under pooling arrangements.

29
<PAGE> 35

PIMCO Advisors markets its investment management services to institutional
and mutual fund clients through client service representatives at each of the
Investment Management Firms and through distributors including PIMCO Funds
Distribution Company ("PFD", (formerly known as PIMCO Advisors Distribution
Company), a wholly-owned broker-dealer which distributes and markets shares of
the retail mutual funds of PIMCO Advisors.

The revenues of PIMCO Advisors and its seven Investment Management Firms
consist principally of management fees based on the value of assets under
management and in some cases the performance of the advisor. The table below
sets forth management fees for PIMCO Advisors and its seven Investment
Management Firms for the periods indicated:

<TABLE>
<CAPTION>
MANAGEMENT FEES
--------------------------------------------------------------------
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ----------------------------------------------------
1997 1996 1995 1994(2) 1993(2) 1992(2)
------------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Pacific Investment Management... $ 200,433 $222,274 $180,937 $141,218 $144,487 $106,279
Columbus Circle Investors....... 43,835 63,698 53,078 44,363 39,460 32,151
Cadence Capital Management...... 17,456 17,873 14,555 12,120 9,504 6,103
Parametric Portfolio
Associates.................... 3,160 3,466 3,753 4,451 4,505 2,932
NFJ Investment Group............ 6,331 7,271 5,916 4,967 3,795 2,007
Blairlogie Capital Management... 3,224 3,721 2,916 420 23 --
Oppenheimer Capital.............
Other(1)........................ 27,802 20,038 20,455 23,936 20,592 22,805
-------- -------- -------- -------- -------- --------
Total................. $ 302,241 $338,341 $281,610 $231,475 $222,366 $172,277
======== ======== ======== ======== ======== ========
</TABLE>

- ---------------
(1) Includes revenues not directly allocable to the investment management
services of the Investment Management Firms, the management fees of the Cash
Accumulation Trust and intercompany eliminations.

(2) Pro forma as if the consolidation of PIMCO Advisors had occurred on January
1, 1993.

A principal component of PIMCO Advisors' marketing strategy is the
historical performance of the Investment Management Firms relative to selected
benchmarks over long periods of time. For example, Pacific Investment Management
stresses its record in equaling or exceeding client-selected performance
benchmarks over long periods through a measured risk taking approach that
emphasizes preservation of capital. Over the last 5 years, Pacific Investment
Management's Total Return composite, representing approximately 56% of Pacific
Investment Management's total assets under management at September 30, 1996,
outperformed the Lehman Brothers Aggregate Bond Index by approximately 159 basis
points (8.51% compared to 6.92%) annually on a compound basis after adjusting
for the advisory fees paid to Pacific Investment Management.

PRIMARY MARKETS AND STRATEGY FOR GROWTH

The two primary markets for the investment management services offered by
the Investment Management Firms are the institutional market and the mutual fund
market. Several of the Investment Management Firms also manage private accounts
for high net worth individuals.

INSTITUTIONS

The institutional market for investment management services includes
corporate, government and multi-employer pension plans, charitable endowments
and foundations, and corporations purchasing investment management services for
their own account. Each of the Investment Management Firms serves the
institutional market and conducts its own institutional marketing activities. In
general, the Investment Management Firms' marketing approach targets Fortune
1,000 companies and other large institutional

30
<PAGE> 36

investors. The Investment Management Firms seek to develop client relationships
through investment management performance and focused and responsive client
service. Their business strategies also involve increasing assets under
management for non-US clients, expanding the array of fixed income and equity
products offered to clients, seeking to expand market share with medium and
smaller institutional investors by offering pooled investment vehicles such as
the PIMCO Funds (described below), and otherwise seeking to diversify and expand
their businesses by investment strategy, method of delivery and markets.

MUTUAL FUNDS

Like the institutional market for investment management services, the
mutual fund market has expanded rapidly in recent years.

The mutual fund industry is highly competitive and is characterized by a
high degree of fragmentation and a large and rapidly increasing number of
product offerings. Marketing strategies, product development, business
development, sales expertise and servicing are increasingly important. The
traditional channel for the distribution of mutual funds (other than money
market funds) is through brokerage firms that are not affiliated with the funds'
sponsor organization and that are compensated primarily through front-end sales
loads deducted from the purchaser's investment at the time of the sale.
Increasingly other distribution arrangements and channels have become important.
These include "no-load" or "low-load" funds, sold primarily through direct
marketing efforts or captive sales forces affiliated with the sponsor
organization; "private label" and "proprietary" funds managed by and offered
primarily through, or to customers of, a financial organization such as a
brokerage firm, insurance company or bank; and "back-end load" or "level load"
funds offered through brokerage and other third-party channels, but with
compensation to the selling brokers being funded through commission advances
from the funds' sponsor which are recovered through ongoing charges against fund
assets assessed under Rule 12b-1 under the Act, contingent deferred sales
charges assessed against shareholders at the time they redeem their investments,
or a combination of such sources.

PIMCO Advisors' retail strategy is to build a "brand name" awareness of the
fund group both at the broker-dealer level and the retail investor level,
creating a valuable, long-term franchise. Leveraging off the depth and expertise
of its Investment Management Firms, PIMCO Advisors has developed new funds to
fill gaps in its product line in terms of investment objectives and styles.

INVESTMENT MANAGEMENT FIRMS

PACIFIC INVESTMENT MANAGEMENT COMPANY (PACIFIC INVESTMENT MANAGEMENT)

General

Pacific Investment Management had aggregate assets under management at
September 30, 1997 and 1996 of $108.5 billion and $83.2 billion, respectively,
of which 89.5% and 90.0%, respectively, consisted of fixed income accounts and
10.5% and 10.0%, respectively, consisted of equity-related accounts. Pacific
Investment Management's clients principally include large and medium-sized
corporate pension and profit sharing plans, public pension plans, multiemployer
pension plans, foreign institutions and foundations and endowment funds. Its
client list includes many of the nation's largest pension funds, foundations and
endowments and other institutional investors.

Investment Strategy

Pacific Investment Management believes that its strength in the management
of fixed income assets is derived from its investment philosophy, which stresses
a long-term or secular focus, active management, with measured risktaking, and
the application of strong analytical capabilities across all fixed income market
sectors. Under Pacific Investment Management's investment philosophy, longer
term macro-economic trends are key inputs to portfolio strategy, and moderate
portfolio duration ranges are favored to reduce volatility relative to
client-specified benchmarks. Pacific Investment Management's investment strategy
process begins with a "top-down" approach utilizing an intensive review of
long-term and cyclical trends to anticipate interest rates, volatility, yield
curve shape and credit trends. These forecasts become the basis for the major
portfolio

31
<PAGE> 37

strategies. Pacific Investment Management then uses a "bottom up" process to
select specific portfolio investments.

In managing fixed income investment advisory accounts, within client and
mutual fund guidelines, Pacific Investment Management uses a broad array of
fixed income investments, including investment grade and below investment grade
securities, as well as derivatives. Pacific Investment Management has developed
and employs, in the case of derivatives as well as other instruments, various
risk controls at the portfolio and individual instrument levels in an effort to
evaluate and monitor interest rate, liquidity and credit quality risk.

As part of its active management style, Pacific Investment Management uses
internally developed, proprietary computer software programs in managing its
clients' assets rather than analytical models purchased from outside sources.
Pacific Investment Management believes that its proprietary computer technology
provides it with an important competitive advantage.

Pacific Investment Management has sought to expand its client base beyond
the traditional defined benefit pension market, and has increased its presence
in the defined contribution pension market. Pacific Investment Management's
strategy also involves focusing on financial service aggregators of retail
assets such as unaffiliated sponsors of mutual funds and other registered
investment advisors (including fee-based financial planners) who recommend the
use of "no-load" mutual funds such as the institutional and administrative
classes of PIMCO Funds PIMS Series (as defined below under -- Partnership Mutual
Funds) to their clients, and consultant alliances. In addition, Pacific
Investment Management seeks to increase both institutional and retail assets
under management from non-US investors.

Investment Products. Pacific Investment Management offers a range of
investment services for both fixed income and equity assets:

FIXED INCOME PORTFOLIOS. Pacific Investment Management offers a
variety of strategies for clients with fixed income portfolios, designed to
reflect each particular client's investment objective:

Total Return Portfolios -- Pacific Investment Management structures
total return portfolios with the objective of realizing maximum total
return, consistent with the preservation of capital and prudent
investment management across the spectrum of fixed income securities.
This strategy generally results in a portfolio duration of three to six
years. Portfolios utilizing this strategy represented approximately $66
billion of Pacific Investment Management's total assets under management
at September 30, 1997.

Low Duration Portfolios -- Pacific Investment Management has actively
managed low duration accounts since 1979 (overall portfolio duration one
to three years). The objectives in the low duration portfolios are to
preserve principal through investment in low-volatility instruments,
while seeking to achieve superior riskadjusted returns.

Other Duration Specific or Sector Specific Portfolios -- Pacific
Investment Management also offers clients active management of
portfolios based upon specific duration targets (e.g., long duration
portfolios or guaranteed investment contract ("GIC") products which are
designed to outperform GICs) and sector emphases (e.g., international,
high-yield, or mortgages).

International And Other Portfolios. -- Pacific Investment Management, as
investment advisor to a series of offshore funds and individual clients,
provides fixed income investment advice to non-US investors. Assets
under management for these offshore funds totaled $1.2 billion and $476
million at September 30, 1997 and December 31, 1996, respectively.
Pacific Investment Management also serves as subadvisor for a series of
term trusts investing in mortgage related securities that are marketed
to Japanese investors. These trusts had assets of $1.3 billion and $1.4
billion at September 30, 1997 and December 31, 1996, respectively.
Pacific Investment Management also serves as subadvisor for nine
families of US mutual funds sponsored by other mutual fund complexes.
Total assets under management for these nonaffiliated funds at September
30, 1997 and December 31, 1996 were $2.7 billion and $3.5 billion,
respectively.

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<PAGE> 38

EQUITY RELATED PORTFOLIOS. Pacific Investment Management also manages
an enhanced equity based strategy: StocksPLUS, which accounted for $11.3
billion of assets under management at September 30, 1997. StocksPLUS
represents a proprietary technique developed by Pacific Investment
Management that combines the active management of stock index futures (to
provide a proxy for equity market returns) with active management of a
short-term fixed income portfolio using much of the same analytics as is
used by Pacific Investment Management in its fixed income portfolios.

Set forth below is a table showing Pacific Investment Management's assets
under management and the number of portfolios at the dates indicated:

<TABLE>
<CAPTION>
ASSETS UNDER MANAGEMENT ($ IN MILLIONS)(1)
---------------------------------------------------------------
SEPTEMBER 30, AT DECEMBER 31,
--------------- ---------------------------------------------
1997 1996 1995 1994
--------------- ------------- ------------- -------------
NO. AMOUNT NO. AMOUNT NO. AMOUNT NO. AMOUNT
---- -------- --- ------- --- ------- --- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Income Portfolios:
Total Return Portfolios........... 203 $ 62,001 182 $51,078 162 $45,075 153 $34,681
Low Duration Portfolios........... 30 6,687 30 5,829 30 5,365 25 4,253
Other Duration Specific or Sector
Specific Portfolios:
Duration/Specific.............. 16 11,069 17 9,514 10 7,719 11 3,506
GIC Alternatives............... 33 4,676 21 2,918 13 1,968 12 1,634
Mortgages...................... 17 3,966 15 3,545 19 4,514 25 4,649
Global/Non-US.................. 31 4,412 17 3,096 9 1,670 8 1,680
Other.......................... 20 4,337 11 3,318 14 2,359 10 1,750
--- ------- --- ------- --- ------- --- -------
Total..................... 350 97,148 293 79,298 257 68,670 244 52,153
--- ------- --- ------- --- ------- --- -------
Equity/Related Portfolios:
StocksPLUS........................ 20 11,342 20 8,838 20 7,591 17 4,636
Other............................. 1 41 1 11 4 110 4 94
--- ------- --- ------- --- ------- --- -------
Total..................... 21 11,383 21 8,849 24 7,701 21 4,730
--- ------- --- ------- --- ------- --- -------
TOTAL ASSETS UNDER MANAGEMENT....... 371 $108,531 314 $88,147 281 $76,371 265 $56,883
=== ======= === ======= === ======= === =======
</TABLE>

- ---------------

(1) Includes the managed assets of PIMCO Funds.

Performance-Based Fees. Pacific Investment Management's fee schedules are
typically computed as a percentage of assets under management. Pacific
Investment Management's StocksPLUS product, which accounted for $11.3 billion of
assets under management at September 30, 1997, generally is subject to a
performance-based fee schedule in which underperformance relative to the S&P 500
index over a particular time period results in no fees being paid by clients and
superior performance results in incentive fees that are not subject to a cap.
The StocksPLUS fee arrangement can materially affect Pacific Investment
Management's total revenues from period to period.

In addition to the StocksPLUS accounts, several large fixed income accounts
also have performance-based fee arrangements. For these accounts, Pacific
Investment Management must outperform a specified fixed income benchmark over a
particular time period in order to receive a performance-based fee, but
generally is entitled to a base fee determined with reference to the value of
assets under management. Such arrangements can make Pacific Investment
Management's revenues volatile, but also provide an opportunity to earn higher
fees than could be obtained under fee arrangements based solely on a percentage
of assets under management.

Employees

Pacific Investment Management's 13 Managing Directors have an average of 18
years of industry experience. Of the 13 Managing Directors, three (William H.
Gross, William F. Podlich, III and James F.

33
<PAGE> 39

Muzzy) have been associated with Pacific Investment Management since its
founding and the other ten have been with Pacific Investment Management for an
average of 11 years. At September 30, 1997, the firm-wide staff of 314 included
59 investment professionals, of whom 20 are Chartered Financial Analysts.
Pacific Investment Management's portfolio managers, including the fixed income
staff (25 professionals), are responsible for research and trading. Account
managers (40 professionals) are primarily responsible for client relationship
management and/or marketing.

OPPENHEIMER CAPITAL

General

Oppenheimer Capital has over $60 billion in assets under management as of
September 30, 1997. Oppenheimer Capital's fundamental strategy is to
consistently increase its assets under management by providing comprehensive,
cost-effective investment management services to its clients. Oppenheimer
Capital seeks to combine the preservation of capital in falling markets with
market or above-market performance in rising markets.

INVESTMENT PHILOSOPHY AND PROCESS

Investment Philosophy

Oppenheimer Capital seeks to adhere to a disciplined, value-oriented
investment philosophy, by identifying company-specific, rather than
industry-specific opportunities. By investing in quality securities that are
temporarily out of favor or have been overlooked, Oppenheimer Capital seeks to
preserve capital in falling markets, reduce volatility compared to the overall
market and produce superior returns. Oppenheimer Capital subscribes to a similar
value-oriented philosophy with respect to fixed income investing. Oppenheimer
Capital seeks to identify the best relative fixed income values available in the
market by capitalizing on market inefficiencies which occur as a result of
unusual volatility, popular misperceptions, temporary supply or demand shocks
and other short-term conditions.

Equity Investment Process

Original company-specific research drives Oppenheimer Capital's equity
investment process. Oppenheimer Capital develops its own investment rationale
internally. While each investment is unique, Oppenheimer Capital's investment
process generally involves four basic steps. First, Oppenheimer Capital engages
in an extensive analysis of corporate fundamentals, focusing on companies with
the following characteristics: (i) successful cash flow generation and
deployment, (ii) a proven management team whose financial interests are aligned
with those of shareholders, (iii) a strong competitive position with significant
barriers to entry, (iv) sustainable levels of profitability and (v) capital
allocation consistent with creating shareholder value. Second, Oppenheimer
Capital's analysts prepare a written investment thesis, which is actively
reviewed and debated by the Investment Management Firm's investment
professionals. Third, once an investment thesis has been accepted, the subject
company's name is added to an approved list, from which Oppenheimer Capital
selects securities to construct its investment portfolios. Fourth, Oppenheimer
Capital continually reviews each investment thesis to evaluate company
performance and uses this review process to guide Oppenheimer Capital's future
investment decisions regarding securities of the subject company.

Fixed Income Investment Process

Every fixed income portfolio is structured according to three critical
investment decisions: (i) duration and yield curve positioning; (ii) sector
allocation; and (iii) credit quality allocation. Based on extensive analysis of
current market dynamics and historical yield relationships, Oppenheimer Capital
seeks to add value to client portfolios at each stage of this decision process.

INVESTMENTS

Oppenheimer Capital applies this disciplined valuation approach across a
complete spectrum of actively managed US and non-US equity investments:

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<PAGE> 40

Core Value. Core portfolios consist of large- and mid-cap equities, generally
capitalized in excess of $1 billion. The approved list for core portfolios
consists of approximately 75 to 85 companies from which Oppenheimer Capital
professionals construct portfolios of 35 to 45 names designed to meet
specific client objectives.

Mid-Cap Value. Dedicated mid-cap portfolios give Oppenheimer Capital clients
the opportunity for focused participation in companies capitalized between
$500 million and $5 billion at the time of purchase. From the core and
small-cap approved lists, portfolio managers construct portfolios of 25 to
35 securities.

Small-Cap Value. Small-cap portfolios seek to take advantage of mispricings
that occur in companies in the $50 million to $1 billion capitalization
range. Portfolios of 55 to 75 securities are selected from a small-cap
approved list of 80 to 100 names.

Non-US and Global Value. Oppenheimer Capital has established an international
group, Oppenheimer Capital International, to apply its proven value
discipline to international markets.

Revenues

The revenues of Oppenheimer Capital consist principally of investment
management fees generated from accounts under management based primarily on the
value of assets in each account and also, to a limited extent, on performance.
Total operating revenues increased 34.0% for the three months ended July 31,
1997 to $55.0 million from $41.1 million for the three months ended July 31,
1996. For the five years ended April 30, 1997, Oppenheimer Capital's investment
management fee income has grown from $79.5 million to $175.8 million,
representing a compound annual increase of 17.2%. Investment management fee
income for the three months ended July 31, 1997, as compared to the three months
ended July 31, 1996, increased 34.6% from $39.4 million to $53.1 million.

The sources of Oppenheimer Capital's fee income are diversified and
balanced among the public, jointly trusteed and corporate employee benefit
plans, endowments and foundations, and individual and small tax-exempt
institutions which together account for 67% of fee income. Mutual funds and
other commingled products and wrap fee accounts contribute the balance. No
single separately managed account represented more than two percent of
Oppenheimer Capital's total investment management revenues during the year ended
April 30, 1997.

Assets Under Management

The following table sets forth the amount of assets under Oppenheimer
Capital's management at April 30, 1997, 1996 and 1995 in millions.

<TABLE>
<CAPTION>
APRIL 30, APRIL 30, APRIL 30,
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Separate Account Management
Public Employee Benefit Plans........................... $ 13,172 $ 10,928 $ 8,988
Jointly Trusteed Benefit Plans.......................... 10,659 9,379 7,064
Corporate Employee Benefit Plans........................ 7,294 5,857 4,737
Endowments & Foundations................................ 1,428 1,106 925
Individuals & Small Institutions........................ 632 825 623
------- ------- -------
Total Separate Account Management......................... 33,185 28,095 22,337
Wrap Fee.................................................. 6,025 3,469 1,804
Mutual Funds & Other Commingled Products.................. 12,014 9,003 6,256
Option Management(1)...................................... -- -- 1,397
------- ------- -------
Total........................................... $ 51,224 $ 40,567 $ 31,794
======= ======= =======
</TABLE>

- ---------------
(1) During fiscal 1996, Oppenheimer Capital withdrew from the option management
business to concentrate on businesses offering higher returns.

35
<PAGE> 41

At April 30, 1992, 1993 and 1994, total assets under management were (in
millions) $23,706, $26,386 and $29,402, respectively. For the five years ended
April 30, 1997, assets under management grew at a compound annual rate of 16.7%.

PRODUCTS

Separate accounts comprise the majority of assets under management, with
mutual funds and other commingled products, wrap fee accounts and variable
annuities comprising the retail management segment.

Separate Account Management

Oppenheimer Capital's traditional, core business is separate account
management, constituting approximately $33.1 billion or 64.8% of assets under
management at April 30, 1997. Separate account management includes institutional
clients, such as state and local public benefit plans, jointly-trusteed
(Taft-Hartley) plans and corporate benefit plans, as well as individual and
other tax-free clients. The minimum size for new investment management accounts
is generally $10 million for equity accounts and $15 million for fixed income
accounts.

Retail Management

Since 1982, Oppenheimer Capital has formed a range of retail businesses
including: (i) wrap fee accounts, programs through which brokers offer their
clients discretionary portfolio management services; (ii) variable annuities;
(iii) equity open-end mutual funds; (iv) closed-end investment companies; and
(v) money market open-end mutual funds.

New Business Initiatives

Over the past several years, Oppenheimer Capital has introduced a variety
of new products, consistent with its diversification strategy. These products
include international equity management offered through Oppenheimer Capital
International, collective trust funds offered through Oppenheimer Capital Trust
Company and SITs.

RECENTLY DISCONTINUED OPERATIONS AND SIGNIFICANT DISPOSITIONS

On January 31, 1997, the Quest For Value Dual Purpose Fund redeemed all
18,004,302 of its income shares for total proceeds of $209 million. On March 3,
1997, the fund began trading as an open-end mutual fund and was renamed
Oppenheimer Quest Capital Value Fund. Oppenheimer Capital is currently managing
the Oppenheimer Quest Capital Value Fund under a subadvisory agreement with OFI.

On May 12, 1997, Oppenheimer Capital sold its exclusive license to market
financial products to members of the American Medical Association for $1
million.

Oppenheimer Capital sold its 50% interest in Saratoga Capital Management
during the fourth fiscal quarter of 1997.

EMPLOYEES

Oppenheimer Capital has a staff of 344 employees, including 43 investment
professionals. The average tenure of these professionals at Oppenheimer Capital
is 9 years, and their average investment experience is 19 years. Besides the
staff of 43 investment professionals, Oppenheimer Capital has a support staff of
301 individuals.

PROPERTIES

Oppenheimer Capital currently maintains office space at the following
locations: approximately 40,000 square feet at the Oppenheimer Tower, New York,
New York; 39,800 square feet at the Merrill Lynch Tower, New York, New York; and
44,000 square feet at 33 Maiden Lane, New York, New York.

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<PAGE> 42

COLUMBUS CIRCLE INVESTORS (CCI)

General

CCI, based in Stamford, Connecticut and established in 1975, manages
discretionary accounts for entities such as corporate, government and union
pension and profit sharing plans, foundations and educational institutions, as
well as accounts for "high net worth" individuals. In addition, CCI has a
private collective investment program for accredited investors. As of September
30, 1997, assets under management by CCI, exclusive of the approximately $5.6
billion of assets of the PIMCO MMS Funds (as defined below under -- Partnership
Mutual Funds) and the Cash Accumulation Trust under CCI management, were
approximately $5.9 billion for 102 clients.

CCI's principal equity products consist of its "core" portfolios, which
accounted for approximately $4.3 billion (or 37%) of its assets under management
at September 30, 1997. CCI uses its "positive momentum & positive surprise"
style for these portfolios, which principally consist of "large cap" US equity
securities. CCI also applies its "positive momentum & positive surprise" style
to manage "small cap" portfolios aggregating approximately $3.5 billion (or 30%)
of its assets under management at September 30, 1997; "mid cap" portfolios
aggregating approximately $1.7 billion (or 15%) of its assets under management
at September 30, 1997; and "equity income" portfolios aggregating approximately
$460 million (or four percent) of its assets under management at September 30,
1997. CCI also manages several relatively small fixed income, balanced and
specialized equity portfolios.

While net cash inflows for PIMCO Advisors, as a whole, were significant
($7.6 billion during the first nine months of 1997, $6.7 billion in 1996 and
$6.6 billion in 1995), CCI experienced substantial net cash outflows in 1995,
1996 and the first nine months of 1997, attributable in large part to
underperformance measured against relevant benchmarks in "Large Cap" portfolios.
This trend has continued in the third quarter of 1997.

Investment Strategy

CCI's investment strategy has remained essentially unchanged since 1975.
CCI's investment philosophy is based on the premise that companies producing
results which exceed the expectations of investors and Wall Street equity
research analysts will have rising stock prices, while companies with
disappointing results will experience stock price decline. CCI's investment
discipline focuses on the potential for "positive momentum & positive surprise."
CCI monitors numerous factors, including political and economic developments,
secular trends and industry and group dynamics, in addition to company-specific
events, to determine which companies are best-positioned to achieve revenue and
earnings acceleration. In addition to meeting the criteria for potential
"positive momentum & positive surprise," thorough fundamental analysis is
completed prior to making an investment decision. Depending upon market
conditions, CCI seeks to enhance investment performance by writing "covered"
call and stock index options on securities held in equity accounts.

Seven of the equity portfolios within the PIMCO Funds (plus the Tax Exempt
Fund) currently are managed by the same individuals who manage CCI's individual
and institutional private accounts. Accordingly, the CCI investment philosophy
and techniques described above are also applied to such equity and fixed income
funds. CCI's policy is to accept only new accounts of $10 million or more
(except in its accredited investors program). In 1995, CCI formed Columbus
Circle Trust Company, a limited purpose Connecticut trust company, which enables
CCI to provide trust and investment advisory services to smaller accounts.

Employees

Two of CCI's nine Managing Directors, Irwin F. Smith and Donald A.
Chiboucas, have been with CCI since its founding in 1975. Mr. Smith also
previously served as Chairman and Chief Executive Officer of Thomson Advisory
Group, L.P. At September 30, 1997, CCI had 94 employees, of whom 38 were
investment professionals. In July 1997, Mr. Christopher Burnham jointed the firm
as its Chief Executive Officer and President.

37
<PAGE> 43

CADENCE CAPITAL MANAGEMENT (CADENCE)

General

Cadence, based in Boston, Massachusetts and established in 1988,
specializes in disciplined, growth-oriented management of equity securities. At
September 30, 1997, Cadence had $4.9 billion of assets under management, managed
separate account portfolios for 77 clients and subadvised five portfolios within
the PIMCO Funds.

Investment Strategy

Cadence is a "growth at a reasonable price" equity manager. Cadence's
philosophy is to participate in the long-term growth of the equity markets by
constructing fully invested portfolios of stocks selling at reasonable
valuations in relation to the fundamental prospects of the underlying companies.
Cadence uses a disciplined, "bottom-up" investment process which utilizes
quantitative screening for favorable fundamental and valuation attributes,
followed by "hands-on" qualitative research to confirm the apparent business
trends. Cadence structures its portfolios to be broadly based, typically
including 80 to 100 issues.

The investment strategy of Cadence involves the application of a
proprietary investment management process to different universes of equity
securities which are usually differentiated by market capitalization into four
categories: large cap (the top 1,000 market cap issues), mid cap (market cap of
over $500 million excluding the largest 250 issues), small cap ($100 million to
$1 billion) and micro cap (up to $100 million). Through this strategy, Cadence
is able to differentiate its investment products while remaining focused on a
single investment style.

Employees

The three Managing Directors of Cadence include David B. Breed, a founder
of the firm; William Bannick, who joined Cadence Inc. in October 1992; Katherine
A. Burdon, who joined Cadence Inc. in December 1992 and was promoted to Managing
Director in May 1995. Mr. Breed is the Chief Executive Officer of Cadence and is
responsible for the original development and ongoing maintenance of the
investment process. Mr. Bannick is responsible for investment management and
client service. Ms. Burdon is a portfolio manager/analyst with client services
responsibilities and research responsibilities in healthcare,
telecommunications, and broadcast media. Cadence had a total of 28 employees at
September 30, 1997, including seven portfolio managers in addition to Mr. Breed.

OTHER INVESTMENT MANAGEMENT FIRMS

Parametric Portfolio Associates (Parametric)

Parametric, based in Seattle, Washington, and established in 1987,
specializes in the management of broadly diversified domestic and international
equity strategies for tax-exempt and taxable clients. The firm offers active and
indexed strategies which are structured to meet client specific risk and return
objectives. Active portfolios seek superior returns relative to an assigned
benchmark within a risk controlled framework, while indexed portfolios are
constructed to closely track an appropriate index. In addition, Parametric
manages tax efficient separate account strategies for a growing clientele of
taxable investors.

Parametric uses quantitative techniques in portfolio construction and
management. The active portfolios are designed to maintain economic sector
allocations similar to the benchmark. Security selection is based on a ranking
system which evaluates each stock's exposure to valuation, earnings and momentum
factors. Portfolios are optimized to achieve a diversified group of securities
which have exposure to factors associated with superior return and risk
characteristics.

Parametric manages a wide variety of index funds which extend to both large
and small capitalizations and across value and growth styles. The international
assignments include allocations to developed countries and emerging markets.

38
<PAGE> 44

At September 30, 1997, Parametric had assets under management of $2.6
billion, managed separate accounts for 29 clients, and served as subadvisor for
two portfolios within the PIMCO Funds and seven portfolios for several
unaffiliated families of funds.

NFJ Investment Group (NFJ)

NFJ, based in Dallas, Texas and established in 1989, is a disciplined,
value-oriented manager of equity securities. NFJ's specialty is investing in a
combination of low P/E stocks with high dividends selected through a proprietary
screening model. NFJ's business strategy involves targeting the U.S. pension and
mutual fund markets with specific attention to the pension consultants which
dominate the pension market. NFJ believes that its value niche and conservative
investment style is attractive to prospective clients because it naturally
complements the styles of other growth or core equity managers. NFJ has
developed a structured process with a systematic buy/sell discipline based on
fundamental research and computer modeling. NFJ's investment philosophy is based
on research showing that portfolios with a combination of low P/E stocks and
high dividends consistently outperform market indices. The low P/E bias is based
on the belief that "out of favor" stocks are not normally subjected to
significant negative earnings surprises because their low P/E ratios already
incorporate the market's negative expectations. The high dividend component
offers an "income cushion" to protect returns when market conditions are
unfavorable. At September 30, 1997, NFJ had assets under management of $2.5
billion, managed separate account portfolios for 25 clients and also served as
manager for seven portfolios within the PIMCO Funds and seven unaffiliated
families of funds.

Blairlogie Capital Management (Blairlogie)

Blairlogie, based in Edinburgh, Scotland and founded in late 1992,
specializes in international equity investments. Blairlogie provides an
international investment product that combines country selection strategies with
the systematic application of an investment process more typically used by U.S.
investment firms. Blairlogie focuses its marketing efforts in the U.S. and seeks
to capitalize on increased demand for international investment products by U.S.
pension funds and retail-oriented U.S. mutual funds. Blairlogie's investment
strategy involves the application of fundamental valuation criteria to country
allocations and then to stock selection in order to enhance client returns over
time, while seeking a relatively low level of overall portfolio risk.
Blairlogie's future business strategy may also include the development of
investment management relationships in the United Kingdom and other parts of
Europe. At September 30, 1997, Blairlogie had assets under management of $875
million in the managed separate account portfolios for nine clients and served
as manager for three portfolios within PIMCO Funds and served as subadvisor to
one affiliated and two unaffiliated families of funds.

PARTNERSHIP MUTUAL FUNDS

PIMCO Advisors, together with the Investment Management Firms, sponsors and
manages mutual funds for both institutional and retail investors.

PIMCO FUNDS

In January 1997, PIMCO Advisors restructured its proprietary mutual funds
into a single fund family called "PIMCO Funds" which is comprised of two series:
(i) PIMCO Funds: Pacific Investment Management Series ("PIMCO Funds PIMS
Series"), 24 funds advised by Pacific Investment Management, and (ii) PIMCO
Funds: Multi-Manager Series ("PIMCO Funds MMS Series") 22 funds advised by PIMCO
Advisors and subadvised by the Investment Management Firms and one independent
subadvisor. The PIMCO Funds PIMS Series are primarily fixed income funds and the
PIMCO Funds MMS Series are primarily equity funds. PIMCO Funds are offered in up
to five different share classes: institutional and administrative share classes
for institutional investors and, for retail investors, Class A shares (which are
"front end" load), Class B shares (which are "back-end load"), and Class C
shares (which are "level load"). The PIMCO Funds now feature a "unified fee"
structure which has specified advisory and administrative fees per fund. As a
result, PIMCO Advisors and Pacific Investment Management (and not the PIMCO
Funds)

39
<PAGE> 45

bear the risk of increases in service costs (including of third-party service
providers such as transfer agents) and will directly benefit from decreases in
those costs.

MARKETING AND DISTRIBUTION

PFD, a wholly-owned subsidiary of PIMCO Advisors, is the distributor for
the PIMCO Funds. PIMCO Advisors uses PFD to distribute the retail share classes
of PIMCO Funds through a large, diversified network of unaffiliated retail
broker-dealers, including many leading full-service broker-dealers. PFD has
selling agreements with over 1,000 broker-dealers and banks. The sales and
marketing personnel develop and support sales and marketing strategies between
PIMCO Advisors and the different retail broker-dealers. Additionally, the
relationships fostered by this group allow PFD's wholesalers to have access to
the branch offices and sales representatives of the retail broker-dealers. At
September 30, 1997, PIMCO Funds had approximately $30.2 billion of assets under
management of which approximately $22.9 billion were in PIMCO Funds PIMS Series
and approximately $7.3 billion were in PIMCO Funds MMS Series.

REGULATION

Virtually all aspects of the investment management business of PIMCO
Advisors are subject to various federal and state laws and regulations. PIMCO
Advisors and its Investment Management Firms are registered with the Commission
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
are registered under various state securities laws. The Advisers Act imposes
numerous obligations on registered investment advisors including fiduciary,
recordkeeping, operational and disclosure obligations. Blairlogie is also a
member of the Investment Management Regulatory Organization in the United
Kingdom. Pacific Investment Management and Parametric are registered with the
Commodity Futures Trading Commission as Commodity Trading Advisors and are
members of the National Futures Association. Pacific Investment Management and
its subsidiary, StocksPLUS Management, Inc., are also registered as Commodity
Pool Operators.

PIMCO Advisors and its Investment Management Firms are subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and to
regulations promulgated thereunder, insofar as they are "fiduciaries" under
ERISA with respect to many of their clients.

The foregoing laws and regulations generally grant supervisory agencies and
bodies broad administrative powers, including the power to limit or restrict any
of the Investment Management Firms from conducting their business in the event
that they fail to comply with such laws and regulations. Possible sanctions that
may be imposed in the event of such noncompliance include the suspension of
individual employees, limitations on the Investment Management Firm's business
activities for specified periods of time, revocation of the Investment
Management Firm's registration as an investment advisor, and other censures and
fines. Changes in these laws or regulations could have a material adverse impact
on the profitability and mode of operations of PIMCO Advisors and its Investment
Management Firms.

The officers, directors and employees of PIMCO Advisors and its Investment
Management Firms may from time to time own securities which are also owned by
one or more of their clients. Under the direction of PIMCO Advisors, each firm
has adopted internal policies with respect to personal investment by employees.
Each firm requires reports of securities transactions and restricts certain
transactions so as to minimize possible conflicts of interest.

PFD is registered as a broker-dealer under the Exchange Act and is subject
to regulation by the Commission, the National Association of Securities Dealers,
Inc. and other federal and state agencies. As a registered broker-dealer, it is
subject to the Commission's net capital rule and certain state securities laws
designed to enforce minimum standards regarding the general financial condition
and liquidity of a broker-dealer. Under certain circumstances, these rules limit
the ability of PFD's parent to make withdrawals of capital and receive
dividends. The securities industry is one of the most highly regulated in the
United States, and failure to comply with related laws and regulations can
result in the revocation of broker-dealer licenses, the imposition of censures
or fines and the suspension or expulsion from the securities business of a firm,
its officers or employees.

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<PAGE> 46

COMPETITION

PIMCO Advisors believes that the most important factors affecting its
success are the abilities, performance records and reputations of its investment
managers, and the development of new investment and marketing strategies. The
relative importance of these factors varies depending on the type of investment
management service involved. Client service is also an important competitive
factor. PIMCO Advisors' ability to increase and retain client assets could be
adversely affected if client accounts underperform the market or if key
investment managers leave the firms. The ability of PIMCO Advisors and the
Investment Management Firms to compete with other investment management firms is
also dependent, in part, on the relative attractiveness of their investment
philosophies and methods under prevailing market conditions. There are
relatively few barriers to entry by new investment management firms in the
institutional managed accounts business, which increases competitive pressure.

Selection of advisors by institutional investors often is subject to a
competitive review process relying heavily upon historical performance. As a
result, new firms such as Blairlogie typically require a three to five year
start-up period during which they experience losses and require subsidies.

A large number of mutual funds are sold to the public by investment
management firms, broker-dealers, insurance companies and banks in competition
with mutual funds sponsored by PIMCO Advisors. Many competitors apply
substantial resources to advertising and marketing their mutual funds which may
adversely affect the ability of Partnership-sponsored funds to attract new
clients and to retain assets under management. The ability to attract and retain
mutual fund assets in the load mutual funds which PIMCO Advisors offers is
dependent to a significant degree on the ability to attract, retain and motivate
retail brokerage salespersons.

PROPERTIES

The principal offices of the Partnership and PIMCO Advisors are located at
800 Newport Center Drive, Newport Beach, California where it occupies
approximately 10,460 square feet of space under a lease expiring in 2002 and at
2187 Atlantic Street, Stamford, Connecticut where it and PFD occupy
approximately 17,200 square feet of space under a sublease expiring in 2002.
Pacific Investment Management's principal offices are located at 840 Newport
Center Drive and 5 Civic Plaza, Newport Beach, California where it occupies
approximately 70,000 square feet of space under leases expiring in 1998. CCI's
principal office is located at 1 Station Place, Stamford, Connecticut, where it
occupies approximately 31,000 square feet of space under a lease expiring in
1999. Each location is a modern office building and the demised space is
adequate for the Partnership's and PIMCO Advisors' current operations, but more
space may be necessary should PIMCO Advisors' business expand.

LEGAL PROCEEDINGS

There are no material legal proceedings pending or, to the knowledge of
PIMCO Advisor's management, threatened against the Partnership or PIMCO
Advisors.

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<PAGE> 47

MANAGEMENT OF THE PARTNERSHIP

The Partnership Agreement provides that the Partnership is managed by its
general partner, PGP. PGP has delegated day to day management of the Partnership
to a management board which has appointed executive officers of the Partnership.
The board members and executive officers of the Partnership are comprised of the
following persons, who also serve as executive officers of PIMCO Advisors:

<TABLE>
<CAPTION>
NAME AGE POSITIONS
- --------------------------------- ---- ----------------------------------
<S> <C> <C>
William D. Cvengros.............. 48 Board Member, Chief Executive
Officer and President
Kenneth M. Poovey................ 65 Board Member, Executive Vice
President and General Counsel
Robert M. Fitzgerald............. 45 Board Member, Senior Vice
President and Chief Financial
Officer
James G. Ward.................... 43 Senior Vice President and Director
of Human Resources
Richard M. Weil.................. 34 Senior Vice President
</TABLE>

MANAGEMENT OF PIMCO ADVISORS

PIMCO Advisors is managed by its general partners, PGP and the Partnership.
PGP has direct control of the Partnership, and therefore controls PIMCO
Advisors. The general partners have the equal right, power and authority to
manage and control the business and affairs of PIMCO Advisors and to take any
action deemed necessary or desirable by them in connection with the business of
PIMCO Advisors. Any difference arising as to any action connected with the
business of PIMCO Advisors, other than those requiring the unanimous consent of
the general partners, is decided by the general partners holding a majority of
the outstanding PIMCO GP Units.

The general partners have jointly delegated substantially all of the
management and control of PIMCO Advisors to the PIMCO Advisors Management Board.
Except as described below, the authority to manage day-to-day operations and
policies of PIMCO Advisors has been delegated by the PIMCO Advisors Management
Board to an Executive Committee.

Each of the following actions require the unanimous consent of all of the
general partners: (i) the constitution of a delegate and the delegation to such
delegate of any of the rights and powers of the general partners duties and any
revision of revocation of such constitution or delegation; (ii) any merger or
consolidation of PIMCO Advisors with another business entity in which PIMCO
Advisors is not the surviving entity; (iii) any sale of all or substantially all
of PIMCO Advisors' assets; (iv) initiation, consent to or acquiescence in any
Insolvency Event (as defined in the PIMCO Advisors Partnership Agreement) with
respect to PIMCO Advisors; (v) any other action which would make it impossible
for the general partners to carry on the ordinary course of business of PIMCO
Advisors; (vi) any determination or election pursuant to Section 16.1 of the
PIMCO Advisors Partnership Agreement (relating to PIMCO Advisors' right to
purchase PIMCO Advisors Units if less than 10% of the PIMCO Units are held by
persons other than the general partners and their affiliates); (vii) any
determination, after the occurrence of an Event of Withdrawal (as defined in the
PIMCO Advisors Partnership Agreement) with respect to a general partner, to
carry on the business of PIMCO Advisors; (viii) any action which would cause an
Assignment Event, a Tax Realization Event or a Termination Event (as such terms
are defined in the PIMCO Advisors Partnership Agreement), or which would, prior
to the Restructuring, cause an Adverse Partnership Tax Event; (ix) and any
amendment of Article VII (relating to management of PIMCO Advisors) or Article
(relating to indemnification) of the PIMCO Advisors Partnership Agreement.

In addition to the actions requiring unanimous consent of the general
partners, the rights and powers of the general partners to take the following
actions may not be delegated: (i) any determination or action pursuant to
Article XVI of the PIMCO Advisors Partnership Agreement (relating to the
restructuring

42
<PAGE> 48

authority); (ii) admission of any successor or additional general partner; (iii)
any amendment of the PIMCO Advisors Partnership Agreement; and (iv) any action
which would require the approval of partners other than the general partners.

Pursuant to the terms of the delegation of authority by the general
partners of PIMCO Advisors, the PIMCO Advisors Management Board is composed of
(i) the Chief Executive Officer of PIMCO Advisors; (ii) six other persons
designated by PGP; (iii) three disinterested persons designated by (A)
representatives of the Public General Partners (defined as any general partner
of PIMCO Advisors that has at least one class of equity security outstanding
that is registered under Section 12 of the Exchange Act and which, together with
its subsidiaries, holds PIMCO Units representing more than 95% of its
consolidated assets other than cash and cash equivalents), if any, in proportion
to their ownership of PIMCO GP Units or (B) if there are no Public General
Partners, PGP or its successor as general partner of PIMCO Advisors; (iv) the
Chief Executive Officer and one Managing Director of each of the two Investment
Managing Firms having the greatest total income, determined as of the date of
appointment; and (v) one Managing Director of each of two other Investment
Managing Firms designated from time to time by the Management Board upon the
recommendation of the nominating committee.

The Executive Committee is composed of five members. The members of the
Executive Committee include the Chief Executive Officer of PIMCO Advisors; three
members appointed by the PGP-appointed members of the Management Board; and one
member appointed the Management Board, upon the recommendation of the Nominating
Committee, which member must have been appointed to the Management Board by an
Investment Management Firm other than Pacific Investment Management.

Under the terms of the delegation, the Executive Committee has all of the
rights, powers and duties of the PIMCO Advisors Management Board to manage and
control the business and affairs of PIMCO Advisors, except that the Executive
Committee may not: (i) constitute any committee or subcommittee, delegate its
power to any committee or subcommittee, revise or revoke any such constitution
or delegation, or appoint or remove any member of such committee or
subcommittee; (ii) provide for, prescribe the duties of, delegate any rights or
powers to, appoint, or determine the compensation of, any officer of PIMCO
Advisors; (iii) approve any partnership agreement, operating agreement or profit
sharing plan of any Investment Management Firm, any amendment to such agreement
or plan or any increase in the compensation of any Managing Director of an
Investment Management Firm; (iv) remove a Managing Director of an Investment
Management Firm; (v) issue any equity security of PIMCO Advisors; (vi) incur any
indebtedness by PIMCO Advisors or its subsidiaries; (vii) acquire or dispose of
any business of PIMCO Advisors; or (viii) perform any action the authority for
which has been delegated to another committee.

In addition, PIMCO Advisors has an Audit Committee, a Compensation
Committee, and a Unit Incentive Committee of the Management Board, each
comprised of members of the PIMCO Advisors Management Board.

43
<PAGE> 49

The members of the PIMCO Advisors Management Board and the executive
officers of PIMCO Advisors are as set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITIONS
--------------------------- --- ------------------------------------------------------
<S> <C> <C>
Walter E. Auch, Sr......... 76 Board Member
David B. Breed............. 50 Board Member
Christopher B. Burnham..... 41 Board Member
William D. Cvengros........ 49 Board Member and Chief Executive Officer
Walter B. Gerken........... 75 Board Member
William H. Gross........... 53 Board Member
Brent R. Harris............ 38 Board Member
Donald R. Kurtz............ 67 Board Member
George A. Long............. 56 Board Member
James F. McIntosh.......... 57 Board Member
Kenneth H. Mortenson....... 51 Board Member
James F. Muzzy............. 58 Board Member
William F. Podlich, III.... 53 Board Member
Glenn S. Schafer........... 48 Board Member
Thomas C. Sutton........... 55 Board Member
William S. Thompson, Jr.... 52 Board Member
Kenneth M. Poovey.......... 65 Executive Vice President and General Counsel
Stephen J. Treadway........ 50 Executive Vice President and President of PFD
Robert M. Fitzgerald....... 45 Senior Vice President and Chief Financial Officer
James G. Ward.............. 43 Senior Vice President and Director of Human Resources
Richard M. Weil............ 34 Senior Vice President and Secretary
</TABLE>

Set forth below is certain biographical information with respect to the
persons who are the members of the Management Board or who serve as executive
officers of PIMCO Advisors or the Partnership:

Walter E. Auch, Sr. Mr. Auch has served on the PIMCO Advisors Management
Board (or a predecessor management board of PIMCO Advisors) as an independent
member and as a member of the Audit Committee, Compensation Committee, Unit
Incentive Committee and the Constructive Termination Committee since the
Consolidation in November 1994. He currently is a management consultant. Mr.
Auch was a Director of TAG from October 1990 until November 1994. He was
previously the Chairman and Chief Executive Officer of the Chicago Board Options
Exchange from 1979 to 1986. He is also a director of Geotek Industries, Inc.,
Fort Dearborn Fund, Shearson VIP Fund, Shearson Advisors Fund, Shearson TRAK
Fund, Banyan Strategic Land Trust, Banyan Strategic Land Fund II, Banyan
Mortgage Investment Fund, Express American Holding Corporation and
Nicholas/Applegate Funds.

David B. Breed. Mr. Breed has served as Chief Executive Officer and a
Managing Director of Cadence since the Consolidation in November 1994. From
February 1988 to July 1993, he was a Managing Director and Director of Cadence
Capital Management Corporation, and he was Chief Executive Officer and Chief
Investment Officer thereof until November 1994.

Christopher B. Burnham. Mr. Burnham has served as a member of the PIMCO
Advisors Management Board since November 1997. Mr. Burnham is the President,
Chief Executive Officer and a Managing Director of CCI. From January 1995 to
July 1997, he served as Treasurer of the State of Connecticut. Prior thereto, he
was a Vice President in Corporate Finance at Advest, Inc. from 1993 to January
1995. In addition, Mr. Burnham was an Associate in investment banking at First
Boston Corporation from June 1990 to December 1992.

William D. Cvengros. Mr. Cvengros is Chief Executive Officer of the
Partnership and has served as Chief Executive Officer of PIMCO Advisors and as a
member of the PIMCO Advisors Management Board (or predecessor management boards
of PIMCO Advisors) since the Consolidation in November 1994. In

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<PAGE> 50

February 1986, Mr. Cvengros became both Chairman of the Board and Director of
Pacific Investment Management (the predecessor to Pacific Investment
Management). He was associated with Pacific Mutual from July 1972 when he joined
Pacific Mutual as an investment analyst until November 1994. He was promoted to
Executive Vice President, Investment Operations of Pacific Life in April 1986,
and became a director in January 1988. Mr. Cvengros became Vice Chairman and
Chief Investment Officer of Pacific Life in January 1990. Mr. Cvengros also
served as a director of Pacific Mutual Distributors, Inc., Mutual Service
Corporation, PFAMCo, PFAMCo UK Limited, Blairlogie, Parametric, NFJ, Cadence and
PMRealty Advisors, Inc. He is currently a director of Furon Corporation and
Remedy Temp.

Robert M. Fitzgerald. Mr. Fitzgerald is Senior Vice President, Chief
Financial Officer and Chief Accounting Officer of the Partnership and PIMCO
Advisors. He joined PIMCO Advisors in February 1995. From April 1994 through
January 1995, he served as a consultant to various companies, including Pacific
Investment Management. From October 1991 until April 1994, he served in various
senior executive positions, including President, at Mechanics National Bank.
Prior to October 1991, he was a partner with Price Waterhouse LLP. He is a
Certified Public Accountant.

Walter B. Gerken. Mr. Gerken has served on the PIMCO Advisors Management
Board (or a predecessor management board of PIMCO Advisors) since the
Consolidation in November 1994. Mr. Gerken is also on the Board of Commercial
Mortgage Securities Trust, Inc. and was formerly on the Board of Pacific
Investment Management. Mr. Gerken is the former Chairman of the Board and CEO of
Pacific Life.

William H. Gross. Mr. Gross is a Managing Director of Pacific Investment
Management and a member of the PIMCO Advisors Management Board. Mr. Gross joined
Pacific Investment Management (the predecessor to Pacific Investment Management)
in June 1971 and became a Managing Director in February 1982. He serves as a
Director and Vice President of StocksPLUS and as a Senior Vice President of
PIMCO Funds.

Brent R. Harris. Mr. Harris is a Managing Director of Pacific Investment
Management and has served on the PIMCO Advisors Management Board (or a
predecessor management board of PIMCO Advisors) since the Consolidation in
November 1994. Mr. Harris was a Managing Director of Pacific Investment
Management (the predecessor to Pacific Investment Management) until November
1994. He joined Pacific Investment Management as an Account Manager in June
1985, and became a Vice President in February 1987, a Senior Vice President in
February 1990, a Principal in April 1991 and a Managing Director in April 1993.
Mr. Harris serves on the boards of PIMCO Commercial Mortgage Securities Trust,
Inc. and StocksPLUS. He also serves as a Trustee and Chairman of the PIMCO Funds
and the PIMCO Commercial Mortgage Securities Trust, Inc.

Donald R. Kurtz. Mr. Kurtz has served on the PIMCO Advisors Management
Board (or a predecessor management board of PIMCO Advisors) as an independent
member and as a member of the Audit Committee, Compensation Committee, Unit
Incentive Committee and the Constructive Termination Committee of PIMCO Advisors
since the Consolidation in November 1994. Mr. Kurtz was a Director of TAG from
May 1992 until November 1994. From December 1994 until October 1995, he was
acting Managing Director of Domestic Equity Investments at General Motors
Investment Management Corp. Prior thereto, he served as Vice President or
Director, Internal Asset Management at General Motors Investment Management
Corp. from January 1990 and at General Motors Corp. from February 1987 until
December 1989.

George A. Long. Mr. Long has served as a member of the PIMCO Advisors
Management Board since November 1997. He also has served as the Chairman and
Chief Executive Officer of Oppenheimer Capital since July 1996, the President of
Oppenheimer Capital since May 1996 and the Chief Investment Officer of
Oppenheimer Capital since 1987, President and Chief Investment Officer of
Oppenheimer Capital. Mr. Long served as a Managing Director of Oppenheimer
Capital from 1992 to May 1996. He also served as an Analyst of Oppenheimer &
Co., Inc. from 1969 to 1982.

James F. McIntosh. Mr. McIntosh has served on the PIMCO Advisors Management
Board (or a predecessor management board of PIMCO Advisors) as an independent
member and as a member of the Audit Committee, Compensation Committee, Unit
Incentive Committee and Constructive Termination

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<PAGE> 51

Committee of PIMCO Advisors since the Consolidation in November 1994. Prior to
that time, he served as a Director of PIMCO Inc. (the predecessor to Pacific
Investment Management), a position he held since June 1983. He is currently the
Executive Director of Allen, Matkins, Leck, Gamble & Mallory LLP, a law firm,
which position he has held from October 1994. From January 1981 to October 1994,
he was Executive Director of Paul, Hastings, Janofsky & Walker LLP, a law firm.

Kenneth H. Mortenson. Mr. Mortenson has served as a member of the PIMCO
Advisors Management Board since November 1997. He is a Managing Director of
Oppenheimer Capital, a position that he has held since 1987.

James F. Muzzy. Mr. Muzzy is a Managing Director of Pacific Investment
Management and has served as a member of the PIMCO Advisors Management Board (or
a predecessor management board of PIMCO Advisors) since the Consolidation in
November 1994. Mr. Muzzy was a Managing Director of Pacific Investment
Management Company (the predecessor to Pacific Investment Management) until
November 1994. Mr. Muzzy joined Pacific Investment Management Company in
September 1971 and became a Director in February 1978 and a Managing Director in
February 1982. Mr. Muzzy serves as a director of StocksPLUS.

William F. Podlich, III. Mr. Podlich is a Managing Director of Pacific
Investment Management and has served as a member of the PIMCO Advisors
Management Board (or a predecessor management board of PIMCO Advisors) since the
Consolidation in November 1994. Mr. Podlich joined Pacific Investment Management
Company (the predecessor to Pacific Investment Management) as a Director in
August 1969 and became a Managing Director in February 1982. Mr. Podlich serves
as a director of StocksPLUS and of Maxagen Technology, Inc.

Kenneth M. Poovey. Mr. Poovey is Executive Vice President and General
Counsel of the Partnership and PIMCO Advisors. Mr. Poovey has served as
Executive Vice President of PIMCO Advisors since May 1997 and as General Counsel
of PIMCO Advisors since November 1994. Prior to May 1997, Mr. Poovey was a
partner with the law firm of Latham & Watkins with which he has been affiliated
since 1980.

Glenn S. Schafer. Mr. Schafer has served as a member of the PIMCO Advisors
Management Board (or a predecessor management board of PIMCO Advisors) since the
Consolidation in November 1994. He currently serves as the President of Pacific
Life. Mr. Schafer was the Executive Vice President and Chief Financial Officer
of Pacific Life from April 1991 until January 1995.

Thomas C. Sutton. Mr. Sutton has served as a member of the PIMCO Advisors
Management Board (or a predecessor management board of PIMCO Advisors) since the
Consolidation in November 1994. Mr. Sutton has been the Chairman and Chief
Executive Officer of Pacific Life since January 1990 and a Director of Pacific
Life since 1987. He has been associated with Pacific Life since June 1965 and
became its President in September 1987. Mr. Sutton is also a Director of Edison
International, Newhall Land and Farming Company and The Irvine Company.

William S. Thompson, Jr. Mr. Thompson is a Managing Director and the CEO of
Pacific Investment Management and has served as Chairman of the PIMCO Advisors
Management Board (or a predecessor management board of PIMCO Advisors) since the
Consolidation in November 1994. Prior thereto, Mr. Thompson was a Managing
Director and the Chief Executive Officer of Pacific Investment Management
Company (the predecessor to Pacific Investment Management). Mr. Thompson joined
Pacific Investment Management Company in April 1993. From February 1975 until
April 1993, he was with Salomon Brothers Inc., an investment banking firm,
serving as a Managing Director starting in 1981 and he is currently a director
of Spieker Properties, a public company.

Stephen J. Treadway. Mr. Treadway is an Executive Vice President of PIMCO
Advisors and Director, Chairman and President of PFD. He joined PIMCO Advisors
in May 1996. Prior thereto, he was associated with Smith Barney, Inc. for
eighteen years and served in various senior positions, including Executive Vice
President.

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<PAGE> 52

James G. Ward. Mr. Ward is Senior Vice President and Director of Human
Resources of PIMCO Advisors. Mr. Ward served as Vice President and Director of
Human Resources of PIMCO Advisors April 1995 through December 1996. Prior to
that time, he served as Vice President and Director of Human Resources for
Pacific Investment Management, a position he held beginning October 1994. From
November 1987 through October 1994, he served as Vice President and Director of
Human Resources for Salomon Brothers Inc.

Richard M. Weil. Mr. Weil is Senior Vice President and Secretary of the
Partnership and PIMCO Advisors. Mr. Weil joined PIMCO Advisors in March 1996.
Mr. Weil was a Vice President in the Global Asset Management Group of Bankers
Trust Company from December 1994 through February 1996 and was associated with
the law firm of Simpson, Thatcher & Bartlett from September 1989 through
November 1994.

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation paid or allocated with
respect to the three years ended December 31, 1996 for services rendered to the
Partnership (and its affiliates, including PIMCO Advisors) in all capacities to
the Chief Executive Officer of the Partnership and each of the Partnership's or
PIMCO Advisors' four most highly compensated executive officers (the "Named
Executive Officers"):

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------
ANNUAL COMPENSATION OTHER RESTRICTED SECURITIES ALL
---------------------------- ANNUAL UNIT UNDERLYING OTHER
NAME AND PRINCIPAL YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SAR COMPENSATION
UNDERLYING POSITION ($) ($) ($) ($) ($) ($) ($)
- ----------------------------- ---- -------- -------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William D. Cvengros.......... 1996 $500,000 $950,000 $9,500(1) -- -- $ 3,444(3)
Chief Executive Officer 1995 500,000 800,000 4,620 -- -- --
and President 1994 63,847 62,500 -- $3,248,571 400,000 1,915
Stephen J. Treadway.......... 1996 $196,730 $250,000 -- $ 562,500(4) 100,000 $303,444(5)
Executive Vice President 1995 -- -- -- -- -- --
1994 -- -- -- -- -- --
Robert M. Fitzgerald......... 1996 $209,500(2) $220,000 $ -- -- 10,000 $ 30,000(5)
Senior Vice President, 1995 175,000 175,000 -- -- 30,000 --
Chief Financial Officer 1994 -- -- -- -- -- --
and Principal
Accounting Officer
Richard M. Weil.............. 1996 $166,667 $166,167 -- $ -- 32,500 $ 75,000(5)
Senior Vice President 1995 -- -- -- -- -- --
and Secretary 1994 -- -- -- -- -- --
James G. Ward................ 1996 $155,000 $105,000 -- -- 10,000 $ 19,000(5)
Senior Vice President 1995 150,000 90,000 -- -- -- --
and Director of 1994 125,000 25,000 18,700 -- 10,000 --
Human Resources
</TABLE>

- ---------------

(1) Represents a bonus paid in lieu of the employer contribution to the PIMCO
Advisors 401(k) Savings and Investment Plan.

(2) The salary and bonus amounts for Mr. Fitzgerald include amounts deferred in
the PIMCO Advisors 401(k) Savings and Investment Plan of $9,500 for 1996.
Mr. Treadway joined PIMCO Advisors in May 1996, and his salary reflects a
partial year of service. Mr. Weil joined PIMCO Advisors in March, 1996, and
his salary reflects a partial year of service.

(3) Represents the premiums on term life insurance and long-term disability.

(4) Mr. Treadway was awarded 25,000 Class A LP Units. The Units vest over a five
year period, pay distributions quarterly and had an aggregate value of
$562,500 at December 31, 1996.

(5) Represents amounts deferred under Executive Deferred Compensation Plan (the
"Plan"). An additional amount, which cannot currently be determined, may be
contributed by PIMCO Advisors at such time as the amounts deferred are
invested by the trustee of the plan in PIMCO Advisors Class A LP Units to
cause the effective purchase price not to exceed 85% of the current market
price for Partnership Units (until December 31, 1997, PIMCO Advisors Class A
LP Units) on the investment date. The amount also includes the premiums on
term life insurance and long-term disability.

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<PAGE> 53

Compensation to key employees who are not executive officers may exceed the
compensation paid to executive officers in any given year.

The following table provides information on option exercises in 1996 by the
Named Executive Officers, and the value of unexercised options held by each
Named Executive Officer at December 31, 1996:

AGGREGATED OPTION/SAR EXERCISE IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES IN-THE-MONEY
SHARES UNDERLYING UNEXERCISED OPTIONS/SARS AT
ACQUIRED VALUE OPTIONS/SARS AT-FY-END(#) FY-END($)
ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE(E)/
NAME (#) ($) UNEXERCISABLE(U) UNEXERCISABLE(U)
- ------------------------------------ ----------- -------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
William D. Cvengros................. -- -- 400,000(U) $2,754,021
Robert M. Fitzgerald................ -- -- 40,000(U) 192,840
Stephen J. Treadway................. -- -- 100,000(U) $ 244,505
Richard M. Weil..................... -- -- 32,500(U) 55,880
James G. Ward....................... -- -- 20,000(U) 98,820
</TABLE>

COMPENSATION OF BOARD MEMBERS

PIMCO Advisors pays members of the Management Board who are not employees
of the Partnership, PIMCO Advisors, an Investment Management Firm or Pacific
Life a $20,000 annual retainer plus $750 per in-person meeting ($250 per
conference call meeting) of the Management Board attended and for each meeting
of a committee of the Management Board. Members who are employees of the
Partnership, PIMCO Advisors or any Investment Management Firm or Pacific Life
are not entitled to any additional compensation for their services as Board
members. Pursuant to the terms of the Partnership's 1996 Unit Incentive Plan,
the non-employee members of the Management Board ("Independent Board Members")
may elect to receive restricted Partnership Units in lieu of such retainer, with
such restricted units valued at 91% of fair market value on the date of
issuance.

COMPENSATION OF GENERAL PARTNER

Neither PGP nor any other general partner of PIMCO Advisors receives any
compensation from the Partnership or PIMCO Advisors for services rendered to the
Partnership or PIMCO Advisors as general partner. Rather, PGP's interest in
profits and losses of the Partnership and PIMCO Advisors is based on its
interest in the Partnership and PIMCO Advisors, respectively. Upon liquidation,
the liquidating distributions to the general partner will be based on the number
of Partnership Units and PIMCO Advisors GP Units it holds. The PIMCO Advisors
Partnership Agreement provides that PIMCO Advisors shall pay all of the
operating expenses of the Public General Partners of PIMCO Advisors. The
Partnership is a Public General Partner and, therefore, all of its operating
expenses are paid by PIMCO Advisors.

COMPENSATION PURSUANT TO CONTRACT

William D. Cvengros, Chief Executive Officer and President of the
Partnership and PIMCO Advisors and a member of the PIMCO Advisors Management
Board and the Executive Committee is party to an employment agreement with the
Partnership, the term of which was extended through December 31, 1998 by the
management of PIMCO Advisors in January 1997. Under the agreement, Mr. Cvengros
receives an annual base salary of $500,000 and a guaranteed annual bonus of
$500,000. Mr. Cvengros is also eligible to receive a discretionary bonus in the
target range of $200,000 to $500,000 (which amount may be increased or decreased
upon the recommendation of the Executive Committee and the approval of the PIMCO
Advisors Management Board). PIMCO Advisors granted Mr. Cvengros options to
purchase up to 400,000 PIMCO Class B LP Units under the 1994 Unit Option Plan.
In 1994, Mr. Cvengros was also granted 100,000 restricted PIMCO Advisors LP
Units and 100,000 restricted PIMCO Class B LP Units which are forfeitable to PGP

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<PAGE> 54

upon certain events of termination. If his contract is terminated without cause
between December 31, 1996 and December 31, 1998, he is entitled to accrued and
unpaid salary and bonus payments totaling $500,000 and immediate vesting of all
of his options and restricted units.

Kenneth M. Poovey, Executive Vice President and General Counsel of the
Partnership and PIMCO Advisors, is a party to an employment agreement through
December 31, 1998, pursuant to which he receives an annual base salary of
$300,000. Mr. Poovey is also eligible to receive a bonus in the target range of
$300,00 to $900,000. PIMCO Advisors granted Mr. Poovey 25,000 restricted PIMCO
Class B LP Units vesting over a three year period, and is eligible, based on
performance, for a second grant of up to 25,000 restricted PIMCO Class B LP
Units in the first quarter of 1998, which will also vest over a three year
period. PIMCO Advisors granted Mr. Poovey options to purchase up to 50,000 PIMCO
Class B LP Units, which will vest over a period of five years. Upon his hire in
March of 1997, PIMCO Advisors also paid Mr. Poovey a $100,000 relocation loan
which will be forgiven over five years subject to certain conditions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

The members of the Unit Incentive Committee of the Company's Board of
Directors are currently Messrs. Auch, Kurtz, and McIntosh, each of whom were
appointed to the Unit Incentive Committee of PIMCO Advisors in November 1997.
None of Messrs. Auch, Kurtz or McIntosh have previously served as an officer or
otherwise engaged as an employee of PIMCO Advisors.

OPPENHEIMER CAPITAL, L.P. 1997 UNIT INCENTIVE PLAN

The principal purposes of the 1997 Plan are to provide performance
incentives for officers, key employees, and consultants of the Partnership,
PIMCO Advisors and its subsidiaries through the grant or issuance of options,
restricted units, unit payments, deferred units, and unit appreciation rights
("UARs") covering Partnership Units, thereby stimulating their personal and
active interest in the Partnership's and PIMCO Advisors' development and
financial success, and inducing them to remain in the Partnership's and PIMCO
Advisors' employ. In addition to grants and awards made to officers, employees
or consultants, the 1997 Plan provides for the granting of restricted units to
independent members of the PIMCO Advisors Management Board in lieu of annual
retainer fees.

ADMINISTRATION OF THE 1997 PLAN

Prior to the Restructuring, the Partnership will adopt the 1997 Unit
Incentive Plan (the "1997 Plan"). Pursuant to the Operating Agreement between
the Partnership and PIMCO Advisors, PIMCO Advisors has agreed to issue to the
Partnership PIMCO Advisors Units in an amount equal to the number of LP Units
issued under the 1997 Plan from time to time. See "Relationship Between the
Partnership and PIMCO Advisors."

The 1997 Plan is administered by the Unit Incentive Committee, or another
committee, or a subcommittee appointed by the PIMCO Advisors Management Board
(the "1997 Plan Committee"), consisting of at least two independent members of
the PIMCO Advisors Management Board. The 1997 Plan Committee is authorized to
select the individuals to whom options, restricted units, UARs and other awards
are to be granted and to determine the number of Partnership Units to be subject
thereto and the terms and conditions thereof, consistent with the 1997 Plan. The
1997 Plan Committee or the PIMCO Advisors Management Board is also authorized to
adopt, amend and rescind rules relating to the administration of the 1997 Plan.
PIMCO Advisors pays all costs of administering the 1997 Plan.

SECURITIES SUBJECT TO THE 1997 PLAN

The aggregate number of Partnership Units that may be issued upon the
exercise of options or rights or may be subject to awards under the 1997 Plan
may not exceed 10,000,000 less the number of Partnership Units covered by awards
outstanding or previously exercised under the 1994 Unit Option Plan. The 1997
Plan limits the number of Partnership Units subject to options, rights or other
awards that any individual may receive under the 1997 Plan in any calendar year
to .

If any portion of a unit option, right or other award under the 1997 Plan
terminates or lapses unexercised, or is canceled upon grant of a new option
(which may be at a higher or lower exercise price than the option so canceled),
the Partnership Units which were subject to the unexercised portion of such
award will continue to

49
<PAGE> 55

be available under the 1997 Plan. Additionally, Partnership Units which are
delivered by the optionee or grantee or withheld by the Partnership upon the
exercise of any option or other award under the 1997 Plan in payment of the
exercise price thereof or any restricted units which are forfeited by the
grantee or repurchased by the Partnership, may again be optioned, granted or
awarded thereunder.

ASSUMPTION OF PIMCO ADVISORS PLAN AWARDS

As soon as practicable after the Restructuring Date, all of the outstanding
awards under the PIMCO Advisors L.P. 1994 Class B LP Unit Option Plan, the 1996
Unit Incentive Plan of PIMCO Advisors L.P. and PIMCO Advisors L.P. Restricted
Unit Plan will be assumed by the 1997 Plan, retaining the economic equivalent of
the plan.

ELIGIBILITY TO PARTICIPATE

Options, restricted units, UARs and other awards under the 1997 Plan may be
granted to individuals who are then officers or other employees of the
Partnership or PIMCO Advisors or any of its present or future subsidiaries and
who are determined by the 1997 Plan Committee to be key employees. Such awards
also may be granted to consultants of the Partnership or PIMCO Advisors selected
by the 1997 Plan Committee for participation in the 1997 Plan. Additionally,
each independent member of the PIMCO Advisors Management Board (an "Independent
Board Member") is eligible to be granted restricted units under the 1997 Plan.

In consideration of the granting of an award under the 1997 Plan, the
employee or consultant must agree in the written agreement embodying the award
to remain in the employ of, or to continue as a consultant for, the Partnership
or PIMCO Advisors or any of its subsidiaries for a period of at least one year
after the award is granted, or such shorter period as may be fixed in the
written agreement or by action of the 1997 Plan Committee. In the case of a
grant of restricted units to an Independent Board Member, the grantee must agree
to serve as an Independent Board Member until the expiration of their term.

AWARDS UNDER THE 1997 PLAN

The 1997 Plan provides that the 1997 Plan Committee may grant or issue unit
options, restricted units, unit payments, deferred units, UARs, and other
Partnership Unit related benefits, or any combination thereof. Each grant or
issuance is to be set forth in a separate written agreement between the
Partnership and the person receiving the award. The agreement embodying the
award will indicate the type, terms and conditions of the award and must be
consistent with the 1997 Plan, as determined by the 1997 Plan Committee, but
need not contain identical provisions.

Unit Options

General. The 1997 Plan provides that the 1997 Plan Committee may grant
options to participants for the purchase of Partnership Units, as provided
below. Unit options provide for the right to purchase Partnership Units at a
specified price which may be equal to or less than fair market value on the date
of grant, and usually will become exercisable (in the discretion of the 1997
Plan Committee) in one or more installments after the grant date. Unit options
generally may be granted for any term specified by the 1997 Plan Committee.
Except as otherwise determined by the 1997 Plan Committee in connection with the
grant of options, options are exercisable only after January 1, 1998, or within
30 days prior to and including the effective date of a dissolution, liquidation,
the sale of all or substantially all the assets of, or the merger or
consolidation of the Partnership, each of which is not in connection with a
restructuring (as described below), and are exercisable only to the extent
vested as of the date of exercise.

Vesting of Options. The period during which the right to exercise an option
in whole or in part vests in the optionee is determined by the 1997 Plan
Committee and the 1997 Plan Committee may determine that an option may not be
exercised in whole or in part for a specified period after it is granted. No
option will vest and become exercisable by any optionee who is subject to
Section 16 of the Exchange Act within the period ending six months and one day
after the date the option is granted. Subject to the provisions contained in the
1997 Plan and unless otherwise determined by the 1997 Plan Committee at the time
of the grant of an option, options shall become fully vested 30 days prior to
the effective date of a merger, consolidation, liquidation, dissolution or
acquisition of the Partnership. The 1997 Plan Committee may, however, on such
terms and

50
<PAGE> 56

conditions as it may determine to be appropriate and subject to the 1997 Plan,
accelerate the time at which such option or any portion thereof may be exercised
by a resolution adopted after an option is granted.

Under the 1997 Plan, the holders of options shall not be, nor have any of
the rights or privileges of, Partnership Unitholders in respect of any
Partnership Units purchasable upon the exercise of any part of an option unless
and until certificates representing such Partnership Units have been issued by
the Partnership to such holders.

Restricted Units

General. Restricted units may be issued to participants at various prices
and made subject to restrictions specified by the 1997 Plan Committee.
Restricted units may be repurchased by the Partnership at the original purchase
price if the conditions or restrictions are not met.

Each Independent Board Member may elect to receive all or a portion of his
or her annual retainer fee in the form of restricted units. Such an election
must be for a minimum of twenty percent of the retainer fees payable and applies
only to retainer fees paid subsequent to the election. The election is made once
each year, and is irrevocable with respect to the compensation payable for the
year for which the election is made. The number of restricted units issued
pursuant to such election is determined by dividing the portion of the retainer
fee that is to be paid in restricted units by ninety one percent of the fair
market value of the Partnership Units on the date the restricted units are
issued. Restricted Units payable or granted to an Independent Board Member vest
immediately upon the grant or payment thereof. The only restriction placed upon
such restricted units is that the Independent Board Member may not assign, sell,
pledge or transfer such restricted units within the six month period following
the grant or payment thereof, except by will or the laws of intestate
succession, or pursuant to a qualified domestic relations order (as defined in
the Code). Upon the effectiveness of the 1997 Plan each Independent Board Member
was granted 1,311 restricted units.

Rights as Restricted Unitholder. Unless otherwise provided by the 1997 Plan
Committee in the written agreement relating to the grant of restricted units,
holders of restricted units have all the rights of a Partnership Unitholder with
respect to the restricted units, including voting rights and the right to
receive all distributions paid or made with respect to the restricted units;
provided, however, that in the discretion of the 1997 Plan Committee (or the
PIMCO Advisors Management Board in the case of restricted units granted to
Independent Board Members), any extraordinary distributions with respect to the
restricted units may be subject to further restrictions. Unless provided
otherwise by the 1997 Plan Committee, if no consideration was paid by the
restricted unitholder upon issuance, a restricted unitholder's rights in
unvested restricted units shall lapse upon the holder's termination of
employment or the termination of his consulting relationship. Upon a termination
of employment, termination of consulting relationship or service as an
Independent Board Member, restricted units then subject to restrictions may be
repurchased by the Partnership at the original purchase price. However,
provision may be made that no such right of repurchase exists in the event of a
termination of employment, consultancy, or service as an Independent Board
Member without cause or following a change in control of the Partnership or
because of the participant's retirement, death, disability or otherwise.

Deferred Units

Deferred units may be awarded to participants, typically without payment of
consideration, but subject to vesting conditions based on continued employment
or on performance criteria established by the 1997 Plan Committee. Like
restricted units, deferred units may not be sold, or otherwise transferred or
hypothecated, until vesting conditions are removed or expire. Unlike restricted
units, deferred units will not be issued until the deferred unit award has
vested, and recipients of deferred units generally will have no voting or
distribution rights prior to the time when vesting conditions are satisfied.

Unit Appreciation Rights

UARs may be granted in connection with unit options or other awards, or
separately. UARs granted by the 1997 Plan Committee in connection with unit
options or other awards provide for payments to the holder

51
<PAGE> 57

based upon increases in the price of the Partnership's UARs over the exercise
price of the related option or other awards. There are no restrictions specified
in the 1997 Plan on the exercise of UARs or the amount of gain realizable
therefrom, although they can be imposed by the 1997 Plan Committee in the
written agreement embodying the grant of the UAR. The 1997 Plan Committee may
elect to pay UARs in cash or in Partnership Units or in a combination of cash
and Partnership Units.

Unit Payments

Unit payments may be authorized by the 1997 Plan Committee in the form of
Partnership Units or an option or other right to purchase Partnership Units as
part of a deferred compensation arrangement in lieu of all or any part of
compensation, including bonuses, that would otherwise be payable to a key
employee or consultant in cash.

MISCELLANEOUS PROVISIONS

Exercise of Awards

The exercise or purchase price for all options, UARs, restricted units and
other rights to acquire Partnership Units, together with any applicable tax
required to be withheld, must be paid in full in cash at the time of exercise or
purchase or may, with the approval of the 1997 Plan Committee, be paid in whole
or in part by delivery of mature Partnership Units owned by the optionee (or
issuable upon exercise of the option) duly endorsed for transfer to the
Partnership and having a fair market value on the date of exercise equal to the
aggregate exercise price of the Partnership Units so to be purchased. The 1997
Plan Committee may also provide, in the terms of an option or other right, that
the purchase price may be payable within thirty days after the date of exercise.
The 1997 Plan Committee may also authorize other lawful consideration to be
applied to the exercise or purchase price of an award. This may include property
of any kind which constitutes good and valuable consideration, or the difference
between the exercise price of presently exercisable options and fair market
value of the Partnership Units covered by such options on the date of exercise.

The 1997 Plan specifies that the Partnership may make loans to 1997 Plan
participants to enable them to exercise options, purchase Partnership Units or
realize the benefits of other awards granted under the 1997 Plan. The terms and
conditions of such loans, if any are made, are to be set by the 1997 Plan
Committee and the loan must be evidenced by a full recourse promissory note and
bear interest at no less than a rate as will then preclude imputation of
interest under the Code.

The Partnership will issue and deliver certificates for Partnership Units
purchased upon the exercise of any option after the fulfillment of certain
conditions, including the payment to the Partnership or a subsidiary of all
amounts which are required to be withheld under federal, state or local law in
connection with the exercise of the option.

Expiration of Awards

The dates on which options or other awards under the 1997 Plan expire will
be set forth in individual unit options or other agreements setting forth the
terms of the awards. The agreements generally will provide that options and
other awards expire on or soon after the termination of the individual's status
as an employee or consultant, although the 1997 Plan Committee may provide that
options and other awards continue to be exercisable following a termination
without cause, or following a change in control of the Partnership, or because
of the individual's retirement, death, disability or otherwise. Restricted units
granted under the 1997 Plan that have not vested generally will be subject to
repurchase by the Partnership in the event of the participant's termination of
employment, consultancy, or as an Independent Board Member.

Restrictions on Transfer

No option, restricted unit award, deferred unit award, unit payment or UAR
or other right to acquire Partnership Units granted under the 1997 Plan may be
assigned, sold, pledged, or transferred by the grantee, except by will or the
laws of intestate succession, or pursuant to a qualified domestic relations
order, although

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the Partnership Units underlying such rights may be transferred if all
applicable restrictions have lapsed. During the lifetime of the holder of any
option or right, the option or right may be exercised only by the holder unless
it has been disposed of pursuant to a qualified domestic relations order, and in
such case it may be exercised only by the beneficiary of the qualified domestic
relations order to the same extent it would have been exercisable by the
original holder.

Merger, Consolidation, Liquidation, Dissolution or Acquisition of the
Partnership

Options granted under the 1997 Plan provide, unless otherwise determined by
the 1997 Plan Committee in connection with an award, for their termination upon
dissolution or liquidation of the Partnership, or unless arrangements have been
made for the continuance of such options or economic equivalent thereof, for
their termination upon the merger or consolidation of the Partnership into
another entity or the acquisition by another entity of all or substantially all
of the Partnership's assets. However, in such events optionees and other
grantees have the right to exercise their outstanding options or rights in full
during the 30 day period prior to and including the effective date of any such
event. Options and other rights granted under the 1997 Plan may also provide
that in the event of a "change in control" of the Partnership (as defined in the
option or grant agreement) all previously unexercisable options and rights
become immediately exercisable unless such options and rights, or portions
thereof, are determined by the 1997 Plan Committee to constitute, when
exercised, "excess parachute payments" (as defined in Section 280G of the Code).
If any option or other right does not contain such limitation, and its
exercisability is accelerated upon a change in control, it is possible that an
optionee may be liable for an excise tax on the amount attributable to such
acceleration (and any other payments made in connection with such change in
control).

The 1997 Plan provides that the 1997 Plan Committee (or in the case of
restricted units granted to Independent Board Members), may, in its sole and
absolute discretion, modify the terms and conditions associated with awards
granted under the 1997 Plan, including causing any outstanding awards under the
1997 Plan to be assumed by, and converted into awards for the securities of, any
corporate or other successor issuer to the publicly-traded securities of the
Partnership, upon the occurrence of any unusual or nonrecurring transactions or
events affecting the Partnership. Such events include, a recapitalization,
reclassification, unit split, reverse unit split, reorganization, merger,
consolidation, liquidation, dissolution, or sale of substantially all of the
assets of the Partnership or other similar transactions which, in the discretion
of the 1997 Plan Committee require an adjustment to the award in order to
prevent dilution or enlargement of the benefits intended to be made available
under the 1997 Plan.

Amendment and Termination of the 1997 Plan

Amendments of the 1997 Plan to increase the number of Partnership Units as
to which options, restricted units, UARs and other awards may be granted (except
for adjustments resulting from Partnership Unit splits and the like) require the
approval of the Unitholders within 12 months before or after the action by the
1997 Plan Committee. In all other respects the 1997 Plan can be amended,
modified, suspended or terminated by the 1997 Plan Committee, unless such action
would otherwise require Unitholder approval as a matter of applicable law,
regulation or rule. Amendments of the 1997 Plan will not, without the consent of
the participant, affect such person's rights under an award previously granted,
unless the award itself otherwise expressly so provides. No awards may be
granted or awarded during any period of suspension or after termination of the
Plan. No termination date is specified for the 1997 Plan.

DESCRIPTION OF THE PIMCO ADVISORS L.P. EXECUTIVE DEFERRED COMPENSATION PLAN

The Deferred Compensation Plan is an unfunded nonqualified deferred
compensation plan pursuant to which a portion of compensation otherwise payable
to certain eligible employees will be subject to mandatory deferral, and
pursuant to which eligible employees may elect to defer additional amounts of
compensation. The primary purpose of the Deferred Compensation Plan is to
provide deferred compensation to a select group of management and highly
compensated employees, within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, but is subject to certain provisions of ERISA. The Deferred
Compensation Plan is not a qualified plan under Section 401(a) of the Code.

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A brief description of the principal features of the Deferred Compensation
Plan follows, but the description is qualified in its entirety by the terms of
the Deferred Compensation Plan.

ADMINISTRATION

The Deferred Compensation Plan is administered, unless otherwise provided
by the Equity Board, by a committee (the "Unit Incentive Committee") composed of
the members of the Unit Incentive Committee of the Equity Board. PIMCO Advisors
and the Participating Entities will make certain contributions to a grantor, or
"rabbi," trust (the "Grantor Trust") in connection with the Deferred
Compensation Plan. The trustee under the Grantor Trust (the "Trustee") is
responsible for establishing and maintaining for each Deferred Compensation Plan
Participant (a "Participant") a deferral account that is (i) credited the amount
of compensation deferred by each Participant and any additional amounts
contributed by a Participating Entity and (ii) debited distributions paid to the
Participant.

The Unit Incentive Committee has exclusive authority and discretion to
operate and administer the Deferred Compensation Plan. The Equity Board has the
right at any time to wholly or partially amend the Deferred Compensation Plan.

ELIGIBILITY

An employee's eligibility to participate in the Deferred Compensation Plan
is determined based on that employee's total compensation and the employee's
equity stake ("Equity Stake") in PIMCO Advisors.

Employees who have an Equity Stake in relation to their compensation in
excess of a predetermined ratio based on their compensation level are not
eligible to participate. Because of this, participation in the Plan is limited
to those employees who do not already have significant equity.

Subject to the foregoing limitation, each employee of a Participating
Entity whose total compensation is more than $250,000 is generally eligible to
participate in the Deferred Compensation Plan.

An employee whose total compensation is greater than $250,000 and less than
$1,000,000 is (i) required to participate in the Deferred Compensation Plan
during a particular year if the employee's Equity Stake at the beginning of the
year is less than his total compensation for the year; (ii) permitted to
participate if his Equity Stake is between one and two times his total
compensation; and (iii) not permitted to participate if his Equity Stake is
greater than two times his total compensation.

An employee whose total compensation is more than $1,000,000 is (i)
required to participate in the Deferred Compensation Plan during a particular
year if his Equity Stake at the beginning of the year is less than two times his
total compensation; (ii) permitted to participate if his Equity Stake is between
two and four times his total compensation; and (iii) not permitted to
participate if his Equity Stake is greater than four times his total
compensation.

COMPUTATION OF MANDATORY DEFERRAL AMOUNTS

Prior to each calendar year, the Unit Incentive Committee determines the
minimum amount of compensation to be deferred by Participants under the Deferred
Compensation Plan. Currently, the compensation to be deferred is computed as
follows: (i) no less than 10% of compensation in excess of $250,000 up to
$500,0000; (ii) no less than 30% of compensation in excess of $500,000 up to
$1,000,000; and, (iii) no less than 30% of all compensation in excess of
$1,000,000. However, no amounts will be deferred unless the amount deferred
exceeds $1,000.

Subject to limits set forth in the Deferred Compensation Plan, any
Participating Entity adopting the Deferred Compensation Plan is permitted to
increase the minimum deferral percentages prior to the commencement of each
calendar year in which the Deferred Compensation Plan is in effect.

Compensation to be deferred by an eligible Participant under the Deferred
Compensation Plan is withheld from that Participant's bonus, profit sharing or
periodic commission compensation ("Bonus Compensation"). If a Participant's
total Bonus Compensation can be determined at the time of the first

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payment thereof, the amount to be withheld from the Participant's Bonus
Compensation paycheck is
determined by applying the deferral schedule then in effect (as described above)
to the sum of (i) the Participant's annual rate of salary, excluding bonuses,
commissions, incentive compensation and other similar amounts ("Base
Compensation") expected to be earned for the year, and (ii) the Participant's
Bonus Compensation paycheck. If the Bonus Compensation is to be paid in one or
more installments, an equal portion of the amounts to be deferred will be
withheld from each installment; provided, however, that the amount to be
deferred shall not be recalculated or adjusted in the event of any increase in
Base Compensation later in the year.

The amount of compensation deferred under the Deferred Compensation Plan
for any Participant which is attributable to any portion of a calendar year
during which such Participant is a resident of Canada ("Canadian Balances")
shall not exceed the portion of such compensation which can reasonably be
considered Bonus Compensation of such a Partnership.

VOLUNTARY ELECTIONS

Each eligible Participant may make an election to defer a percentage of
compensation under the Deferred Compensation Plan above the minimum percentage
for the Participant's compensation bracket; provided, however, that, unless
otherwise provided by the Unit Incentive Committee, no Participant may defer an
amount in a given year that exceeds the Participant's total compensation less
$150,000. The election to defer such additional compensation under the Deferred
Compensation Plan is irrevocable.

INVESTMENT OF FUNDS AND DISTRIBUTIONS

Compensation that is withheld from a Participant for deferral (the
"Deferred Compensation") is paid to the Trustee who, at the discretion of the
Compensation Plan Committee, invests the Deferred Compensation in Class A LP
Units. Pending investment of the aggregate amount of compensation deferred by
all Participants in Class A LP Units, the Trustee invests the Deferred
Compensation in a mutual fund or similar investment consisting of short-term
investment grade interest-bearing securities.

The investment of the aggregate amount of deferred compensation in Class A
LP Units is initially accomplished through a "Dutch auction," in which the
Trustee, as auctioneer, offers to buy Class A LP Units from holders of
unregistered Class A LP Units at a stated low price and continues to raise the
price which he or she is willing to pay for Class A LP Units, subject to a cap
of 90% of then current fair market value for the Class A LP Units. To the extent
that the aggregate amount of deferred compensation has not been depleted in the
auction, the Trustee then purchases additional Class A LP Units.

Following investment by the Trustee of the aggregate amount of deferred
Compensation in Class A LP Units, PIMCO Advisors will, if necessary, make a
contribution (an "Additional Contribution") to the Trustee in an amount
sufficient to cause the sum of the market value of the Class A LP Units
purchased by the Trustee in the auction and the market value of any Class A LP
Units acquired as a result of the Additional Contribution to equal 118% of the
aggregate amount of Deferred Compensation credited to all Participant's deferral
accounts.

Upon the completion of acquiring Class A LP Units in the auction or as a
result of any payment of Additional Contribution by PIMCO Advisors, the Trustee
will credit each Participant's deferral account with that portion of the Class A
LP Units acquired by the Trustee which bears the same proportion to the total
number of Class A LP Units so acquired as the amount of Deferred Compensation
credited to the Participant's deferral account for the year bears to the total
amount of Deferred Compensation credited to all Participant's deferral accounts
for that year.

Unless otherwise elected by the Participant with respect to Compensation
deferred in a particular year, all amounts earned on funds credited to a
Participant's deferral account pending the purchase of Class A LP Units by the
Trustee and all cash distributions made on Class A LP Units credited to the
Participant's deferral account will be paid by the Trustee to the Participant
quarterly, within thirty days after the distribution is paid on the Class A LP
Units.

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DEFERRALS OF RESTRICTED UNITS

Effective as of June 1, 1997, the Deferred Compensation Plan was amended to
provide for the issuance of restricted PIMCO Advisors Class A LP Units
("Restricted Class A LP Units") and restricted PIMCO Advisors Class B LP Units
("Restricted Class A LP Units" and "Restricted Class B LP Units," respectively,
collectively "Restricted Units") to be distributed on a deferred basis. Pursuant
to the Deferred Compensation Plan provisions permitting the issuance of deferred
Restricted Units, the Equity Board may from time to time issue Restricted Units
to the Trustee, who shall credit such Restricted Units to an account (the
"Restricted Unit Account") maintained for each Participant on whose behalf
Restricted Units are issued.

Restricted Units vest in accordance with the terms and conditions of their
issuance, and a Participant's Restricted Unit Account is credited with the
number of PIMCO Advisors Class A Units or PIMCO Advisors Class B Units, as the
case may be, that become vested. A Participant's Restricted Unit Account is
debited with the corresponding number of Restricted Class A LP Units or
Restricted Class B LP Units. Except in the event of the death of a Participant,
Units credited to a Participant's Restricted Unit Account may not be distributed
before the expiration of a deferral period, which is not to be less than 5 years
or some other period, if greater, determined by the Equity Board. A Participant
has no right to receive a distribution of Units credited to his or her
Restricted Unit Account, except to the extent the such Units become vested in
accordance with the terms and conditions of their issuance.

To the extent directed by a Participant, amounts distributed during the
deferral period in respect of Restricted Units, PIMCO Advisors Class A LP Units
or PIMCO Advisors Class B LP Units credited to such Participant's Restricted
Unit Account are reinvested by the Trustee in PIMCO Advisors Class A LP Units or
PIMCO Advisors Class B LP Units, as the case may be. Absent any direction by the
Participant, amounts distributed in respect of Restricted Units, PIMCO Advisors
Class A LP Units or PIMCO Advisors Class B LP Units are distributed to the
Participant.

Upon a Participant's termination of employment during the deferral period,
all Units credited to a Participant's Restricted Unit Account are held by the
Trustee until the expiration of the deferral period; provided, however, that
Restricted Units, PIMCO Advisors Class A LP Units and PIMCO Advisors Class B LP
Units credited to a Participant's Restricted Unit Account shall be forfeited and
transferred and distributed by the Trustee to the Partnership in the event the
Unit Incentive Committee determines that such forfeiture is merited because the
Participant has engaged in gross misconduct, including fraud, theft, serious
violations of federal or state securities laws or regulations or willful and
persistent violation of any policies established for the purpose of compliance
with federal or state securities laws. Upon the death of a Participant, any
Units credited to a Participant's Restricted Unit Account, less any amounts
required to be withheld by law, are distributed by the Trustee in one lump sum
to such Participant's beneficiary or beneficiaries, notwithstanding the deferral
period applicable to such Units.

Upon expiration of the deferral period, a Participant may elect to receive
Units credited to his or her Restricted Unit Account in one lump sum or in any
fixed number of annual or more frequent installments (not exceeding 20 years or
four installments per year).

GRANTOR TRUST

PIMCO Advisors has established the Grantor Trust with the U.S. Trust
Company. The Grantor Trust is irrevocable. Under the terms of the Grantor Trust,
the Trustee is required to distribute the assets of the Grantor Trust to PIMCO
Advisors and the Participating Entities in the event they become bankrupt or
insolvent. In that case, the Trustee is required to suspend all payments from
the Grantor Trust to Participants. The assets distributed from the Grantor Trust
to PIMCO Advisors and the Participating Entities are to be used to satisfy the
claims of the general creditors of PIMCO Advisors and the Participating Entities
under those circumstances.

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VESTING OF DEFERRAL AMOUNTS

Subject to forfeiture as described below under "-- Forfeiture of Deferral
Amounts," all Compensation deferred by a Participant and paid to the Trustee,
whether by voluntary election or mandatory requirement, is fully vested at the
time of the deferral; provided, however, that upon a Participant's Termination
of Employment (as defined in the Deferred Compensation Plan), all Compensation,
Class A LP Units or other investments credited to the Participant's deferral
account will be held by the Trustee until the expiration of the deferral period
selected by the Participant in accordance with the requirements set forth in
"-- Deferral Period" below. Any Class A LP Units held by the Trustee on behalf
of a Participant that are attributable to Additional Contributions become fully
vested on the earlier of (i) six years from the end of the year in which the
Additional Contribution was made, or (ii) the retirement or death of the
Participant or a change of control of PIMCO Advisors.

A Participant's Canadian Balance in relation to a calendar year shall vest
in and be distributed to such Participant no later than the end of the third
year immediately following such year.

FORFEITURE OF DEFERRAL AMOUNTS

Except those deferral amounts attributable to elective deferrals, all
deferred compensation credited to a Participant's deferral account which has not
previously been distributed to the Participant will be forfeited by the
Participant in the event that the Unit Incentive Committee determines that such
forfeiture is merited upon a finding by the Unit Incentive Committee that the
Participant has engaged in gross misconduct. Upon forfeiture, the amount
forfeited is transferred and paid by the Trustee to the Participant's employer.

Any Participating Entity which adopts the Deferred Compensation Plan may
require that Class A LP Units held for the account of one of its Managing
Directors which are attributable to the deferral of total compensation in excess
of $1,000,000 be subject to forfeiture if the Managing Director competes with
PIMCO Advisors within a five year period following his departure from PIMCO
Advisors or the Participating Subsidiary.

DEFERRAL PERIOD

Any compensation deferred pursuant to the Deferred Compensation Plan is
required to be deferred for a minimum period of five years from the end of the
year in which the compensation is deferred. Notwithstanding the mandatory five
year deferral period, upon the death of a Participant any Class A LP Units
and/or compensation credited to the Participant's deferral account, less any
amounts required to be held by law, will be distributed to the Participant's
designated beneficiary or beneficiaries.

In addition, but only upon a showing of an Unforeseen Emergency (as defined
in the Deferred Compensation Plan) to the Committee's satisfaction, a
Participant may request (i) a reduction of such deferral period or, if such
reduction is not sufficient, (ii) a withdrawal from such Participant's deferral
account on a form specified by PIMCO Advisors.

PAYMENT OF BENEFITS

Upon the expiration of the deferral period applicable to Compensation
withheld from a Participant, the Trustee shall distribute to the Participant the
number of Class A LP Units credited to the Participant's deferral account
attributable to such Compensation and related Additional Contributions, less any
amounts required to be withheld by law. The distribution will be made, as
elected by the Participant, in one lump sum or, subject to certain limits, in a
fixed number of annual or more frequent installments, as is designated by the
Participant. The number of Class A LP Units to be distributed in each
installment is determined by dividing then current number of Class A LP Units to
be distributed by the remaining number of installments to be paid.

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MERGER, CONSOLIDATION, AND RESTRUCTURING OF PIMCO ADVISORS

In the event of the consolidation or merger of a Participating Entity with
or into any other corporation, partnership or other Participating Entity, or the
sale by a Participating Entity of all or substantially all of its assets, the
resulting successor may continue the Deferred Compensation Plan by adopting it
in a resolution of its board of directors or agreement of its partners. If
within 90 days from the effective date of such consolidation, merger or sale of
assets, such new corporation does not adopt the Deferred Compensation Plan, the
Deferred Compensation Plan will automatically terminate.

After a restructuring of PIMCO Advisors, subject to the limits set forth
below, the Deferred Compensation Plan authorizes the Unit Incentive Committee to
direct the Trustee to take such actions as the Unit Incentive Committee may find
to be appropriate and equitable to cause the Class A LP Units held in all
Participants' deferral accounts to be exchanged or otherwise substituted for
such securities as may be received by other holders of publicly-traded Class A
LP Units in exchange for such Class A LP Units in connection with the
restructuring, including, without limitation, transferring to the restructuring
entity the Class A LP Units held by the Trustee in exchange for equity
securities of the restructuring entity; provided, however, that unless required
to be earlier exchanged to maintain PIMCO Advisors' status as a partnership for
federal income tax purposes, the Trustee will retain the Class A LP Units
following the restructuring and not exchange the same for any successor security
except upon distribution of Class A LP Units to Participants or their
beneficiaries who are not eligible to be Nonpublic Unitholders under the
Existing Partnership Agreement. If and to the extent Class A LP Units are
exchanged for a successor security after the restructuring, as applicable, all
references in the Deferred Compensation Plan to "Class A Units" shall be deemed
to refer to such successor security.

FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH THE DEFERRED COMPENSATION PLAN

The federal income tax consequences of the Deferred Compensation Plan under
current federal law are summarized in the following discussion which deals with
the general tax principles applicable to the Deferred Compensation Plan, and is
intended for general information only. Alternative minimum tax and employment
tax and state, local and foreign taxes are not discussed, and may vary depending
on individual circumstances and from locality to locality.

DEFERRALS

A Participant will not recognize the compensation deferred in accordance
with the Deferred Compensation Plan, or the contributions made by PIMCO Advisors
and the Participating Entities to the Grantor Trust as taxable income upon the
deferral of compensation or the contribution of amounts to the Grantor Trust.

EARNINGS ON THE GRANTOR TRUST ASSETS

Earnings and interest realized on the assets of the Grantor Trust will be
treated as income recognized by PIMCO Advisors and the Participating Entities
for federal income tax purposes. A Participant will not recognize taxable income
on such earnings and interest realized on the assets of the Grantor Trust,
except as described below.

DISTRIBUTIONS

A Participant will recognize ordinary income upon the payment of (i)
amounts earned on funds credited to the Participant's Deferral Account which are
paid to the Participant pending the purchase of Class A LP Units by the Trustee
and (ii) cash distributions made on Class A LP Units credited to the
Participant's Deferral Account, when such amounts are paid to the Participant.
The Participating Entity that employs the Participant will be entitled to a
deduction in the amount paid to the Participant.

In addition, a Participant will recognize ordinary income upon the
distribution to the Participant of Class A LP Units credited to the
Participant's Deferral Account by the Trustee in an amount equal to the fair
market value of the Class A LP Units distributed. The Participating Entity that
employs the Participant will

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be entitled to a deduction, in an amount equal to the fair market value of the
Class A LP Units at the time of distribution. In connection with the
distribution of any Class A LP Units to a Participant, the Participant is deemed
to have (i) received a cash bonus from the Participating Entity employing the
Participant equal to the Unit Price on the date of issuance multiplied by the
number of Class A LP Units issued (without regard to any withholding that would
apply to such bonus if actually paid), and (ii) contributed cash in the amount
of such cash bonus as a Contribution in exchange for a Capital Account equal, on
a per unit basis, to the relevant Unit Price on the date of issuance.

PIMCO Advisors recommends that Participants consult their personal tax
advisors with respect to federal, foreign (if applicable), state and local tax
aspects of participation in the Deferred Compensation Plan.

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RELATIONSHIP BETWEEN THE PARTNERSHIP AND PIMCO ADVISORS

OPERATING AGREEMENT

The Partnership and PIMCO Advisors are party to an operating agreement (the
"Partnership Operating Agreement") which generally governs the ongoing
relationship of the Partnership and PIMCO Advisors.

Exchange Rights for Nonpublic Unitholders. Subject to the annual Volume
Limitation (as described below) the Partnership will (i) allow the Nonpublic
Unitholders the semi-annual right to exchange some or all of their Exchangeable
Units (as defined below) for Partnership Units at the Exchange Rate (as defined
below) in effect on the date of the exchange (the "Exchange Rights") and (ii)
provide certain registration rights with respect to the Partnership Units so
obtained. Under the Volume Limitation, which is intended to allow exchanges
pursuant to the Exchange Rights to qualify under an IRS regulatory safe harbor
for avoiding "publicly traded partnership" tax status for PIMCO Advisors, the
number of Exchangeable Units that may be exchanged in any one year pursuant to
the Exchange Rights may not exceed 10% of the total outstanding PIMCO Advisors
Units (the "Volume Limitation"); however, for purposes of applying such Volume
Limitation, certain exchanges will not be taken into account, including
transfers upon death, disability or retirement and certain "block transfers" of
more than 2% of outstanding PIMCO Advisors Units. The Exchangeable Units are
PIMCO Advisors Units which are (i) designated as private units in a Certificate
executed by PIMCO Advisors and not revoked, (ii) issued pursuant to a unit
incentive plan covering PIMCO Advisors Units or (iii) held by noteholders of
that certain Amended and Restated Note Agreement, dated as of September 26,
1997, between such noteholders and PGP. For purposes of the Volume Limitation
and related transfer restrictions under the PIMCO Advisors Partnership
Agreement, certain holders of Exchangeable Units, including those with
registration rights under the 1994 Registration Rights Agreement, will have a
priority right to exchange Exchangeable Units for Partnership Units. Upon a
transfer, on or after January 1, 1998, of an Exchangeable Unit, the Exchange
Right associated with such transferred Unit may be assigned to the transferee
only if the transferee is a Nonpublic Unitholder and the transferor expressly
agrees in writing to assign the Exchange Right to the transferee. The Exchange
Rate is equal to the number of Partnership Units outstanding divided by the
number of PIMCO Advisors Units held by the Partnership (excluding the PIMCO
Advisors Units underlying the general partner interests in the Partnership).

Employee Plans. The Partnership Operating Agreement provides that the
Partnership will adopt and maintain one or more unit incentive plans for the
benefit of employees of PIMCO Advisors, subsidiaries of PIMCO Advisors and any
affiliates of any of them. Upon the issuance of (or lapse of restrictions with
respect to) Partnership Units to employees of PIMCO Advisors and its
subsidiaries under the plan, the Partnership will contribute the proceeds
therefrom to PIMCO Advisors and shall receive an amount of additional PIMCO
Advisors GP Units equal to the number of Partnership Units sold or issued
divided by the Exchange Rate. Under certain of such employee unit incentive
plans, participants who qualify as Nonpublic Unitholders will have the option of
receiving PIMCO Advisors Units in lieu of Partnership Units upon an event which
requires the issuance of units under such plans, with any proceeds attributable
to such issuance being paid to PIMCO Advisors. The Partnership will agree to
maintain one or more registration statements covering the Partnership Units
issued under the plans.

Limitation on Issuances of Securities. The Partnership has agreed not to
issue any Partnership Units or securities convertible into or exchangeable for
Partnership Units without the prior consent of PIMCO Advisors. The Partnership
Operating Agreement contemplates that any such permitted issuance would result
in the net proceeds from such issuance being contributed to PIMCO Advisors in
exchange for additional PIMCO Advisors Units. With respect to this provision and
all other provisions which refer to the consent of PIMCO Advisors, such consent
will require the consent of the PIMCO Advisors Management Board unless there is
no PIMCO Advisors Management Board or the action is of a nature that requires
the unanimous consent of the general partners of PIMCO Advisors under the PIMCO
Advisors Partnership Agreement, in which case the unanimous consent of the
general partners of PIMCO Advisors will be required. Furthermore, if the action
is of a nature that also requires the consent of the limited partners of PIMCO
Advisors under the PIMCO Advisors Partnership Agreement, the consent of the
limited partners of PIMCO Advisors will also be required.

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Limitation on Transactions. The Partnership Operating Agreement provides
that the Partnership will not sell, assign or otherwise transfer any PIMCO
Advisors Units without the prior consent of PIMCO Advisors nor declare or pay
any in-kind distributions of PIMCO Advisors Units to the holders of Partnership
Units. In addition, the Partnership may not merge or otherwise combine its
assets with or into any other entity unless (i) PIMCO Advisors consents to such
transaction and (ii) the holders of PIMCO Advisors Units either (A) have the
right to receive a pro rata share of the consideration from the transaction
equal to that which they would be entitled to under the terms of the transaction
had they converted their PIMCO Advisors Units for Partnership Units at the
Exchange Rate immediately prior to the transaction or (B) continue to own an
interest in PIMCO Advisors or a successor entity after the transaction, which
interest carries rights and preferences at least as favorable as those in effect
with respect to PIMCO Advisors Units immediately prior to the transaction.

Coordination of Finance and Acquisitions. The Partnership Operating
Agreement provides that if PIMCO Advisors determines that additional funds are
required for acquisitions, growth or other purposes, and that it is in the best
interests of PIMCO Advisors that the funds be raised through the issuance of
additional Partnership Units or convertible securities by the Partnership, the
Partnership shall use its best efforts to effect the issuance and sale of such
securities as may be requested by PIMCO Advisors and, at the time of completion
of such sale, contribute the net proceeds to PIMCO Advisors in exchange for
PIMCO Advisors Units at the Exchange Rate in effect on the closing date.

Other Limitations. The Partnership Operating Agreement also limits the
incurrence of indebtedness by the Partnership and its subsidiaries, and limit
the business activities of the Partnership and its subsidiaries (other than
PIMCO Advisors) to those of owning PIMCO Advisors Units and acting as a general
partner of PIMCO Advisors and engaging in activities attendant to its status as
a public reporting company with one or more classes of equity securities
registered under the Exchange Act.

EXPENSE REIMBURSEMENT

In accordance with the PIMCO Advisors Partnership Agreement, PIMCO Advisors
pays all of the operating expenses of the Partnership. See "Management of the
Partnership -- Compensation of General Partner."

CERTAIN RELATIONSHIPS AND TRANSACTIONS

PGP INDEBTEDNESS

The operations of PIMCO Advisors and the Investment Management Firms may be
affected by the terms of the $130 million of indebtedness owed by PGP. Although
this indebtedness does not constitute an obligation of PIMCO Advisors or any of
the Investment Management Firms, and the documents governing the indebtedness
are not binding on PIMCO Advisors or any of the Investment Management Firms, the
businesses of PIMCO Advisors and the Investment Management Firms have been and
are anticipated to continue to be conducted in compliance with the operating
restrictions in the documents governing the indebtedness in order to avoid a
default thereunder even though contrary courses of action may be in the best
interests of PIMCO Advisors or the Investment Management Firms. The operating
restrictions, which remain in effect until the debt matures in 2001 if the debt
is not prepaid, include, among other things, cash flow and interest coverage
requirements and restrictions on incurrence of indebtedness and liens,
investments, asset sales, mergers and consolidations, affiliate transactions,
issuance of additional PIMCO Advisors Units and amendment of the PIMCO Advisors
Partnership Agreement. In particular, financial covenants relating to this
indebtedness could have the effect of inhibiting PIMCO Advisors' use of cash for
any purpose other than for distributions. The indebtedness is non-recourse to
PGP and is secured by, among other things, a pledge of certain PIMCO Advisors
Units owned by PGP. In the event of a default under the indebtedness, the
lenders could foreclose upon the pledged PIMCO Advisors Units which would reduce
the economic interests in PIMCO Advisors of PGP and its beneficial owners.

61
<PAGE> 67

WITHDRAWAL AND REMOVAL OF A GENERAL PARTNER OF PIMCO ADVISORS

The general partners of PIMCO Advisors have agreed that either of them may
withdraw as a general partner of the Partnership only if such withdrawal is
approved by holders of a majority of the units of limited partner interest
(other than those held by the general partners and their affiliates) and if
counsel renders an opinion that the limited partners do not lose their limited
liability pursuant to Delaware Law or the PIMCO Advisors Partnership Agreement
(a "Limited Liability Determination"), and provides certain other opinions
relating to the status of PIMCO Advisors as a partnership for federal income tax
purposes (a "Tax Determination") and the continuation of PIMCO Advisors'
advisory agreements (an "Assignment Determination"). The general partners may be
removed by a vote of unitholders holding 80% or more of all outstanding units if
a successor general partner is appointed, counsel makes a Limited Liability
Determination and such removal is approved by the successor general partner.
However, by virtue of PGP's and the Partnership's ownership of units, either of
the general partners can veto any such removal. Also, interests in the general
partner may be sold or transferred without any prior approval or consent of the
holders of PIMCO Advisors LP Units.

In the event of withdrawal or removal of a general partner of PIMCO
Advisors, such general partner would have the option to require a successor
general partner (if any) to acquire all of the general partner's PIMCO Advisors
GP Units for a cash payment equal to their fair market value as of the effective
date of the general partner's departure. Such value would be determined by
agreement between the general partner and the successor general partner or, if
no agreement were reached, by an independent investment banking firm or other
independent expert selected by the general partner and the successor general
partner (or if no expert can be agreed upon, by the expert chosen by agreement
of each of the experts selected by each such general partner). If the option was
not exercised by the general partner, the PIMCO Advisors GP Units of the general
partner would be converted into an equal number of PIMCO Advisors LP Units.

INDEMNIFICATION

The PIMCO Advisors Partnership Agreement provides that PIMCO Advisors will
indemnify the general partners or any general partner which has withdrawn or
been removed (a "Departing Partner"), any person who is or was an affiliate of
any general partner or any Departing Partner, each shareholder of the general
partner or of the parent company of the general partner, each shareholder of the
Departing Partner or of the parent company of the Departing Partner, and any
member of the Management Board, any officer of PIMCO Advisors or any of its
Investment Management Firms or divisions. PIMCO Advisors may also enter into
indemnification agreements with certain other persons.

The PIMCO Advisors Partnership Agreement also provides that neither a
general partner nor any indemnitee will be liable to PIMCO Advisors or the
unitholders for errors in judgment or for breach of fiduciary duty (including
breach of any duty of care or any duty of loyalty) unless it is proved by clear
and convincing evidence that the general partner's action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
PIMCO Advisors or was undertaken with reckless disregard for the best interests
of PIMCO Advisors.

CONTRIBUTION AGREEMENT

As part of the Opgroup Transaction, Opfin, Opgroup, PIMCO Advisors and
Value Advisors LLC entered into a contribution agreement (the "Contribution
Agreement") pursuant to which Opfin contributed its investment advisory assets
and its 100% interest in Value Advisors to PIMCO Advisors in exchange for an
aggregate initial consideration of 6,000,000 Class C LP Units. Under the terms
of the Contribution Agreement, if PIMCO Advisors or its direct or indirect
subsidiaries (other than Opgroup or Opfin) incurs a loss relating to or arising
from Opfin's investment advisory businesses or which is otherwise attributable
to the Opgroup Merger Agreement, and, as a result of such loss, Opgroup receives
an indemnification payment in excess of any loss incurred by Opgroup or Opfin
attributable to the same loss event (the excess portion thereof, an "Excess
Indemnification Payment"), then (i) if the indemnification payment is in the
form of a reduction of the face amount of the Indemnity Certificate, Opfin shall
return to PIMCO Advisors a number of Class C

62
<PAGE> 68

LP Units equal to the quotient of (x) 6,000,000 multiplied by the principal
amount of the reduction constituting such Excess Indemnification Payment divided
by (y) $265 million, or (ii) if the Excess Indemnification Payment is in cash,
Opgroup shall contribute the cash to PIMCO Advisors.

In addition, PIMCO Advisors agreed that if Opgroup or Opfin incurs a Loss
for which Opgroup does not receive an indemnification payment in cash, PIMCO
Advisors will loan to Ogroup an amount equal to the Loss. PIMCO Advisors further
agreed to loan Opgroup an amount sufficient to pay the remaining principal and
interest payments on the Opfin Debt.

REGISTRATION RIGHTS AGREEMENTS

PIMCO Advisors is a party to (i) that certain Registration Rights Agreement
dated November 4, 1997 between PIMCO Advisors and former Opgroup stockholders
(the "1997 Registration Rights Agreement"), and (ii) that certain Registration
Rights Agreement dated as of November 15, 1994 between PIMCO Advisors and
certain of its unitholders (the "1994 Registration Rights Agreement").

The holders of registration rights under the 1997 Registration Rights
Agreement were granted (i) the right to cause PIMCO Advisors to initiate up to
two registrations of their registrable securities (subject to customary
limitations, a minimum sale requirement and priority rights of holders of
registration rights under the 1994 Registration Rights Agreement) and (ii)
certain piggyback registration rights in respect of registrations initiated by
PIMCO Advisors or by other holders of registration rights granted pursuant to a
separate agreement, subject to approval of the managing underwriter. In the case
of a registration initiated by PIMCO Advisors, participation in such
registration by the holders of registration rights under the 1997 Registration
Rights Agreement and other registration rights agreements will not be reduced to
less than 40%.

The holders of registration rights under the 1994 Registration Rights
Agreement were granted (i) the right to cause PIMCO Advisors to initiate up to
five demand registrations on Form S-1 and an unlimited number of demand
registrations on Form S-3 (subject to customary limitations and a minimum sale
requirement) and (ii) piggy-back registration rights in respect of primary
offerings by PIMCO Advisors similar to those held by the holders under the 1997
Registration Rights Agreement. The holders under the 1994 Registration Rights
Agreement generally have priority over the holders under the 1997 Registration
Rights Agreement with respect to management of the registration process and
inclusion of shares in registrations initiated by holders of registration
rights.

After the Restructuring, the Partnership will assume the obligations of
PIMCO Advisors under the 1997 Registration Rights Agreement and the 1994
Registration Rights Agreement.

63
<PAGE> 69

RECENT UNIT PRICES AND DISTRIBUTIONS

The Partnership's LP Units are traded on the NYSE under the symbol "OCC"
and the PIMCO Advisors Class A LP Units are traded on the NYSE under the symbol
"PA." Following the Restructuring, the Partnership's LP Units are expected to be
traded under the symbol "PA", and the PIMCO Advisors Class A LP Units will cease
to be publicly traded.

The following table sets forth, for the periods indicated, the high and low
trading prices for the LP Units as reported on the NYSE and the total cash
distributions paid per LP Unit:

<TABLE>
<CAPTION>
TRADING PRICES
------------------- TOTAL CASH
YEAR ENDED APRIL 30, HIGH LOW DISTRIBUTIONS
--------------------------------------------------------------- ------- ------- -------------
<S> <C> <C> <C>
1996
First Quarter................................................ $30.000 $27.125 $ 0.550
Second Quarter............................................... 34.500 28.000 0.625
Third Quarter................................................ 37.375 33.250 1.175
Fourth Quarter............................................... 38.250 32.500 0.825
Total...................................................... $38.250 $27.125 $3.1750
======= ======= =======
1997
First Quarter................................................ $24.500 $21.125 $ 0.650
Second Quarter............................................... 28.000 24.000 0.750
Third Quarter................................................ 29.500 27.000 0.950
Fourth Quarter............................................... 38.250 27.750 1.150
Total...................................................... $38.250 $21.125 $ 3.500
======= ======= =======
1998
First Quarter................................................ $39 7/8 $32 1/8 $ 0.950
Second Quarter............................................... $57 3/4 $39 1/8 $ 1.510
Total...................................................... $57 1/8 $36 1/4 $ 2.460
======= ======= =======
</TABLE>

At November 4, 1997, the closing price of the LP Units was $52 3/16 and
there were approximately 30,000 beneficial holders of units.

The following table sets forth, for the periods indicated, the high and low
trading prices for each PIMCO Advisors Class A LP Unit as reported on the NYSE
and the total cash distributions paid per PIMCO Advisors Class A LP Unit, GP
Unit and Class B LP Unit.

<TABLE>
<CAPTION>
TRADING PRICES CLASS A LP
CLASS A UNITS AND GP UNITS CLASS B UNITS
--------------- TOTAL CASH TOTAL CASH
YEAR ENDED DECEMBER 31, HIGH LOW DISTRIBUTIONS DISTRIBUTIONS
------------------------------------------------ ----- ----- ------------ -------------
<S> <C> <C> <C> <C>
1995
First Quarter................................. $18 1/4 $16 7/8 $0.239 $ 0.077
Second Quarter................................ 20 5/8 17 3/8 0.470 0.138
Third Quarter................................. 21 1/4 19 0.470 0.199
Fourth Quarter................................ 21 1/4 19 5/8 0.470 0.259
----- ----- ------------ -------------
Total....................................... 21 1/4 16 7/8 $1.649 $ 0.673
====== ====== ============ ============
1996
First Quarter................................. $23 5/8 $20 1/2 $0.470 $ 0.444
Second Quarter................................ 22 1/4 20 1/8 0.470 0.318
Third Quarter................................. 22 7/8 20 0.470 0.447
Fourth Quarter................................ 23 7/8 21 3/4 0.470 0.449
----- ----- ------------ -------------
Total....................................... 23 7/8 20
====== ====== ============ ============
1997
First Quarter................................. $27 1/4 $20 5/8 $0.470 $ 0.464
Second Quarter................................ 26 20 3/4 0.470 0.435
Third Quarter................................. 31 15/16 24 1/2 0.470 0.505
Fourth Quarter (through November 5)........... 30 11/16 30
----- ----- ------------ -------------
Total....................................... 31 15/16 20 3/4 $1.410 $ 1.404
====== ====== ============ ============
</TABLE>

64
<PAGE> 70

On November 4, 1997, the closing price of the PIMCO Advisors Class A LP
Units as reported on the NYSE was $30 3/8 per unit. On November 4, 1997, there
were approximately 646 holders of record of the PIMCO Advisors Class A LP Units
and approximately 22 holders of record of the Partnership's Class B LP Units.
The PIMCO Advisors Class B LP Units (and all PIMCO Advisors GP Units) are not
publicly traded.

Distribution Policy

Prior to the Oppenheimer Capital Merger and the change in the Partnership's
fiscal year, quarterly distributions were paid within 30 business days after the
last day of each July, October, January and April to unitholders of record as of
the last day of each fiscal year quarter in respect to which such distributions
were made. Distributions were based on the results of operations of Oppenheimer
Capital. Following the Oppenheimer Capital Merger and the change in the
Partnership's fiscal year, distributions will be made following calendar
quarters, and will be based on distributions received on the PIMCO Advisors
units held.

The Partnership makes quarterly distributions in an amount equal to 99.99%
of available cash flow to the LP Unitholders and 0.01% to the general partner.
The Partnership Agreement of the Partnership requires the general partners of
the Partnership to cause a quarterly distribution to unitholders in an amount
equal to the excess of the cash distribution from PIMCO Advisors. The PIMCO
Advisors Partnership Agreement provides that the general partners shall cause
PIMCO Advisors to distribute to Unitholders on a quarterly basis cash in an
amount equal to Operating Profit Available for Distribution less any amount the
general partner deems may be required for capital expenditures, reserves or
otherwise in the business of PIMCO Advisors. The PIMCO Advisors Partnership
Agreement defines Operating Profit Available for Distribution as the sum of (i)
the net income of the Partnership for such quarter determined in accordance with
generally accepted accounting principles; (ii) certain non-cash charges
resulting from the amortization of goodwill and certain other intangible assets
and non-cash compensation expenses related to options and restricted units and
(iii) losses of any subsidiary which is not a flow-through entity for tax
purposes.

No assurances can be given as to the Partnership's future earnings levels.
Distributions made by the Partnership will depend on PIMCO Advisors'
profitability and the profitability of the Investment Management Firms. Such
profitability will be affected in part by overall economic conditions and other
factors affecting capital markets generally, which are beyond the control of the
Partnership and PIMCO Advisors. In addition, the general partner of PIMCO
Advisors may, in determining the amount of distributions, deduct from Operating
Profit Available for Distribution any amount the general partners deem may be
required for capital expenditures, reserves or otherwise in the business of
PIMCO Advisors. To the extent PIMCO Advisors or the Partnership retains profits
in any year, unitholders may have taxable income from the Partnership that
exceeds their cash distributions.

65
<PAGE> 71

SELECTED CONSOLIDATED FINANCIAL DATA OF OPPENHEIMER CAPITAL, L.P.

<TABLE>
<CAPTION>
OPPENHEIMER CAPITAL, L.P.
-----------------------------------------------------------------------------------
FOR THE THREE
MONTHS
ENDED JULY 31, FOR THE YEARS ENDED APRIL 30,
------------------- -----------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------- ------- -------- -------- ------- ------- -------
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.................................... $19,585 $12,280 $ 56,046(1) $ 61,316(1) $34,282 $35,091 $30,022
Expenses.................................... 685 685 2,720 2,720 3,461 4,038 3,704
------- ------- ------- ------- ------- ------- -------
Net income.................................. $18,900 $11,595 $ 53,326(1) $ 58,596(1) $30,821 $31,053 $26,318
------- ------- ------- ------- ------- ------- -------
Net income per unit......................... 1.21(3) 0.75 3.44(1) 3.81(1) 2.02 2.04 1.74
Distributions declared per unit............. 0.95 0.65 3.50(2) 3.175(2) 2.175 2.1375 1.9375
Weighted average number of units
outstanding............................... $15,427 $15,363 $ 15,367 $ 15,244 $15,136 $15,043 $15,009
======= ======= ======= ======= ======= ======= =======
</TABLE>

Financial condition data at:

<TABLE>
<CAPTION>
APRIL 30,
JULY 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets................................ $118,313 $116,149 $110,099 $96,633 $98,116 $98,365
Total liabilities........................... 14,806 17,858 12,713 10,321 10,319 9,683
------- -------- -------- ------- ------- -------
Partners' capital........................... $103,507 $ 98,291 $ 97,386 $86,312 $87,797 $88,682
</TABLE>

- ---------------

(1) Includes revenues and a gain on Quest sale of $1.8 million, or $.12 per unit
in fiscal 1997 and $17.7 million, or $1.15 per unit in fiscal 1996.

(2) Includes a special distribution related to the Quest sale of $.10 per unit
in fiscal 1997 and $.55 in fiscal 1996.

(3) Includes revenues and a gain on Quest sale of $2.8 million, or $.18 per
unit.

<TABLE>
<CAPTION>
OPPENHEIMER CAPITAL
-------------------------------------------------------------------------------
FOR THE THREE
MONTHS
ENDED JULY 31, FOR THE YEARS ENDED APRIL 30,
------------------- --------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
------- ------- -------- -------- -------- -------- -------
(UNAUDITED) (AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................................ $55,043 $41,075 $181,974 $158,215 $129,912 $112,290 $94,733
Expenses........................................ 30,302 23,441 103,064 95,551 83,066 64,683 54,707
------- ------- -------- -------- -------- -------- -------
Operating Income................................ 24,741 17,634 78,910 62,664 46,846 47,607 40,026
Gain on Quest sale(1)........................... 4,374 -- 2,806 27,725 -- -- --
------- ------- -------- -------- -------- -------- -------
Income before income taxes and minority
interest...................................... $29,115 $17,634 $ 81,716 $ 90,389 $ 46,846 $ 47,607 $40,026
------- ------- -------- -------- -------- -------- -------
Assets under management at period end (in
Billions)..................................... $ 60.8 $ 40.4 $ 51.2 $ 40.6 $ 31.8 $ 29.4 $ 26.4
======= ======= ======== ======== ======== ======== =======
</TABLE>

Financial condition data at:

<TABLE>
<CAPTION>
APRIL 30,
JULY 31, --------------------------------------------------------
1997 1997 1996 1995 1994 1993
------------------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets.................................... $103,055 $ 93,019 $ 76,338 $ 56,129 $ 43,034 $37,677
Total liabilities............................... 54,356 53,044 41,462 41,582 30,557 27,830
Minority interest............................... 396 277 174 87 25 18
------- -------- -------- -------- -------- -------
Partners' capital............................... $48,303 $ 39,698 $ 34,702 $ 14,460 $ 12,452 $ 9,829
</TABLE>

- ---------------

66
<PAGE> 72

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF THE PARTNERSHIP

GENERAL

The primary source of income for the Partnership is its proportionate share
of the net income of Oppenheimer Capital and interest income on a $32,193,000
par value 10% note due from Oppenheimer Equities, Inc. in the year 2012 (the
"Equities note").

Revenues and Expenses

The Partnership recorded equity in earnings of Oppenheimer Capital for the
three months ended July 31, 1997 and July 31, 1996 of $18.8 million and $11.5
million, respectively. Equity in earnings of Oppenheimer Capital for the three
months ended July 31, 1997 included a gain recognized by Oppenheimer Capital on
the sale of the investment advisory and other contracts and business
relationships of the Quest for Value Dual Purpose Fund, Inc. to Oppenheimer
Funds, Inc. ("OFI") (the "Dual Purpose sale") of $2.8 million. Excluding the
Dual Purpose sale, the increase in equity in earnings of Oppenheimer Capital is
primarily due to the higher operating income of Oppenheimer Capital.

Other expenses consist of New York City unincorporated business tax
("UBT"). For the three months ended July 31, 1997 and July 31, 1996, New York
City UBT totaled $33,000 and $33,000, respectively.

The Partnership recorded equity in earnings of Oppenheimer Capital for the
years ended April 30, 1997, 1996 and 1995 of $52.8 million, $58.1 million, and
$31.1 million, respectively. Equity in earnings of Oppenheimer Capital for the
1997 and 1996 fiscal years included gains recognized by Oppenheimer Capital on
the sale of the Quest for Value Funds investment advisory and other contracts
and business relationships (the "Quest sale") to OFI of $1.8 million and $17.7
million, respectively. Equity in earnings of Oppenheimer Capital, excluding the
Quest sale, increased 26.4% to $51.0 million for the year ended April 30, 1997
from $40.4 million for the year ended April 30, 1996, as a result of higher
operating income at Oppenheimer Capital. Equity in earnings of Oppenheimer
Capital, excluding the Quest sale, increased 30.0% for the year ended April 30,
1996 from $31.1 million for the year ended April 30, 1995, primarily due to
higher operating income at Oppenheimer Capital. Interest income on the Equities
note for each of the years ended April 30, 1997, 1996 and 1995 totaled $3.2
million.

Amortization of goodwill for each of the years ended April 30, 1997, 1996
and 1995 amounted to $2.6 million. Other expenses consist of New York City
unincorporated business tax ("UBT") computed at a rate of 4% of taxable income.
For the years ended April 30, 1997, 1996 and 1995, New York City UBT amounted to
$132,000, $132,000 and $873,000, respectively. The decline in New York City UBT
in fiscal 1996 reflects a change in the tax law effective on January 1, 1995. As
of that date, New York City UBT is imposed on the total income of Oppenheimer
Capital, and the Partnership is allowed to claim a credit for its pro rata share
of any New York City UBT paid by Oppenheimer Capital. Previously, New York City
UBT was assessed directly at the Partnership level.

Net income for the three months ended July 31, 1997 and July 31, 1996
amounted to $18.9 million and $11.6 million, respectively, or $1.21 per unit and
$.75 per unit, respectively. Excluding the Dual Purpose sale, net income for the
three months ended July 31, 1997 amounted to $16.1 million, or $1.03 per unit.

Net income amounted to $53.3 million or $3.44 per unit based on an average
of 15.4 million units outstanding for the year ended April 30, 1997; $58.6
million or $3.81 per unit based on an average of 15.2 million units outstanding
for the year ended April 30, 1996; and $30.8 million or $2.02 per unit based on
an average of 15.1 million units outstanding for the year ended April 30, 1995.
Included in the net income for the years ended April 30, 1997 and 1996 are gains
on the Quest sale, which amounted to $1.8 million, or $.12 per unit and $17.7
million, or $1.15 per unit, respectively.

67
<PAGE> 73

TAXES

The Partnership is not subject to federal, state, or local income taxes,
which are the obligations of the individual partners. However, beginning in
calendar year 1998, the Partnership will elect to be subject to a 3.5% federal
tax on its share of Oppenheimer Capital's gross income from the active conduct
of a trade or business in order to retain its partnership status. The imposition
of these taxes will reduce both net income and cash available for distribution
to partners. Similar taxes may be imposed by states in which the Partnership is
subject to such taxes.

Liquidity and Capital Resources

The only business activity carried on by the Partnership is its investment
in Oppenheimer Capital. The Partnership receives quarterly cash distributions
from Oppenheimer Capital and receives interest income from Oppenheimer Equities,
Inc. The Partnership distributes its available cash flow to its partners, which
equals cash distributions from Oppenheimer Capital plus interest income from the
Equities note less New York City UBT. Consequently, the Partnership does not
require any additional liquidity or capital resources.

The Partnership makes quarterly distributions in an amount equal to 99% of
available cash flow to the limited partners (the "Oppenheimer Capital
Unitholders") and 1% to the general partner, Opfin. For the three months ended
July 31, 1997 and July 31, 1996, the Partnership declared distributions to
Oppenheimer Capital Unitholders of $.95 per unit and $.65 per unit,
respectively.

For the years ended April 30, 1997, 1996 and 1995, the Partnership declared
total distributions to Oppenheimer Capital Unitholders of $3.50, $3.175 and
$2.175 per unit, respectively. The total distributions for the years ended April
30, 1997 and 1996 included special distributions of $0.10 and $0.55,
respectively, related to the Quest sale.

OPPENHEIMER CAPITAL

General

Oppenheimer Capital's results of operations include those of its basic
institutional investment management business and those of its subsidiary
entities; Opcap Advisors ("Advisors"), OCC Distributors ("Distributors"),
Oppenheimer Capital Limited, Oppenheimer Capital Trust Company ("Opcap Trust"),
and 225 Liberty Street Advisers, L.P., formerly AMA Investment Advisers, L.P.
("AMA Advisers"). The results for the quarter ended July 31, 1996 also include
Saratoga Capital Management ("Saratoga"), which was sold on April 29, 1997.

For the periods presented, Oppenheimer Capital's operations have been
characterized by substantial increases in assets under management. This growth
has been from four principal sources. First, new clients have entered into
investment management agreements and existing clients have added funds to their
accounts under management. Second, rising securities price levels have increased
the market values of investment portfolios. Third, mutual funds and variable
annuities managed by Advisors have added to assets under management due to
increased sales and market appreciation. Fourth, wrap fee assets have increased
due to new accounts opened, expanded distribution to broker-dealers and market
appreciation. The growth in assets under management has been tempered by
Oppenheimer Capital's withdrawal from the low fee rate option management
business in fiscal 1996 in order to concentrate on businesses offering higher
returns. For the periods presented, the option management business had no
material effect on revenues or profitability. Revenues are generally derived
from charging a fee based on the net assets of clients' portfolios. All periods
presented show increased operating revenue. Revenues for all periods presented
consist principally of investment management fees.

In fiscal 1996, Oppenheimer Capital began to implement a strategic decision
to withdraw from selling directly to the retail market, and to instead market
directly to institutions with strong retail distribution capabilities. In
November 1995, Oppenheimer Capital withdrew from the open-end mutual fund
distribution business (see the Quest sale) and began to eliminate retail
operations at AMA Advisers, completing this process in the first quarter of
fiscal 1997. Oppenheimer Capital also reduced the losses incurred by Saratoga
throughout fiscal 1997, and during the fourth quarter of fiscal 1997 sold its
interest in Saratoga. Additionally,

68
<PAGE> 74

Oppenheimer Capital terminated the distribution of unit investment trusts during
the fourth quarter of fiscal 1997.

QUARTER ENDED JULY 31, 1997

On July 18, 1997, Oppenheimer Capital completed the sale of the investment
advisory and other contracts and business relationships of its Quest for Value
Dual Purpose Fund to OFI, which is unrelated to Oppenheimer Capital. The fund
has been renamed the Oppenheimer Quest Capital Value Fund, and continues to be
managed by Advisors under a subadvisory agreement with OFI.

As shown below, the value of assets under management increased 50.3% to
$60.8 billion at July 31, 1997 from $40.4 billion at July 31, 1996. Oppenheimer
Capital continued to experience growth in its traditional business, the
management of separate accounts for large financial institutions and
high-net-worth individual investors, as well as its newer businesses, including
mutual funds and wrap fee accounts.

<TABLE>
<CAPTION>
AT JULY 31, AT JULY 31, PERCENT
1997 1996 INCREASE
----------- ----------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Separate Account Management.......................... $38,684 $27,456 40.9%
Wrap Fee............................................. 7,505 3,674 104.3%
Mutual Funds & Other Commingled Products............. 14,568 9,306 56.5%
------- ------- -----
$60,757 $40,436 50.3%
======= ======= =====
</TABLE>

YEARS ENDED APRIL 30, 1997, 1996 AND 1995

The value of total assets under management increased 26.3% to $51.2 billion
at April 30, 1997 from $40.6 billion at April 30, 1996. The growth of assets
under management was tempered by the loss of $530 million in mutual fund assets
as a result of the closed-end Quest for Value Dual Purpose Fund redeeming all
income fund shares and converting to an open end fund. For the year ended April
30, 1997, assets under management for separately managed accounts increased
18.1% to $33.2 billion, mutual fund and other commingled products increased
33.4% to $12.0 billion, and wrap fee accounts increased 73.7% to $6.0 billion.

The value of total assets under management increased 27.6% to $40.6 billion
at April 30, 1996 from $31.8 billion at April 30, 1995. The growth of assets
under management was tempered by the loss of $1.5 billion in option management
accounts with a low effective fee rate and a reduction of $300 million in fixed
income mutual fund assets as a result of the Quest sale. For the year ended
April 30, 1996, assets under management for separately managed accounts
increased 25.8% to $28.1 billion from $22.3 billion, mutual fund and other
commingled products increased 43.9% to $9.0 billion from $6.3 billion, and wrap
fee accounts increased 92.3% to $3.5 billion from $1.8 billion.

GAIN ON QUEST SALE

On November 22, 1995, Oppenheimer Capital completed the sale of the
investment advisory and other contracts and business relationships for its
twelve Quest for Value mutual funds (the "Quest sale") to OFI, which is
unrelated to Oppenheimer Capital, for an Initial Purchase Price Payment of $41.7
million. In December 1996, a Deferred Purchase Price Payment of $3.8 million was
received by Oppenheimer Capital as a result of the assets of the six merged
fixed income funds being at stated levels. The gains on the sale, before New
York City unincorporated business tax ("UBT") and minority interest, amounted to
$2.8 million for the year ended April 30, 1997, and $27.7 million for the year
ended April 30, 1996.

Total assets of the twelve funds were $1.7 billion at November 21, 1995.
The six equity funds involved, representing $1.4 billion of those assets,
continue to be managed by Advisors under a subadvisory contract with OFI, which
allows the current portfolio management teams to remain in place. The six equity
funds were renamed the Oppenheimer Quest Value funds (the "Quest funds"). The
six fixed income funds, representing approximately $300 million of those assets,
were merged into comparable funds managed by OFI.

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<PAGE> 75

The overall impact of the Quest sale on Oppenheimer Capital's results has
been highly positive. Although the fee rate as a subadviser is less, assets in
the six equity funds have more than tripled to $4.9 billion at June 30, 1997 as
a result of the extensive distribution capabilities of OFI and market
appreciation. In addition, Oppenheimer Capital has eliminated distribution
expenses related to these funds. Reflecting the impact of these various factors,
the profitability of Oppenheimer Capital's mutual fund business has increased
significantly since the Quest sale.

Oppenheimer Capital implemented a portion of the mutual fund distribution
cost savings prior to the close of the Quest sale, and results for the quarter
ended April 30, 1996 reflected those savings. In addition, as a result of the
sale, significant expenditures that would have been made in systems, technology,
sales and marketing capabilities, and new product development have not been
necessary.

On January 31, 1997, the closed-end Quest for Value Dual Purpose Fund (the
"Fund") redeemed all of its income shares as required by its Articles of
Incorporation, and on February 28, 1997, the Fund converted to an open-end fund.
The investment contracts and other business relationships were sold to OFI (the
"Dual Purpose Fund sale"), and Advisors now serves as subadviser to the Fund
under an agreement with OFI. The subadvisory fee is significantly lower than the
management fee previously earned by Oppenheimer Capital. Annual subadvisory fees
related to the Fund are projected at $1.0 million annually, based on assets
under management at June 30, 1997, while Oppenheimer Capital received $5.0
million of investment management fees for the fiscal year ended April 30, 1997.

On July 18, 1997, Oppenheimer Capital received an initial payment of $7.0
million related to the Dual Purpose Fund sale.

OPERATING REVENUES -- QUARTER ENDED JULY 31, 1997

Total operating revenues increased 34.0% for the three months ended July
31, 1997 to $55.0 million from $41.1 million for the three months ended July 31,
1996. Total operating revenues include investment management fees, net
distribution assistance and commission income, and interest and dividends.

Investment management fees increased 34.6% for the three months ended July
31, 1997 to $53.1 million from $39.4 million for the three months ended July 31,
1996 as average assets under management for the three months ended July 31, 1997
increased 35.8% to $55.8 billion from $41.1 billion for the three months ended
July 31, 1996.

Net distribution assistance and commission income increased 13.9% to $1.6
million for the three months ended July 31, 1997 from $1.4 million for the three
months ended July 31, 1996. The increase was due to higher certificate of
deposit commission income resulting from greater demand for funds by banks, and
was offset in part by lower unit investment trust commission income as a result
of Oppenheimer Capital's decision to withdraw from this business during the
fourth quarter of fiscal 1997.

Interest and dividend income increased to $351,000 for the three months
ended July 31, 1997 from $237,000 for the three months ended July 31, 1996. This
increase can be primarily attributed to higher average cash balances.

OPERATING REVENUES -- YEARS ENDED APRIL 30, 1997, 1996 AND 1995

Total operating revenues increased 15.0% for the year ended April 30, 1997
to $182.0 million from $158.2 million for the year ended April 30, 1996 and
increased 21.8% for the year ended April 30, 1996 from $129.9 million for the
year ended April 30, 1995. Total operating revenues include investment
management fees, net distribution assistance and commission income, and interest
and dividends.

Investment management fees increased 16.2% to $175.8 million for the year
ended April 30, 1997 from $151.3 million for the year ended April 30, 1996. This
increase is a result of average assets under management increasing 24.7% to
$45.8 billion for the year ended April 30, 1997 from $36.7 billion for the year
ended April 30, 1996. Investment management fee revenue grew less than assets
under management due to the lower subadvisory fee rates earned on the Quest
funds than the advisory fee rate prior to the Quest sale. These lower

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<PAGE> 76

fee rates were more than offset by asset growth for these funds and the
elimination of mutual fund distribution expenses. Annual subadvisory fees are
projected at $15.3 million, based on assets under management at June 30, 1997,
down slightly from the previous $15.7 million of annual fees for the twelve
Quest for Value Funds at November 22, 1995. Assets in the six equity funds have
more than tripled to $4.9 billion at June 30, 1997 from $1.4 billion on November
22, 1995, reflecting record fund sales and market appreciation.

In addition, investment management fee revenue grew less than the increase
in assets under management due to a decline in performance fees earned in fiscal
1997 to $1.2 million from $3.0 million in fiscal 1996. These decreases were
offset in part by investment management fees increasing due to higher fee
realizations resulting from a continued shift in the asset mix toward higher
effective fee rate businesses such as variable annuities and wrap fee accounts.

Investment management fees increased 26.9% for the year ended April 30,
1996 from $119.2 million for the year ended April 30, 1995, primarily as a
result of average assets under management increasing 23.8% for the year ended
April 30, 1996 from $29.7 billion for the year ended April 30, 1995. This
increase also reflects higher fee realizations as a result of a shift in the
asset mix toward the higher fee rate businesses including mutual funds, variable
annuities and wrap fee accounts, and the withdrawal from the option management
business, which had very low fee rates. Offsetting the increase in part was the
lower fee rate earned subadvising the Quest funds as a result of the Quest sale.

Net distribution assistance and commission income decreased 18.9% to $4.9
million for the year ended April 30, 1997 from $6.1 million for the year ended
April 30, 1996. This decrease reflects reduced commission and distribution
income as a result of the Quest sale and lower unit investment trust commission
income due to reduced demand for fixed income unit investment trusts
(Oppenheimer Capital discontinued the distribution of unit investment trusts in
April 1997). This decrease was offset in part by a $1.3 million increase in
certificate of deposit commission income as a result of increased demand for
funds by banks.

Net distribution assistance and commission income decreased 42.0% for the
year ended April 30, 1996 from $10.4 million for the year ended April 30, 1995
primarily as a result of a $3.5 million decline in certificate of deposit
commission income as a result of lower demand for funds by banks, decreased unit
investment trust commission income, and reduced commission and distribution
income as a result of the Quest sale in November 1995.

Interest and dividend income increased 39.7% to $1.3 million for the year
ended April 30, 1997 from $895,000 for the year ended April 30, 1996. This
increase can be attributed to higher average cash balances.

Interest and dividend income increased to $.9 million for the year ended
April 30, 1996 from $275,000 for the year ended April 30, 1995. This increase
can be primarily attributed to the interest earned on the proceeds received from
the Quest sale.

OPERATING EXPENSES -- QUARTER ENDED JULY 31, 1997

Total operating expenses increased 29.3% for the three months ended July
31, 1997 to $30.3 million from $23.4 million for the three months ended July 31,
1996.

Oppenheimer Capital's most significant expense category is employee
compensation and benefits, which includes salaries, bonuses, sales commissions,
incentive compensation and other payroll related expenses. Compensation and
benefits expense increased 36.2% for the three months ended July 31, 1997 to
$24.0 million from $17.6 million for the three months ended July 31, 1996.
Compensation and benefits expense increased primarily due to higher incentive
compensation costs due to increased new business, higher operating profits and
increased participation by key executives in incentive compensation plans as a
result of industry competitive pressures and their individual contributions to
firm profitability. In addition, compensation and benefits expenses increased
due to higher amortization expenses related to restricted units granted to
certain key employees on May 1, 1997, as well as staff salary increases and
additions to staff to support expanding businesses. These increases were offset
in part by staff reductions as a result of the sale of Oppenheimer Capital's 50%
interest in Saratoga and the decision to withdraw from the distribution of unit
investment trusts.

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<PAGE> 77

Occupancy expenses increased 17.7% for the three months ended July 31, 1997
to $1.8 million from $1.5 million for the three months ended July 31, 1996. This
increase was due to adjustments to rent escalation accruals during the quarters
ended July 31, 1997 and 1996.

General and administrative expenses increased 12.1% for the three months
ended July 31, 1997 to $3.1 million from $2.8 million for the three months ended
July 31, 1996. The increase in general and administrative expenses reflects
increased costs incurred in connection with the development of new businesses
and increased investments in computer equipment and software as a result of
increased technical support for professional and administrative staff and higher
professional services expense due to the expansion of Oppenheimer Capital's
business. This increase was offset in part by savings realized from the sale of
Oppenheimer Capital's interest in Saratoga.

Promotional expenses decreased 7.8% for the three months ended July 31,
1997 to $1.4 million from $1.6 million for the three months ended July 31, 1996.
The decrease in promotional expenses was due primarily to the elimination of
costs incurred by Saratoga and the elimination of the retail distribution of
unit investment trusts. This decrease was offset in part by increased travel and
entertainment expenses as a result of new business activities.

OPERATING EXPENSES -- YEARS ENDED APRIL 30, 1997, 1996 AND 1995

Total operating expenses increased 7.9% for the year ended April 30, 1997
to $103.1 million from $95.6 million for the year ended April 30, 1996 and
increased 15.0% for the year ended April 30, 1996 from $83.1 million for the
year ended April 30, 1995.

Oppenheimer Capital's most significant expense category is compensation and
benefits, which includes salaries, bonuses, sales commissions, incentive
compensation and other payroll related expenses. Compensation and benefits
expenses increased 12.9% to $77.7 million for the year ended April 30, 1997 from
$68.8 million for the year ended April 30, 1996 and increased 24.2% for the year
ended April 30, 1996 from $55.4 million for the year ended April 30, 1995. For
both years, compensation and benefits increased primarily due to higher
incentive compensation costs due to increased new business, higher operating
profits and increased participation by key executives in incentive compensation
plans as a result of industry competitive pressures and their individual
contributions to firm profitability. In addition, compensation and benefits
expense increased due to staff salary increases and additions to staff to
support expanding businesses. These increases were offset in part by significant
staff reductions at OCC Distributors, AMA Advisers, and in mutual fund
accounting in fiscal 1996 with most staff reductions occurring after the Quest
sale in November 1995. In fiscal 1997, staff size was reduced as a result of the
sale of Oppenheimer Capital's 50% interest in Saratoga and the termination of
the unit investment trust distribution effort during the fourth fiscal quarter.
Reflecting these reductions, staff size declined to 344 at April 30, 1997 from
348 at April 30, 1996, and from 417 at April 30, 1995.

Occupancy expense decreased 4.4% for the year ended April 30, 1997 to $6.6
million from $6.9 million for the year ended April 30, 1996 and increased 6.8%
for the year ended April 30, 1996 from $6.4 million for the year ended April 30,
1995. The decrease for the year ending April 30, 1997 reflects reduced rent
expense as a result of the termination of leases at AMA Advisers as well as
adjustments made to rent escalation accruals during the fiscal year. For the
year ended April 30, 1996, the increase was attributable to increased
amortization expense relating to leasehold improvements and increased equipment
rental costs.

Oppenheimer Capital subleases a portion of its space at the Oppenheimer
Tower, World Financial Center, from Oppenheimer & Co., Inc. ("Opco"), an
affiliated broker-dealer, paying a pro rata share of Opco's lease payments,
based on the percentage of total space leased. Oppenheimer Capital is currently
in negotiations to lease an additional 7,500 square feet at Oppenheimer Tower to
house its growing business.

General and administrative expenses increased 1.6% for the year ended April
30, 1997 to $12.5 million from $12.3 million for the year ended April 30, 1996
and increased 15.4% for the year ended April 30, 1996 from $10.7 million for the
year ended April 30, 1995. The rate of growth of general and administrative
expenses slowed in fiscal 1996 and continued in fiscal 1997 as Oppenheimer
Capital realized cost savings from

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the Quest sale and cost reductions at AMA Advisers. As a result of the Quest
sale in November 1995, Oppenheimer Capital was able to eliminate all of its
outstanding bank loans and related interest expense. Offsetting these reductions
in both fiscal 1997 and 1996 were increased costs incurred in connection with
the development of new businesses and increased investments in computer
equipment and software as a result of increased technical support for
professional and administrative staff and higher professional services expense
due to the expansion of Oppenheimer Capital's business.

Promotional expenses decreased 16.7% for the year ended April 30, 1997 to
$6.3 million from $7.6 million for the year ended April 30, 1996 and decreased
28.3% for the year ended April 30, 1996 from $10.6 million for the year ended
April 30, 1995. The decrease in promotional expenses for both fiscal years was
due primarily to a reduction in expenses incurred by OCC Distributors as a
result of the elimination of the open-end mutual fund distribution effort, and
the retail operations of AMA Advisers, and was offset in part by increased
expenses in Oppenheimer Capital's new businesses due to increased travel and
entertainment expenses as a result of new business activities. In addition,
promotional expenses decreased in fiscal 1997 due in part to decreased
promotional activities at Saratoga.

OPERATING INCOME -- QUARTER ENDED JULY 31, 1997

Operating income for the three months ended July 31, 1997 increased 40.3%
to $24.7 million from $17.6 million for the three months ended July 31, 1996.
For the three months ended July 31, 1997, the operating profit margin expanded
to 44.9% from 42.9% for the three months ended July 31, 1996 as operating
revenues grew 34.0% while expenses increased only 29.3%.

OPERATING INCOME -- YEARS ENDED APRIL 30, 1997, 1996 AND 1995

Operating income increased 25.9% for the year ended April 30, 1997 to $78.9
million from $62.7 million for the year ended April 30, 1996 and increased 33.8%
for the year ended April 30, 1996 from $46.8 million for the year ended April
30, 1995. For the year ended April 30, 1997, the operating profit margin
expanded to 43.4% from 39.6% for the year ended April 30, 1996; and in the year
ended April 30, 1996, the operating profit margin increased from 36.1% for the
year ended April 30, 1995. The increase in operating income and operating profit
margin for both years is due to rising securities price levels, strong new
business growth and the resultant revenue increase combined with Oppenheimer
Capital controlling the rate of expense growth. In both fiscal 1997 and fiscal
1996, the operating revenue growth rate exceeded the operating expense growth
rate. This was accomplished primarily from the decision to withdraw from the
mutual fund distribution business (the Quest sale), which was completed in the
final quarter of fiscal 1996, and the suspension of retail sales activities at
AMA Advisers. This process, which began in fiscal 1996, was completed in the
first quarter of fiscal 1997. In addition, losses from Saratoga were reduced to
$1.4 million in fiscal 1997 from $2.5 million in fiscal 1996, and during the
fourth quarter of fiscal 1997, Oppenheimer Capital sold its 50% interest in
Saratoga.

TAXES

Oppenheimer Capital is not subject to Federal, state, or local income
taxes, which are the obligations of the individual partners. Oppenheimer
Capital, however, was subject to New York City UBT of $1,194,000 for the three
months ended July 31, 1997 and $585,000 for the three months ended July 31,
1996. This increase was due to higher operating income as well as the gain on
the sale of the Quest for Value Dual Purpose Fund.

Corporate subsidiaries of Oppenheimer Capital were subject to income taxes
of $24,000 for the three months ended July 31, 1997.

Oppenheimer Capital was subject to New York City UBT of $3.1 million, $3.7
million and $1.2 million, respectively, for the years ended April 30, 1997, 1996
and 1995. The decrease in New York City UBT expense in fiscal 1997 compared to
fiscal 1996 is due to a decline in net income in fiscal 1997 as a result of the
$27.7 million gain recorded for the Quest sale in fiscal 1996, compared with the
$2.8 million gain in fiscal 1997. This decline was offset in part by higher
operating income in fiscal 1997 than in fiscal 1996.

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The increase in New York City UBT expense in fiscal 1996 from fiscal 1995
was due to a change in the tax law effective January 1, 1995 imposing taxes on
the total income of Oppenheimer Capital and allowing the Partnership a credit
for its pro rata share of any New York City UBT paid by Oppenheimer Capital.
Prior to January 1, 1995, New York City UBT was assessed directly at the
Partnership level. A second reason for the increase was Oppenheimer Capital's
higher earnings, including the gain realized on the Quest sale.

A corporate subsidiary of Oppenheimer Capital is subject to Federal, state
and local income taxes. A foreign corporate subsidiary is subject to taxes in
the foreign jurisdiction in which it is located.

LIQUIDITY AND CAPITAL RESOURCES

Oppenheimer Capital's business is not capital intensive and its working
capital requirements are generally modest. To the extent that additional funds
are required by Oppenheimer Capital (e.g. to support increased investment
management fees receivable or to expand its facilities to accommodate the growth
of its businesses), Oppenheimer Capital currently intends to borrow from a
commercial bank.

Oppenheimer Capital intends to distribute on a quarterly basis
substantially all its net income to the Partnership and to Opfin. Oppenheimer
Capital may distribute to the Partnership and to Opfin excess cash, taking into
account Oppenheimer Capital's financial condition, results of operations, cash
requirements and general economic conditions. On July 31, 1997, Oppenheimer
Capital declared a distribution to its partners of $20.8 million which was paid
on August 29, 1997. On April 30, 1997, Oppenheimer Capital declared a
distribution to its partners of $25.3 million which was paid on May 30, 1997.

Oppenheimer Capital recorded gains on the Quest sale of $2.8 million in
fiscal 1997 and $27.7 million in fiscal 1996. The net proceeds from the sale
were used to pay a special distribution to partners of $2.3 million in fiscal
1997 and $12.6 million in fiscal 1996, and the remaining funds were used to
eliminate bank borrowings and to fund the working capital needs of Oppenheimer
Capital. At April 30, 1997, working capital totaled $30.8 million as compared
with $26.3 million at April 30, 1996 and partners capital increased to $39.7
million from $34.7 million during this same period.

SALE OF AMA LICENSE

In May 1997, Oppenheimer Capital sold its exclusive right to market to
members of the American Medical Association ("AMA") to Scudder, Stevens & Clark,
Inc. for $1.0 million. Simultaneously, Oppenheimer Capital purchased the AMA's
19.9% interest in AMA Advisers for $500,000. The $1.0 million payment was used
to reduce unamortized goodwill. AMA Advisers have been renamed 225 Liberty
Advisers, L.P.

SALE OF SARATOGA CAPITAL MANAGEMENT

On April 29, 1997, Oppenheimer Capital completed the sale of its 50%
interest in Saratoga. The proceeds, which are not significant, will be paid
annually to Oppenheimer Capital over a five year period, ending May 1, 2001.
Oppenheimer Capital continues to manage two portfolios of the Saratoga Advantage
Trust, for which it receives subadvisory fees.

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SELECTED CONSOLIDATED FINANCIAL DATA OF PIMCO ADVISORS

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
--------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total revenues......................... $344,210 $287,161 $392,024 $323,014 $180,263 $165,856 $120,155
Operating expenses..................... 232,572 190,975 261,978 215,271 145,220 131,447 93,011
Amortization of intangibles, options
and restricted units................. 31,000 30,852 41,171 42,723 6,202
-------- -------- -------- -------- -------- -------- --------
Operating income....................... 80,638 65,334 88,875 65,020 28,841 34,409 27,144
Other income, net...................... 3,249 2,401 3,454 3,964 1,083 864 1,115
-------- -------- -------- -------- -------- -------- --------
Income before income tax expense....... 83,887 67,735 92,329 68,984 29,924 35,273 28,259
Income tax expense..................... 1,226 834 1,201 517 10,669 15,556 11,405
-------- -------- -------- -------- -------- -------- --------
Net income............................. $ 82,661 $ 66,901 $ 91,128 $ 68,467 $ 19,255 $ 19,717 $ 16,854
======== ======== ======== ======== ======== ======== ========
Net income allocated to:
General Partner and Class A Limited
Partner units...................... $ 45,329 $ 39,421 $ 52,916 $ 46,655 $ 4,976
Class B Limited Partner units........ 37,332 27,480 38,212 21,812 1,128
Pre-Consolidation.................... -- -- -- -- 13,151
-------- -------- -------- -------- --------
Total.................................. $ 82,661 $ 66,901 $ 91,128 $ 68,467 $ 19,255
======== ======== ======== ======== ========
NET INCOME PER UNIT(1):
General Partner and Class A Limited
Partner units........................ $ 1.06 $ 0.96 $ 1.29 $ 1.16 $ 0.12
Class B Limited Partner units.......... $ 1.06 $ 0.76 $ 1.05 $ 0.59 $ 0.03
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING (POST-CONSOLIDATION):
Units outstanding:
General Partner...................... 800 800 800 800 800
Class A Limited Partner.............. 40,146 40,132 40,135 40,108 40,018
Class B Limited Partner.............. 32,983 32,961 32,961 32,961 32,961
-------- -------- -------- -------- --------
Total.................................. 73,929 73,893 73,896 73,869 73,779
Weighted average effect of unit
options.............................. 3,906 2,915 3,119 1,684 984
-------- -------- -------- -------- --------
Total.................................. 77,835 76,808 77,015 75,553 74,763
======== ======== ======== ======== ========
DIVIDENDS/DISTRIBUTIONS................ $104,042 $ 97,560 $131,604 $ 89,613 $ 24,384 $ 22,158 $ 12,950
======== ======== ======== ======== ======== ======== ========
FINANCIAL CONDITION AT END OF PERIOD:
Total assets(2)........................ $365,728 $373,545 $358,500 $369,592 $379,708 $ 70,388 $ 43,189
Total liabilities...................... 86,752 68,802 62,257 38,035 34,179 44,567 17,686
-------- -------- -------- -------- -------- -------- --------
Total Partners' Capital................ $278,976 $304,743 $296,243 $331,557 $345,529 $ 25,821 $ 25,503
======== ======== ======== ======== ======== ======== ========
</TABLE>

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<PAGE> 81

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER STATISTICS:
Assets under management (in
millions)............................ $130,632 $104,540 $110,022 $ 95,182 $ 72,175 $ 57,182 $ 43,737
Operating Profit Available for
Distribution(1)...................... 113,830 97,763 132,314 111,205 12,306 -- --
Cash flows provided by operating
activities........................... 112,502 119,882 140,446 86,921 25,852 23,620 9,309
Cash flows provided by (used in)
investing activities................. (16,598) (2,983) (2,446) (17,771) 22,401 (436) (1,149)
Cash flows used in financing
activities........................... (104,042) (97,560) (131,604) (89,238) (2,549) (14,900) (15,800)
</TABLE>

- ---------------

(1) Computed on earnings following the Consolidation. Operating Profit Available
for Distribution is defined by the PIMCO Advisors Partnership Agreement as
the sum of net income plus non-cash charges from the amortization of
intangible assets, non-cash compensation expenses arising from option and
restricted unit plans, and losses of any subsidiary which is not a
flow-through entity for tax purposes.

(2) Upon completion of the Consolidation, approximately $284.9 million of
intangible asset were created. See Note 3 in the Notes to the Consolidated
Financial Statements.

(3) Stockholders' equity before consolidation.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF PIMCO ADVISORS

OVERVIEW

PIMCO Advisors was formed on November 15, 1994 when PFAMCo merged PFAMCo
Group into TAG L.P. PFAMCo Group comprised the operations of PFAMCo, an indirect
wholly-owned subsidiary of Pacific Life Insurance Company ("Pacific Life"), and
certain of its wholly-owned investment management subsidiaries. The businesses
of PFAMCo Group contributed to PIMCO Advisors were then contributed to
newly-formed subsidiaries of PIMCO Advisors. These businesses, as well as TAG
L.P.'s former division of CCI, are as follows:

Pacific Investment Management and its wholly owned subsidiary, StocksPLUS
Management, Inc. ("StocksPLUS Management"), manages primarily fixed income
investments, with approximately $108.5 billion in assets under management;

CCI and Columbus Circle Trust Company ("CCTC") manages primarily equity and
equity related investments, with approximately $11.5 billion in assets
under management;

Cadence manages equity and equity related investments, with approximately
$4.9 billion in assets under management;

Parametric manages equity and equity related investments, with
approximately $2.5 billion in assets under management;

NFJ manages equity and equity related investments, with approximately $2.3
billion in assets under management; and

Blairlogie manages equity and equity related investments, with
approximately $875 million in assets under management.

PIMCO Advisors, together with these six firms, sponsors and manages mutual
funds for both institutional and retail investors.

PIMCO Funds. In January 1997, the Partnership restructured its proprietary
mutual funds into a single fund family called "PIMCO Funds" which is comprised
of two series: (i) PIMCO Funds: Pacific Investment Management Series: PIMCO
Funds PIMS Series, 20 funds advised by Pacific Investment Management, and (ii)
PIMCO Funds: Multi Manager Series: PIMCO Funds MMS Series, 21 funds advised by
the Partnership and subadvised by the Investment Management Firms and one
independent subadvisor. The PIMCO Funds PIMS Series are primarily fixed income
funds and the PIMCO Funds MMS Series are primarily equity funds. All PIMCO Funds
are offered in up to five different share classes: institutional and
administrative share classes primarily for institutional investors and, for
retail investors, Class A shares (which are "front end" load), Class B shares
(which are "back-end load") and Class C shares (which are "level load"). The
PIMCO Funds now feature a "unified fee" structure which has specified advisory
and administrative fees per fund. As a result, the Partnership and Pacific
Investment Management (and not the PIMCO Funds) bear the risk of increases in
service costs (including of third-party service providers such as transfer
agents) and will directly benefit from decreases in those costs.

RESULTS OF OPERATIONS

GENERAL COMMENTARY

PIMCO Advisors derives substantially all its revenues and net income from
advisory fees for investment management services provided through its investment
management subsidiaries to its institutional and individual clients, and
advisory, distribution and servicing fees for services provided to the PIMCO
Funds.

Generally, such fees are determined based upon a percentage of client
assets under management and are billed quarterly to institutional clients,
either in advance or arrears, depending on the agreement with the client and
monthly in arrears to the PIMCO Funds. Revenues are determined in large part
based upon the level of

77
<PAGE> 83

assets under management, which itself is dependent upon factors including market
conditions, client decisions to add or withdraw assets from PIMCO Advisors
management, and PIMCO Advisors ability to attract new clients. In addition,
PIMCO Advisors has certain accounts which are subject to performance based fee
schedules wherein performance relative to the S&P 500 Index or other benchmarks
over a particular time period can result in additional fees. These fees accrue
on a quarterly or annual basis, depending upon the specific investment advisory
contract. Quarterly fees generally are calculated based upon a rolling
twelve-month performance result. Annual fees have historically been weighted
towards second and fourth quarter billings although the third quarter of 1997
reflects certain new annual account billings. As a result, there is a
seasonality to the recognition of such fees. Such performance based fees can
have a significant effect on revenues, but also provide an opportunity to earn
higher fees (as well as lower fees) than could be obtained under fee
arrangements based solely on a percentage of assets under management.

Intangible assets of approximately $284.9 million created by the
Consolidation represent the excess of the purchase price over the fair value of
net tangible assets of TAG L.P. deemed acquired by PFAMCo Group. Approximately
$80.7 million of the intangible assets represents the value assigned to PIMCO
Advisors MLP structure. Under previous tax law, an MLP was exempt from federal
and most state and local income taxes through December 31, 1997. As discussed
elsewhere, the tax status has been extended. However, the value attributed to
the MLP structure is being amortized through the period ended December 31, 1997.
The remainder is being amortized over its estimated life of 20 years.

Net income per unit is computed under the two-class method which allocates
net income to Class A and Class B Limited Partner Units in proportion to the
Operating Profit Available for Distribution for each class. Operating Profit
Available for Distribution is defined by the PIMCO Advisors Partnership
Agreement and is computed as the sum of net income plus non-cash charges from
the amortization of intangible assets, non-cash compensation expenses arising
from option and restricted unit plans, and losses of any subsidiary which is not
a flow-through entity for tax purposes. Class A Limited Partner and GP Units are
entitled to a priority distribution of $1.88 per unit per year until December
31, 1997. Because of this, the amount of Operating Profit Available for
Distribution allocated to such units can be greater than the amount allocated to
Class B Limited Partner Units. As a result, the net income allocated per Class A
Limited Partner and GP Units is currently greater than the net income allocated
per Class B Limited Partner Units. In addition, because of the priority
distribution, the initial dilution to net income per unit from the asumed
exercise of options can be applied entirely to Class B Limited Partner Units.
However, growth in both net income and Operating Profit Available for
distribution in 1997 beyond the priority levels has resulted in the year to date
allocations as income and distribution, per unit to be equal across all classes.

QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1996

PIMCO Advisors derives substantially all its revenues and net income from
advisory fees for investment management services provided to its institutional
and individual clients and advisory, distribution and servicing fees for
services provided to its two proprietary series of mutual funds ("Proprietary
Funds").

PIMCO Advisors consolidated 1997 third quarter revenues, including those of
its wholly owned distributor PFD, were $125.1 million compared to $97.1 million
in the third quarter of 1996, up $28.0 million. Advisory revenues were $110.2
million in the third quarter of 1997 compared to $84.7 million for the same
period in 1996, up $25.5 million. For the nine months ended September 30, 1997
PIMCO Advisors consolidated revenues were $344.2 million compared to $287.2
million in the same period of 1996. Revenues at the distributor for the nine
months of 1997 increased to $46.3 million in 1997 from $39.7 million in 1996.
Advisory revenue increases resulted from both the commitment of new assets by
institutional clients and from market appreciation. Performance based fees
amounted to $9.3 million during the third quarter of 1997 as compared to $4.9
million during the same period in 1996. For the nine months ended September 30,
1997 performance fees increased to $20.8 million, from $16.3 million in the
comparable period of 1996. The increase in performance based fees occurred in
both fixed income portfolio products seeking to outperform relative benchmarks,
and an equity product seeking to outperform the S&P 500 Index.

78
<PAGE> 84

Revenues by operating entity were as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Pacific Investment Management............... $ 74.4 $ 54.9 $200.4 $162.1
CCI......................................... 14.3 15.5 43.8 47.2
Cadence..................................... 6.8 4.5 17.5 13.0
Parametric.................................. 1.1 0.9 3.2 2.6
NFJ......................................... 2.4 1.8 6.3 5.4
Blairlogie.................................. 1.1 0.9 3.2 2.8
PFD......................................... 16.3 13.3 46.3 39.7
Other....................................... 8.7 5.3 23.5 14.4
------ ----- ------ ------
$125.1 $ 97.1 $344.2 $287.2
====== ===== ====== ======
</TABLE>

Assets under management, in the aggregate, were as follows:

Compensation and benefits in the third quarter of 1997 of $55.5 million
were $12.3 million higher than the same period in 1996. For the nine month
period, this cost category increased from $128.1 million in 1996 to $151.6
million in 1997. These increases reflect additional staffing, at both Pacific
Investment Management and CCI, as well as higher profit sharing expenses which
are based on profits of each of the investment management subsidiaries.

Commission expenses, incurred by PFD related to sales and servicing of
retail mutual funds, increased $2.5 million to $11.7 million in the third
quarter of 1997 compared to the same period a year ago, and increased $4.7
million to $32.2 million for the nine months of 1997 compared to 1996,
reflecting higher trail commissions due to an increased level of qualifying
assets, as well as increased "up front" commissions on higher current sales
levels.

General and administrative expenses amounted to $6.9 million during the
third quarter of 1997, an increase of $2.9 million over the same period a year
ago. This cost category increased by $5.8 million to $18.8 million for the nine
months of 1997 compared to 1996. This increase can be primarily attributed to
the conversion of the retail share classes of the PIMCO Funds to a fixed
administrative fee basis resulting in increases to this cost category for
expenses previously borne directly by the funds. There is a corresponding
increase in revenues related to this conversion. These incremental costs account
for substantially all of this increase.

Occupancy and equipment increased by $147,000 to $2.5 million in the third
quarter of 1997 from the same period a year ago; during the nine months of 1997
these costs increased $550,000 to $7.5 million compared to the same period in
1996. The increase in this expense category can be attributed primarily to
additional office space and equipment as a result of the additional staffing
discussed above.

Other expenses in the third quarter of 1997 increased by $1.4 million from
1996. Such costs for the nine months of 1997 increased $7.1 million to $22.5
million compared to the same period in 1996 due principally to increases in
marketing and promotional costs and professional fees as well as other increases
reflective of inflation and increased staffing.

79
<PAGE> 85

PRO FORMA FINANCIAL INFORMATION

Under generally accepted accounting principles, the Consolidation has been
accounted for as an acquisition of TAG L.P. by PFAMCo Group, even though the
legal form was the reverse. Therefore, the historical financial statements
include the operations of PFAMCo Group, in its corporate form, prior to the
Consolidation and the combined results of PIMCO Advisors, in its partnership
form, for the period since the Consolidation.

Due to the different bases of presentation and resulting difficulties in
analyzing comparative historical financial information as a result of the
required accounting presentation, management has included below certain pro
forma financial information as if the Consolidation occurred at the beginning of
1993. Pro forma results eliminate the significant comparative differences in the
historical results of operations arising primarily from different taxation of
corporations and partnerships, from the inclusion of TAG's results of operations
in the pro forma results from the beginning of 1993 (rather than only from the
date of Consolidation reflected in the historical financial statements), and
from certain transactions and restructuring effected by the Consolidation,
principally related to the creation and amortization of intangibles and revised
profit sharing arrangements.

The following table summarizes the unaudited condensed pro forma results of
operations of PIMCO Advisors as if the Consolidation discussed above had
occurred on January 1, 1993. The pro forma operating results give effect to:

(i) the Consolidation of PFAMCo Group and TAG L.P.;

(ii) the amendment of existing options under TAG L.P.'s 1993 Unit
Option Plan;

(iii) the adoption of the Class B Limited Partnership Unit Option
Plan;

(iv) the contribution of PFD to PIMCO Advisors in exchange for Class A
Limited Partner Units; and

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<PAGE> 86

(v) certain transactions effected by PFAMCo Group and TAG L.P. in
connection with the Consolidation, primarily related to intangible
amortization and profit sharing.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
-------- -------- -----------
(ACTUAL) (ACTUAL) (ACTUAL)
(AMOUNTS IN MILLIONS,
EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C>
REVENUES
Investment Advisory......................... $338.3 $281.6 $ 231.5
PFD......................................... 53.7 41.4 37.6
------ ------ ------
392.0 323.0 269.1
------ ------ ------
EXPENSES
Compensation and Benefits................... 173.5 149.1 119.7
Commissions................................. 37.7 28.7 23.1
Marketing and Promotional................... 11.0 9.1 11.4
Occupancy and Equipment..................... 9.2 8.7 6.7
General and Administrative.................. 17.6 11.4 7.4
Insurance................................... 2.6 2.8 1.8
Professional Fees........................... 5.5 3.2 3.4
Amortization of intangibles,
options and restricted units.............. 41.2 42.7 40.7
Other (income) expense (net)................ 2.6 (1.2) 0.2
------ ------ ------
300.9 254.5 214.4
------ ------ ------
NET INCOME.................................. $ 91.1 $ 68.5 $ 54.7
====== ====== ======
Net Income per General Partner and Class A
Limited Partner unit...................... $ 1.29 $ 1.16 $ 1.08
====== ====== ======
Net Income per Class B Limited Partner
unit...................................... $ 1.05 $ 0.59 $ 0.28
====== ====== ======
Revenues by operating entity were as
follows:
Pacific Investment Management.......... $222.3 $180.9 $ 142.9
CCI.................................... 63.7 53.0 45.1
Cadence................................ 17.9 14.6 12.1
Parametric............................. 3.5 3.8 4.5
NFJ.................................... 7.3 5.9 5.0
PFD.................................... 53.7 41.4 37.6
Other(1)............................... 23.6 23.4 21.9
------ ------ ------
Consolidated PIMCO Advisors............ $392.0 $323.0 $ 269.1
====== ====== ======
</TABLE>

- ---------------

(1) Includes PIMCO Advisors Institutional Services (formerly PFAMCo) and Mutual
Funds divisions and Blairlogie.

The pro forma information for 1994, given above, is not intended to reflect
the results that actually would have been obtained if the operations were
consolidated during the period presented.

PRO FORMA AND ACTUAL FINANCIAL INFORMATION

Year Ended December 31, 1996 Actual Compared to Year Ended December 31,
1995 Actual

PIMCO Advisors consolidated actual 1996 revenues, including those of its
wholly-owned distributor, PFD, were $392.0 million, compared to revenues of
$323.0 million in 1995. Advisory revenues in this comparison increased $56.7
million to $338.3 million in 1996. PFD's revenues increased $12.3 million to

81
<PAGE> 87

$53.7 million in 1996. Revenue increases resulted from the commitment of new
assets primarily by institutional clients and increases in the market value of
existing assets under management. These increases were further enhanced by an
increase in performance based fees, which amounted to $22.5 million in 1996 as
compared to $19.1 million in 1995. The increase in performance based fees
occurred principally in fixed income portfolio products seeking to outperform
relative benchmarks.

Compensation and benefit expenses in 1996 of $173.5 million were $24.4
million higher than 1995, reflecting additional staffing at virtually all
subsidiaries, and increased profit sharing at the investment management firms
due to improved profitability. The total number of employees increased 5.0% from
521 as of December 31, 1995 to 547 as of December 31, 1996.

Commission expenses increased by $9.0 million or 31.3% in 1996 as compared
with 1995. Commission expenses are incurred by PFD and are paid primarily to
broker-dealers and their sales people for the sale of PIMCO Advisors
retail-oriented mutual funds. These include "up-front" commissions paid at the
time of sale of the mutual funds, "trail" commissions for the maintenance of
assets in the mutual funds and service fee commissions paid for services
provided to mutual fund shareholders. The level of commission expense will vary
according to the level of assets in the mutual funds (on which trail and service
fee commissions are determined) and on the level of sales of mutual funds (on
which up-front commissions are determined). Trail and service fee commissions
are generally paid quarterly beginning one year after sale of the mutual funds.
Therefore, at any given time, trail and service fee commissions will be paid on
only the mutual fund assets that qualify for such payments. In 1996, trail and
service fee commissions increased to $30.3 million, an increase of $6.1 million
or 25.2%, compared to 1995. This increase is related to an increase in the
underlying qualifying assets. Up-front commissions increased from $4.5 million
in 1995 to $7.4 million in 1996, an increase of $2.9 million or 64.4%. This is a
result of increases in total sales volume and the mix of share classes sold.

Marketing and promotional costs increased $1.9 million or 20.9% in 1996
compared to 1995. This increase occurred at most entities, but primarily at PFD
and Pacific Investment Management. At PFD, increased mutual fund share sales
correlate to the increase. At Pacific Investment Management, increased travel
costs comprise the majority of the increase.

Occupancy and equipment costs increased $.5 million or 5.7% in 1996
compared to 1995. The increase relates to increased depreciation of equipment
and inflationary facilities cost increases at all entities.

General and administrative costs increased $6.2 million or 54.4% in 1996
compared to 1995. Pacific Investment Management converted its institutional fund
family to a fixed administrative fee basis in October 1995 resulting in
increases to this cost category for expenses previously borne directly by the
funds. There is a corresponding increase in revenues related to this conversion.
These incremental costs account for approximately $6.0 million of the increase.

Insurance costs decreased $.2 million or 7.1% in 1996 compared to 1995.
This decrease relates principally to PIMCO Advisors decreased cost of coverage
for general partner liability insurance coverage. Offsetting this decline,
partially, were slight increases due to increased assets under management, and
related activities at the Investment Management Firms.

Professional fees increased $2.3 million or 71.9% in 1996 compared to 1995.
This increase resulted primarily from the costs associated with the
restructuring of the three mutual fund "families" in December of 1996.

Other (income) expense, net, includes such items as consulting costs,
reimbursement agreements and income taxes, offset by other income, and reflects
a net increase of $3.8 million in 1996 compared to 1995. This increase is
comprised principally of decreased investment income and lower levels of
reimbursement under agreements with Pacific Mutual that became effective in
November 1994.

Amortization of intangibles, options and restricted units decreased $1.5
million principally due to the accelerated vesting in 1995 of outstanding
options and restricted units for certain employees terminating during 1995.

82
<PAGE> 88

Year Ended December 31, 1995 Actual Compared to Year Ended December 31,
1994 Pro Forma

PIMCO Advisors consolidated actual 1995 revenues, including those of its
wholly-owned distributor, PFD, were $323.0 million, compared to pro forma
revenues of $269.1 million in 1994. Advisory revenues in this comparison
increased $50.1 million to $281.6 million in 1995. PFD's revenues increased $3.8
million to $41.4 million in 1995. Revenue increases resulted from the commitment
of new assets by institutional clients and increases in the market value of
existing assets under management. These increases were further enhanced by an
increase in performance based fees, which amounted to $19.1 million in 1995 as
compared to $9.2 million in 1994. The increase in performance based fees
occurred principally in a product line that seeks to outperform the S&P 500
Index.

Compensation and benefit expenses in 1995 of $149.1 million were $29.4
million higher than 1994, reflecting additional staffing at virtually all
subsidiaries, and increased profit sharing at the investment management firms
due to improved profitability. The total number of employees increased 12.5%
from 463, as of December 31, 1994, to 521, as of December 31, 1995.

Commission expenses increased by $5.6 million or 24.3% in 1995 as compared
with 1994 pro forma. In 1995, trail and service fee commissions increased to
$24.2 million, an increase of $7.9 million or 48.5%, compared to 1994. This
increase is related to an increase in the underlying qualifying assets. Up-front
commissions decreased from $6.8 million in 1994 to $4.5 million in 1995, a
decrease of $2.3 million or 33.8%. This is a result of decreases in total sales
volume and the mix of share classes sold.

Marketing and promotional costs declined $2.3 million or 20.6% in 1995
compared to 1994. This decrease occurred at most entities, but primarily at PFD
and Pacific Investment Management. At PFD, reduced mutual fund share sales
correlate to the reduction. At Pacific Investment Management, reduced
promotional costs comprise the majority of the reduction.

Occupancy and equipment costs increased $2.0 million or 29.8% in 1995
compared to 1994. The increase correlates strongly to new equipment and
facilities for increased staff, primarily at Pacific Investment Management.

General and administrative costs increased $4.0 million or 55.1% in 1995
compared to 1994. Pacific Investment Management converted its institutional fund
family to a fixed administrative fee basis in October 1995 resulting in
increases to this cost category for expenses previously borne directly by the
funds. There is a corresponding increase in revenues related to this conversion.
These incremental costs account for approximately $2.6 million of the increase.
The remaining increase was incurred at all entities and relates to higher levels
of staffing and activity.

Insurance costs increased $1.0 million or 55.0% in 1995 compared to 1994.
This increase relates principally to PIMCO Advisors increased cost of coverage
for general partner liability. Increases due to increased assets under
management and related activities also occurred at the Investment Management
Firms.

Professional fees declined $0.2 million or 5.7% in 1995 compared to 1994.
This decline resulted primarily from increased reliance on internal staffing.

Other (income) expense, net, includes such items as consulting costs,
reimbursement agreements and income taxes, offset by other income, and reflects
a net decrease of $1.4 million in 1995 compared to 1994. This decrease is
comprised principally of increased investment income and higher levels of
reimbursement under an agreement with Pacific Mutual that became effective in
November 1994.

Amortization of intangibles, options and restricted units increased $2.0
million principally due to the accelerated vesting of outstanding options and
restricted units for certain employees terminating during 1995.

HISTORICAL FINANCIAL INFORMATION ONLY

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

The historical financial statements reflect the results of PFAMCo Group, in
its corporate form for the period January 1, 1994 to November 15, 1994 and PIMCO
Advisors post-Consolidation combined results in

83
<PAGE> 89

its partnership form from November 16, 1994 to December 31, 1994, and for 1995.
This accounting treatment, known as "reverse acquisition" accounting, is
required under generally accepted accounting principles.

Therefore, many of the comparative differences in the results of operations
between 1995 and 1994 are due to the reorganization of PFAMCo Group into
partnership form, the inclusion of TAG's operations in PFAMCo Group's operations
from November 16, 1994, to December 31, 1994, and in 1995, and from transactions
and restructuring that occurred in the Consolidation. The 1994 and 1995 results
also include certain non-cash expenses related to the amortization of intangible
assets created by the Consolidation and from expenses related to option and
restricted unit plans.

PIMCO Advisors 1995 revenues, including PFD, were $323.0 million, compared
to $180.3 million in 1994, up $142.7 million. The increase in revenue results
primarily from the inclusion of TAG in the results of PIMCO Advisors operations
since the Consolidation, and to a lesser extent, from increased assets under
management at the investment management firms.

Compensation and benefits, which includes salaries, employee benefits and
incentive compensation, is the largest expense category. The increase in 1995 of
$31.9 million, to $149.1 million, reflects increased staff levels, higher profit
sharing and the inclusion of TAG in the full year of 1995, compared with only 46
days in 1994.

In addition to the effect of including TAG's operations for a full year in
1995, as compared to only 46 days in 1994, other expense categories reflect the
following fluctuations:

(i) Restricted units and option plans, which came into existence at
the Consolidation, include approximately $2.0 million of amortization
related to the accelerated vesting of outstanding options; and

(ii) Trail and service fee commissions increased approximately $7.0
million as a result of an increase in the underlying qualifying assets.

CAPITAL RESOURCES AND LIQUIDITY

PIMCO Advisors and its predecessor entities' combined business have not
historically been capital intensive. In general, working capital requirements
had been satisfied out of operating cash flow or short-term borrowings. PIMCO
Advisors will make quarterly profit-sharing payments and distributions to its
unitholders. PIMCO Advisors may need to finance profit-sharing payments using
short-term borrowings.

PIMCO Advisors had approximately $58.1 million of cash and cash equivalents
and short-term investments at September 30, 1997 compared to approximately $52.8
million at December 31, 1996, and approximately $52.8 million of cash and cash
equivalents and short term investments at December 31, 1996 compared to
approximately $46.5 million at December 31, 1995. The increases were due to the
timing of payment of certain current liabilities offset by the funding of "B"
Share commissions to brokers. "B" Shares involve the payment of commissions to
the selling broker by the distributor at the time of sale of mutual fund shares.
Through deferred sales charges to the investor, or 12-b1 plans with the mutual
fund, these "front-end" commissions are recouped by the distributor over a
period of years. PIMCO Advisors excess liquidity, after distributions to its
unitholders, is used for general corporate purposes including profit-sharing
payments and brokers' commissions on sales of mutual fund shares distributed
without a front-end sales load. To the extent that the level of such commissions
increases due to the introduction of new products and mutual fund pricing
structures, an alternate financing source may be needed. However, PIMCO Advisors
has made no decision as to the source or necessity of such financing.

The Partnership distributes substantially all of its Operating Profit
Available for Distribution, after appropriate reserves, to its partners.
Distributions are paid quarterly, in arrears, on the units outstanding to
unitholders of record on the thirtieth day of the first month following each
quarter-end. Actual unit distributions in 1996 were $1.88 for the GP and Class A
Limited Partner Units and $1.658 for the Class B Limited Partner Units. These
amounts reflect Operating Profit Available for Distribution for the fourth
quarter of 1995 and the first three quarters of 1996, as such distributions are
made in arrears. Actual unit distributions in 1995 were $1.649 for the GP and
Class A Limited Partner Units and were $0.673 for the

84
<PAGE> 90

Class B Limited Partner Units. These amounts reflect Operating Profit Available
for Distribution for the 46 day period from the date of Consolidation through
December 31, 1994, and Operating Profit Available for Distribution for the first
three quarters of 1995.

During the first nine months of 1997, the Partnership distributed $1.410
per Class A Limited Partner and GP Units and $1.404 per Class B Limited Partner
Units related to the fourth quarter of 1996's and first two quarters of 1997's
earnings. During the third quarter of 1997, the Partnership distributed $0.47
per Class A Limited Partner and GP Units and $0.505 per Class B Limited Partner
Units related to the second quarter of 1997's earnings. The Partnership declared
a third quarter distribution of $0.58 per Class A Limited Partner and GP Units
payable to holders of record on October 30, 1997. The payment date for this
distribution is November 15, 1997. The Partnership also declared a third quarter
distribution of $0.58 per Class B Limited Partner unit payable to holders of
record on October 30, 1997. The payment date for this distribution is November
30, 1997.

PIMCO Advisors currently has no long-term debt. In April 1996, the
Partnership obtained a $25 million, four year revolving line of credit for
working capital purposes. There was no outstanding balance at September 30,
1997, nor was the facility utilized during the quarter ended September 30, 1997.

ECONOMIC FACTORS

The general economy including interest rates, inflation and client
responses to economic factors will affect, to some degree, the operations of
PIMCO Advisors. As a significant portion of assets under management are fixed
income funds, fluctuations in interest rates could have a material impact on the
operations of PIMCO Advisors. PIMCO Advisors advisory business is generally not
capital intensive and therefore any effect of inflation, other than on interest
rates, is not expected to have a significant impact on its operations or
financial condition. Client responses to the economy, including decisions as to
the amount of assets deposited may also impact the operations of PIMCO Advisors.
Any resulting revenue fluctuations may or may not be recoverable in the pricing
of services offered by PIMCO Advisors.

During the first nine months of 1997, assets under management for PIMCO
Advisors and its subsidiaries increased $20.6 billion. During 1996 and 1995,
assets under management for PIMCO Advisors and its subsidiaries increased $14.8
billion and $23.0 billion, respectively. While net cash inflows year to date in
1997, and 1996 and 1995 for PIMCO Advisors, as a whole, were significant ($7.6
billion in the first nine months of 1997, $6.7 billion in 1996 and $6.6 billion
in 1995), CCI experienced substantial net cash outflows in the same periods
(including $4.9 billion during the first nine months of 1997) predominantly from
its "large cap" separate account clients, attributable in large part to
underperformance measured against relevant benchmarks.

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<PAGE> 91

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF THE PARTNERSHIP

The following table sets forth pro forma information regarding beneficial
ownership of the Partnership Units as of September 30, 1997, giving effect to
the Restructuring as if it had occurred on that date, by each person who, to the
Partnership's knowledge, is the beneficial owner of more than five percent of
the Partnership Units, each person who may be deemed to be a "director" of the
Partnership, the Chief Executive Officer of the Partnership and the
Partnership's Named Executive Officers and all officers and persons who may be
deemed to be directors of the Partnership as a group. Except as indicated, the
address of each person or entity listed below is 800 Newport Center Drive,
Newport Beach, California 92660.

<TABLE>
<CAPTION>
PARTNERSHIP PARTNERSHIP PIMCO PERCENTAGE OWNERSHIP
UNITS PRIOR TO UNITS AFTER ADVISORS OF
RESTRUCTURING(1) RESTRUCTURING(1)(2) UNITS(1)(2)(3) PARTNERSHIP UNITS(3)
---------------- ------------------- -------------- --------------------
<S> <C> <C> <C> <C>
FIVE PERCENT HOLDERS (other than
those listed as members of the
PIMCO Advisors Management Board
below)
PIMCO Partners, G.P. ("PGP")(4)...... 0 0 53,790,539 56.7%
Pacific Life Insurance Company
("Pacific Life")(5)................ 0 0 59,775,186 59.3%
Pacific Financial Asset Management
Corporation ("PFAMCo")(5).......... 0 0 59,775,186 59.3%
Pacific Investment Management Company
("PIMCO Inc.")(6).................. 0 0 54,155,573 56.9%
PIMCO Partners, LLC ("PPLLC")(7)..... 0 0 53,933,019 56.8%
Thomson Advisory Group, Inc.......... 0 0 14,380,217 26.0%
William R. Benz, II(8)............... 0 66,000 53,933,019 56.8%
David H. Edington(8)................. 0 184,000 53,933,019 56.9%
John L. Hague(8)..................... 0 184,000 53,933,019 56.9%
Dean S. Meiling(8)................... 0 184,000 53,933,019 56.9%
William C. Powers(8)................. 0 184,000 53,933,019 56.9%
Frank B. Rabinovitch(8).............. 0 184,000 53,933,019 56.9%
Lee R. Thomas(8)..................... 0 38,000 53,933,019 56.8%
Benjamin L. Trosky(8)................ 0 57,000 53,933,019 56.8%
PIMCO ADVISORS MANAGEMENT BOARD
MEMBERS
Walter E. Auch, Sr................... 0 0 1,311 *
David B. Breed....................... 0 0 550,000 1.3%
Christopher B. Burnham............... 0 *
William D. Cvengros.................. 0 320,000 200,000 1.3%
Walter B. Gerken..................... 0 0 1,798 *
William H. Gross(8)(9)............... 0 384,000 54,035,019 57.1%
Brent R. Harris(8)................... 0 184,000 53,933,019 58.9%
Donald R. Kurtz...................... 0 0 5,798 *
George A. Long....................... 320 320 0 *
James F. McIntosh.................... 0 0 5,798 *
Kenneth H. Mortenson................. *
James F. Muzzy(8).................... 0 184,000 53,933,019 56.9%
William F. Podlich, III(8)........... 0 64,000 53,933,019 56.8%
Glenn S. Schafer..................... 0 0 0 *
Thomas C. Sutton..................... 0 0 0 *
William S. Thompson, Jr.(10)......... 0 184,000 53,939,019 56.9%
EXECUTIVE OFFICERS NOT INCLUDED ABOVE
Robert M. Fitzgerald................. 0 20,000 0 *
Kenneth M. Poovey.................... 0 10,000 0 *
Stephen J. Treadway.................. 0 40,000 25,000 *
James G. Ward........................ 0 10,000 500 *
Richard M. Weil...................... 0 10,800 0 *
All directors and executive officers
as a group (21 persons)............
</TABLE>

- ---------------

* Less than 1%

(1) Each of the persons and entities listed disclaims beneficial ownership of
any units except to the extent that it has a pecuniary interest in such
items.

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<PAGE> 92

(2) Assumes that all awards under the PIMCO Advisors L.P. 1994 Class B LP
Option Plan, the 1996 Unit Incentive Plan of PIMCO Advisors L.P. and the
PIMCO Advisors L.P. Restricted Unit Plan (collectively, the "PIMCO Advisors
Plans") have been assumed by the 1997 Unit Incentive Plan of Oppenheimer
Capital, L.P. (the "1997 Plan"). The 1997 Plan will assume the awards under
the PIMCO Advisors Plans as soon as practicable after the Restructuring.

(3) Subject to certain transfer restrictions under the PIMCO Advisors
Partnership Agreement, PIMCO Advisors Units are exchangeable at certain
times each year on a one-to-one basis for Partnership Units. The percentage
ownership column assumes conversion of only those PIMCO Advisors Units held
by the applicable person or entity.

(4) Includes (i) 39,410,322 PIMCO Advisors Units held of record by PGP and (ii)
14,380,217 PIMCO Advisors Units held by TAG over which PGP may be deemed to
have voting control.

(5) Includes (i) the 53,790,539 PIMCO Advisors Units which may be deemed to be
beneficially owned by PGP, which may be deemed to be beneficially owned by
Pacific Life and PFAMCo, because PIMCO Inc. is a general partner of PGP and
is a wholly-owned subsidiary of PFAMCo, which is a wholly-owned subsidiary
of Pacific Life; (ii) 587,924 PIMCO Advisors Units held of record by
PFAMCo, over which PFAMCo holds sole voting and disposition power; and
(iii) an aggregate of 2,331,689 PIMCO Advisors Units of PIMCO Advisors
issued as follows: Cadence Inc. (32,652 units), Cadence L.P. (1,275,000
units), NFJ Inc. (18,404 units), NFJ LP (506,211 units), Parametric Inc.
(18,562 units), and Parametric LP (490,860 units) which may be deemed
beneficially owned by PFAMCo because Cadence Inc., NFJ Inc., and Parametric
Inc., are wholly owned subsidiaries of PFAMCo and Cadence Inc., NFJ Inc.,
Parametric Inc., in turn are the general partners of Cadence L.P., NFJ LP,
and Parametric LP, respectively. Also includes 2,700,000 units of PIMCO
Advisors owned by the foregoing. As general partners, Cadence Inc., NFJ
Inc., and Parametric Inc., have shared investment and disposition powers
with respect to Units held by Cadence L.P., NFJ LP, and Parametric LP,
respectively. Address: 700 Newport Center Drive, Newport Beach, California
92660.

(6) Includes (i) 365,034 PIMCO Advisors Units held of record by PIMCO Inc. and
(ii) the 53,790,539 PIMCO Advisors Units which may be viewed to be
beneficially owned by PGP, which may be deemed to be owned by PIMCO Inc.
because PIMCO Inc. is a general partner of PGP.

(7) Includes (i) 142,480 PIMCO Advisors Units held of record by PPLLC; and (ii)
53,790,539 PIMCO Advisors Units which may be considered to be beneficially
owned by PGP and which may be deemed to be beneficially owned by PPLLC,
which is a general partner of PGP.

(8) Includes the following which may be deemed to be beneficially owned by the
individual as a member of PPLLC. (i) 142,480 PIMCO Advisors Units of PIMCO
Advisors held of record by PPLLC; and (ii) 53,790,539 PIMCO Advisors Units
which may be considered to be beneficially owned by PGP, and which may be
deemed to be beneficially owned by PPLLC as a general partner of PGP.

(9) Includes 83,500 PIMCO Advisors Units held in trusts of which the individual
is trustee and as to which he has sole voting and disposition power, 18,000
PIMCO Advisors Units held by him and his spouse, of which he has shared
voting and investment power and 500 PIMCO Advisors Units held by his spouse
of which he has no voting or investment power.

(10) Includes (i) 6,000 PIMCO Advisors Units held in trusts of which the
individual is trustee and as to which he has sole voting and disposition
power.; and (ii) 142,480 PIMCO Advisors Units held of record by PPLLC; and
(ii) 53,790,539 PIMCO Advisors Units which may be considered to be
beneficially owned by PGP and which may be deemed to be beneficially owned
by PPLLC, which is a general partner of PGP.

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<PAGE> 93

DESCRIPTION OF THE PARTNERSHIP AGREEMENT

The following summarizes certain terms of the Partnership Agreement. The
summary is qualified in its entirety by the complete text of the Partnership
Agreement.

Organization and Duration. The Partnership was formed as a Delaware limited
partnership in 1987. PGP is the sole general partner of the Partnership. The
Partnership will dissolve on December 31, 2061 unless sooner dissolved pursuant
to the Partnership Agreement.

Purpose and Business. The purpose and business of the Partnership is
primarily to engage in the investment management and advisory business. The
Partnership may engage in all aspects of the financial services business,
including, but not limited to, the acquisition, development, ownership,
management and distribution of investment advisory businesses and development,
management and distribution of investment companies registered under the
Investment Company Act, as amended, and other pooled investment funds and in
investment, trading and financing activities of all kinds and carry on any
business relating thereto or arising therefrom, including entering into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged in any of the
foregoing. The Partnership may also carry out any activities that are incidental
or necessary to such business which may lawfully be conducted by a limited
partnership organized under the Delaware RULPA.

Management of the Partnership. As more fully discussed under "Management of
the Partnership," the general partner of the Partnership has full authority and
discretion to manage and control the business and affairs of the Partnership.
Under the Partnership Agreement, the Limited Partners (as defined in the
Partnership Agreement) have no right or power to take part in the day-to-day
management, operation or control of the Partnership. The Limited Partners have
no rights other than those specifically provided in the Partnership Agreement or
the Delaware RULPA.

The general partner may be removed with the vote of the holders of 80% of
the limited partner units. Limited Partners have voting rights only on certain
limited matters. Further, approval of actions by or involving the Partnership
may be proposed by, and generally requires the consent of, the general partner.
Limited Partners generally have no right to propose amendments to the
Partnership Agreement or to propose any Partnership action.

Duties of the General Partner. The Partnership Agreement provides that the
general partner will not be liable to the Partnership or the Limited Partners
for breach of fiduciary duty (including breach of any duty of care or any duty
of loyalty) unless the breach involves actual fraud, gross negligence or willful
or wanton misconduct. In addition, the Partnership Agreement provides that
whenever a conflict of interest arises between the general partner or its
affiliates on the one hand, and the Partnership or any of its limited partners
on the other hand (including without limitation any such conflict arising out of
any transaction involving the Partnership and its affiliates), any resolution or
course of action in respect of such conflict of interest, in the absence of bad
faith, shall not be a breach of the Partnership Agreement, any other agreement,
or any duty expressed or implied by law or equity. Where the Partnership
Agreement requires the general partner to make a decision in its discretion or
requires the general partner to act in good faith, the general partner may make
any such decision, so long as such action or decision does not constitute
willful misconduct and is reasonably believed by the general partner to be
consistent with the best interests of the Partnership.

Withdrawal and Removal of General Partner. Except under certain limited
exceptions, the general partner has agreed that it may withdraw as general
partner of the Partnership only if such withdrawal is approved by holders of a
majority of the LP Units and the general partner determines that the
Partnership's advisory agreements shall continue to be in effect (an "Assignment
Determination"), and if counsel renders an opinion that such action may be taken
without approval of all of the partners and that the limited partners will not
lose their limited liability pursuant to Delaware law or the Partnership
Agreement (a "Limited Liability Determination"), and provides certain other
opinions relating to the status of the Partnership as a partnership for federal
income tax purposes (a "Tax Determination"). The general partner may be removed
by a vote of Limited Partners holding 80% or more of all outstanding limited
partner units if a successor general partner is appointed, counsel makes a
Limited Liability Determination, a Tax Determination, the

88
<PAGE> 94

general partner makes an Assignment Determination and such removal is approved
by the successor general partner. Also, interests in the general partner may be
sold or transferred without any prior approval or consent of the holders of the
limited partner units.

Indemnification. The Partnership Agreement requires the Partnership to
indemnify the general partner, its affiliates and all of its officers,
directors, partners, employees and agents (collectively, the "Indemnitees")
against any and all proceedings in which the Indemnitees may be involved, or
threatened to be involved, as a party or otherwise by reason of their management
of the affairs of the Partnership or which relates to or arises out of the
Partnership or related entities. The Partnership Agreement provides that such
Indemnitees are not entitled to indemnification with respect to any claim, issue
or matter in which it has been adjudged liable for actual fraud, willful
misconduct or gross negligence, unless and only to the extent that the court in
which such action was brought, or another court of competent jurisdiction,
determines upon application that, despite the adjudication of liability, but in
view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnification for such liabilities and expenses as the
court may deem proper.

The Partnership Agreement also provides that the general partner will not
be liable to the Partnership or the Limited Partners for errors in judgment or
for breach of fiduciary duty (including breach of any duty of care or any duty
of loyalty) unless the general partner's action or failure to act involved an
act or omission that constitutes actual fraud, gross negligence or willful or
wanton misconduct.

Power of Attorney. Each Limited Partner and each person who executes a
Transfer Application grants to the general partner (and its successors) and the
Liquidating Trustee of the Partnership (as such term is defined in the
Partnership Agreement) an irrevocable power of attorney to execute and file
certain documents agreements and certificates in connection with, inter alia,
the formation, qualification, continuance or dissolution of the Partnership and
certain other matters.

Transfer of Units. Without the approval of the Limited Partners, the
general partner may sell or transfer its general partner interest in the
Partnership to any affiliate of the general partner that agrees to assume the
duties of the general partner and agrees to be bound by the provisions of the
Partnership Agreement. The general partner may also transfer its general partner
interest in the Partnership to a person who agrees to assume the duties of the
general partner and agrees to be bound by the provisions of the Partnership
Agreement in connection with any merger or consolidation of the general partner
or in connection with a transfer of all or substantially all of the general
partner's assets without the approval of the Limited Partners. The general
partner may not sell or transfer its general partner interest to any other
person or entity unless (i) such sale or transfer is approved by a majority of
the limited partnership unitholders, (ii) the purchaser or other transferee of
such interest is, or in connection therewith becomes, a general partner and
(iii) the general partner makes certain assignment, tax and limited liability
determinations.

Except upon the death of a Limited Partner or by operation of law, the
Partnership shall not recognize a transferee of limited partner units unless
such transferee has executed and delivered a transfer application to the general
partner. By executing and delivering a transfer application, the transferee of
limited partner units represents that it has, among other things, requested
admission as a Substituted Limited Partner (as defined by the Partnership
Agreement), executed and agreed to comply with and be bound by the Partnership
Agreement and granted the powers of attorney provided for in the Partnership
Agreement. A transferee shall be admitted to the Partnership as Limited Partner
only with the express consent of the general partner. Until and unless the
general partner consents to the transfer, the transferee will be an Assignee (as
defined by the Partnership Agreement). An Assignee shall receive allocations in
income, gains, credits, deductions, profits and losses of the Partnership
attributable to his interest in the Partnership, but shall not be entitled to
vote. After the general partner consents to the transferee, the Assignee will
become a Substituted Limited Partner.

Notwithstanding the foregoing, no transfer of any limited partner units
shall be made if such transfer would violate applicable federal and state
securities laws or would affect the Partnership's existence or qualification as
a limited partnership under Delaware law.

Amendment of the Partnership Agreement. The general partner (pursuant to
the general partner's power of attorney) without the approval of any Record
Holder (as such term is defined by the Partnership

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<PAGE> 95

Agreement), may amend the Partnership Agreement at any time to effect a broad
range of changes to the Partnership, including, among other matters, (i) changes
in its name or principal place of business, the admission, substitution or
withdrawal of partners, (ii) changes that are of an inconsequential nature and
do not adversely affect the Limited Partners in any material respect, (iii)
changes that are necessary or desirable to cure any ambiguity, to correct or
supplement any internally inconsistent provisions of the Partnership Agreement
so long as such changes do not adversely affect the Limited Partners, (iv)
changes necessary or desirable to satisfy any requirements of any opinion,
directive, order, ruling or regulation of any federal or state statute, so long
as such change is made in a manner which minimizes any adverse effect on the
Limited Partners, (v) changes necessary or desirable to facilitate the trading
of the Units or to comply with any rule, regulation, guideline or requirement of
any securities exchange, (vi) changes that are required or contemplated by the
Partnership Agreement, (vii) changes designed to promote compliance with or
continued exemption from various laws (including changes designed to ensure that
the Partnership is not treated as a corporation for federal income tax
purposes), (viii) changes in connection with the issuance of any class or series
of units or other securities of the Partnership and (ix) other changes specified
in the Partnership Agreement or those similar to those types of changes
specified therein.

Generally, if an amendment is proposed by the General Partner, it shall be
effective upon its approval by a Majority Vote unless the Partnership Agreement
requires a greater percentage.

Certain other amendments to the Amended Partnership Agreement require the
unanimous approval of the general and Limited Partners. Such approval is
required if the effect of any amendment would (i) result in the loss of limited
liability of the Limited Partners, (ii) have an effect on the provisions that
allocate distributions and profits and losses or on the voting rights of any of
the partners that is materially adverse to the Limited Partners or the general
partner or (iii) cause the Partnership to be treated as an association taxable
as a corporation for federal income tax purposes.

Voting; Meetings. Meetings of the unitholders may be called by the general
partner or by any Limited Partners holding at least 25% of the issued and
outstanding limited partnership units. Generally, no action may be taken by the
Limited Partners unitholders without a meeting duly called or without written
approval in accordance with the Partnership Agreement.

Unitholders of record on the record date set pursuant to the Partnership
Agreement will be entitled to notice of, and to vote in person or by proxy at,
Limited Partner meetings and to act with respect to matters as to which written
consents may be solicited. Any action that may be taken at a meeting of Limited
Partners may be taken without a meeting Limited Partners owning not less than
the number of Units that would be necessary to take such action at a meeting at
which all the Limited Partners were present and voted.

The holders of more than 50% of the issued and outstanding units will
constitute a quorum at such a meeting or by proxy, and, with certain exceptions,
matters submitted to Limited Partners will be determined by the affirmative vote
of the Limited Partners holding a majority of the units entitled to vote.

Issuance of Additional Units and Other Securities. The general partner is
authorized to cause the Partnership to issue limited partner units or any other
types of securities at any time or from time to time to the general partner, to
Limited Partners or to other persons and to admit them to the Partnership as
additional Limited Partners, all without any consent or approval of the Limited
Partners. Generally, any such additional issuances shall be made only after
receipt of the opinion of an investment banking firm that such issuance is fair
to the limited partners from a financial point of view. The general partner
shall have sole and complete discretion to determine the rights, powers and
duties and the consideration and terms and conditions with respect to any future
issuance of such units or securities, without the consent of the limited
partners. However, the approval of holders of a majority of outstanding limited
partnership units held by persons who are not affiliates of the general partner
shall be required in order to issue limited partner units which rank senior,
with respect to any right to receive distributions, to the units originally
issued. Additionally, under certain circumstances and conditions defined in the
Partnership Agreement, the general partner may make a distribution in limited
partner units to Record Holders, or subdivide or split limited partner units and
combine such units.

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<PAGE> 96

Subject to certain exceptions involving changes in the tax laws, any
issuance under the foregoing provisions of the Partnership Agreement shall only
be permitted if the general partner makes an Assignment Determination and a Tax
Determination.

Right to Purchase Units. The general partner and its affiliates have the
right to purchase or otherwise acquire limited partner units for their own
account and may, subject to certain provisions in the Partnership Agreement,
sell or otherwise dispose of such units.

Limited Liability. The liability of a Limited Partner units who does not
take part in the control of the business of the Partnership and who acts in
conformity with the provisions of the Partnership Agreement will generally be
limited under Delaware law to the amount of such unitholders' capital
contribution to the Partnership in respect of such unitholder's limited partner
units plus such unitholder's share of the Partnership's assets and undistributed
profits. Under certain circumstances, Limited Partners may also be liable under
Delaware law to return to the Partnership distributions from the Partnership to
the extent that at the time of the distributions after giving effect thereto,
all liabilities of the Partnership, other than liabilities to Limited Partners
on account of their interest in the Partnership, exceed the fair value of the
Partnership's assets. Generally, any such liability is not released by the sale
of limited partner units. Although the Partnership will conduct some level of
direct or indirect operations in several U.S. jurisdictions other than Delaware,
it is believed, but cannot be determined with certainty, that the limited
liability of the Limited Partners will be determined by reference to Delaware
law.

Books and Reports. The general partner is required to keep appropriate
books of the Partnership's business at the principal office of the Partnership.
The books will be maintained for financial reporting purposes on an accrual
basis in accordance with generally accepted accounting principles.

Each Limited Partner, and each Limited Partner's duly authorized
representatives, shall have the right upon reasonable notice and at reasonable
times and at such person's own expense, but only upon his written request and
for a purpose reasonably related to such person's interest as a Limited Partner,
and subject to any confidentiality limitations reasonably imposed by the general
partner in order to protect trade secrets and similar proprietary information
and to comply with applicable securities laws, to inspect and copy certain books
of the Partnership and to have access to certain other records and information
as specified in the Partnership Agreement.

As soon as practicable, but in no event later than 120 days after the close
of each year and 75 days after the close of each quarter, the general partner
shall mail to each record holder certain financial reports as specified in the
Partnership Agreement.

The general partner shall arrange for the preparation and timely filing of
all tax returns of the Partnership showing certain tax information specified in
the Partnership Agreement, and shall use all reasonable efforts to furnish such
tax information to the Record Holders within ninety days after the close of each
taxable year of the Partnership as is reasonably required by the Record Holders
for applicable income tax reporting purposes.

Events Causing Dissolution. The Partnership shall be dissolved and its
affairs wound up upon the occurrence of any of the following events: (i) the
expiration of the term of the Partnership; (ii) the withdrawal of the General
Partner or the occurrence of any other event that results in the General Partner
ceasing to be a general partner of the Partnership (other than by reason of a
transfer); (iii) the bankruptcy of the General Partner; (iv) a written
determination by the General Partner to dissolve the Partnership; or (v) the
sale by the Partnership of all or substantially all of the Partnership's assets.

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<PAGE> 97

COMPARISON OF PIMCO ADVISORS CLASS A LP UNITS
AND PARTNERSHIP LP UNITS

FORM OF ORGANIZATION
PIMCO ADVISORS

PIMCO Advisors is a limited partnership formed under DRULPA.

THE PARTNERSHIP

The Partnership is a limited partnership formed under DRULPA.

BUSINESS

PIMCO ADVISORS

The PIMCO Advisors Partnership Agreement provides that the purpose of PIMCO
Advisors is (i) to engage in the investment management and advisory business and
(ii) to engage in any other lawful activities for which limited partnerships may
be formed under DRULPA.

THE PARTNERSHIP

The Partnership Agreement provides that the purpose of the Partnership is
(i) to, through an operating partnership, engage in investment advisory services
and (ii) to engage in all other aspects of the financial services business.

VOTING RIGHTS

PIMCO ADVISORS

Under DRULPA and/or the PIMCO Advisors Partnership Agreement, limited
partners have voting rights with respect to (i) the withdrawal, removal,
transfer and replacement of a general partner, (ii) the merger or consolidation
of PIMCO Advisors with another entity, (iii) the sale of all or substantially
all of the assets owned, directly or indirectly, by PIMCO Advisors, (iv) the
dissolution of PIMCO Advisors, (v) the domestication of PIMCO Advisors, (vi)
certain types of amendments to the PIMCO Advisors Partnership Agreement, (vii)
reconstitution, (viii) election, compensation, and approval of a successor
liquidating trustee, (ix) conversion or reorganization of PIMCO Advisors into
another type of legal entity, (x) distributions of publicly traded securities,
other than upon liquidation and (xi) issuance of units which rank senior to the
Class A LP units.

THE PARTNERSHIP

Under DRULPA and/or the Partnership Agreement, limited partners have voting
rights with respect to (i) the withdrawal, removal, transfer and replacement of
a general partner, (ii) the merger or consolidation of the Partnership with
another entity, (iii) the sale of all or substantially all of the assets owned,
directly or indirectly, by the Partnership, (iv) the dissolution of the
Partnership, (v) the domestication of the Partnership, (vi) certain types of
amendments to the Partnership Agreement, (vii) reconstitution, (viii) election,
compensation, and approval of a successor liquidating trustee, (ix) conversion
or reorganization of the Partnership into another type of legal entity, (x)
distributions of publicly traded securities, other than upon liquidation, (xi)
issuance of units which rank senior to the units originally issued and (xii)
capital contribution by the Partnership to the operating partnership, if the
proceeds are to be lent by the operating partnership to an affiliate of the
general partner and if such funds are raised by the general partner causing the
partnership to issue additional units.

PIMCO ADVISORS

Each limited partner unit entitles each holder thereof who is admitted as a
limited partner of PIMCO Advisors to cast one vote on all matters presented to
limited partners.

THE PARTNERSHIP

Each limited partner unit entitles each holder thereof who is admitted as a
limited partner of the Partnership to cast one vote on all matters presented to
limited partners.

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<PAGE> 98

PIMCO ADVISORS

THE PARTNERSHIP

Approval of any matter submitted to limited partners generally requires the
affirmative vote of limited partners holding more than 50% of the units then
outstanding, except that removal of a general partner requires the vote of 80%
of the outstanding units, and amendments that would have (a) a material and
adverse effect on the limited partners, (b) would result in the loss of limited
liability of the limited partners or (c) would cause the Partnership to be
treated as an association taxable as a corporation require a unanimous vote of
the Partnership.

PIMCO ADVISORS

Only the general partner may propose amendments to the PIMCO Advisors
Partnership Agreement.

THE PARTNERSHIP

Only the general partner may propose amendments to the Partnership
Agreement.

PIMCO ADVISORS

Any action that may be taken at a meeting of Unitholders may be taken by
written consent in lieu of a meeting executed by Unitholders sufficient to
authorize such action at a meeting of Unitholders.

THE PARTNERSHIP

Any action that may be taken at a meeting of Unitholders may be taken by
written consent in lieu of a meeting executed by Unitholders sufficient to
authorize such action at a meeting of Unitholders.

DISTRIBUTIONS AND DIVIDENDS

PIMCO ADVISORS

From and after December 31, 1997, PIMCO Advisors is required to distribute
all Operating Profit Available for Distribution. Prior to December 31, 1997
PIMCO Advisors is required under the PIMCO Advisors Partnership Agreement to
distribute Operating Profit Available for Distribution to the partners of PIMCO
Advisors on a quarterly basis as follows: (i) first to the holders of Class A LP
and GP Units until such holders have received $0.47 per Unit per calendar
quarter (aggregating to $1.88 per Unit per year) since the date of the 1997
consolidation, second to holders of Class B LP Units until such holders have
received $0.47 per unit per calendar quarter on a cumulative basis within a
calendar year but not carried over from year to year and third to all holders of
units on a pro rata basis.

THE PARTNERSHIP

The Partnership is required to distribute quarterly an amount equal to the
excess of the cash distribution from the operating partnership. The
distributions shall be made in proportion to the ownership interest of each
partner.

Since the Oppenheimer Capital Merger, the Partnership's distributions have
been dependent on the distributions of PIMCO Advisors. Prior to the Oppenheimer
Capital Merger, the Partnership's distributions were dependent on the
distributions of Oppenheimer Capital.

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TAXATION

PIMCO ADVISORS

Under current law, PIMCO Advisors is not a taxpaying entity. Rather, each
holder of units includes the holder's share of the income and gain and, subject
to certain limitations, the losses, deductions and credits of PIMCO Advisors in
computing taxable income without regard to the cash distributed to the holder.
Generally, cash distributions to holders of units are not taxable, unless
distributions exceed the holder's basis in the units. See "Certain Federal
Income Tax Consequences."

THE PARTNERSHIP

Like PIMCO Advisors, the Partnership is not a taxpaying entity. Rather,
each holder of units includes the holder's share of the income and gain and,
subject to certain limitations, the losses, deductions and credits of PIMCO
Advisors in computing taxable income without regard to the cash distributed to
the holder. Generally, cash distributions to holders of units are not taxable,
unless distributions exceed the holder's basis in the units. Due to recent
legislation, the Partnership will be subject to a 3.5% federal tax (and,
possibly, additional state taxes) on its gross income derived from active
businesses after December 31, 1997. See "Certain Federal Income Tax
Consequences."

PIMCO ADVISORS

A tax-exempt limited partner's share of PIMCO Advisors' taxable income
constitutes unrelated business taxable income to the tax-exempt limited partner.
See "Certain Federal Income Tax Consequences."

THE PARTNERSHIP

A tax-exempt limited partner's share of the Partnership's taxable income
constitutes unrelated business taxable income to the tax-exempt limited partner.
See "Certain Federal Income Tax Consequences."

MANAGEMENT

PIMCO ADVISORS

PIMCO Advisors is managed by its general partners: PGP and the Partnership.
PGP has direct control of the Partnership, and therefore controls PIMCO
Advisors. Any difference arising as to any action connected with the business of
PIMCO Advisors, other than those requiring the unanimous consent of the general
partners, is decided by the general partners holding a majority of the
outstanding PIMCO GP Units.

The general partners have jointly delegated substantially all of the
management and control of PIMCO Advisors to the PIMCO Advisors Management Board
which has delegated to an Executive Committee the authority to manage most
day-to-day operations and policies of PIMCO Advisors.

THE PARTNERSHIP

The business and affairs of the Partnership are managed by its general
partner, PGP.

PIMCO ADVISORS

The general partners may be removed only by vote of 80% of the outstanding
units.

THE PARTNERSHIP

The general partner may be removed only by vote of 80% of the outstanding
units.

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POTENTIAL DILUTION

PIMCO ADVISORS

The general partners, generally without the approval of the Unitholders,
have the authority to cause PIMCO Advisors to issue additional classes or series
of limited partners interests, and has discretion to determine rights, powers
and duties and the consideration in terms and conditions with respect to any
such issuance; provided, however, that a majority of outstanding limited
partners unaffiliated with the general partner must approve any issuance of
units which rank senior to the Class A LP Units. PIMCO Advisors will not issue
any units or other equity securities unless PIMCO Advisors receives an opinion
of counsel to the effect that the issuance will not cause PIMCO Advisors to be
treated as a corporation for federal income tax purposes.

THE PARTNERSHIP

The general partner, generally without the approval of the Unitholders, has
the authority to cause the Partnership to issue additional classes or series of
limited partners' interests, and has discretion to determine the rights, powers
and duties and the consideration and terms and conditions with respect to any
such issuance; provided, however, that a majority of outstanding limited
partners unaffiliated with the general partner must approve any issuance of
units which rank senior, with respect to any right to receive distributions, to
the units originally issued. In addition, with certain exceptions, any
additional issuances shall be made only after receipt of an opinion of an
investment banking firm that such issuance is fair to the limited partners who
are not affiliates of the general partner from a financial point of view. The
Partnership will not issue any units or other equity securities unless the
general partner determines that the effect of the issuance will not cause the
Partnership to be treated as a corporation for federal income tax purposes, or
cause an "assignment" for regulatory purposes.

MEETINGS

PIMCO ADVISORS

Meetings of limited partners may be called by the general partner, any
liquidating trustee or limited partners holding at least 10% of the issued and
outstanding units.

THE PARTNERSHIP

Meetings of limited partners may be called by the general partner or
limited partners holding at least 25% of the issued and outstanding units.

CONVERSION RIGHTS

PIMCO ADVISORS

The units are not convertible into any other securities.

Following the Restructuring, Nonpublic Unitholders will have certain rights
to exchange their PIMCO Advisors units for Partnership units from time to time.

THE PARTNERSHIP

The units are not convertible into any other securities.

RIGHT TO PURCHASE UNITS

PIMCO ADVISORS

If the general partners determine that there is a substantial risk of the
partnership becoming subject to taxation on its income, the general partners may
initiate redemption transactions which will permit the exchange of some or all
of the limited partner units for interests in one or more successor entities.

THE PARTNERSHIP

If less than 10% of issued and outstanding units are units held by limited
partners, the general partner will have the right to purchase all of the units
held by limited partners for a purchase price based on the recent trading price
of the units.

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LIQUIDATION RIGHTS

PIMCO ADVISORS

In the event of the liquidation of the Partnership the assets of the
Partnership remaining after the satisfaction of all debts and liabilities of the
Partnership are distributed to limited partners pro rata in accordance with
their capital accounts.

THE PARTNERSHIP

RIGHT TO COMPEL DISSOLUTION

PIMCO ADVISORS

Under the DRULPA and the PIMCO Advisors Partnership Agreement, the limited
partners may only compel dissolution of PIMCO Advisors if all of the limited
partners consent in writing. An election by the general partners to dissolve
PIMCO Advisors may be made under certain circumstances or if approved by limited
partners holding more than 50% of the units held by persons other than the
general partners and their affiliates, voting as a single class.

THE PARTNERSHIP

Under the Partnership Agreement, limited partners may only compel
dissolution of the Partnership with the affirmative vote of 80% of the
outstanding limited partner units. A written determination by the general
partner to dissolve the Partnership will also compel liquidation.

LIMITED LIABILITY

PIMCO ADVISORS

In general, holders of units are limited partners in a Delaware limited
partnership, and do not have personal liability for obligations of PIMCO
Advisors.

THE PARTNERSHIP

In general, holders of units are limited partners in a Delaware limited
partnership, and do not have personal liability for obligations of the
Partnership.

LIQUIDITY AND MARKETABILITY

PIMCO ADVISORS

The units are transferable, provided that no transfer will be made if it
(i) would violate applicable federal and state securities laws, (ii) would cause
an "assignment" for regulatory purposes or would cause PIMCO Advisors to lose
its partnership tax treatment or (iii) would affect PIMCO Advisors' existence or
qualification as a limited partnership under the DRULPA. Following the
Restructuring, significant restrictions will be imposed on the right to transfer
units. Under the PIMCO Advisors Partnership Agreement, following the
Restructuring PIMCO Advisors units will not be transferable unless the transfer
is permitted under certain IRS regulatory safe-harbor rules for avoiding
"publicly traded partnership" tax status for PIMCO Advisors. Under such rules,
and subject to an annual volume limitation, Nonpublic Unitholders will be
entitled to exchange certain PIMCO Advisors units for Partnership Units. See
"Relationship Between the Partnership and PIMCO Advisors -- Operating
Agreement."

THE PARTNERSHIP

The units are transferable, provided that no transfer will be made if it
(i) would violate applicable federal and state securities laws or (ii) would
affect the Partnership's existence or qualification as a limited partnership
under the DRULPA.

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CONTINUITY OF EXISTENCE

PIMCO ADVISORS

The PIMCO Advisors Partnership Agreement provides for PIMCO Advisors to
continue in existence until December 31, 2086, unless earlier dissolved in
accordance with the PIMCO Advisors Partnership Agreement.

THE PARTNERSHIP

The Partnership Agreement provides for the Partnership to continue in
existence until December 31, 2061, unless earlier dissolved in accordance with
the Partnership Agreement.

FINANCIAL REPORTING

PIMCO ADVISORS

Until the Effective Date, PIMCO Advisors is subject to the reporting
requirements of the Exchange Act and files annual and quarterly reports
thereunder. After the Restructuring, PIMCO Advisors will not be subject to the
reporting requirements of the Exchange Act and will not file such reports.

THE PARTNERSHIP

The Partnership is subject to the reporting requirements of the Exchange
Act and files annual and quarterly reports thereunder.

CERTAIN LEGAL RIGHTS

PIMCO ADVISORS

Delaware law allows a limited partner, under certain circumstances, to
institute legal action on behalf of a partnership (a partnership derivative
action) to recover damages from a third party or a general partner where the
general partner has failed to institute the action. In addition, a limited
partner may have rights to institute legal action on behalf of the limited
partner or all other similarly situated limited partners (a class action) to
recover damages from a general partner for violations of fiduciary duties to the
limited partners. Limited partners may also have rights to bring actions in
federal courts to enforce federal rights.

THE PARTNERSHIP

RIGHT TO LIST OF HOLDERS; INSPECTION OF BOOKS AND RECORDS

PIMCO ADVISORS

Under DRULPA, limited partners have a right, subject to reasonable
standards as may be established by the general partner, to obtain from the
general partner, from time to time upon reasonable demand for any purpose
reasonably related to the limited partner's interest as a limited partner,
certain information relating to the status of the business and financial
condition of PIMCO Advisors, tax returns, governing instruments of PIMCO
Advisors and a current list of the partners of PIMCO Advisors, provided that the
general partner may keep confidential any trade secrets or any other information
the disclosure of which could damage PIMCO Advisors or violate any agreement or
applicable law.

THE PARTNERSHIP

Under DRULPA, limited partners have a right, subject to reasonable
standards as may be established by the general partner, to obtain from the
general partner, from time to time upon reasonable demand for any purpose
reasonably related to the limited partner's interest as a limited partner,
certain information relating to the status of the business and financial
condition of the Partnership, tax returns, governing instruments of the
Partnership and a current list of the partners of the Partnership, provided that
the general partner may keep confidential any trade secrets or any other
information the disclosure of which could damage the Partnership or violate any
agreement or applicable law.

SUBORDINATION

PIMCO ADVISORS

Subordinated to claims of creditors of PIMCO Advisors.

THE PARTNERSHIP

Subordinated to claims of creditors of the Partnership.

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of certain federal income tax consequences of
the Restructuring and the receipt, retention, and disposition of Partnership
Units. This discussion is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the Treasury Regulations thereunder and
rulings and court decisions as of the date hereof, all of which are subject to
change, possibly retroactively. Neither the Partnership nor PIMCO Advisors has
requested a ruling from the Internal Revenue Service ("IRS") in connection with
the proposed transactions.

The following discussion is for general information and does not address
all federal income tax consequences that may affect the receipt, retention or
disposition of Partnership Units, nor does the discussion specifically address
the effect of any applicable state, local, or foreign tax laws. ACCORDINGLY,
EACH PROSPECTIVE HOLDER OF PARTNERSHIP UNITS IS URGED TO CONSULT HIS OR HER TAX
ADVISOR WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX AND
REPORTING CONSEQUENCES ARISING FROM THE RECEIPT AND OWNERSHIP OF PARTNERSHIP
UNITS AS THEY MAY RELATE TO HIS OR HER TAX SITUATION.

TAX CONSEQUENCES OF THE RESTRUCTURING

The exchange of PIMCO Advisors LP Units for Partnership Units will be
treated for federal income tax purposes as a contribution of property to a
partnership in exchange for an interest in the partnership. As such, under
Section 721 of the Code, no gain or loss will recognized by the exchanging party
or the Partnership on the exchange. The exchanging party will have a tax basis
in its Partnership Units equal to the tax basis such party had in the
surrendered PIMCO Advisors LP Units and will have a holding period for the
Partnership Units that includes the holding period that it had for the
surrendered PIMCO Advisors LP Units. Furthermore, the Partnership will have a
tax basis in the contributed PIMCO Advisors LP Units equal to the tax basis of
such PIMCO Advisors LP Units in the hands of the exchanging party and will have
a holding period for the PIMCO Advisors LP Units that includes the holding
period for such PIMCO Advisors LP Units in the hands of the exchanging party.

TAX CLASSIFICATION OF THE PARTNERSHIP

Tax Classification of the Partnership Generally. In general, entities
classified as partnerships under the Code are not subject to federal income tax.
Instead, all holders of partnership interests are taxable on their allocable
share of the partnership's income or gain, whether or not such income or gain is
distributed. If an entity formed as a partnership under state law were
classified for federal income tax purposes as a corporation, income would be
taxed at the entity level at the then applicable corporate rate of tax
(currently a maximum federal marginal rate of 35%), and distributions to the
partners of such partnership would constitute taxable dividends to the extent of
current or accumulated earnings and profits of the entity.

Publicly Traded Partnership Status. As a result of amendments to the Code
made by the Revenue Act of 1987, "publicly traded partnerships" are generally
treated as corporations under the Code. If the Partnership were determined at
any time to be a "publicly traded partnership" within the meaning of Section
7704 of the Code, the Partnership would be taxable as a corporation. In this
event, the income, gain, loss, deductions and credits of the Partnership would
be reflected only on its tax return and would not be passed through to the
holder of Partnership Units. If the Partnership had positive taxable income for
any period, it would be required to pay tax on such income at applicable
corporate rates. The imposition of such tax would reduce the amount of
distributions that would ultimately be made to holders of Partnership Units. In
addition, the amount of any distributions to holders of Partnership Units would
be taxable to them as ordinary dividend income to the extent of the
Partnership's current or accumulated earnings and profits, regardless of the
source from which they were generated. Distributions in excess of the
Partnership's current or accumulated earnings and profits would be treated as a
nontaxable return of capital to the extent of the holder's tax basis in its
Partnership Units and thereafter as gain from the sale of such holder's
Partnership Units.

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Because the Partnership was publicly traded prior to the effective date of
the amendments made by the Revenue Act of 1987, the Partnership believes that it
qualifies for transition relief that was scheduled to expire on December 31,
1997. This transition relief permits the Partnership to continue to enjoy
partnership status (and not be treated as a corporation) until its first taxable
year beginning in 1998, so long as the Partnership does not add a substantial
new line of business (or otherwise cease to be taxed as a partnership without
regard to the publicly traded partnership rules) before then.

The Taxpayer Relief Act of 1997 extends the transitional relief afforded by
the Revenue Act of 1987 for an "electing 1987 partnership." Subject to the
discussion below, an "electing 1987 partnership" is exempt from the application
of the publicly traded partnership rules and therefore will continue to be taxed
as a partnership and not a corporation. An "electing 1987 partnership" is
subject to a 3.5% annual tax on its gross income from the active conduct of any
trades or businesses. For an "electing 1987 partnership" holding interests in
another partnership, gross income includes the partnership's distributive share
of any gross income from the other partnership's active conduct of a trade or
business. The 3.5% tax cannot be offset by any tax credits. An "electing 1987
partnership" is a publicly traded partnership (1) that was a publicly traded
partnership on December 17, 1987 (or which filed a registration statement with
the SEC on or before such date indicating that the partnership was to be a
publicly traded partnership), (2) that is not treated as a corporation for all
taxable years beginning after December 31, 1987 and prior to January 1, 1998 (so
long as such treatment is not determined under the "passive type income
exception" of Code Section 7704(c)(1)), and (3) that has properly elected to be
subject to Code Section 7704(g) and consents to the application of the 3.5% tax
for its first taxable year beginning after December 31, 1997. The election, once
made, applies to the tax year for which it has been made and for all subsequent
tax years, until revoked by the partnership. Consent of the Internal Revenue
Service is not needed to revoke the election, and, once revoked, the election
cannot be reinstated. Furthermore, an "electing 1987 partnership" will lose its
partnership status as of the first day after December 31, 1997 on which the
partnership adds a substantial new line of business.

The Partnership believes that it qualifies for continued exemption from the
publicly traded partnership rules, and will take all action necessary to be
characterized as an "electing 1987 partnership." Furthermore, the Partnership
does not anticipate either revoking the election or adding a substantial new
line of business. However, because characterization as a publicly traded
partnership taxable as a corporation will depend in large part upon facts
existing in the future, there can be no assurances that such characterization
will not occur.

Flow-Through of Partnership Income. Except for the 3.5% annual tax on gross
income discussed above, no federal income tax will be paid by the Partnership
itself. Instead, holders of Partnership Units will be required to report on
their federal income tax returns their allocable share of income, gains, losses,
deductions and credits of the Partnership. The characterization of any item of
profit or loss (e.g., as capital gain or loss rather than ordinary income or
loss) will generally be the same for a holder of Partnership Units as it is for
the Partnership. Tax allocations are discussed further below. Because a holder
of Partnership Units will be required to include Partnership income or gain in
gross income for tax purposes, without regard to whether there are any
distributions from the Partnership, a holder may become liable for taxes on
Partnership income or gain in excess of the cash distributions received by such
holder.

Because the activities of the Partnership are expected to consist of
holding PIMCO Advisors GP Units, and the activities of PIMCO Advisors are
expected to consist primarily of holding interests in OpCap GP and the
Investment Management Firms, the types of income that the Partnership may
realize other than with respect to the sale or other disposition of PIMCO
Advisors GP Units or interests in the Investment Management Firms is expected to
be principally operating income from the operations of Opcap GP and the
Investment Management Firms, which will be characterized as if such income were
realized directly by the holders of Partnership Units.

Calculation of Adjusted Tax Basis and Treatment of Partnership
Distributions. In general, a holder's tax basis in his Partnership Units will
generally be equal to the tax basis such holder had in the PIMCO Advisors LP
Units that were exchanged by such holder for Partnership Units in the
Restructuring (for holders contributing PIMCO Advisors LP Units to the
Partnership in exchange for Partnership Units in the

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Restructuring), increased by the amount of any contributions made by the holder
to the Partnership and by the holder's allocable share of any income of the
Partnership, and decreased by the amount of any distributions received by the
holder from the Partnership and by the holder's allocable share of any losses of
the Partnership. Increases in a holder's share of liabilities of the Partnership
(if any) are treated as contributions to the Partnership, and decreases in a
holder's share of such liabilities (if any) are treated as distributions of cash
by the Partnership to such holder.

As described above, holders of Partnership Units are subject to tax on
their allocable share of Partnership income whether or not distributed.
Generally, the receipt of cash distributions from a partnership are not taxable
to the recipient partner except to the extent that such distributions exceed the
partner's tax basis in his interest in the partnership. Cash distributions
(including deemed distributions resulting from a decrease in a partner's share
of liabilities of the partnership) in excess of a partner's tax basis in his
partnership interest are treated as gain realized from the sale or other taxable
disposition of the partnership interest Distributions of assets in kind to a
partner from a partnership generally are not taxable to either the partnership
or the recipient partner, although certain exceptions apply.

Under the Partnership Agreement, items of Partnership income, gain, loss,
deduction and credit are determined on a monthly basis and allocated to holders
who hold Partnership Units as of the last day of such monthly period.
Distributions are made to holders who hold Partnership Units on record dates
determined by the General Partner. As a result, holders who sell Partnership
Units between record dates may be allocated taxable income of the Partnership
without receiving a distribution in respect of such income. Such an allocation
would increase a holder's basis in his or her Partnership Units, however,
decreasing any gain or increasing any loss recognized on a sale of such
Partnership Units.

TAX ALLOCATIONS

Overview. As indicated above, each holder of Partnership Units must include
in taxable income his or her share of the taxable income of the Partnership.
Although the applicable tax rules are complex, it is anticipated that the
reported income of each holder of Partnership Units will generally consist of
two parts:

- first, a share of the taxable income of the Partnership calculated at the
Partnership level (using the Partnership's basis in its assets and
without the benefit of any deductions for goodwill and certain other
intangible assets that are eligible for amortization pursuant to Section
197 of the Code ("Section 197 Intangibles")), and

- second, a deduction taken ratably over 15 years for the amortization of
the portion of the original purchase price of the PIMCO Advisors LP Units
contributed to the Partnership in the Restructuring or, for holders who
purchase Partnership Units, the portion of the original purchase price
for such Partnership Units allocable to Section 197 Intangibles (which
generally will be approximately equal to the excess of the purchase price
over such holder's proportionate share of PIMCO Advisors LP's basis in
its assets, in the former case, or of the Partnership's basis in its
assets, in the latter case).

The treatment of Section 197 Intangibles is discussed further under
"Certain Additional Tax Considerations for Holders of Partnership Units." A more
detailed explanation of the relevant tax allocation rules is set forth
immediately below.

Code Sections 704(b), 704(c) and 754. There are three basic tax rules that
are relevant in determining the taxable income allocable to any holder of
Partnership Units:

First, under Code Section 704(b), taxable income of the Partnership must be
allocated among Partnership Units in a manner that reflects the allocation of
economic income. Thus, the basic allocation rule is that Partnership taxable
income will be allocated pro rata among Partnership Units.

Second, if a partner acquires an interest in a partnership in exchange for
a contribution of property to the partnership, the partnership's initial tax
basis in the contributed property may differ from the property's fair market
value at the time of the contribution. In that event, the taxable income earned
by the partnership from such property would differ from the partnership's "book
income" from the property (which would be

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calculated under tax accounting principles using as the property's initial book
value the property's fair market value at the time it was acquired by the
partnership). Under Code Section 704(c), the taxable income of a partnership
generally must be allocated among the partnership interests that were issued in
exchange for property in a way that attributes to each such partnership interest
the difference between the book income and the actual taxable income from the
property for which such interest was exchanged. Regulations allow a partnership
to use any one of a number of reasonable methods for making this adjustment. A
similar principle applies when the capital accounts for outstanding partnership
interests are adjusted to fair market value. The book/tax differences stemming
from the capital account adjustments must be allocated to the partnership
interests for which the adjustments are made. Special allocations of taxable
income made to a partnership interest under Code Section 704(c) continue to be
made even after the partnership interest is transferred to a new owner. The
foregoing rules would apply to holders of PIMCO Advisors LP Units contributing
such Units to the Partnership in exchange for Partnership Units in connection
with the Restructuring, as well as to other persons contributing property to the
Partnership in exchange for Partnership Units.

Finally, the Partnership and PIMCO Advisors each has in effect, and each
Investment Management Firm has made, Code Section 754 elections. As a result,
each purchaser of a Partnership Unit will be allowed to adjust the basis of the
Partnership's assets, solely for purposes of computing the taxable income of
such purchaser, in an amount equal to the difference between the price paid for
the Unit and the share of the Partnership's basis in its assets allocable to
that Unit. Substantially all of this adjustment is expected to be allocated to
Section 197 Intangibles with the result that purchasers generally can deduct the
amount of the adjustment ratably over 15 years. See "Certain Additional Tax
Considerations for Holders of Partnership Units" below.

Because the special allocations attributable to a Partnership Unit that are
made under Code Section 704(c) continue to be made to such Partnership Unit even
after the Partnership Unit is transferred, the rules of Code Section 704(c)
outlined above could potentially cause individual Partnership Units to be taxed
differently depending on the amount of book/tax differences allocable to such
Partnership Units.

Certain of the Partnership's allocation methods are designed to deal with
some of the practical issues that arise from operating in the form of a public
partnership. While those methods have not been specifically approved by the IRS,
and may not be in technical compliance with Code Sections 704(c) and 754, the
Partnership believes that they are consistent with the purposes of those
provisions. The IRS could challenge the allocations made by the Partnership, and
if such challenge were successful, the taxable income of some holders of
Partnership Units might be increased without any corresponding increase in cash
distributions.

Certain Limitations on Certain Losses and Deductions. Holders of
Partnership Units are not expected to be allocated losses in excess of income.
If, however, this occurs, passive activity loss rules will generally permit a
holder of Partnership Units to deduct his or her share of Partnership losses
only to the extent of passive activity income from the Partnership or against
taxable gain from the sale of Partnership Units. A variety of other provisions
(including, for example, investment interest rules, at-risk rules, and the fact
that a partner is not entitled to deduct losses in excess of such partner's
basis in his partnership interest) could also limit the ability of a holder of
Partnership Units to utilize such losses. The deduction of interest on debt used
to purchase or carry Partnership Units may also be limited.

DISPOSITION OF PARTNERSHIP UNITS

Gain or loss from a sale or other disposition of a Partnership Unit will
generally be based on the difference between the amount realized and the
adjusted tax basis for such Partnership Unit. The amount realized will include
the holder's share of Partnership liabilities. Any such gain or loss will
generally be taxable as either midterm or long-term capital gain or loss if the
holder has held the Partnership Unit for more than one year but not more than
eighteen months (in the case of mid-term capital gain or loss) or more than
eighteen months (in the case of longterm capital gain or loss). However, a
holder of Partnership Units may recognize ordinary income from sale proceeds
attributable to unrealized receivables and substantially appreciated inventory
of the Partnership ("Section 751 Assets"). Such ordinary income may exceed net
gain realized upon the sale of Units and may be recognized even if there is a
net loss on the sale of Units. Because

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amortization deductions with respect to Section 197 Intangibles will be treated
as Section 751 Assets, if such Section 197 Intangibles maintain their value,
sellers of Partnership Units who have been allocated amortization deductions
attributable to such Section 197 Intangibles will recognize ordinary income on
the sale equal to the amount of amortization deductions previously taken. If,
however, there is a loss on the sale of Partnership Units and such loss is
attributable to the decline in the value of the Section 197 Intangibles, the
loss in some circumstances might be deferred until a holder disposes of all of
his or her Partnership Units.

The IRS has ruled that a partner acquiring multiple interests in a
partnership in separate transactions at different prices must maintain an
aggregate adjusted tax basis in a single partnership interest consisting of the
combined interests in the partnership. Upon a disposition of a portion of such
single interest, the partner would, under the ruling, be required to apportion
equitably his or her aggregate tax basis between the interest sold and the
interest retained. Under this ruling, a holder of Partnership Units that had
acquired PIMCO Advisors LP Units at different prices would in effect be
precluded from selecting which Partnership Units to sell, and thereby from
selectively controlling the recognition of gain or loss.

Certain Reporting Requirements. In order to comply with Code requirements
and avoid imposition of potentially significant penalties, holders of
Partnership Units transferring any such Units, other than through a broker
subject to the provisions of Code Section 6045, must report such transfer to the
Partnership. In addition, under Code Sections 1060, 755 and related provisions,
transferors and transferees of Partnership Units must report the amount of any
basis adjustment allocated to Section 197 Intangibles. The Partnership intends
to provide holders of Partnership Units with sufficient basis allocation
information to comply substantially with applicable reporting requirements.

Any person who holds Partnership Units as a nominee for another person is
required to furnish to the Partnership: (i) the name, address and taxpayer
identification number of the beneficial owner and the nominee; (ii) certain
information relating to the status of the beneficial owner; (iii) the amount and
description of the Partnership Units held, acquired or transferred for the
beneficial owner; and (iv) certain other information including the dates of
acquisitions and transfers, means of acquisitions and transfers and the
acquisition cost for purposes, as well as the amount of net proceeds from sales.
Brokers and financial institutions are required to furnish certain additional
information on Partnership Units they acquire, hold or transfer for their own
accounts including the amount of net proceeds from sale.

TAX EXEMPT ENTITIES, FOREIGN INVESTORS AND REGULATED INVESTMENT COMPANIES

Tax-Exempt Entities. Certain entities otherwise generally exempt from
federal income taxes (such as individual retirement accounts, pension plans and
exempt organizations) are nevertheless taxed under Code Section 511 on net
unrelated business taxable income ("UBTI") in excess of $1,000, and each such
entity must file a tax return for each year in which it has $1,000 of gross
income included in computing UBTI. Most, if not all, operating income from the
Partnership is expected to be UBTI.

Foreign Investors. The rules governing the federal taxation of non-resident
alien individuals, foreign corporations, foreign partnerships or other foreign
investors ("foreign persons") are complex and no attempt is made herein to
summarize such rules. Nonetheless, because, by virtue of owning Partnership
Units, foreign persons (i) will be treated as engaged in a U.S. trade or
business, (ii) will be treated as having a permanent establishment in the United
States, (iii) may be subject to withholding on distributions at a rate of 39.6%,
(iv) if considered corporations, may be subject to a branch profits withholding
tax and (v) if individuals, will be subject to U.S. estate taxes on death,
Partnership Units may not be an appropriate investment for foreign persons.
Prospective foreign holders of Partnership Units should consult with their tax
advisors to determine the effect of United States federal, state and local tax
laws on an investment in the Partnership.

Regulated Investment Companies. Regulated investment companies are required
to derive 90% or more of their gross income from interest, dividends, gains from
the sale of stocks, securities or foreign currency or certain related income. It
is not expected that any significant amount of the Partnership's gross income
will be qualifying income for purposes of the 90% requirement.

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BACKUP WITHHOLDING

In general, information reporting requirements will apply to payments to
noncorporate holders of the proceeds of a sale of Partnership Units and "backup
withholding" at a rate of 31% will apply to such payments if the holder fails to
provide an accurate taxpayer identification number. In addition, distributions
made to or on behalf of a noncorporate holder whose Partnership Units are held
by a broker may be subject to a backup withholding tax unless the holder
complies with certain reporting requirements.

CERTAIN ADDITIONAL TAX CONSIDERATIONS FOR HOLDERS OF PARTNERSHIP UNITS

Section 197 of the Code added by the Revenue Reconciliation Act of 1993,
generally allows an amortization deduction with respect to any Section 197
Intangible acquired by the taxpayer after August 10, 1993 and held in connection
with the conduct of a trade or business. The amount of such deduction is
determined by amortizing the taxpayer's adjusted tax basis in such intangible
ratably over 15 years. Section 197 Intangibles generally include goodwill and
going concern value, among other items.

The portion of the purchase price of an interest in a partnership that is
allocable to Section 197 Intangibles will generally equal the excess of the
purchase price over a partner's proportionate share of the fair market value of
the partnership's assets that are not Section 197 Intangibles, as determined
based on the allocation methods employed by the partnership. In the present
case, the per-Partnership Unit value of such other assets could be affected by a
number of factors, including the issuance of new Partnership Units by the
Partnership. The amount allocated to Section 197 Intangibles by any holder of
Partnership Units could be reduced if the IRS were to challenge the allocation
methods used by the Partnership. See "-- Tax Allocations." Deductions from
amortization of Section 197 Intangibles will decrease the holder's tax basis in
his Partnership Units, and such deductions will be recaptured as ordinary income
upon a taxable disposition of the Partnership Units to the extent that
amortization deductions are not matched by a decline in the fair market value of
the relevant intangible assets. See "-- Disposition of Units."

LEGAL MATTERS

Richards, Layton & Finger, P.A. has delivered an opinion to the effect
that, upon the consummation of the Restructuring, the Partnership Units offered
pursuant to this Prospectus will be validly issued, fully paid and
nonassessable.

EXPERTS

The consolidated financial statements of PIMCO Advisors L.P. as of December
31, 1996 and for the year then ended and the financial statements of Oppenheimer
Capital, L.P. and the consolidated financial statements of Oppenheimer Capital
as of April 30, 1997 and 1996 and for each of the three fiscal years in the
period ended April 30, 1997, included in this Prospectus have been so included
in reliance on the reports of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of PIMCO Advisors L.P., as of
December 31, 1995 and 1994 and for each of the years then ended, included in
this Prospectus have been so included in reliance on the report of Deloitte &
Touche LLP, independent auditors, given on the authority of said firm as experts
in auditing and accounting.

AVAILABLE INFORMATION

The Partnership has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration Statement"
which term shall encompass all exhibits, annexes and schedules thereto) pursuant
to the Securities Act and the rules and regulations promulgated thereunder, with
respect to the Partnership Units described in this Prospectus and the exchange
of PIMCO Advisors LP Units for the Partnership Units in the Restructuring. This
Prospectus constitutes the Prospectus

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of the Partnership filed as part of the Registration Statement. Pursuant to the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement. Statements contained in
this Prospectus as to the contents of any agreement or other document are not
necessarily complete, and in each instance, reference is made to the copy of the
document filed as an exhibit to the Registration Statement, each such statement
being qualified by such reference.

The Partnership is, and, following the Restructuring, will be, subject to
the informational requirements of the Exchange Act and, in accordance therewith,
files reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information filed by the Partnership, and
the Registration Statement, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the Regional Offices of the Commission at 7 World
Trade Center, New York, New York 10048 and Northwest Atrium Center, 500 West
Madison, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Partnership's LP
Units are traded on the New York Stock Exchange and, therefore, reports, proxy
statements and other information concerning the Partnership can also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.

ADDITIONAL INFORMATION CONCERNING THE PARTNERSHIP AND A COPY OF THE
REGISTRATION STATEMENT MAY BE OBTAINED VIA THE INTERNET WEB SITE MAINTAINED BY
THE COMMISSION AT HTTP://WWW.SEC.GOV.

104
<PAGE> 110

INDEX TO FINANCIAL STATEMENTS

PIMCO ADVISORS, L.P.

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Report of Independent Accountants.................................................... F-1
Independent Auditors' Report......................................................... F-2
Consolidated Statements of Financial Condition of PIMCO Advisors L.P. as of September
30, 1997, December 31, 1996 and 1995............................................... F-3
Consolidated Statements of Operations of PIMCO Advisors L.P. for the nine months
ended September 30, 1997 and 1996 and for the years ended December 31, 1996, 1995
and 1994........................................................................... F-4
Consolidated Statements of Changes in Owners' Equity of PIMCO Advisors L.P. for the
nine months ended September 30, 1997 and for the years ended December 31, 1996,
1995 and 1994...................................................................... F-5
Consolidated Statements of Cash Flows of PIMCO Advisors L.P. for the nine months
ended September 30, 1997 and 1996 and for the years ended December 31, 1996, 1995
and 1994........................................................................... F-7
Notes to Consolidated Financial Statements........................................... F-8

OPPENHEIMER CAPITAL, L.P.

Report of Independent Accountants.................................................... F-20
Statements of Financial Condition of Oppenheimer Capital, L.P. as of July 31, 1997,
April 30, 1997, 1996 and 1995...................................................... F-21
Statements of Income of Oppenheimer Capital, L.P. for the fiscal quarters ended July
31, 1997 and 1996 and for the fiscal years ended April 30, 1997, 1996 and 1995..... F-22
Statements of Changes in the Partners' Capital of Oppenheimer Capital, L.P. for the
fiscal quarter ended July 31, 1997 and for the fiscal years ended April 30, 1997,
1996 and 1995...................................................................... F-23
Statements of Cash Flows of Oppenheimer Capital, L.P. for the fiscal quarters ended
July 31, 1997 and 1996 and for the fiscal years ended April 30, 1997, 1996 and
1995............................................................................... F-25
Notes to Financial Statements........................................................ F-26

OPPENHEIMER CAPITAL

Report of Independent Accountants.................................................... F-31
Consolidated Statements of Financial Condition of Oppenheimer Capital as of July 31,
1997, April 30, 1997 and 1996...................................................... F-32
Consolidated Statements of Income of Oppenheimer Capital for the fiscal quarters
ended July 31, 1997 and 1996 and for the fiscal years ended April 30, 1997, 1996
and 1995........................................................................... F-33
Consolidated Statements of Changes in the Partners' Capital of Oppenheimer Capital
for the fiscal quarter ended July 31, 1997 and for the fiscal years ended April 30,
1997, 1996 and 1995................................................................ F-34
Consolidated Statements of Cash Flows of Oppenheimer Capital for the fiscal quarters
ended July 31, 1997 and 1996 and for the fiscal years ended April 30, 1997, 1996
and 1995........................................................................... F-35
Notes to Consolidated Financial Statements........................................... F-36
</TABLE>

105
<PAGE> 111

REPORT OF INDEPENDENT ACCOUNTANTS

To the Equity Board and Partners
of PIMCO Advisors L.P.

In our opinion, the accompanying consolidated statement of financial
condition and the related consolidated statements of operations, of changes in
owners' equity and of cash flows present fairly, in all material respects, the
financial position of PIMCO Advisors L.P. and subsidiaries (the "Partnership")
at December 31, 1996, and the results of their operations and their cash flows
for the year in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

/s/ PRICE WATERHOUSE LLP

Los Angeles, California
February 14, 1997

F-1
<PAGE> 112

INDEPENDENT AUDITORS' REPORT

PIMCO Advisors L.P. and subsidiaries:

We have audited the accompanying consolidated statement of financial
condition of PIMCO Advisors L.P. and subsidiaries (the "Partnership") as of
December 31, 1995, and the related consolidated statements of operations, cash
flows, and changes in owners' equity for each of the two years ended December
31, 1995. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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, such consolidated financial statements present fairly, in
all material respects, the financial condition of the Partnership as of December
31, 1995, and the results of their operations and their cash flows for each of
the two years ended December 31, 1995, in conformity with generally accepted
accounting principles.

/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California
February 2, 1996

F-2
<PAGE> 113

PIMCO ADVISORS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ----------------------------
1997 1996 1995
-------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 33,172,652 $ 41,311,545 $ 34,915,170
Fees receivable.................................. 81,617,543 -- --
Investment advisory fees receivable:
Private accounts.............................. -- 52,261,212 45,344,158
Proprietary Funds............................. -- 9,629,075 8,413,302
Distribution and servicing fees receivable....... -- 4,382,154 3,594,534
Notes receivable................................. 1,715,071 1,569,950 1,230,168
Receivable from PIMCO Advisors Funds............. -- 462,616 337,744
Short term investments........................... 24,934,892 11,520,726 11,531,226
Other current assets............................. 2,747,079 3,924,592 2,282,895
------------ ------------ ------------
Total current assets..................... 144,187,237 125,061,870 107,649,197
Investment in StocksPLUS, L.P...................... 3,398,144 2,629,864 3,384,237
Fixed assets -- Net of accumulated depreciation and
amortization of $9,520,277, $6,979,756 and
$4,415,199....................................... 10,801,603 10,561,346 10,743,184
Intangible assets -- Net of accumulated
amortization of $103,526,109, $76,519,260 and
$40,510,128...................................... 180,815,838 207,822,687 243,831,819
Other non current assets........................... 26,525,291 12,424,534 3,983,358
------------ ------------ ------------
Total assets............................. $ 365,728,113 $358,500,301 $369,591,795
============ ============ ============
LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
Accounts payable and accrued expenses............ $ 24,187,295 $ 13,841,641 $ 8,132,005
Commissions payable.............................. -- 8,435,048 6,450,407
Payable to affiliates............................ -- -- --
Accrued compensation............................. 53,085,409 26,027,732 21,246,685
Other current liabilities........................ -- 11,537,236 1,457,800
------------ ------------ ------------
Total current liabilities................ 77,272,704 59,841,657 37,286,897
Other non current liabilities...................... 9,479,234 2,415,883 748,265
------------ ------------ ------------
Total liabilities........................ 86,751,938 62,257,540 38,035,162
------------ ------------ ------------
Partners' Capital:
General Partner (800,000 units issued and
outstanding).................................. 2,691,047 2,986,983 3,456,973
Class A Limited Partners (40,146,155, 40,146,155
and 40,121,155 units issued and
outstanding).................................. 192,413,535 205,420,612 228,465,440
Class B Limited Partners (32,992,531, 32,960,826
units issued and outstanding)................. 90,958,450 98,369,570 114,806,204
Unamortized compensation......................... (7,086,857) (10,534,404) (15,171,984)
------------ ------------ ------------
Total Partners' Capital.................. 278,976,175 296,242,761 331,556,633
------------ ------------ ------------
Total Liabilities and Partners'
Capital................................ $ 365,728,113 $358,500,301 $369,591,795
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 114

PIMCO ADVISORS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE FOR THE
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, --------------------------------------------
1997 1996 1996 1995 1994
------------- ------------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Investment advisory fees:
Private accounts....................... $ 182,364,963 $ 156,571,557 $213,852,081 $192,702,939 $126,913,420
Proprietary Funds...................... 119,875,646 94,575,782 128,855,694 90,772,988 48,822,835
Distribution and servicing fees.......... 40,316,623 35,185,219 48,182,499 38,240,015 4,288,702
Other.................................... 1,652,823 828,408 1,134,108 1,297,933 238,208
------------ ------------ ------------ ------------ ------------
Total revenues.................... 344,210,055 287,160,966 392,024,382 323,013,875 180,263,165
------------ ------------ ------------ ------------ ------------
Expenses:
Compensation and benefits................ 151,560,373 128,119,778 173,526,137 149,163,906 117,197,986
Amortization of intangibles, Restricted
Unit and Option Plans.................. 30,999,737 30,852,315 -- -- --
Commissions.............................. 32,188,873 27,480,251 37,738,954 28,743,396 2,877,497
Restricted Unit and Option Plans......... -- -- 5,162,268 6,713,664 1,162,143
Marketing and promotional................ -- -- 10,981,804 9,066,414 6,594,546
Occupancy and equipment.................. 7,482,631 6,932,010 9,195,606 8,662,499 4,342,777
General and administrative............... 18,834,411 13,019,473 17,629,876 11,433,726 5,842,962
Insurance................................ -- -- 2,621,086 2,799,795 1,118,651
Professional fees........................ -- -- 5,472,729 3,164,410 3,899,758
Amortization of intangible assets........ -- -- 36,009,132 36,009,132 5,039,680
Other.................................... 22,505,987 15,423,389 4,812,078 2,236,996 3,345,535
------------ ------------ ------------ ------------ ------------
Total expenses.................... 263,572,012 221,827,216 303,149,670 257,993,938 151,421,535
------------ ------------ ------------ ------------ ------------
Operating income........................... 80,638,043 65,333,750 88,874,712 65,019,937 28,841,630
Equity in income of StocksPLUS, L.P...... (350,614) 173,556 271,187 225,670 10,722
Other income, net........................ 3,599,429 2,227,716 3,183,699 3,738,980 1,072,221
------------ ------------ ------------ ------------ ------------
Income before income tax expense......... 83,886,858 67,735,022 92,329,598 68,984,587 29,924,573
Income tax expense....................... 1,225,610 833,554 1,201,417 517,133 10,669,295
------------ ------------ ------------ ------------ ------------
Net income................................. $ 82,661,248 $ 66,901,468 $ 91,128,181 $ 68,467,454 $ 19,255,278
============ ============ ============ ============ ============
Net income allocated to:
General Partner.......................... $ 849,602 $ 770,361 $ 1,034,010 $ 912,890 $ 97,522
Class A Limited Partner units............ 44,479,115 38,651,130 51,881,756 45,742,775 4,878,336
Class B Limited Partner units............ 37,332,531 27,479,977 38,212,415 21,811,789 1,128,234
Pre-Consolidation........................ -- -- -- -- 13,151,186
------------ ------------ ------------ ------------ ------------
Total............................. $ 82,661,248 $ 66,901,468 $ 91,128,181 $ 68,467,454 $ 19,255,278
============ ============ ============ ============ ============
Net income per unit (Post-Consolidation):
Net income per General Partner and Class A
Limited Partner units.................... $ 1.06 $ 0.96 $ 1.29 $ 1.16 $ 0.12
============ ============ ============ ============ ============
Net income per Class B Limited Partner
unit..................................... $ 1.06 $ 0.76 $ 1.05 $ 0.59 $ 0.03
============ ============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 115

PIMCO ADVISORS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK FOREIGN GENERAL PARTNER
---------------- PAID-IN RETAINED CURRENCY ---------------------
SHARES AMOUNT CAPITAL EARNINGS TRANSLATION UNITS AMOUNT
------ ------- ------------ ------------ ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1994......... 1,000 $ 1,000 $ 10,843,146 $ 14,978,001 $ (812) -- --
Net income...................... 13,151,186 $ 97,522
PFAMCo Group capital
contributions................. 7,775,000
Dividends....................... (9,200,000)
Translation adjustment.......... (50,427)
Deemed dividend, net............ (6,559,420) (8,625,011)
Conversion to partnership....... (1,000) (1,000) (12,058,726) (10,304,176) 51,239 800,000 318,182
TAG contributed capital.........
Goodwill from acquisition....... 3,447,579
Proceeds from Primary
Offering......................
Amended Option Plan grants
(total award).................
Restricted Unit Plan grants
(total award).................
Vesting of options and
restricted units..............
------ ------- ------------ ------------ -------- ------- -----------
Balances, December 31, 1994....... -- -- -- -- -- 800,000 3,863,283
Net income...................... 912,890
Distributions................... (1,319,200)
Exercise of unit options........
Balance of proceeds -- Primary
offering......................
Vesting of options and
restricted units..............
------ ------- ------------ ------------ -------- ------- -----------
Balances, December 31, 1995....... -- -- -- -- -- 800,000 3,456,973
Net income...................... 1,034,010
Distributions................... (1,504,000)
Restricted Unit Plan grants.....
Vesting of options and
restricted units..............
------ ------- ------------ ------------ -------- ------- -----------
Balances, December 31, 1996....... -- -- -- -- -- 800,000 2,986,983
====== ======= ============ ============ ======== ======= ===========
Net income...................... 832,054
Distributions................... (1,128,000)
Restricted Unit Plan grants.....
Vesting of options and
restricted units..............
------ ------- ------------ ------------ -------- ------- -----------
Balances, September 30, 1997...... -- $ -- $ -- $ -- $ -- 800,000 $ 2,619,047
====== ======= ============ ============ ======== ======= ===========
</TABLE>

(Continued)

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 116

PIMCO ADVISORS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY (CONTINUED)

<TABLE>
<CAPTION>
CLASS A LIMITED PARTNERS CLASS B LIMITED PARTNERS
------------------------- ------------------------- UNAMORTIZED TOTAL
UNITS AMOUNT UNITS AMOUNT COMPENSATION OWNER'S EQUITY
---------- ------------ ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1994....... -- -- -- -- -- $ 25,821,335
Net income.................... $ 43,599,002 $ 1,128,234 19,255,278
PFAMCo Group capital
contributions............... 7,775,000
Dividends..................... (9,200,000)
Translation adjustment........ (50,427)
Deemed dividend, net.......... (15,184,431)
Conversion to partnership..... 23,775,000 13,088,231 24,575,000 8,906,250 --
TAG contributed capital....... 14,918,155 9,644,238 8,260,826 1,990,739 11,634,977
Goodwill from acquisition..... 167,285,821 101,459,864 272,193,264
Proceeds from Primary
Offering.................... 1,200,000 19,972,951 19,972,951
Amended Option Plan grants
(total award)............... 31,135,761 $(18,987,077) 12,148,684
Restricted Unit Plan grants
(total award)............... 125,000 2,368,750 125,000 1,691,964 (4,060,714) --
Vesting of options and
restricted units............ 1,162,143 1,162,143
---------- ------------ ---------- ------------ ------------ -------------
Balances, December 31, 1994..... 40,018,155 248,374,088 32,960,826 115,177,051 (21,885,648) 345,528,774
Net income.................... 45,742,775 21,811,789 68,467,454
Distributions................. (66,110,962) (22,182,636) (89,612,798)
Exercise of unit options...... 103,000 374,920 374,920
Balance of proceeds -- Primary
offering.................... 84,619 84,619
Vesting of options and
restricted units............ 6,713,664 6,713,664
---------- ------------ ---------- ------------ ------------ -------------
Balances, December 31, 1995..... 40,121,155 228,465,440 32,960,826 114,806,204 (15,171,984) 331,556,633
Net income.................... 51,881,756 38,212,415 91,128,181
Distributions................. (75,451,272) (54,649,049) (131,604,321)
Restricted Unit Plan grants... 25,000 524,688 (524,688) --
Vesting of options and
restricted units............ 5,162,268 5,162,268
---------- ------------ ---------- ------------ ------------ -------------
Balances, December 31, 1996
(unaudited)................... 40,146,155 205,420,612 32,960,826 98,369,570 (10,534,404) 296,242,761
Net income.................... 43,544,000 38,230,182 82,661,248
Distributions................. (56,606,079) (46,307,763) (104,041,842)
Restricted Unit Plan grants... -- 31,030 666,461 (545,342) 121,119
Vesting of options and
restricted units............ -- 3,992,889 3,992,889
---------- ------------ ---------- ------------ ------------ -------------
Balances, September 30, 1997.... 40,196,155 $192,413,535 32,991,856 $ 90,958,450 $ (7,086,857) $ 278,976,175
========== ============ ========== ============ ============ =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 117

PIMCO ADVISORS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE FOR THE
NINE MONTHS NINE MONTHS
ENDED ENDED FOR THE YEARS ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, -------------------------------------------
1997 1996 1996 1995 1994
------------- ------------- ------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.......................................... $ 82,661,248 $ 66,901,468 $ 91,128,181 $ 68,467,454 $ 19,255,278
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 32,315,605 29,553,183 40,916,431 38,972,101 6,339,107
Issuance of restricted units in lieu of directors
fees............................................ 121,119 -- -- -- --
Deferred income taxes............................. -- -- 734,836 270,000 804,116
Amortization of compensation plan................. -- -- -- -- 663,697
Restricted Unit and Option Plans.................. 3,992,888 3,845,466 5,162,268 6,713,664 1,162,143
Unrealized loss (gain) on investments............. (1,256,708) 150,348 53,879 (198,396) (135,376)
Equity in income of StocksPLUS, L.P............... 350,614 (173,556) (271,187) (225,670) (10,722)
Change in operating assets and liabilities:
Change in fees receivable......................... (15,345,101) (5,622,393) (8,920,447) (28,217,386) 7,919,554
Change in receivable from PIMCO Advisors Funds.... -- -- (124,872) 865,614 (618,123)
Change in other assets............................ (14,843,417) (5,495,334) (11,676,643) (3,398,979) (10,838,869)
Change in accounts payable and accrued expenses... (9,626,630) 13,492,355 5,709,636 941,302 (660,816)
Change in commissions payable..................... -- -- 1,984,641 1,714,200 2,413,750
Change in accrued compensation.................... 27,057,677 17,330,853 4,781,047 7,859,345 8,423,141
Change in other liabilities....................... 7,063,351 (56,043) 11,012,219 (1,003,184) (649,686)
Change in payable to affiliates................... -- -- -- (5,841,256) (6,877,311)
Other............................................. 10,910 (43,687) (43,686) 1,811 (1,337,755)
------------ ------------ ------------ ----------- -----------
Net cash provided by operating activities........... 112,501,556 119,882,460 140,446,303 86,920,620 25,852,128
------------ ------------ ------------ ----------- -----------
Cash flows from investing activities:
Purchases of investments.......................... (45,712,557) (517,227) (694,498) (11,334,021) (52,601,192)
Proceeds from sales of investments................ 35,201,306 783,570 783,570 -- 62,247,248
Return of investment in StocksPLUS, L.P........... -- -- 1,600,000 -- --
Investment in StocksPLUS, L.P..................... (2,765,100) (800,000) (700,000) (400,000) --
Cash of acquired entities......................... -- -- -- -- 14,698,855
Proceeds from sale of fixed assets................ 3,000 621,387 644,978 309,575 --
Purchase of fixed assets.......................... (2,804,725) (2,394,268) (3,446,152) (5,982,054) (1,826,800)
Notes receivable advances......................... (520,531) (676,737) (633,505) (364,823) (117,232)
------------ ------------ ------------ ----------- -----------
Net cash (used in) provided by investing
activities........................................ (16,598,607) (2,983,275 (2,445,607) (17,771,323) 22,400,879
------------ ------------ ------------ ----------- -----------
Cash flows from financing activities:
Proceeds from primary offering.................... -- -- -- -- 19,972,951
Cash distributions................................ (104,041,842) (97,560,217) (131,604,321) (89,612,798) --
Unit options exercised............................ -- -- -- 374,920 --
Dividends......................................... -- -- -- -- (22,521,573)
------------ ------------ ------------ ----------- -----------
Net cash used in financing activities............... (104,041,842) (97,560,217) (131,604,321) (89,237,878) (2,548,622)
------------ ------------ ------------ ----------- -----------
Net increase (decrease) in cash and cash
equivalents....................................... (8,138,893) 19,338,968 6,396,375 (20,088,581) 45,704,385
Cash and cash equivalents, beginning of year........ -- -- 34,915,170 55,003,751 9,299,366
Cash and cash equivalents, beginning of period...... 41,311,545 34,915,170 -- -- --
------------ ------------ ------------ ----------- -----------
Cash and cash equivalents, end of year.............. $ -- $ -- $ 41,311,545 $ 34,915,170 $ 55,003,751
Cash and cash equivalents, end of period............ 33,172,652 54,254,138 -- -- --
============ ============ ============ =========== ===========
Supplemental schedule of non-cash financing
activities:
Reduction of payable to affiliates by capital
contribution.................................... $ -- $ -- $ -- $ -- $ 7,775,000
============ ============ ============ =========== ===========
Deemed dividend................................... $ -- $ -- $ -- $ -- $ 1,862,858
============ ============ ============ =========== ===========
Supplemental disclosures:
Income taxes paid................................. $ 279,710 356,232 $ 447,724 $ 405,542 $ 15,004,148
============ ============ ============ =========== ===========
Interest paid..................................... $ 67,083 $ -- $ -- $ 18,750 $ 209,171
============ ============ ============ =========== ===========
Fair value of non-cash assets acquired............ $ -- $ -- $ -- $ -- $ 27,995,376
============ ============ ============ =========== ===========
Liabilities assumed............................... $ -- $ -- $ -- $ -- $ 24,642,727
============ ============ ============ =========== ===========
Non-cash assets excluded from the consolidation... $ -- $ -- $ -- $ -- $ 46,431,262
============ ============ ============ =========== ===========
Liabilities transferred excluded from the
consolidation................................... $ -- $ -- $ -- $ -- $ 31,748,537
============ ============ ============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE> 118

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

PIMCO Advisors L.P. ("PIMCO Advisors") is a registered investment advisor
that provides a broad array of investment management and advisory services to
institutional and retail mutual funds and to separate accounts of institutional
clients. PIMCO Advisors operates in one industry segment, that of investment
management services.

PIMCO Advisors was formed on November 15, 1994, when Pacific Financial
Asset Management Group ("PFAMCo Group") merged (the "Consolidation") certain of
its investment management businesses and substantially all of its assets into
Thomson Advisory Group L.P. ("TAG"). The PFAMCo Group comprised Pacific
Financial Asset Management Corporation ("PFAMCo"), a wholly-owned subsidiary of
Pacific Mutual Life Insurance Company ("Pacific Mutual"), and certain of its
wholly-owned investment management subsidiaries. The businesses of PFAMCo Group
contributed to PIMCO Advisors were then contributed to newly formed subsidiaries
of PIMCO Advisors.

For the period after the Consolidation, the accompanying consolidated
financial statements include the accounts of PIMCO Advisors and its
subsidiaries. The investment advisor subsidiaries included in these consolidated
financial statements are as follows:

- PACIFIC INVESTMENT MANAGEMENT COMPANY ("Pacific Investment Management")
manages a variety of predominantly fixed income portfolios primarily for
institutions and mutual funds;

- COLUMBUS CIRCLE INVESTORS ("CCI") manages primarily equity securities
using a Positive Momentum/Positive Surprise approach, principally for
institutions and mutual funds;

- CADENCE CAPITAL MANAGEMENT ("Cadence") specializes in disciplined,
growth oriented management of equity securities primarily for
institutions and mutual funds;

- PARAMETRIC PORTFOLIO ASSOCIATES ("Parametric") specializes in highly
quantitative management of domestic and international equity portfolios
primarily for institutions and mutual funds;

- NFJ INVESTMENT GROUP ("NFJ") is a value-oriented manager of equity
securities primarily for institutions and mutual funds; and

- BLAIRLOGIE CAPITAL MANAGEMENT ("Blairlogie") specializes in
international equity securities from its office in Edinburgh, Scotland,
primarily for institutions and mutual funds.

The investment advisor subsidiaries are supported by additional
incorporated subsidiaries:

- PIMCO FUNDS DISTRIBUTION COMPANY (formerly PIMCO Advisors Distribution
Company) ("PFD") serves as the distributor of institutional and retail
mutual funds (the "Proprietary Funds") for which PIMCO Advisors and the
investment advisor subsidiaries provide investment management and
administrative services;

- STOCKSPLUS MANAGEMENT, INC. ("StocksPLUS"), a wholly-owned subsidiary of
Pacific Investment Management, owns approximately 0.125 percent interest
in, and is the general partner of StocksPLUS, L.P. (Note 12); and

- COLUMBUS CIRCLE TRUST COMPANY ("CCTC"), a non bank trust company and
wholly owned subsidiary of CCI, established in November 1995, which
commenced business in January 1996.

Pacific Investment Management, CCI, Cadence, Parametric, NFJ and Blairlogie
are registered investment advisors. PFD is a registered broker/dealer with the
Securities and Exchange Commission and a member of the National Association of
Securities Dealers, Inc.

F-8
<PAGE> 119

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Prior to January 17, 1997, institutional mutual funds managed consisted of
two open-end investment management companies. One series included 18
predominantly fixed income funds. The other series included 12 predominantly
equity funds. The retail mutual funds managed consisted of 17 funds included
within two open-end investment management companies, the PIMCO Advisors Funds
("PAF"), formerly the Thomson Funds, and the Cash Accumulation Trust ("CAT").
With Trustee and shareholder approval, the fund groups were combined into a
single mutual fund complex, the PIMCO Funds, in January 1997, consisting of 41
funds offering retail and institutional share classes.

The accompanying consolidated financial statements for the period prior to
the Consolidation include the accounts of PFAMCo and its wholly-owned
subsidiaries, reflected on a combined basis.

2. SIGNIFICANT ACCOUNTING POLICIES

a. Cash And Cash Equivalents -- PIMCO Advisors invests certain cash
balances in money market funds. At December 31, 1996, this investment is
approximately $25,429,000, of which approximately $814,000 is invested in the
National Money Market Fund of CAT, approximately $595,000 is invested in the
PIMCO Advisors Money Market Fund and approximately $24,020,000 is invested in
non affiliate money market funds. At December 31, 1995, this investment was
approximately $20,844,000, of which approximately $5,738,000 was invested in the
National Money Market Fund of CAT, approximately $4,284,000 was invested in the
PIMCO Advisors Money Market Fund and approximately $10,822,000 was invested in
non affiliate money market funds. Management considers investments in money
market funds to be cash equivalents for purposes of the Consolidated Statements
of Cash Flows. These investments are carried at cost, which approximates market.

b. Investment Advisory Fees -- PIMCO Advisors records investment advisory
fees on an accrual basis. Investment advisory fees receivable for private and
separate accounts consist primarily of accounts billed on a quarterly basis.
Private accounts may also generate a fee based on investment performance, which
is recorded as income when earned and not subject to forfeiture. Investment
advisory fees for the Proprietary Funds are received monthly.

c. Short Term Investments -- The short term investments, as of December
31, 1996 and 1995, are primarily invested in the PIMCO Funds with a short-term
duration objective. The investments are carried at market value. Cost
approximated market value as of December 31, 1996 and 1995.

d. Depreciation and Amortization -- Office equipment, furniture and
fixtures are depreciated on a straight-line basis over their estimated useful
lives, generally five years. Automobiles are depreciated on a straight-line
basis over their estimated lives, generally three years. Leasehold improvements
are amortized on a straight-line basis over the remaining terms of the related
leases or the useful lives of such improvements, whichever is shorter.

e. Other Assets -- Effective May 29, 1995, PFD commenced sale of a "B"
class of mutual fund shares. Under this share structure PFD advances commissions
to independent brokers and is entitled to recoup its marketing costs through an
ongoing fee stream from the respective funds or contingent deferred sales
charges collected from the share purchaser. Such fees are capitalized as
deferred sales charges and amortized on a straight line basis as commission
expense over a period of 60 months. Deferred unamortized marketing costs of
approximately $11,100,000 and $3,600,000 are included in other assets at
December 31, 1996 and 1995, respectively.

f. Income Taxes -- Subsequent to the Consolidation, PIMCO Advisors and its
subsidiaries are predominantly partnerships and, as a result, are generally not
subject to Federal or state income taxes. PIMCO Advisors is subject to an
unincorporated business tax in a certain jurisdiction in which it operates. All
partners of PIMCO Advisors are responsible for taxes, if any, on their
proportionate share of Pimco Advisors' taxable income. Certain corporate
subsidiaries are subject to Federal and state income taxes and file separate tax

F-9
<PAGE> 120

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

returns and account for income taxes under Statement of Financial Accounting
Standards No. 109 ("FASB 109"). The provision for income taxes is determined
using the liability method which gives recognition to deferred tax assets and
liabilities based on the expected future tax consequences of events that have
been recognized in the financial statements or tax returns. In estimating future
tax consequences, FASB 109 generally requires the consideration of all expected
future events other than enactments of changes in the tax law or rates.

g. Foreign Currency Translation -- The assets and liabilities of
Blairlogie, PFAMCo UK Limited and Blairlogie's predecessor company have been
translated into U.S. dollars at the current rate of exchange existing at
year-end. Revenues and expenses were translated at the average of the monthly
exchange rates then in effect.

h. Net Income Allocation -- Net income is allocated in accordance with the
Amended and Restated Agreement of Limited Partnership of PIMCO Advisors. Net
income is allocated among unit holders in the same proportions as cash
distributions. PIMCO Advisors cash distribution policy provides for a first
priority distribution to General Partner and Class A Limited Partner Units
($1.88 per year through December 31, 1997) followed by a second priority
distribution to Class B Limited Partner Units. During the years ended December
31, 1996 and 1995, the second priority distribution was less than the first
priority distribution.

i. Earnings Per Unit -- Earnings per unit are computed based on the
weighted average number of units outstanding, assuming the exercise of dilutive
unit options. Proceeds from the exercise of such unit options are assumed to be
used to repurchase outstanding Limited Partner units under the treasury stock
method. The weighted average number of units used to compute earnings per unit
was as follows:

<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
General Partner and Class A Limited Partner
units........................................ 42,501,469 42,127,833 41,802,420
Class B Limited Partner units.................. 34,513,573 33,425,537 32,960,826
</TABLE>

j. Other -- Certain items have been reclassified to conform with the
current year presentation. All significant intercompany items have been
eliminated in the accompanying consolidated financial statements.

k. Use of Estimates in the Preparation of Financial Statements -- The
financial statements have been prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.

3. INTANGIBLE ASSETS

For accounting purposes, the Consolidation between PFAMCo Group and TAG is
treated as a purchase and recapitalization of TAG by PFAMCo Group, or a "reverse
acquisition." Intangible assets of approximately $284.9 million represented the
excess of the purchase price over the fair value of the net tangible assets of
TAG deemed acquired in the Consolidation. A portion of the intangible assets
represents the value assigned to PIMCO Advisor's Master Limited Partnership
("MLP") structure. Under current Internal Revenue code guidelines, an MLP is
exempt from Federal and most state and local income taxes through December 31,
1997. The value attributed to the MLP structure will be amortized over the
period ending December 31, 1997. The remainder will be amortized on a straight-
line basis over its estimated life of twenty years. During the years ended
December 31, 1996, 1995 and 1994, approximately $36,000,000, $36,000,000 and
$5,000,000 of amortization have been charged to expense, respectively.

F-10
<PAGE> 121

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. SUPPLEMENTARY FINANCIAL DATA

The following supplementary financial data presents the actual results of
operations for 1996 and 1995 and the unaudited pro forma results of operations
for 1994 as if the Consolidation discussed in Note 1 had occurred on January 1,
1993, except for the period from November 15, 1994 through December 31, 1994
which reflects actual results. The 1994 pro forma operating results give effect
to:

(a) The Consolidation of PFAMCo Group and TAG;

(b) The amendment of existing options under TAG's 1993 Unit Option Plan;

(d) The contribution of PFD to PIMCO Advisors in exchange for Class A
Limited Partner Units; and

(e) Certain transactions effected by PFAMCo Group and TAG in connection
with the Consolidation, primarily related to intangible amortization
and profit sharing.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
(ACTUAL) (ACTUAL) (PRO FORMA)
-------- -------- -----------
(AMOUNTS IN THOUSANDS,
EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C>
Revenues:
Investment advisory............................. $338,341 $281,610 $ 231,475
PFD............................................. 53,683 41,404 37,629
-------- -------- --------
$392,024 $323,014 $ 269,104
======== ======== ========
Expenses:
Investment advisory............................. 207,203 171,272 137,246
PFD............................................. 52,522 40,552 36,435
Amortization of intangibles, options and
restricted units............................. 41,171 42,723 40,713
-------- -------- --------
300,896 254,547 214,394
-------- -------- --------
Net income........................................ $ 91,128 $ 68,467 $ 54,710
======== ======== ========
Net income per General Partner and Class A Limited
Partner unit.................................... $ 1.29 $ 1.16 $ 1.08
======== ======== ========
</TABLE>

The pro forma information above is not intended to reflect the results that
actually would have been obtained if the operations were consolidated during the
periods presented.

5. NOTES RECEIVABLE

Pacific Investment Management and PIMCO Advisors have granted loans to
certain employees as part of programs designed to ensure the long-term retention
of those employees. These loans are primarily non-interest bearing and are
generally due within one year of issuance.

F-11
<PAGE> 122

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. FIXED ASSETS

The major classifications of fixed assets are as follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Office equipment, furniture and fixtures.................. $12,827,368 $ 9,548,212
Automobiles............................................... 9,069 836,152
Leasehold improvements.................................... 4,704,665 4,774,019
----------- -----------
Total fixed assets........................................ 17,541,102 15,158,383
Less accumulated depreciation and amortization............ 6,979,756 4,415,199
----------- -----------
Fixed assets, net......................................... $10,561,346 $10,743,184
=========== ===========
</TABLE>

Fixed assets of certain of the subsidiaries were revalued at their
estimated fair market value in connection with the Consolidation.

7. INCOME TAXES

Subsequent to the Consolidation, only certain subsidiaries are subject to
income taxes directly. The total income tax provision for the affected
subsidiaries is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995
---------- --------
<S> <C> <C>
Current expense:
State...................................................... $ 163,669 $105,724
Federal.................................................... 295,215 159,440
Deferred expense:
State...................................................... 197,970 68,378
Federal.................................................... 544,563 183,591
---------- --------
$1,201,417 $517,133
========== ========
</TABLE>

Prior to the Consolidation, PFAMCo's operations and those of its domestic
subsidiaries were included in the combined domestic Federal income tax returns
of Pacific Mutual. PFAMCo's operations and its domestic subsidiaries were
included in the combined California franchise tax return of Pacific Financial
Holding Company ("PFHC"), the parent of PFAMCo. Certain subsidiaries filed
separate state income or franchise tax returns. PFAMCo and its domestic
subsidiaries were allocated an expense or a benefit based principally on the
effect of including their operations in the combined provision as if the
companies filed a separate return in accordance with a tax sharing agreement
between PFAMCo and PFHC.

The provision for taxes prior to the Consolidation was as follows:

<TABLE>
<CAPTION>
PERIOD
ENDED
NOVEMBER 15,
1994
-----------
<S> <C>
Current expense:
State................................................................. $ 2,140,509
Federal............................................................... 7,705,429
Deferred expense:
State................................................................. 156,960
Federal............................................................... 647,147
-----------
$10,650,045
===========
</TABLE>

F-12
<PAGE> 123

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

After the Consolidation, PIMCO Advisors incurred a tax liability of $19,250
in 1994 principally related to the activities of a corporate subsidiary.

Reconciliations of the statutory Federal income tax rates to the effective
income tax rates prior to the Consolidation are as follows:

<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 15,
1994
------------
<S> <C>
Statutory Federal income tax rate applied to income before
Federal income taxes.......................................... 35.0%
State taxes, net of Federal benefit............................. 6.1
Foreign operations.............................................. 3.1
Other........................................................... 0.5
----
Effective income tax rate....................................... 44.7%
====
</TABLE>

8. RELATED-PARTY TRANSACTIONS

Pacific Mutual provided certain support services to PFAMCo Group prior to
the Consolidation. Services for certain of PFAMCo Group's employees include
participation in a pension plan maintained by Pacific Mutual (Note 9g). Charges
for support services, including pension plan participation, amounted to
approximately $2,335,000 for the period ended November 15, 1994.

9. BENEFIT PLANS

a. Profit Sharing and Incentive Programs -- PIMCO Advisors and its
subsidiaries have several profit sharing and incentive programs that compensate
participants on the basis of profitability and discretionary bonuses.
Compensation under these programs was approximately $114,139,000 and $94,487,000
for the years ended December 31, 1996 and 1995, respectively, and was
approximately $10,091,000 for the period from the Consolidation through December
31, 1994. PFAMCo Group had nonqualified profit sharing plans (the "Profit
Sharing Plans") covering certain key employees and other employees. The Profit
Sharing Plans provided for awards based on the profitability of the respective
subsidiary. Such profitability was primarily based on income before income taxes
and before profit sharing. The awards ranged from 40% to 80% of such amounts
depending on the level of profitability. Profit sharing awards were fully vested
at the date of the Consolidation. Profit sharing expense relating to the Profit
Sharing Plans of approximately $68,387,000 is included in compensation and
benefits in the accompanying Consolidated Statements of Operations for the
period ended November 15, 1994.

b. Long Term Compensation -- Long term compensation includes amounts
payable to certain officers of a subsidiary in connection with the discretionary
bonuses discussed above. The amounts payable will be paid on specified dates and
are subject to cancellation upon the occurrence of certain events. In addition,
certain key employees of the PFAMCo subsidiaries participated in Long-Term
Incentive Plans that provided compensation under the Profit Sharing Plans for a
specified period of time subsequent to their termination of employment. These
plans were terminated as of the Consolidation.

c. Executive Deferred Compensation Plan -- PIMCO Advisors and its
subsidiaries have a nonqualified deferred compensation plan pursuant to which a
portion of the compensation otherwise payable to certain eligible employees will
be mandatorily deferred, and pursuant to which such eligible employees may elect
to defer additional amounts of compensation. The plan is unfunded and is
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, within the meaning
of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended. Amounts deferred under the plan are held in a
trust and invested by the trustee in Class A Limited Partner Units. PIMCO
Advisors will contribute additional funds or Class A Limited Partner Units to
the trust such that the average purchase price of all units acquired at that
date is not

F-13
<PAGE> 124

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

greater than 85% of the then current market price for such units. No expense was
incurred in 1996 related to this plan.

d. Savings and Investment Plans -- PIMCO Advisors and its subsidiaries
have several defined contribution employee benefit plans covering substantially
all employees. PIMCO Advisors and Pacific Investment Management are the sponsors
of certain defined contribution employee savings and investment plans. The plans
qualify under Section 401(k) of the Internal Revenue Code and allow eligible
employees of PIMCO Advisors and certain of its subsidiaries, to contribute up to
ten percent of their annual compensation as defined, and subject to a maximum
dollar amount determined from time to time by the Internal Revenue Service.
Employees are generally eligible following the later of attainment of age 21 or
the completion of one year of credited service ("IRS"). For 1996 and 1995, PIMCO
Advisors and certain of its subsidiaries, matched and contributed an amount
equal to the first five or six percent of annual compensation, subject to IRS
Internal Revenue Service limits, contributed by the employees. In addition,
PIMCO Advisors and certain of its subsidiaries, may elect to make a
discretionary contribution to all participants. The amount expensed by PIMCO
Advisors and its subsidiaries related to this plan during the year ended
December 31, 1996, 1995 and 1994 was approximately $2,017,000, $1,851,000 and
$50,000, respectively.

For 1994, PIMCO Advisors and certain of its subsidiaries, matched and
contributed an amount equal to one half of the first six percent of annual
compensation, subject to IRS limits, contributed by the employees. In addition,
PIMCO Advisors and certain of its subsidiaries, elected to make a discretionary
contribution to all participants. Contributions fully vest to employees after
five years of credited service.

Pacific Investment Management has several defined contribution employee
benefit plans covering substantially all of its employees and made contributions
to the plans ranging form five percent to eleven percent of covered individuals'
base compensation. The aggregate expense recorded is approximately $989,000,
$950,000 and none in 1996, 1995 and 1994, respectively.

e. Restricted Unit Plan -- PIMCO Advisors adopted a restricted unit plan
for the benefit of certain key employees. A total of 150,000 Class A Limited
Partner Units and 125,000 Class B Limited Partner Units have been awarded under
the plan. The units generally vest over a five-year period; however, accelerated
vesting occurred in 1995 upon the departure of a key employee. There are no
additional units available for grants under the plan. The expense under this
plan was approximately $755,000, $2,010,000 and $101,000 during 1996, 1995 and
1994, respectively.

f. Unit Option Plans -- PIMCO Advisors has two unit-option plans, which
are described below. No compensation cost has been recognized for these fixed
unit option plans because the option price approximated the market price on the
date of grant. Had compensation cost for PIMCO Advisors two unit option plans
been determined based on the fair value rather than market value at the grant
dates, PIMCO Advisors net income and earnings per unit would have been reported
as the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net income:
As reported.......................................... $91,128,181 $68,467,454
Pro forma............................................ $90,839,243 $68,368,057
Net income per unit:
Net income per General Partner and
Class A Limited Partner unit:
As reported.......................................... $1.29 $1.16
Pro forma............................................ $1.29 $1.16
Net income per Class B Limited Partner unit:
As reported.......................................... $1.05 $0.59
Pro forma............................................ $1.05 $0.59
</TABLE>

F-14
<PAGE> 125

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the above disclosure purposes, the fair value of each option granted is
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions used for grants in 1996 and 1995,
respectively: dividend yield of 7.7% and 3.5%; expected volatility of 14% and
10%; risk-free interest of 6.30% and 6.80%; and expected lives of 6 and 7 years.

The unit option plans are administered by the Unit Incentive Committee of
the Equity Board of PIMCO Advisors, which determines the key employees and the
terms of the options to be granted. Under the 1993 Unit Option Plan (as
amended), PIMCO Advisors may grant options to its employees up to 3,090,000
Class A Limited Partner Units. Under the 1994 Unit Option Plan, PIMCO Advisors
may grant options to its employees up to 5,600,000 Class B Limited Partner
Units. There are 270,400 Class B Limited Partner Units options available for
future grants at December 31, 1996. The expense under the option plans was
approximately $4,408,000, $4,704,000 and $1,061,000 during 1996, 1995 and 1994,
respectively.

Under both plans, the exercise price for each option reported herein has
been not less than the average trading price of PIMCO Advisor's units for the 20
trading day period prior to the grant date and each option's maximum term is 10
years. There was no material difference between the option price and the market
price on the grant date. The outstanding options vest over a period of not more
than five years and vested options are generally exercisable after January 1,
1998. Following is a summary of the status of both unit option plans:

<TABLE>
<CAPTION>
OPTION PRICE
UNITS RANGE PER UNIT
--------- --------------
<S> <C> <C>
Outstanding, January 1, 1994.............................. -- --
Class A Limited Partner units
Granted................................................. 2,442,130 $2.425-$ 4.85
Class B Limited Partner units
Granted................................................. 5,297,000 $13.53
---------
Outstanding, December 31, 1994............................ 7,739,130 $2.425-$13.53
---------
Class A Limited Partner units
Exercised............................................... (103,000) $2.425-$ 4.85
Class B Limited Partner units
Granted................................................. 109,000 $12.70-$14.68
Canceled................................................ (174,200) $13.53
---------
Outstanding, December 31, 1995............................ 7,570,930 $2.425-$14.68
---------
Class B Limited Partner units
Granted................................................. 227,000 $17.72-$18.81
Canceled................................................ (29,200) $12.78-$13.53
---------
Outstanding, December 31, 1996............................ 7,768,730 $2.425-$18.81
---------
Exercisable:
Class A Limited Partner units........................... 801,110 $2.425
Class B Limited Partner units........................... 200,000 $13.53
---------
Exercisable, December 31, 1996............................ 1,001,110
=========
</TABLE>

g. Other Benefit Plans -- Certain of PFAMCo Group's eligible employees
were included in a Pacific Mutual sponsored defined benefit pension plan, and
health care and life insurance plans that provide post-retirement benefits.
PFAMCo Group was charged an immaterial amount by Pacific Mutual for these plans
prior to the Consolidation. Subsequent to the Consolidation, PIMCO Advisors has
no expense associated with these plans.

F-15
<PAGE> 126

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. COMMITMENTS

a. Lease Agreements -- PIMCO Advisors and its subsidiaries lease office
space and certain office equipment under noncancelable leases with terms in
excess of one year. Future minimum payments are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
<S> <C>
1997.......................................................... $3,560,785
1998.......................................................... 2,523,057
1999.......................................................... 1,705,000
2000.......................................................... 821,122
2001.......................................................... 759,837
Thereafter.................................................... 375,054
----------
Total.................................................... $9,744,855
==========
</TABLE>

Rent expense in connection with these agreements was approximately
$3,772,000, $3,641,000 and $2,379,000 for the years ended December 31, 1996,
1995 and 1994, respectively.

b. Letter Of Credit -- PIMCO Advisors is contingently liable for a letter
of credit in the amount of $738,548 related to PIMCO Advisors membership in a
captive insurance program.

c. Revolving Line of Credit -- PIMCO Advisors has a $25 million, 4 year
revolving credit facility, originated in April of 1996. The facility permits
short term borrowings at a floating rate of interest. The terms of the agreement
include an interest coverage ratio, a fixed charge coverage ratio and a minimum
operating cash flow ratio. The partnership did not utilize this facility in
1996, but was in compliance with the required ratios.

11. NET CAPITAL

PFD is subject to the Uniform Net Capital Rule (Rule 15c3-1) under the
Securities and Exchange Act of 1934, which requires the maintenance of minimum
net capital and requires that the ratio of aggregate indebtedness to net
capital, both as defined, shall not exceed 15 to 1. At December 31, 1996, PFD
had net capital of $3,058,237, which was $2,238,261 in excess of its required
net capital of $819,976. PFD's net capital ratio was 3.73 to 1. At December 31,
1995, PFD had net capital of $1,049,818, which was $515,116 in excess of its
required net capital of $534,702. PFD's net capital ratio was 7.64 to 1. At
December 31, 1994, PFD had $1,156,876 in excess of its required net capital of
$579,935. PFD's net capital ratio was 5.01 to 1 at that time.

12. INVESTMENT IN STOCKSPLUS, L.P.

StocksPLUS accounts for its investment in StocksPLUS, L.P. under the equity
method because StocksPLUS is the general partner in, and exercises significant
influence over the operating and financial policies of StocksPLUS, L.P. (Note
1). The underlying investments of StocksPLUS, L.P. are carried at fair value.
The effect of such accounting does not have a material effect on PIMCO Advisors
consolidated financial statements. StocksPLUS, L.P. has made its investments
with the intent to have its performance exceed that of the S & P 500 Index.

StocksPLUS has mitigated the effects of its pro rata investment in
StocksPLUS, L.P.'s investments through the use of short futures positions. Gains
and losses related to these positions are settled daily. Included in "Short term
investments" in the accompanying Consolidated Statements of Financial Condition
are securities which are used as necessary for deposits made in connection with
the futures positions and are recorded at fair value. The notional amounts of
the contracts do not necessarily represent future cash

F-16
<PAGE> 127

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

requirements, as the contracts are intended to be closed prior to their
expiration. As of December 31, 1996 and 1995, the notional amounts of futures
contracts approximated $2,932,000 and $3,401,000, respectively.

Condensed financial information for StocksPLUS, L.P. is as follows:

SUMMARY OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Assets:
Investments -- at fair value....................... $2,306,673,000 $1,893,770,000
Other assets....................................... 26,481,000 18,685,000
-------------- --------------
Total assets.................................... $2,333,154,000 $1,912,455,000
============== ==============
Liabilities and Partners' Capital:
Liabilities........................................ $ 136,880,000 $ 219,072,000
StocksPLUS' Partner Capital........................ 2,629,000 3,384,000
Limited Partners' Capital.......................... 2,193,645,000 1,689,999,000
-------------- --------------
Total liabilities and partners' capital......... $2,333,154,000 $1,912,455,000
============== ==============
</TABLE>

SUMMARY OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net trading gains (losses) on futures.... $292,185,000 $326,096,000 $(30,291,000)
Net gain (loss) in fair value of
securities............................. 12,040,000 31,266,000 (21,278,000)
Interest income.......................... 126,535,000 92,260,000 58,383,000
Fees and commissions..................... (4,631,000) (3,822,000) (878,000)
------------ ------------ ------------
Net income............................... $426,129,000 $445,800,000 $ 5,936,000
============ ============ ============
</TABLE>

13. SUBSEQUENT EVENT

On February 13, 1997, PIMCO Advisors and its affiliate, Thomson Advisory
Group Inc. ("TAG Inc."), and Oppenheimer Group, Inc. and its subsidiary,
Oppenheimer Financial Corp. signed a definitive agreement for TAG Inc. to
acquire a one-third, managing general partner interest in Oppenheimer Capital (a
general partnership), the 1 percent general partner interest in Oppenheimer
Capital, L.P. and 100% of the stock of Advantage Advisers, an affiliate of
Oppenheimer Group, which manages eight closed-end funds. The transaction covers
only the private interests Oppenheimer Group holds in Oppenheimer Capital and
Oppenheimer Capital, L.P. and does not include the publicly traded units of
Oppenheimer Capital, L.P. The acquisition is subject to certain client, lender,
IRS and other approvals, and is expected to take up to six months to complete.

The agreement provides for the acquisition by TAG Inc. of the above listed
assets through a merger with Oppenheimer Group, Inc. in exchange for total
consideration of approximately $233 million in convertible preferred stock to be
issued by TAG Inc. and the assumption of approximately $32 million of debt.
Subsequently, TAG Inc. will contribute the general partner interest in
Oppenheimer Capital to PIMCO Advisors, in exchange for approximately $233
million of newly issued Class A Limited Partner Units, at $25.50 per unit.

F-17
<PAGE> 128

PIMCO ADVISORS L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PIMCO Advisors may be obligated in certain circumstances to purchase such
convertible preferred stock for its issue price. PIMCO Advisors will account for
this transaction using the purchase method. After the closing, operating results
for PIMCO Advisors will include its proportionate share of the operating results
of Oppenheimer Capital.

14. CONSOLIDATED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The quarterly results for the periods indicated were as follows:

<TABLE>
<CAPTION>
THREE THREE
MONTHS MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1996 1996 1996 1996
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues................................... $91,220,000 $98,842,000 $ 97,099,000 $104,863,000
Expenses................................... 71,468,000 74,827,000 73,131,000 80,269,000
----------- ----------- ----------- ------------
Income before taxes........................ 19,752,000 24,015,000 23,968,000 24,594,000
Income tax expense......................... 389,000 207,000 238,000 367,000
----------- ----------- ----------- ------------
Net income................................. $19,363,000 $23,808,000 $ 23,730,000 $ 24,227,000
=========== =========== =========== ============
Net income per General Partner and Class A
Limited Partner unit..................... $ 0.31 $ 0.33 $ 0.32 $ 0.33
=========== =========== =========== ============
Net income per Class B Limited Partner
unit..................................... $ 0.19 $ 0.29 $ 0.28 $ 0.29
=========== =========== =========== ============
Market price per Class A Limited Partner
unit:
Low...................................... $20 5/8 $20 1/4 $20 1/4 $19 5/8
High..................................... $23 1/8 $22 $22 3/4 $23 5/8
</TABLE>

<TABLE>
<CAPTION>
THREE THREE
MONTHS MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1995 1995 1995 1995
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues................................... $71,118,000 $75,465,000 $ 83,203,000 $ 93,228,000
Expenses................................... 57,934,000 61,158,000 65,799,000 69,139,000
----------- ----------- ----------- ------------
Income before taxes........................ 13,184,000 14,307,000 17,404,000 24,089,000
Income tax expense......................... 44,000 198,000 263,000 12,000
----------- ----------- ----------- ------------
Net income................................. $13,140,000 $14,109,000 $ 17,141,000 $ 24,077,000
=========== =========== =========== ============
Net income per General Partner and Class A
Limited Partner unit..................... $ 0.26 $ 0.26 $ 0.29 $ 0.35
=========== =========== =========== ============
Net income per Class B Limited Partner
unit..................................... $ 0.07 $ 0.10 $ 0.14 $ 0.28
=========== =========== =========== ============
Market price per Class A Limited Partner
unit:
Low...................................... $16 7/8 $17 3/8 $19 $19 5/8
High..................................... $18 1/4 $20 5/8 $21 1/4 $21 1/4
</TABLE>

F-18
<PAGE> 129

OPPENHEIMER CAPITAL, L.P.

FINANCIAL STATEMENTS

APRIL 30, 1997 AND 1996

F-19
<PAGE> 130

REPORT OF INDEPENDENT ACCOUNTANTS

To The General Partner and Limited Partners of
Oppenheimer Capital, L.P.

In our opinion, the accompanying statements of financial condition and the
related statements of income, changes in partners' capital and cash flows
present fairly, in all material respects, the financial position of Oppenheimer
Capital, L.P. (the "Partnership") at April 30, 1997 and 1996, and the results of
its operations and its cash flows for each of the three years in the period
ended April 30, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

July 22, 1997
New York, New York

F-20
<PAGE> 131

OPPENHEIMER CAPITAL, L.P.

STATEMENTS OF FINANCIAL CONDITION

(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
AT APRIL 30,
JULY 31, ---------------------
1997 1997 1996
-------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Cash and short term investments (Note 4)................... $ 101 $ 91 $ 35
Investment in Oppenheimer Capital (Note 2)................. 32,640 26,796 23,362
Distribution receivable (Note 2)........................... 14,050 17,090 11,950
10% note due 2012 from Oppenheimer Equities, Inc. (Note
4)....................................................... 32,193 32,193 32,193
Interest receivable........................................ 538 538 538
Other assets............................................... 138 136 128
Goodwill, net (Note 2)..................................... 38,653 39,305 41,893
-------- --------
Total Assets..................................... $118,313 $116,149 $110,099
======== ========

LIABILITIES AND PARTNERS' CAPITAL

Distribution payable to partners........................... $ 14,806 $ 17,858 $ 12,713
-------- --------
Total Liabilities................................ 14,806 17,858 12,713
-------- --------
General partner's capital.................................. 1,049 996 987
Limited partners' capital; 16,950,000 Units authorized;
15,429,298; 15,373,586 and 15,255,070 Units outstanding,
respectively............................................. 102,458 97,295 96,399
-------- --------
Total Partners' Capital.......................... 103,507 98,291 97,386
-------- --------
Total Liabilities and Partners' Capital.......... $118,313 $116,149 $110,099
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-21
<PAGE> 132

OPPENHEIMER CAPITAL, L.P.

STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
JULY JULY FOR THE YEAR ENDED APRIL 30,
31, 31, -------------------------------
1997 1996 1997 1996 1995
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Equity in earnings of Oppenheimer
Capital (Note 2):
Operating earnings.................. $15,963 $11,468 $51,022 $40,359 $31,054
Gain on Quest sale (Note 8)......... 2,809 -- 1,800 17,734 --
------- ------- ------- ------- -------
Total equity in earnings of
Oppenheimer Capital............... 18,772 11,468 52,822 58,093 31,054
Interest............................ 813 812 3,224 3,223 3,228
------- ------- ------- ------- -------
Total revenues................. 19,585 12,280 56,046 61,316 34,282

Expenses:
Amortization of goodwill (Note 2)...... 652 652 2,588 2,588 2,588
Other expenses (Note 2)................ 33 33 132 132 873
------- ------- ------- ------- -------
Total expenses...................... 685 685 2,720 2,720 3,461
------- ------- ------- ------- -------
Net income............................... $18,900 $11,595 $53,326 $58,596 $30,821
======= ======= ======= ======= =======
Net income per unit (Note 3)............. $ 1.21 $ 0.75 $ 3.44 $ 3.81 $ 2.02
======= ======= ======= ======= =======
Distributions declared per unit.......... $ .95 $ 0.65 $ 3.50 $ 3.175 $ 2.175
======= ======= ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-22
<PAGE> 133

OPPENHEIMER CAPITAL, L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

(IN THOUSANDS)

<TABLE>
<CAPTION>
GENERAL LIMITED TOTAL
PARTNER'S PARTNERS' PARTNERS'
CAPITAL CAPITAL CAPITAL
------ -------- --------
<S> <C> <C> <C>
BALANCES AT APRIL 30, 1994................................... $ 892 $ 86,905 $ 87,797
Net income................................................. 308 30,513 30,821
Distributions declared..................................... (332) (32,923) (33,255)
Amortization of restricted unit compensation expense....... 8 851 859
Capital contributions...................................... -- 90 90
------ -------- --------
BALANCES AT APRIL 30, 1995................................... 876 85,436 86,312
Net income................................................. 586 58,010 58,596
Distributions declared..................................... (489) (48,416) (48,905)
Amortization of restricted unit compensation expense....... 11 1,127 1,138
Capital contributions...................................... 3 242 245
------ -------- --------
BALANCES AT APRIL 30, 1996................................... 987 96,399 97,386
Net income................................................. 533 52,793 53,326
Distributions declared..................................... (543) (53,790) (54,333)
Amortization of restricted unit compensation expense....... 15 1,476 1,491
Capital contributions...................................... 4 417 421
------ -------- --------
BALANCES AT APRIL 30, 1997 (UNAUDITED)....................... 996 97,295 98,291
------ -------- --------
Net income................................................. 189 18,711 18,900
Distributions declared.....................................
Amortization of restricted unit compensation expense.......
Capital contributions......................................
------ -------- --------
BALANCES AT JULY 31, 1997 UNAUDITED.......................... $1,049 $102,458 $103,507
====== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-23
<PAGE> 134

<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER'S PARTNERS'
CAPITAL CAPITAL
--------- ---------
<S> <C> <C>
BALANCES AT APRIL 30, 1994.............................................. $ 892 $ 86,905
Net income............................................................ 308 30,513
Distributions declared................................................ (332) (32,923)
Amortization of restricted unit compensation expense.................. 8 851
Capital contributions................................................. -- 90
---- --------
BALANCES AT APRIL 30, 1995.............................................. 876 85,436
Net income............................................................ 586 58,010
Distributions declared................................................ (489) (48,416)
Amortization of restricted unit compensation expense.................. 11 1,127
Capital contributions................................................. 3 242
---- --------
BALANCES AT APRIL 30, 1996.............................................. 987 96,399
Net income............................................................ 533 52,793
Distributions declared................................................ (543) (53,790)
Amortization of restricted unit compensation expense.................. 15 1,476
Capital contributions................................................. 4 417
---- --------
BALANCES AT APRIL 30, 1997.............................................. $ 996 $ 97,295
==== ========
BALANCES, AT JULY 31, 1997 (UNAUDITED).................................. $ 1,049 $ 102,458
==== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-24
<PAGE> 135

OPPENHEIMER CAPITAL, L.P.

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS THREE MONTHS
ENDED ENDED FOR THE YEAR ENDED APRIL 30,
JULY 31, JULY 31, ----------------------------------
1997 1996 1997 1996 1995
------------ ------------ -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income...................... $ 18,900 $ 11,595 $ 53,326 $ 58,596 $ 30,821
Adjustments to reconcile net
income to net cash provided
by operating activities:
Distributions received (less
than) the equity in
earnings of Oppenheimer
Capital.................... (1,682) 482 (6,662) (14,677) (60)
Amortization of goodwill..... 652 652 2,588 2,588 2,588
(Increase) in other assets... (2) (2) (8) (19) (109)
-------- -------- -------- -------- --------
Net cash provided by operating
activities...................... 17,868 12,727 49,244 46,488 33,240

Cash flows from investing
activities:
Capital contributions to
Oppenheimer Capital............. (631) (273) (530) (300) (86)
-------- -------- -------- -------- --------

Cash flows from financing
activities:

Distributions to partners:
General partner................. (179) (127) (492) (465) (332)
Limited partners................ (17,679) (12,586) (48,696) (46,048) (32,923)
Issuance of limited partnership
units on exercise of
restricted options........... 631 273 530 300 86
-------- -------- -------- -------- --------
Net cash (used in) financing
activities...................... (17,227) (12,440) (48,658) (46,213) (33,169)
-------- -------- -------- -------- --------
Net increase (decrease) in cash
and short term investments...... 10 14 56 (25) (15)
Cash and short term investments at
beginning of period............. 91 35 35 60 75
-------- -------- -------- -------- --------
Cash and short term investments at
end of period................... $ 101 $ 49 $ 91 $ 35 $ 60
======== ======== ======== ======== ========

Supplemental disclosure of cash
flow information (Note 6):
New York City unincorporated
business tax paid............ $ 35 $ 35 $ 140 $ 151 $ 985
======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-25
<PAGE> 136

OPPENHEIMER CAPITAL, L.P.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION

Oppenheimer Capital, L.P. (the "Partnership"), is a publicly traded limited
partnership owned 1% by its general partner, Oppenheimer Financial Corp.
("Opfin") and 99% by its public limited partners ("Unitholders"). The
Partnership's sole business is its holding of a 67.5% interest in Oppenheimer
Capital (the "Operating Partnership"), a registered investment adviser. Opfin
holds the remaining 32.5% interest in the Operating Partnership. The Operating
Partnership is part of an affiliated group of companies operating in the
financial services industry. The financial statements of the Partnership should
be read in conjunction with the consolidated financial statements of the
Operating Partnership.

NOTE 2 -- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Investment in Oppenheimer Capital

The Partnership accounts for its investment in the Operating Partnership in
accordance with the equity method of accounting. The Partnership records as
income its proportionate share of the net income of the Operating Partnership
and credits distributions from the Operating Partnership to its investment in
Oppenheimer Capital. At April 30, 1997, the Partnership had a distribution
receivable of $17.1 million from the Operating Partnership that was received on
May 30, 1997.

(b) Goodwill

The excess of the initial contribution of capital to the Operating
Partnership over fair value of the net assets acquired is being amortized on a
straight-line basis over a period of 25 years. Accumulated amortization at April
30, 1997 and 1996 was $25,388,000 and $22,800,000, respectively. Impairment of
goodwill is measured on the basis of anticipated undiscounted cash flows. At
April 30, 1997, 1996 and 1995, the Partnership determined there was no
impairment of goodwill.

Other expenses consist of New York City unincorporated business tax at a
rate of 4% of taxable income. The Partnership is not subject to Federal or local
income taxes which are obligations of the individual partners. However, under
current tax law, the Partnership will be taxed as a corporation beginning in
1998.

(d) Statements of Cash Flows

For purposes of reporting cash flows, cash and short term investments
include highly- liquid investments with maturities of three months or less.

(e) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

F-26
<PAGE> 137

OPPENHEIMER CAPITAL, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3 -- NET INCOME PER UNIT

<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE YEAR ENDED APRIL
ENDED 30,
JULY 31, ---------------------------
1997 1997 1996 1995
------------ ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
FOR PER UNIT AMOUNTS)
<S> <C> <C> <C> <C>
Net income.................................... $ 18,900 $53,326 $58,596 $30,821
Less 1% applicable to the General Partner..... 189 533 586 308
------- ------- ------- -------
Net income available to the Limited
Partners.................................... $ 18,711 $52,793 $58,010 $30,513
======= ======= ======= =======
Weighted average number of units
outstanding................................. 15,427 15,367 15,244 15,136
Net income per unit........................... $1.21 $3.44 $3.81 $2.02
</TABLE>

NOTE 4 -- TRANSACTIONS WITH AFFILIATED COMPANIES

(a) Cash and Short Term Investments

On occasion the Partnership deposits excess funds with an affiliate and
receives interest at money market rates. In addition, excess funds are also
invested in a money market fund managed by an affiliate. Included in cash and
short term investments at April 30, 1997 and 1996 was $1,000 and $34,000,
respectively, on deposit with Oppenheimer & Co., Inc. ("Opco"), an affiliated
broker-dealer, and $90,000 and $1,000, respectively, invested in the OCC Cash
Reserves Primary Portfolio, which is managed by Opcap Advisors, an affiliated
investment adviser.

(b) 10% par value Note due 2012 from Oppenheimer Equities, Inc.

The Partnership has a $32,193,000, 10% par value note due 2012 from
Oppenheimer Equities, Inc., ("Equities"), a direct wholly-owned subsidiary of
Opfin.

The summary financial position of Equities is as follows:

<TABLE>
<CAPTION>
APRIL 30,
1997
-------------
(IN MILLIONS)
<S> <C>
Total assets.................................................... $ 5,277
Total liabilities, exclusive of subordinated liabilities........ 4,900
Liabilities subordinated to claims of general creditors......... 3
Total shareholder's equity...................................... 374
------
Total liabilities and shareholder's equity...................... $ 5,277
======
</TABLE>

For the year ended April 30, 1997, Equities' net income was $52 million on
total revenues of $974 million.

F-27
<PAGE> 138

OPPENHEIMER CAPITAL, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5 -- SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1997
---------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)
<S> <C> <C> <C> <C>
Total revenues.................................... $12,280 $13,308 $16,196(1) $14,262
Net income........................................ $11,595 $12,622 $15,511(1) $13,598
Net income per unit............................... $ .75 $ .81 $ 1.00(1) $ .88
Distributions declared per unit................... $ .65 $ .75 $ .95(2) $ 1.15
Market price:
High............................................ $30.000 $34.500 $37.375 $38.250
Low............................................. $27.125 $28.000 $33.250 $32.500
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1996
---------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total revenues.................................... $ 9,862 $10,527 $29,322(1) $11,605
Net income........................................ $ 9,177 $ 9,841 $28,637(1) $10,941
Net income per unit............................... $ .60 $ .64 $ 1.86(1) $ .71
Distributions declared per unit................... $ .55 $ .625 $ 1.175(2) $ .825
Market price:
High............................................ $24.500 $28.000 $29.500 $30.750
Low............................................. $21.125 $24.000 $27.000 $27.750
</TABLE>

- ---------------

(1) Includes a gain on the Quest sale of $1.8 million, or $.12 per unit in
fiscal 1997 and $17.7 million, or $1.15 per unit in fiscal 1996 (see Note
8).

(2) Includes a special distribution related to the Quest sale of $.10 per unit
in fiscal 1997 and $.55 per unit in fiscal 1996 (see Note 8).

NOTE 6 -- SUPPLEMENTAL CASH FLOW INFORMATION

Oppenheimer Capital, L.P. issued 118,516, 118,233 and 93,668 units of
limited partner interest under the Restricted Unit and Restricted Option Plans
in exchange for an additional .18%, .18% and .14% general partner interest in
Oppenheimer Capital for the fiscal years ended April 30, 1997, 1996 and 1995,
respectively.

NOTE 7 -- COMPENSATION PLANS

No compensation cost is recognized in the statements of income by the
Operating Partnership for Options granted under the Plan because the exercise
price of the Options approximates the market price of the

F-28
<PAGE> 139

OPPENHEIMER CAPITAL, L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

units on the date of grant. Had compensation cost for the Options been
recognized based on the fair value of the Options at the date of grant, the
Partnership's net income would have been reported as the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30,
-------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net income
As reported............................................ $53,326 $58,596
Pro forma.............................................. $53,214 $58,554
Net Income per unit
As reported............................................ $ 3.44 $ 3.81
Pro forma.............................................. $ 3.43 $ 3.80
</TABLE>

For the purpose of the above disclosure, the fair value of each Option
granted is estimated on the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions used for grants in fiscal
1997 and fiscal 1996, respectively: distribution yield of 7.3% and 8.0%;
expected volatility of 21% and 22%; risk-free interest rate of 6.36% and 6.96%;
and expected lives of 6 and 7 years.

NOTE 8 -- GAIN ON QUEST SALE

Included in "Equity in earnings of Oppenheimer Capital" for the fiscal
years ended April 30, 1997 and 1996 are gains resulting from the Operating
Partnership's sale of the investment advisory and other contracts and business
relationships for its twelve Quest for Value mutual funds to OppenheimerFunds,
Inc. ("OFI"), which is unrelated to the Operating Partnership. For the years
ended April 30, 1997 and 1996, the Partnership recognized gains of $1.8 million,
or $0.12 per unit, and $17.7 million, or $1.15 per unit, respectively.

NOTE 9 -- SUBSEQUENT EVENTS

(a) Quest Dual Purpose Fund Sale

On February 28, 1997, the Operating Partnership entered into an agreement
to sell its investment contracts and other business relationships of the Quest
for Value Dual Purpose Fund to OFI. On July 18, 1997, the sale was consummated
and the Partnership recognized a gain on the sale of $2.8 million, or $0.18 per
unit.

(b) Sale of Opfin Interest

On July 22, 1997, Oppenheimer Group, Inc. ("OGI") and its subsidiary,
Opfin, entered into an Amended and Restated Agreement and Plan of Merger,
providing for PIMCO Advisors and its affiliate, Thomson Advisory Group Inc., to
acquire, among other things, Opfin's current 32.4% managing general partner
interest in the Operating Partnership, and Opfin's 1% general partner interest
in the Partnership and in the various subpartnerships of the Operating
Partnership. The transaction covers only the private interests OGI holds in the
Operating Partnership and the Partnership, does not include the publicly traded
units of the Partnership, and is subject to certain conditions being satisfied
prior to closing, including the closing of the sale of the stock of Oppenheimer
Holdings, Inc., an affiliate, to a third party, and consents of certain clients.
It is anticipated that the transaction will close no later than the first
quarter of calendar 1998.

Upon consummation of the transaction, the Operating Partnership will
function as an indirect subsidiary of PIMCO Advisors. PIMCO Advisors has advised
OGI that it anticipates that the senior portfolio management team of the
Operating Partnership will continue in their present capacities.

F-29
<PAGE> 140

OPPENHEIMER CAPITAL

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 1997 AND 1996

F-30
<PAGE> 141

REPORT OF INDEPENDENT ACCOUNTANTS
July 22, 1997

To The General Partners of
Oppenheimer Capital

In our opinion, the accompanying statements of financial condition and the
related statements of income, changes in partners' capital and cash flows
present fairly, in all material respects, the financial position of Oppenheimer
Capital and its subsidiaries (the "Partnership") at April 30, 1997 and 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended April 30, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

New York, New York

F-31
<PAGE> 142

OPPENHEIMER CAPITAL

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
AT APRIL 30,
AT JULY 31, -------------------
1997 1997 1996
----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Cash and short term investments (Notes 1 and 4)............. $ 32,869 $27,123 $19,744
Investment management fees receivable....................... 57,990 52,357 43,016
Investments in affiliated mutual funds and other sponsored
investment products (Note 4).............................. 3,371 4,347 4,644
Furniture, equipment and leasehold improvements at cost less
accumulated depreciation and amortization of $2,812 and
$2,179 (Note 1)........................................... 3,752 3,795 3,515
Intangible assets, less accumulated amortization of $565 and
$377 (Note 1)............................................. 1,213 1,511 1,699
Other assets................................................ 3,860 3,886 3,720
------- ------- -------
Total assets...................................... $ 103,055 $93,019 $76,338
======= ======= =======

LIABILITIES, MINORITY INTEREST AND PARTNERS' CAPITAL

LIABILITIES
Accrued employee compensation and benefits.................. $ 18,933 $13,914 $12,873
Accrued expenses and other liabilities...................... 9,152 8,880 7,168
Note payable (Note 8)....................................... -- 400 800
Deferred investment management fees......................... 5,482 4,532 2,870
Distribution payable to partners............................ 20,789 25,318 17,751
------- ------- -------
Total liabilities......................................... 54,356 53,044 41,462
------- ------- -------
Minority interest........................................... 396 277 174
Partners' capital........................................... 48,303 39,698 34,702
------- ------- -------
Total Liabilities, Minority Interest and Partners'
Capital......................................... $ 103,055 $93,019 $76,338
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-32
<PAGE> 143

OPPENHEIMER CAPITAL

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS THREE MONTHS FOR THE YEAR ENDED APRIL 30,
ENDED ENDED ----------------------------------
JULY 31, 1997 JULY 31, 1996 1997 1996 1995
--------------- --------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Investment management fees (Note
1)............................. $ 53,093 $39,433 $175,814 $151,269 $119,194
Net distribution assistance and
commission income (Note 4)..... 1,599 1,405 4,910 6,051 10,443
Interest and dividends........... 351 237 1,250 895 275
-------- -------- -------- -------- --------
TOTAL OPERATING REVENUES......... 55,043 41,075 181,974 158,215 129,912
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Compensation and benefits (Note
3)............................. 23,991 17,610 77,664 68,781 55,367
Occupancy........................ 1,757 1,493 6,572 6,873 6,436
General and administrative....... 3,124 2,787 12,494 12,293 10,652
Promotional...................... 1,430 1,551 6,334 7,604 10,611
-------- -------- -------- -------- --------
TOTAL OPERATING EXPENSES......... 30,302 23,441 103,064 95,551 83,066
-------- -------- -------- -------- --------
OPERATING INCOME................. 24,741 17,634 78,910 62,664 46,846
Gain on Quest sale (Note 6)...... 4,374 -- 2,806 27,725 --
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST.............. 29,115 17,634 81,716 90,389 46,846
Income taxes (Note 5)............ (1,218) (585) (3,198) (3,627) (1,201)
-------- -------- -------- -------- --------
INCOME BEFORE MINORITY
INTEREST....................... 27,897 17,049 78,518 86,762 45,645
Minority interest................ (119) (56) (254) (452) --
-------- -------- -------- -------- --------
NET INCOME....................... $ 27,778 $16,993 $ 78,264 $ 86,310 $ 45,645
======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-33
<PAGE> 144

OPPENHEIMER CAPITAL

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

(IN THOUSANDS)

<TABLE>
<S> <C>
BALANCE AT APRIL 30, 1994................................................. $ 12,452
Net income.............................................................. 45,645
Amortization of restricted unit compensation expense.................... 1,280

Distributions declared to partners:
Oppenheimer Financial Corp........................................... (14,313)
Oppenheimer Capital, L.P............................................. (30,690)
Contributions by Oppenheimer Capital, L.P............................... 86
-------
BALANCE AT APRIL 30, 1995................................................. 14,460
Net income.............................................................. 86,310
Amortization of restricted unit compensation expense.................... 1,691

Distributions declared to partners:
Oppenheimer Financial Corp........................................... (22,247)
Oppenheimer Capital, L.P............................................. (45,812)
Contributions by Oppenheimer Capital, L.P............................... 300
-------
BALANCE AT APRIL 30, 1996................................................. 34,702
Net income.............................................................. 78,264
Amortization of restricted unit compensation expense.................... 2,209

Distributions declared to partners:
Oppenheimer Financial Corp........................................... (24,707)
Oppenheimer Capital, L.P............................................. (51,300)
Contributions by Oppenheimer Capital, L.P............................... 530
-------
BALANCE AT APRIL 30, 1997................................................. $ 39,698
Net income.............................................................. 27,778
Amortization of restricted unit compensation expense....................

Distributions declared to partners:
Oppenheimer Financial Corp...........................................
Oppenheimer Capital, L.P.............................................
Contributions by Oppenheimer Capital, L.P............................... 631
-------
BALANCE AT JULY 31, 1997 (UNAUDITED)...................................... $ 48,303
=======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-34
<PAGE> 145

OPPENHEIMER CAPITAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS THREE MONTHS FOR THE YEAR ENDED APRIL 30,
ENDED ENDED ------------------------------
JULY 31, 1997 JULY 31, 1996 1997 1996 1995
--------------- --------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................... $ 27,778 $ 16,993 $ 78,264 $ 86,310 $ 45,645
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of restricted unit compensation
expense.......................................... 980 535 2,209 1,691 1,280
Depreciation and amortization...................... 247 230 1,019 2,413 1,082
Minority interest, net of distributions............ 119 87 103 87 62
(Increase) in investment management fees
receivable....................................... (5,633) 830 (9,341) (9,839) (4,517)
(Increase) decrease in other assets................ (197) 381 (182) (1,195) 1,300
Increase in accrued employee compensation and
benefits......................................... 5,019 (3,731) 1,041 4,549 1,637
Increase in accrued expenses and other
liabilities...................................... 272 1,859 1,712 290 2,144
Increase in deferred investment management fees.... 950 308 1,662 1,154 93
-------- -------- -------- --------
Net cash provided by operating activities............ 29,535 17,492 76,487 85,460 48,726
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets............................ (178) (350) (1,111) (498) (1,634)
Sale of AMA license.................................. 1,000 -- -- -- --
Intangible assets resulting from acquisitions........ (500) -- -- -- (1,689)
Proceeds from sales of mutual funds shares and other
investments........................................ 976 -- 3,132 7,296 2,048
Purchases of mutual funds shares and other
investments........................................ -- (35) (2,819) (7,844) (4,384)
-------- -------- -------- --------
Net cash (used in) investing activities.............. 1,298 (385) (798) (1,046) (5,659)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments of) proceeds from bank loans......... -- -- (9,182) 6,446
Issuance (repayment) of note payable................. (400) (400) (400) (400) 1,200
Distributions to partners:
Oppenheimer Financial Corp......................... (8,228) (5,801) (22,280) (21,187) (14,898)
Oppenheimer Capital, L.P........................... (17,090) (11,950) (46,160) (43,415) (30,995)
Contributions by Oppenheimer Capital, L.P............ 631 273 530 300 86
-------- -------- -------- --------
Net cash (used in) financing activities.............. (25,087) (17,878) (68,310) (73,884) (38,161)
-------- -------- -------- --------
Net increase in cash and short term investments...... 5,746 (771) 7,379 10,530 4,906
Cash and short term investments at beginning of
period............................................. 27,123 21,019 19,744 9,214 4,308
-------- -------- -------- --------
Cash and short term investments at end of period..... $ 32,869 $ 20,248 $ 27,123 $ 19,744 $ 9,214
======== ======== ======== ========
Supplemental disclosure of cash flow information:
Interest paid...................................... $ 22 $ 38 $ 112 $ 638 $ 738
======== ======== ======== ========
New York City unincorporated business tax paid....... $ 983 $ 661 $ 3,376 $ 3,701 $ 1,049
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-35
<PAGE> 146

OPPENHEIMER CAPITAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization and Consolidation

Oppenheimer Capital (the "Operating Partnership") is a general partnership
owned 32.5% by Oppenheimer Financial Corp. ("Opfin") and 67.5% by Oppenheimer
Capital, L.P. (the "Partnership"). The Operating Partnership is a registered
investment adviser and is part of an affiliated group of companies operating in
the financial services industry.

The consolidated financial statements include the accounts of the Operating
Partnership and its subsidiaries, Opcap Advisors ("Advisors"), OCC Distributors
("Distributors") and AMA Investment Advisers, L.P. ("AMA Advisers, L.P.")
(collectively, the "Subpartnerships"), Oppenheimer Capital Limited and
Oppenheimer Capital Trust Company. All material intercompany balances and
transactions have been eliminated in consolidation.

(b) Cash and Short Term Investments

Short term investments are recorded at cost which approximates market value
and include holdings in money market mutual funds and highly-liquid investments
with maturities of three months or less.

Furniture and equipment are depreciated on a straight-line basis over five
to seven year periods. Amortization of leasehold improvements is on a
straight-line basis over the lesser of their economic useful life or the term of
the lease.

(d) Investment Management Fees

Investment management fees are based on written contracts and are generally
computed on the net assets of the managed accounts and recognized in the period
earned.

(e) Statements of Cash Flows

For purposes of reporting cash flows, cash and short term investments
include highly-liquid investments with maturities of three months or less.

(f) Intangible Assets

Impairment of intangible assets is measured on the basis of anticipated
undiscounted cash flows. At April 30, 1997, 1996 and 1995, the Operating
Partnership determined that there was no impairment of the intangible assets.

(g) Use of Estimates

(h) Reclassifications

Certain prior year amounts have been reclassified to conform to the current
year's presentation.

F-36
<PAGE> 147

OPPENHEIMER CAPITAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 -- LONG TERM LEASE COMMITMENTS

The Operating Partnership occupies office premises at various locations,
including the Oppenheimer Tower under an agreement to sublease with Oppenheimer
& Co., Inc. ("Opco"), an affiliated broker-dealer. The Operating Partnership' s
lease commitments for office space under operating leases having noncancelable
lease terms in excess of one year provide for the following minimum annual
rentals:

<TABLE>
<CAPTION>
YEARS ENDING APRIL 30,
----------------------------------------------------------------
<S> <C>
1998....................................................... $ 3,919,000
1999....................................................... 3,919,000
2000....................................................... 3,919,000
2001....................................................... 3,640,000
2002....................................................... 3,310,000
Thereafter................................................. 8,685,000
-----------
Total minimum lease payments.................................... $27,392,000
==========
</TABLE>

The agreements expire at various dates through the fiscal year ending April
30, 2006 and contain provisions for additional charges (e.g., ground rent, real
estate taxes and operating expenses). Office rent expense for the years ended
April 30, 1997, 1996 and 1995 was $5,046,000, $5,348,000 and $5,100,000,
respectively.

NOTE 3 -- COMPENSATION PLANS

The Operating Partnership has established a Restricted Unit Plan and a
Restricted Option Plan (the "Plan") for the benefit of certain key employees.
Pursuant to the Plan, an eligible employee is granted the right to receive a
number of units of the Partnership at no cost to the employee ("Rights"), in the
case of the Restricted Unit Plan, and/or the right to purchase a number of units
at the fair market value of such units on the date of grant ("Options"), in the
case of the Restricted Option Plan. The right to receive or purchase units vests
33 1/3% per year at the end of each of the third, fourth and fifth years from
the date of grant. The Partnership transfers to the Operating Partnership the
proceeds from the exercise of Options in exchange for an increase in its general
partner interest in the Operating Partnership. Opfin and the limited partners of
the Partnership incur dilution, in accordance with their respective percentage
interests in the Operating Partnership, upon the vesting of Rights and the
exercise of Options. A total of 2,475,000 restricted units and/or restricted
options have been authorized under the Plan. The following table shows the
Rights granted and the Options granted with exercise prices of $18.125 to $33.75
at April 30, 1997. As a result of the grant of Rights, the Operating Partnership
recorded deferred restricted unit compensation expense in partners' capital of
$5,977,000, $4,738,000 and $343,000 for the fiscal years ended April 30, 1997,
1996 and 1995, respectively, which amounts are amortized over a five year
period. Amortization of $2,209,000, $1,691,000, and $1,280,000

F-37
<PAGE> 148

OPPENHEIMER CAPITAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

has been recorded for the years ended April 30, 1997, 1996 and 1995,
respectively. This amortization results in a charge to compensation and benefits
and a corresponding credit to partners' capital.

<TABLE>
<CAPTION>
RIGHTS OPTIONS EXERCISE PRICE
OUTSTANDING OUTSTANDING PER OPTION
-------- -------- ---------------
<S> <C> <C> <C>
Balances at April 30, 1994........................... 322,950 141,501 $11.375-$28.125
Rights granted..................................... 16,300 -- --
Rights canceled.................................... (3,333) -- --
Units issued with respect to Rights................ (88,167) -- --
Options granted.................................... -- 140,500 $23.625-$24.875
Options exercised.................................. -- (5,501) $11.375-$23.875
Options canceled................................... -- (9,667) $11.375-$ 25.00
------- ------- ---------------
Balances at April 30, 1995........................... 247,750 266,833 $ 13.50-$28.125
Rights granted..................................... 188,540 -- --
Rights canceled.................................... (8,333) -- --
Units issued with respect to Rights................ (103,200) -- --
Options granted.................................... -- 153,000 $ 20.75
Options exercised.................................. -- (15,033) $ 13.50-$ 25.00
Options canceled................................... -- (30,333) $20.625-$ 25.00
------- ------- ---------------
Balances at April 30, 1996........................... 324,757 374,467 $18.125-$28.125
Rights granted..................................... 207,517 -- --
Rights canceled.................................... (14,109) -- --
Units issued with respect to Rights................ (95,851) -- --
Options granted.................................... -- 168,500 $29.375-$ 33.75
Options exercised.................................. -- (22,665) $18.125-$29.375
Options canceled................................... -- (24,000) $ 20.75-$29.375
------- ------- ---------------
Balances at April 30, 1997........................... 422,314 496,302 $18.125-$ 33.75
======= ======= ===============
</TABLE>

No compensation cost is recognized in the consolidated statements of income
for Options granted under the Plan because the exercise price of the Options
approximates the market price of the units on the date of grant. Had
compensation cost for the Options been recognized based on the fair value of the
Options at the date of the grant, the Operating Partnership's net income would
have been reported as the pro forma amounts indicated below:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30,
-------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net Income
As reported............................................ $78,264 $86,310
Pro forma.............................................. $78,098 $86,248
</TABLE>

F-38
<PAGE> 149

OPPENHEIMER CAPITAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 -- TRANSACTIONS WITH AFFILIATED COMPANIES

(a) Cash and Short Term Investments

On occasion the Operating Partnership deposits excess funds with an
affiliate and receives interest at money market rates. In addition, excess funds
are also invested in a money market fund managed by Advisors. Included in cash
and short term investments at April 30, 1997 and 1996 was $35,000 and $275,000,
respectively, on deposit with Opco and $1,567,000 and $1,675,000, respectively,
invested in the OCC Cash Reserves Primary Portfolio, for which Advisors acts as
investment adviser.

(b) Investments in Affiliated Mutual Funds and Other Sponsored Investment
Products

Investments in affiliated mutual funds and other sponsored investment
products are carried at market value.

The Operating Partnership receives distribution assistance fees from
various mutual funds and has entered into agreements with various broker-dealers
including Opco to obtain sales-related services in rendering distribution
assistance. Payments to Opco for the Quest for Value equity and fixed income
mutual funds for the years ended April 30, 1996 and 1995 were recorded as
distribution assistance expenses and for financial statement purposes were
netted against distribution assistance fees (see note 6). Payments to Opco for
OCC Cash Reserves are netted against investment management fees. Such payments
totaled $8,902,000, $9,522,000 and $8,496,000 for the years ended April 30,
1997, 1996 and 1995, respectively.

(d) Other Services

Opco provides various services to the Operating Partnership and its
subsidiaries at its cost. Charges pursuant to these agreements are not material.

(e) Affiliated Mutual Funds and Commingled Products -- Investment Management
Fees

The Operating Partnership provides investment management services to
affiliated mutual funds and other commingled products. For the years ended April
30, 1997, 1996 and 1995 amounts earned for these services totaled $15,382,000,
$22,778,000 and $23,088,000, respectively.

NOTE 5 -- INCOME TAXES

Although the Operating Partnership is not otherwise subject to Federal,
state, or local income taxes, it was subject to New York City unincorporated
business tax of $3,143,000, $3,667,000 and $1,201,000, respectively, for the
years ended April 30, 1997, 1996 and 1995.

A domestic corporate subsidiary of the Operating Partnership is subject to
Federal, state and local income taxes. A foreign corporate subsidiary is subject
to taxes in the foreign jurisdiction in which it is located.

NOTE 6 -- GAIN ON QUEST SALE

On November 22, 1995, the Operating Partnership sold the investment
advisory and other contracts and business relationships for its twelve Quest for
Value mutual funds to OppenheimerFunds, Inc. ("OFI"), which is unrelated to the
Operating Partnership. In fiscal 1997 and 1996, the Operating Partnership
received payments of $3.8 million and $41.7 million, respectively, related to
the sale, and recognized pre-tax gains of $2.8 million and $27.7 million,
respectively.

F-39
<PAGE> 150

OPPENHEIMER CAPITAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7 -- SALE OF SARATOGA CAPITAL MANAGEMENT

On April 29, 1997, the Operating Partnership completed the sale of its 50%
interest in Saratoga Capital Management. The proceeds, which are not
significant, will be paid annually to the Operating Partnership over a five year
period, ending May 1, 2001. The Operating Partnership continues to manage two
portfolios of the Saratoga Advantage Trust, for which it receives subadvisory
fees.

NOTE 8 -- SUBSEQUENT EVENTS

(a) Sale of AMA License

On May 12, 1997, the Operating Partnership sold its exclusive license to
market financial products to members of the American Medical Association for $1
million. The proceeds received from this transaction were used to purchase the
remaining 19.9% interest of AMA Advisers, L.P. not owned by the Operating
Partnership and Opfin, and to repay the balance of the original acquisition debt
incurred to purchase AMA Advisers, L.P. AMA Advisers, L.P. has been renamed 225
Liberty Street Advisers, L.P.

(b) Quest Dual Purpose Fund Sale

On February 28, 1997, the Operating Partnership entered into an agreement
to sell its investment advisory and other contracts and business relationships
of the Quest for Value Dual Purpose Fund to OFI. On July 18, 1997, the sale was
consummated and the Operating Partnership received a payment of $7.0 million and
recorded a net gain of $4.2 million.

F-40
<PAGE> 151

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by the
Partnership in connection with the issuance and distribution of the securities
being registered (all amounts are estimated except the SEC registration fee):

<TABLE>
<S> <C>
SEC Registration Fee.............................................. $124,822
---------
Printing and engraving expenses................................... *
Legal Fees and expenses........................................... *
Accounting fees and expenses...................................... *
NYSE Listing Fee.................................................. *
Transfer agent and registrar fees................................. $ *
---------
Blue Sky qualification fees and expenses.......................... *
Miscellaneous..................................................... $ *
---------
TOTAL............................................................. $ *
=========
</TABLE>

- ---------------
* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
permits a limited partnership to indemnify and hold harmless any partner or
other person from and against any and all claims whatsoever, subject to such
standards and restrictions, if any, as set forth in its partnership agreement.
Under the Partnership Agreement, the general partner of the Partnership, its
affiliates and all officers, directors, partners, agents and employees of the
general partner and its affiliates will not be liable to the Partnership or to
any Unitholders for any actions or inactions of the general partner or such
other persons if such action or inaction did not constitute actual fraud, gross
negligence or willful or wanton misconduct. The Partnership will indemnify the
general partner and such persons and entities against all losses or liabilities,
costs and expenses (including legal fees and expenses) incurred by the general
partner or any such persons or entities arising from their conduct whenever such
course of conduct does not constitute actual fraud, gross negligence or willful
or wanton misconduct.

In regards to PIMCO Advisors, certain executive officers of PIMCO Advisors
and directors and officers of TAG and Thomson Investor Services, Inc. ("ITS")
are parties to indemnification agreements with PIMCO Advisors pursuant to which
PIMCO Advisors has agreed, to the fullest extent permitted by law, to indemnify
such persons from and against, among other things, all losses, claims,
liabilities, expenses and other amounts arising from any and all claims, actions
or proceedings in which any such person may be involved by reason of his or her
status as an officer of PIMCO Advisors or in connection with such person's
services to TAG and ITS.

The PIMCO Advisors Partnership Agreement provides that each officer and
director of PIMCO Advisors shall be indemnified by PIMCO Advisors against any
and all losses, claims, damages, liability and expense arising from any
proceeding in which any such director or officer may be involved by reason of
his or her status and further shall be advanced expenses in defending any such
proceeding to the fullest extent permitted by law. PIMCO Advisors will not be
permitted to change the indemnification provisions of the PIMCO Advisors
Partnership Agreement for at least six years following the 1994 Consolidation.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, or persons controlling PGP (as the general
partner of the Partnership and the managing general partner of

II-1
<PAGE> 152

PIMCO Advisors) pursuant to the foregoing provisions, PGP has been informed that
in the opinion of the ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On November 4, 1997, PIMCO Advisors completed the Opgroup Transaction
described in the Prospectus and issued the securities described therein.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------ -------------------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Agreement of Limited Partnership of Oppenheimer Capital,
L.P. (Incorporated by reference to Exhibit 3.1 of the Partnership's
Registration Statement No. 33-39354 on Form S-3)
3.1.1* Amendment to Amended and Restated Agreement of Limited Partnership of
Oppenheimer Capital, L.P. dated November 4, 1997
3.1.2* Assignment of General Partner Interest and Amendment to Amended and Restated
Agreement of Limited Partnership of Oppenheimer Capital, L.P. dated November 4,
1997
3.1.3* Assignment of General Partner Interest and Amendment to Amended and Restated
Agreement of Limited Partnership of Oppenheimer Capital, L.P. dated November 4,
1997
4.1* Form certificate of Limited Partnership Units
5.1* Opinion and consent of Richards, Layton & Finger regarding the validity of the
units being registered
10.1 Promissory Note Issued by Oppenheimer Equities, Inc. (Incorporated by reference
to Exhibit 10.1 of the Partnership's Registration Statement No. 33-39354 on
Form S-3)
10.2 Form of lease with respect to premises at Oppenheimer Tower. (Incorporated by
reference from the Partnership's Registration Statement No. 33-39354 on Form
S-3)
10.3 Lease with respect to premises at World Financial Center, Tower B, New York.
(Incorporated by reference from the Partnership's Annual Report on Form 10-K
for the fiscal year ended April 30, 1993)
10.4 Amended and Restated Oppenheimer Past Service Benefit Plan. (Incorporated by
reference from the Partnership's Registration Statement No. 33-39354 on Form
S-3)
10.5 First Amendment to the Oppenheimer Past Service Benefit Plan. (Incorporated by
reference from the Partnership's Registration Statement No. 33-39354 on Form
S-3)
10.6 Oppenheimer Capital Deferred Compensation Plan. (Incorporated by reference from
the Partnership's Registration Statement No. 33-39354 on Form S-3)
10.7 Restricted Unit Plan. (Incorporated by reference from the Partnership's
Registration Statement No. 33-35584 on Form S-8)
10.8 Restricted Option Plan. (Incorporated by reference from the Partnership's
Registration Statement No. 33-35584 on Form S-8)
10.9 Lease with respect to premises at 33 Maiden Lane, New York. (Incorporated by
reference to Exhibit 10.9 of the Partnership's Report on Form 10-K for the
fiscal year ended April 30, 1994)
10.10 Acquisition Agreement dated August 17, 1995 among Oppenheimer Capital, Quest
for Value Advisors, Quest for Value Distributors and Oppenheimer Management
Corporation. (Incorporated by reference to Exhibit 10.1 of the Partnership's
Form 10-Q for the fiscal quarter ended October 31, 1995)
10.11* Form of Operating Agreement between PIMCO Advisors and Oppenheimer Capital,
L.P.
10.12* Form of Oppenheimer Capital, L.P. 1997 Unit Incentive Plan
</TABLE>

II-2
<PAGE> 153

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------ -------------------------------------------------------------------------------
<S> <C>
10.13* Agreement of Limited Partnership
10.14* Amendment to Amended and Restated Agreement of Limited Partnership of
Oppenheimer Capital, L.P. dated November 4, 1997
10.15* Assignment of General Partner Interest and Amendment to Amended and Restated
Agreement of Limited Partnership of Oppenheimer Capital, L.P. dated November 4,
1997
10.16* Amendment to Amended and Restated Agreement of Limited Partnership of
Oppenheimer Capital, L.P. dated November 4, 1997
10.17* Amended and Restated Partnership Agreement of PIMCO Advisors dated October 31,
1997
10.18 Cvengros Employment Agreement. (Incorporated by reference from Thomson Advisory
Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.19 Smith Employment Agreement. (Incorporated by reference from Thomson Advisory
Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.20 Chiboucas Employment Agreement. (Incorporated by reference from Thomson
Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.21 Form of Manager Employer Agreement. (Incorporated by reference from Thomson
Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.22 Profit Sharing Plan for Pacific Investment Management Company. (Incorporated by
reference to Exhibit 10.5 of PIMCO Advisors' Report on Form 10-K for the fiscal
year ended December 31, 1994)
10.23 Profit Sharing Plan for Columbus Circle Investors. (Incorporated by reference
from Thomson Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.24 Form of Profit Sharing Plan for Investment Management Firms. (Incorporated by
reference from Thomson Advisory Group L.P.'s Report on Form 8-K dated July 11,
1994)
10.25 PFAMCo Loss Reimbursement Agreement. (Incorporated by reference from Thomson
Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.26 Blairlogie Loss Reimbursement and Recapture Agreement. (Incorporated by
reference from Thomson Advisory Group L.P.'s Report on Form 8-K dated July 11,
1994)
10.27 Thomson Advisory Group L.P. 1993 Unit Option Plan (as amended through April 20,
1993). (Incorporated by reference to Exhibit 10.65 of Thomson Advisory Group
L.P.'s Report on Form 10-Q for the fiscal quarter ended March 31, 1993)
10.28 Amendment to the Thomson Advisory Group L.P. 1993 Unit Option Plan.
(Incorporated by reference to Exhibit 10.10(B) of PIMCO Advisors' Report on
Form 10-K for the fiscal year ended December 31, 1995)
10.29 Award of Options dated March 10, 1993 to Irwin F. Smith. (Incorporated by
reference to Exhibit 10.68 of Thomson Advisory Group L.P.'s Report on Form 10-K
for the fiscal year ended December 31, 1992)
10.30 Smith Option Amendment Agreement. (Incorporated by reference from Thomson
Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.31 Form of Class I Option Amendment Agreement. (Incorporated by reference from
Thomson Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.32 Form of Class II Option Amendment Agreement. (Incorporated by reference from
Thomson Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.33 Form of PIMCO Advisors L.P. 1994 Class B LP Unit Option Plan. (Incorporated by
reference to Exhibit 2.12 of Thomson Advisory Group L.P.'s Registration
Statement No. 33-84914 on Form S-4)
</TABLE>

II-3
<PAGE> 154

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------ -------------------------------------------------------------------------------
<S> <C>
10.34 Form of Option Agreement. (Incorporated by reference to Exhibit 2.13 of Thomson
Advisory Group L.P.'s Registration Statement No. 33-84914 on Form S-4)
10.35 PIMCO Advisors L.P. Restricted Unit Plan. (Incorporated by reference from
Thomson Advisory Group L.P.'s Report on Form 8-K dated July 11, 1994)
10.36 Thomson Advisory Group 401(k) Savings and Investment Plan. (Incorporated by
reference to Exhibit 10.10 of Thomson Advisory Group L.P.'s Report on Form 10-K
for the fiscal year ended December 31, 1991)
10.37 First Amendment to the Thomson Advisory Group 401(k) Savings and Investment
Plan. (Incorporated by reference to Exhibit 10.10(b) of Thomson Advisory Group
L.P.'s Report on Form 10-K for the fiscal year ended December 31, 1993)
10.38 Thomson Advisory Group 401(k) Savings and Investment Plan Submitter Amendment.
(Incorporated by reference to Exhibit 10.10(c) of Thomson Advisory Group L.P.'s
Report on Form10-K for the fiscal year ended December 31, 1993)
10.39 Consolidation Transaction Amendment. (Incorporated by reference to Exhibit
10.18(D) of PIMCO Advisors' Report on Form 10-K for the fiscal year ended
December 31, 1994)
10.40 Third Amendment to the Thomson Advisory Group 401(k) Savings and Investment
Plan. (Incorporated by reference to Exhibit 10.18(E) of PIMCO Advisors' Report
on Form 10-K for the fiscal year ended December 31, 1994)
10.41 Fourth Amendment to the PIMCO Advisors L.P. 401(k) Savings and Investment Plan.
(Incorporated by reference to Exhibit 10.18(F) of PIMCO Advisors' Report on
Form 10-K for the fiscal year ended December 31, 1994)
10.42 Form of Indemnification Agreement executed by certain officers of the
Registrant and certain directors of Thomson McKinnon Asset Management Inc.
(Incorporated by reference to Exhibit 10.21 of Thomas McKinnon Asset Management
L.P.'s Report No. 33-17227 on Form 10-Q for the fiscal quarter ended June 30,
1990)
10.43 Form of Indemnification Agreement executed by certain directors of Thomson
Advisory Group, Inc. (Incorporated by reference to Exhibit 10.22 of Thomson
Advisory Group L.P.'s Report No, 33-17227 on Form 10-Q for the quarter ended
September 30, 1990)
10.44 Form of Amendment No. 1 to Indemnification Agreement. (Incorporated by
reference to Exhibit 10.46 of Thomson Advisory Group L.P.'s Report No. 33-17227
on Form 10-Q for the fiscal quarter ended March 31, 1991)
10.45 The 1996 Unit Incentive Plan of PIMCO Advisors L.P. (Incorporated by reference
to Exhibit 10.22 of PIMCO Advisors' Report on Form 10-K for the fiscal year
ended December 31, 1996)
10.46 Credit Agreement dated as of April 12, 1996 between PIMCO Advisors L.P. as
borrower and Citicorp USA, Inc. as initial lender and agent. (Incorporated by
reference to Exhibit 10.23 of PIMCO Advisors' Report on Form 10-Q for the
fiscal quarter ended March 31, 1996)
10.47 PIMCO Advisors L.P. Executive Deferred Compensation Plan. (Incorporated by
reference to Exhibit 10.24 of PIMCO Advisors' Report on Form 10-K for the
fiscal ended December 31, 1996)
10.48 Employment Agreement: David B. Breed. (Incorporated by reference to Exhibit
10.25 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
10.49 Employment Agreement: William H. Gross. (Incorporated by reference to Exhibit
10.26 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
10.50 Employment Agreement: John L. Hague. (Incorporated by reference to Exhibit
10.27 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
</TABLE>

II-4
<PAGE> 155

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------ -------------------------------------------------------------------------------
<S> <C>
10.51 Employment Agreement: Brent R. Harris. (Incorporated by reference to Exhibit
10.28 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
10.52 Employment Agreement: James F. Muzzy. (Incorporated by reference to Exhibit
10.29 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
10.53 Employment Agreement: Daniel S. Pickett. (Incorporated by reference to Exhibit
10.30 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
10.54 Employment Agreement: William F. Podlich, III. (Incorporated by reference to
Exhibit 10.31 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended
December 31, 1996)
10.55 Employment Agreement: William S. Thompson, Jr. (Incorporated by reference to
Exhibit 10.32 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended
December 31, 1996)
10.56 Employment Agreement: Benjamin L. Trosky. (Incorporated by reference to Exhibit
10.33 of PIMCO Advisors' Report on Form 10-K for the fiscal year ended December
31, 1996)
10.57* Agreement and Plan of Merger dated November 4, 1997
10.58* Put Right dated November 4, 1997
10.59* Exchange Right dated November 4, 1997
10.60* Note Agreement dated November 4, 1997
10.61* Contribution Agreement dated November 4, 1997
10.62* Certificate of Long Term Indemnity Indebtedness dated November 4, 1997
10.63* Amended and Restated Release and Indemnity Agreement dated November 4, 1997
10.64* Amended and Restated Tax Indemnity Agreement dated November 4, 1997
10.65* Registration Rights Agreement dated November 4, 1997
11.1* Statement re computation of per unit earnings
23.1* Consent of Richards, Layton & Finger (included as part of Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP
23.3* Consent of Price Waterhouse LLP
23.4* Consent of Deloitte & Touche
24.1 Power of Attorney (included on signature page)
27.1* Financial Data Schedule
</TABLE>

- ---------------

* To be filed by amendment.

(b) FINANCIAL STATEMENT SCHEDULES INCLUDED IN PART II.

Schedule II -- Valuation and Qualifying Accounts of Oppenheimer
Capital, L.P. and PIMCO Advisors

All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Commission Exchange are not required
under the related instructions or are inapplicable and therefore have been
omitted.

II-5
<PAGE> 156

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Partnership pursuant to the foregoing provisions, or otherwise, the Partnership
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Partnership of expenses
incurred or paid by a director, officer or controlling person of the Partnership
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Partnership will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act, and will be governed
by the final adjudication of such issue.

(b) THE UNDERSIGNED REGISTRANT HEREBY UNDERTAKES THAT:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Partnership pursuant to Rule 424(b)(1) or
(4) and 497(h) under the Securities Act shall be deemed to be a part of
this Registration Statement as of the time declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-6
<PAGE> 157

SIGNATURES

Pursuant to the requirements of the Securities Act, the Partnership has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, New York on the
5th day of November, 1997.

OPPENHEIMER CAPITAL, L.P.

/s/ WILLIAM D. CVENGROS

--------------------------------------
William D. Cvengros
Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
William D. Cvengros and Robert M. Fitzgerald as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement on Form S-1 and to file the same with all
exhibits thereto and any other documents in connection therewith, with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM D. CVENGROS Board Member, November 5, 1997
- ---------------------------------------- Chief Executive Officer
William D. Cvengros (Principal Executive Officer)
/s/ ROBERT M. FITZGERALD Board Member, November 5, 1997
- ---------------------------------------- Senior Vice President,
Robert M. Fitzgerald Chief Financial Officer
(Principal Financial and
Accounting Officer)

/s/ KENNETH M. POOVEY Board Member, November 5, 1997
- ---------------------------------------- Executive Vice President
Kenneth M. Poovey
</TABLE>

II-7

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 14, 1997
relating to the consolidated financial statements of PIMCO Advisors L.P. as of
December 31, 1996 and for the year then ended, which appear in such Prospectus.
We also consent to the reference to us under the headings 'Experts' in such
Prospectus.

PRICE WATERHOUSE LLP

Los Angeles, California
November 4, 1997