<PAGE>
As filed with the Securities and Exchange Commission on September 10, 1996
Registration No. 33-36528
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 23 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 25 [X]
(Check appropriate box or boxes)
PIMCO Funds: Equity Advisors Series
(Exact Name of Registrant as Specified in Charter)
840 Newport Center Drive, Newport Beach, CA 92660
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number: (714) 640-3593
Sharon A. Cheever
Vice President and Investment Counsel
of Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
(Name and Address of Agent for Service)
Copies to:
Jeffrey S. Puretz
Dechert Price & Rhoads
1500 K Street, N.W.
Suite 500
Washington, D.C. 20005
[X] It is proposed that this filing will become effective on September 15, 1996
pursuant to paragraph (b) of Rule 485.
<PAGE>
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940 and filed its Notice pursuant to Rule 24f-2 for the fiscal year ended
June 30, 1996 on August 28, 1996.
<PAGE>
PIMCO FUNDS: EQUITY ADVISORS SERIES
CROSS-REFERENCE SHEET
Required by Rule 404 Under the Securities Act of 1933
Prospectus for the Institutional Class and Administrative
Class of NFJ Equity Income, NFJ Diversified Low P/E,
NFJ Small Cap Value, Cadence Capital Appreciation,
Cadence Mid Cap Growth, Cadence Micro Cap Growth,
Cadence Small Cap Growth, Columbus Circle Investors Core Equity,
Columbus Circle Investors Mid Cap Equity, Parametric
Enhanced Equity, Parametric Structured Emerging Markets,
Blairlogie Emerging Markets, Blairlogie International Active, and
Balanced Funds
Part A
<TABLE>
<CAPTION>
Item Heading
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Prospectus Summary;
Expense Information
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objectives and
Registrant Policies; Investment
Restrictions;
Characteristics and Risks
of Securities and
Investment Techniques
5. Management of the Fund Management of the Trust
6. Capital Stock and Other Other Information; Net
Securities Asset Value; Portfolio
Transactions; Dividends,
Distributions and Taxes
7. Purchase of Securities Purchase of Shares
Being Offered
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PIMCO FUNDS: EQUITY ADVISORS SERIES
CROSS-REFERENCE SHEET
Required by Rule 404 Under the Securities Act of 1933
Prospectus for the Institutional Class and
Administrative Class of Cadence Capital Appreciation,
Cadence Mid Cap Growth, Cadence Micro Cap Growth,
and Cadence Small Cap Growth Funds
Part A
<TABLE>
<CAPTION>
Item Heading
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Prospectus Summary;
Expense Information
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objectives and
Registrant Policies; Investment
Restrictions;
Characteristics and Risks
of Securities and
Investment Techniques
5. Management of the Fund Management of the Trust
6. Capital Stock and Other Other Information; Net
Securities Asset Value; Portfolio
Transactions; Dividends,
Distributions and Taxes
7. Purchase of Securities Purchase of Shares
Being Offered
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PIMCO FUNDS: EQUITY ADVISORS SERIES
CROSS-REFERENCE SHEET
Required by Rule 404 Under the Securities Act of 1933
Statement of Additional Information for the
NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value,
Cadence Capital Appreciation, Cadence Mid Cap Growth, Cadence
Micro Cap Growth, Cadence Small Cap Growth, Columbus Circle
Investors Core Equity, Columbus Circle Investors Mid Cap
Equity, Parametric Enhanced Equity, Parametric Structured Emerging
Markets, Blairlogie Emerging Markets, Blairlogie International
Active and Balanced Funds
Part B
<TABLE>
<CAPTION>
Item Heading
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Management of the Trust
History
13. Investment Objectives and Risk Factors and
Policies Investment Techniques;
Investment Restrictions
14. Management of the Management of the Trust
Registrant
15. Control Persons and Holders of Securities
Principal Holders of
Securities
16. Investment Advisory and Management of the Trust
Other Services
17. Brokerage Allocation Brokerage and Research
Services
18. Capital Stock and Other Voting Rights
Securities
19. Purchase, Redemption and Purchases and Redemptions
Pricing
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
20. Tax Status Taxation
21. Underwriters Distribution of Fund
Shares
22. Calculation of Performance Other Information
Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
P I M C O
PIMCO FUNDS
Equity Advisors Series
NFJ Equity Income Fund
NFJ Diversified Low P/E Fund
NFJ Small Cap Value Fund
Cadence Capital Appreciation Fund
Cadence Mid Cap Growth Fund
Cadence Micro Cap Growth Fund
Cadence Small Cap Growth Fund
Columbus Circle Investors Core Equity Fund
Columbus Circle Investors Mid Cap Equity Fund
Parametric Enhanced Equity Fund
Parametric Structured Emerging Markets Fund
Blairlogie Emerging Markets Fund
Blairlogie International Active Fund
Balanced Fund
PROSPECTUS
- --------------------------------------------------------------------------------
September 15, 1996
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(This page left blank intentionally)
<PAGE>
PROSPECTUS
September 15, 1996
PIMCO Funds: Equity Advisors Series (the "Trust"), formerly PIMCO Advisors
Institutional Funds, is a no-load, open-end management investment company
("mutual fund") which currently offers fourteen separate investment portfolios
(the "Funds"). Each Fund has its own investment objective and policies. The
Trust is designed to provide access to the professional investment management
services offered by PIMCO Advisors L.P. ("PIMCO Advisors") and its investment
management affiliates.
The Funds described in this Prospectus are as follows:
<TABLE>
<S> <C>
NFJ Equity Income Fund Columbus Circle Investors Core Equity Fund
NFJ Diversified Low P/E Fund Columbus Circle Investors Mid Cap Equity Fund
NFJ Small Cap Value Fund Parametric Enhanced Equity Fund
Cadence Capital Appreciation
Fund Parametric Structured Emerging Markets Fund*
Cadence Mid Cap Growth Fund Blairlogie Emerging Markets Fund
Cadence Micro Cap Growth Fund Blairlogie International Active Fund
Cadence Small Cap Growth
Fund* Balanced Fund
</TABLE>
*Not currently available for investment.
Information about the investment objective of each Fund, along with a
detailed description of the types of securities in which each Fund may invest,
and of investment policies and restrictions applicable to each Fund, are set
forth in this Prospectus. There can be no assurance that the investment
objective of any Fund will be achieved. Because the market value of the Funds'
investments will change, the investment returns and net asset value per share
of each Fund also will vary.
Each Fund offers two classes of shares: the "Institutional Class" and the
"Administrative Class." Shares of the Institutional Class are offered
primarily for direct investment by investors such as pension and profit
sharing plans, employee benefit trusts, endowments, foundations, corporations,
other institutions, and high net worth individuals. They also are offered
through certain financial intermediaries that charge their customers
transaction or other fees with respect to the customers' investment in the
Funds. Shares of the Administrative Class are offered primarily through
brokers, retirement plan administrators, and other financial intermediaries.
Administrative Class shares indirectly pay service fees to such entities for
services they provide to shareholders of that class. Administrative Class
shares of certain Funds are not currently available for investment. Shares of
each class of the Funds are offered for sale at the relevant next determined
net asset value for that class with no sales charge.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Funds. It should be read and retained for
ready reference to information about the Funds. A Statement of Additional
Information, dated September 15, 1996, as supplemented from time to time,
containing additional and more detailed information about the Funds, has been
filed with the Securities and Exchange Commission and is hereby incorporated
by reference into this Prospectus. It is available without charge and may be
obtained by writing or calling:
PIMCO Funds
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
Telephone:(800) 927-4648 (Current Shareholders)
(800) 800-0952 (New Accounts)
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PIMCO FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................................................... 3
Expense Information..................................................... 6
Financial Highlights.................................................... 8
Investment Objectives and Policies...................................... 12
Investment Restrictions................................................. 19
Characteristics and Risks of Securities and Investment Techniques....... 22
Management of the Trust................................................. 29
Purchase of Shares...................................................... 34
Redemption of Shares.................................................... 36
Portfolio Transactions.................................................. 38
Net Asset Value......................................................... 38
Dividends, Distributions and Taxes...................................... 39
Other Information....................................................... 40
</TABLE>
<PAGE>
3
PROSPECTUS SUMMARY
PIMCO Funds: Equity Advisors Series (the "Trust") is a no-load, open-end
management investment company ("mutual fund"), organized as a Massachusetts
business trust on August 24, 1990. The Trust currently offers fourteen separate
investment portfolios (the "Funds").
COMPARISON OF FUNDS
The following chart provides general information about each of the Funds. It
is qualified in its entirety by the more complete descriptions of the Funds
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FUND INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS
- ------------------------------------------------------------------------------
<C> <S>
NFJ Equity Income Seeks current income as a primary investment objective,
and long-term growth of capital as a secondary objective;
invests primarily in common stocks with below-average
price to earnings ratios and higher dividend yields
relative to their industry groups.
- ------------------------------------------------------------------------------
NFJ Diversified Low Seeks long-term growth of capital and income; invests
P/E primarily in common stocks with below-average price to
earnings ratios relative to their industry groups.
- ------------------------------------------------------------------------------
NFJ Small Cap Value Seeks long-term growth of capital and income; invests
primarily in common stocks of companies with market
capitalizations between $50 million and $1 billion and
below-average price to earnings ratios relative to their
industry groups.
- ------------------------------------------------------------------------------
Cadence Capital Seeks growth of capital; invests primarily in common
Appreciation stocks of companies with market capitalizations of at
least $100 million that have improving fundamentals and
whose stock is reasonably valued by the market.
- ------------------------------------------------------------------------------
Cadence Mid Cap Seeks growth of capital; invests primarily in common
Growth stocks of companies with market capitalizations in excess
of $500 million that have improving fundamentals and
whose stock is reasonably valued by the market.
- ------------------------------------------------------------------------------
Cadence Micro Cap Seeks long-term growth of capital; invests primarily in
Growth common stocks of companies with market capitalizations of
less than $100 million that have improving fundamentals
and whose stock is reasonably valued by the market.
- ------------------------------------------------------------------------------
Cadence Small Cap Seeks growth of capital; invests primarily in common
Growth stocks of companies with market capitalizations between
$50 million and $1 billion that have improving
fundamentals and whose stock is reasonably valued by the
market.
- ------------------------------------------------------------------------------
Columbus Circle Seeks long-term growth of capital, with income as a
Investors Core secondary objective; invests primarily in common stocks
Equity of companies with market capitalizations in excess of $3
billion.
- ------------------------------------------------------------------------------
Columbus Circle Seeks long-term growth of capital; invests primarily in
Investors Mid Cap common stocks of companies with market capitalizations
Equity between $800 million to $3 billion.
- ------------------------------------------------------------------------------
Parametric Enhanced Seeks to provide a total return which equals or exceeds
Equity the total return performance of the Standard & Poor's 500
Composite Stock Price Index; invests in common stocks
represented in that Index.
- ------------------------------------------------------------------------------
Parametric Seeks long-term growth of capital; invests primarily in
Structured Emerging common stocks of companies located in emerging market
Markets countries.
- ------------------------------------------------------------------------------
Blairlogie Emerging Seeks long-term growth of capital; invests primarily in
Markets common stocks of companies located in emerging market
countries.
- ------------------------------------------------------------------------------
Blairlogie Seeks long-term growth of capital; invests primarily in a
International diversified portfolio of international equity securities.
Active
- ------------------------------------------------------------------------------
Balanced Seeks total return; invests in common stocks, fixed
income securities and money market instruments.
- ------------------------------------------------------------------------------
</TABLE>
PIMCO FUNDS
<PAGE>
4
INVESTMENT RISKS AND CONSIDERATIONS
The following are some of the primary risks relevant to an investment in the
Funds and to the securities in which the Funds invest. Investors should read
the Prospectus carefully for a more complete discussion of the risks relating
to an investment in the Funds. The value of all securities and other
instruments held by the Funds vary from time to time in response to a wide
variety of market factors. Consequently, the net asset value per share of each
Fund will vary. The net asset value per share of any Fund may be less at the
time of redemption than it was at the time of investment. It is the policy of
all of the Funds except the Balanced Fund (the "Equity Funds"), all of which
invest primarily in common stock, to be as fully invested as practicable in
such securities at all times. This policy precludes any of the Equity Funds
from investing in debt securities as a defensive investment posture (although
the Equity Funds may invest in such securities to provide for payment of
expenses and to meet redemption requests). Accordingly, investors in these
Funds bear the risk of general declines in stock prices, and bear any risk that
an Equity Fund's exposure to such declines cannot be lessened by investment in
debt securities. For further information, see "Investment Objectives and
Policies--Equity Funds."
Certain Funds may invest in securities of foreign issuers, which may be
subject to additional risk factors, including foreign currency and political
risks, not applicable to securities of U.S. issuers. Investments by certain
Funds in securities of issuers based in countries with developing economies may
pose political, currency, and market risks greater than, or in addition to,
risks of investing in foreign developed countries. Certain of the Funds'
investment techniques may involve a form of borrowing, which may tend to
exaggerate the effect on net asset value of any increase or decrease in the
market value of a Fund's portfolio and may require liquidation of portfolio
positions when it is not advantageous to do so.
Certain Funds may use derivative instruments, consisting of futures, options,
options on futures, and swap agreements, for hedging purposes or as part of
their investment strategies. Use of these instruments may involve certain costs
and risks, including the risk that a Fund could not close out a position when
it would be most advantageous to do so, the risk of an imperfect correlation
between the value of the securities being hedged and the value of the
particular derivative instrument, and the risk that unexpected changes in
interest rates may adversely affect the value of a Fund's investments in
particular derivative instruments.
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser") serves as investment
adviser to the Trust. Subject to the supervision of the Board of Trustees of
the Trust, the Adviser supervises the investment program for the Funds in
accordance with each Fund's investment objective, policies, and restrictions.
For all of the Funds, the Adviser has engaged its affiliates to serve as
Portfolio Managers. Under the supervision of PIMCO Advisors, the Portfolio
Managers make determinations with respect to the purchase and sale of portfolio
securities, and they place, in the names of the Funds, orders for execution of
the Funds' transactions. Pacific Investment Management Company ("PIMCO")
manages the portion of the assets of the Balanced Fund allocated for investment
in fixed income securities. Parametric Portfolio Associates ("Parametric")
manages the Parametric Enhanced Equity Fund and the Parametric Structured
Emerging Markets Fund. NFJ Investment Group ("NFJ") manages the NFJ Equity
Income Fund, the NFJ Diversified Low P/E Fund, the NFJ Small Cap Value Fund,
and a portion of the assets of the Balanced Fund allocated for investment in
common stock. Cadence Capital Management ("Cadence") manages the Cadence
Capital Appreciation Fund, the Cadence Mid Cap Growth Fund, the Cadence Micro
Cap Growth Fund, the Cadence Small Cap Growth Fund, and a portion of the assets
of the Balanced Fund allocated for investment in common stock. Columbus Circle
Investors ("Columbus Circle") manages the Columbus Circle Investors Core Equity
Fund and the Columbus Circle Investors Mid Cap Equity Fund. Blairlogie Capital
Management ("Blairlogie") manages the Blairlogie Emerging Markets Fund and the
Blairlogie International Active Fund. PIMCO, Parametric, NFJ, Cadence, Columbus
Circle, and Blairlogie are each subsidiary partnerships of PIMCO Advisors. For
the Balanced Fund, PIMCO Advisors determines the allocation of the Fund's
assets among various asset classes and manages the portion of the assets
allocated for investment in money market instruments.
For its services, the Adviser receives fees based on the average daily net
assets of each Fund. The Portfolio Managers are compensated by the Adviser out
of its fees (not by the Trust). See "Management of the Trust."
<PAGE>
5
PURCHASE OF SHARES
Each Fund offers two classes of shares: the "Institutional Class" and the
"Administrative Class." Shares of the Institutional Class are offered primarily
for direct investment by institutional investors and high net worth
individuals. They are also offered through certain financial intermediaries
that charge their customers transaction or other fees with respect to the
customers' investment in the Funds. Shares of the Administrative Class are
offered primarily through brokers, retirement plan administrators and other
financial intermediaries. Administrative Class shares indirectly pay service
fees to such entities for services they provide to shareholders of that class.
Administrative Class shares of certain Funds are not currently available for
investment.
Shares of each class of the Funds are offered at the relevant next determined
net asset value with no sales charge. The minimum initial investment for shares
of either class is $200,000. The Cadence Micro Cap Growth Fund limits the
purchase of shares (contributed capital) by any one investor to $10,000,000,
exclusive of shares purchased through reinvestment of dividends and
distributions. Additionally, the Trust has determined to limit the aggregate
contributed capital by all investors in the Cadence Micro Cap Growth Fund to
$100,000,000. Therefore, when the aggregate contributed capital in the Fund
reaches such amount, the Fund will no longer be available for additional
investment, until such time as an existing investor redeems a dollar amount
sufficient to allow a new investment into the Fund. In addition, shares of the
Cadence Small Cap Growth Fund and the Parametric Structured Emerging Markets
Fund are not offered as of the date of this Prospectus; however, investment
opportunities in these Funds may be available in the future. These limitations
may be changed or eliminated at any time at the discretion of the Trust's Board
of Trustees. See "Purchase of Shares."
REDEMPTIONS AND EXCHANGES
Shares of each class of each Fund may be redeemed without cost at the
relevant net asset value per share of the class of that Fund next determined
after receipt of the redemption request. The redemption price may be more or
less than the purchase price.
Shares of a class of any Fund may be exchanged for shares of the same class
of any other Fund of the Trust offered generally to the public on the basis of
relative net asset values, or for shares of the same class of a series of the
PIMCO Funds: Pacific Investment Management Series, an affiliated no-load mutual
fund family composed primarily of fixed income portfolios managed by PIMCO. See
"Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute dividends from net investment income at least
annually (except for the NFJ Equity Income, NFJ Diversified Low P/E, and
Balanced Funds, which will distribute quarterly), and any net realized capital
gains at least annually. All dividends and distributions will be reinvested
automatically at net asset value in additional shares of the same class of the
same Fund, unless cash payment is requested. Dividends from net investment
income with respect to Administrative Class shares will be lower than those
paid with respect to Institutional Class shares, reflecting the payment of
service fees by that class. See "Dividends, Distributions and Taxes."
PIMCO FUNDS
<PAGE>
6
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (EACH CLASS):
<TABLE>
<S> <C>
Sales Load Imposed on Purchases.......................................... None
Sales Load Imposed on Reinvested Dividends............................... None
Redemption Fee........................................................... None
Exchange Fee............................................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS):
<TABLE>
<CAPTION>
ADVISORY ADMINISTRATIVE TOTAL
INSTITUTIONAL CLASS SHARES FEE FEE EXPENSES
-------------------------------------------- -------- -------------- --------
<S> <C> <C> <C>
NFJ Equity Income Fund...................... 0.45% 0.25% 0.70%
NFJ Diversified Low P/E Fund................ 0.45 0.25 0.70
NFJ Small Cap Value Fund.................... 0.60 0.25 0.85
Cadence Capital Appreciation Fund........... 0.45 0.25 0.70
Cadence Mid Cap Growth Fund................. 0.45 0.25 0.70
Cadence Micro Cap Growth Fund............... 1.25 0.25 1.50
Cadence Small Cap Growth Fund............... 1.00 0.25 1.25
Columbus Circle Investors Core Equity Fund.. 0.57 0.25 0.82
Columbus Circle Investors Mid Cap Equity
Fund....................................... 0.63 0.25 0.88
Parametric Enhanced Equity Fund............. 0.45 0.25 0.70
Parametric Structured Emerging Markets Fund. 0.45 0.50 0.95
Blairlogie Emerging Markets Fund............ 0.85 0.50 1.35
Blairlogie International Active Fund........ 0.60 0.50 1.10
Balanced Fund............................... 0.45 0.25 0.70
</TABLE>
<TABLE>
<CAPTION>
ADVISORY ADMINISTRATIVE SERVICE TOTAL
ADMINISTRATIVE CLASS SHARES FEE FEE FEE EXPENSES
------------------------------------ -------- -------------- ------- --------
NFJ Equity Income Fund.............. 0.45% 0.25% 0.25% 0.95%
<S> <C> <C> <C> <C>
NFJ Diversified Low P/E Fund........ 0.45 0.25 0.25 0.95
NFJ Small Cap Value Fund............ 0.60 0.25 0.25 1.10
Cadence Capital Appreciation Fund... 0.45 0.25 0.25 0.95
Cadence Mid Cap Growth Fund......... 0.45 0.25 0.25 0.95
Cadence Micro Cap Growth Fund....... 1.25 0.25 0.25 1.75
Cadence Small Cap Growth Fund....... 1.00 0.25 0.25 1.50
Columbus Circle Investors Core Eq-
uity Fund.......................... 0.57 0.25 0.25 1.07
Columbus Circle Investors Mid Cap
Equity Fund........................ 0.63 0.25 0.25 1.13
Parametric Enhanced Equity Fund..... 0.45 0.25 0.25 0.95
Parametric Structured Emerging Mar-
kets Fund.......................... 0.45 0.50 0.25 1.20
Blairlogie Emerging Markets Fund.... 0.85 0.50 0.25 1.60
Blairlogie International Active
Fund............................... 0.60 0.50 0.25 1.35
Balanced Fund....................... 0.45 0.25 0.25 0.95
</TABLE>
For a more detailed discussion of the Funds' fees and expenses, see "Fund
Administrator," "Advisory and Administrative Fees," and "Service Fees" under
the caption "Management of the Trust."
<PAGE>
7
EXAMPLE OF FUND EXPENSES:
An investor would pay the following expenses on a $1,000 investment assuming
(1) a hypothetical 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NFJ Equity Income Fund...................... $ 7 $22 $39 $ 87
NFJ Diversified Low P/E Fund................ $ 7 $22 $39 $ 87
NFJ Small Cap Value Fund.................... $ 9 $27 $47 $105
Cadence Capital Appreciation Fund........... $ 7 $22 $39 $ 87
Cadence Mid Cap Growth Fund................. $ 7 $22 $39 $ 87
Cadence Micro Cap Growth Fund............... $15 $47 $82 $179
Cadence Small Cap Growth Fund............... $13 $40 $69 $151
Columbus Circle Investors Core Equity Fund.. $ 8 $26 $46 $101
Columbus Circle Investors Mid Cap Equity
Fund....................................... $ 9 $28 $49 $108
Parametric Enhanced Equity Fund............. $ 7 $22 $39 $ 87
Parametric Structured Emerging Markets Fund. $10 $30 $53 $117
Blairlogie Emerging Markets Fund............ $14 $43 $74 $162
Blairlogie International Active Fund........ $11 $35 $61 $134
Balanced Fund............................... $ 7 $22 $39 $ 87
<CAPTION>
ADMINISTRATIVE CLASS SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NFJ Equity Income Fund...................... $10 $30 $53 $117
NFJ Diversified Low P/E Fund................ $10 $30 $53 $117
NFJ Small Cap Value Fund.................... $11 $35 $61 $134
Cadence Capital Appreciation Fund........... $10 $30 $53 $117
Cadence Mid Cap Growth Fund................. $10 $30 $53 $117
Cadence Micro Cap Growth Fund............... $18 $55 $95 $206
Cadence Small Cap Growth Fund............... $15 $47 $82 $179
Columbus Circle Investors Core Equity Fund.. $11 $34 $59 $131
Columbus Circle Investors Mid Cap Equity
Fund....................................... $12 $36 $62 $137
Parametric Enhanced Equity Fund............. $10 $30 $53 $117
Parametric Structured Emerging Markets Fund. $12 $38 $66 $145
Blairlogie Emerging Markets Fund............ $16 $50 $87 $190
Blairlogie International Active Fund........ $14 $43 $74 $163
Balanced Fund............................... $10 $30 $53 $117
</TABLE>
The above tables are provided to assist investors in understanding the
various expenses which may be borne directly or indirectly in connection with
an investment in the Funds. This example should not be considered a
representation of past or future expenses or performance. Actual expenses may
be higher or lower than those shown.
PIMCO FUNDS
<PAGE>
8
FINANCIAL HIGHLIGHTS
The following information regarding selected per share data and ratios for
shares of each Fund is part of the Trust's financial statements which are
included in the Trust's Annual Report dated June 30, 1996 and incorporated by
reference in the Statement of Additional Information. The Trust's audited
financial statements and the selected per share data and ratios as of June 30,
1996 have been examined by Price Waterhouse LLP, independent accountants, whose
opinion thereon is also included in the Annual Report, which may be obtained
without charge. Information is presented for each Fund, and class thereof, of
the Trust which had investment operations during the reporting periods. Prior
to November 1, 1995, the Trust's fiscal year end was October 31, and
information for each of the five years in the period ended October 31, 1995 has
been audited by the Funds' former independent accountants.
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS DISTRIBUTIONS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET FROM NET DISTRIBUTIONS
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED FROM
ENDED OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS EQUALIZATION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NFJ EQUITY INCOME FUND
Institutional Class
6/30/96 $13.09 $ 0.78 $ 1.31 $ 2.09 $(0.34) $(0.48) $ 0.00
10/31/95 11.75 0.46 1.67 2.13 (0.46) (0.33) 0.00
10/31/94 11.95 0.42 (0.16) 0.26 (0.42) (0.04) 0.00
10/31/93 10.92 0.40 1.40 1.80 (0.40) (0.37) 0.00
10/31/92 10.77 0.45 0.93 1.38 (0.43) (0.57) (0.23)
10/31/91(a) 10.00 0.24 0.92 1.16 (0.24) (0.15) 0.00
Administrative Class
6/30/96 13.13 0.75 1.31 2.06 (0.36) (0.48) 0.00
10/31/95(b) 11.12 0.39 2.35 2.74 (0.40) (0.33) 0.00
NFJ DIVERSIFIED LOW P/E FUND
Institutional Class
6/30/96 $12.53 $ 0.25 $ 1.62 $ 1.87 $(0.17) $(1.77) $ 0.00
10/31/95 11.55 0.30 2.18 2.48 (0.30) (1.20) 0.00
10/31/94 11.92 0.30 (0.28) 0.02 (0.29) (0.10) 0.00
10/31/93 10.05 0.28 2.36 2.64 (0.28) (0.49) 0.00
10/31/92(c) 10.00 0.24 0.23 0.47 (0.24) (0.18) 0.00
NFJ SMALL CAP VALUE FUND
Institutional Class
6/30/96 $13.10 $ 0.56 $ 1.49 $ 2.05 $(0.21) $(0.74) $ 0.00
10/31/95 12.07 0.28 1.92 2.20 (0.28) (0.89) 0.00
10/31/94 12.81 0.29 (0.65) (0.36) (0.29) (0.09) 0.00
10/31/93 10.98 0.24 2.33 2.57 (0.24) (0.50) 0.00
10/31/92 10.09 0.22 1.17 1.39 (0.22) (0.24) (0.04)
10/31/91(d) 10.00 0.02 0.10 0.12 (0.03) 0.00 0.00
Administrative Class
6/30/96(e) 13.16 0.54 1.43 1.97 (0.19) (0.74) 0.00
CADENCE CAPITAL APPRECIATION FUND
Institutional Class
6/30/96 $16.94 $ 0.35 $ 1.99 $ 2.34 $(0.15) $(1.03) $ 0.00
10/31/95 13.34 0.18 3.60 3.78 (0.18) 0.00 0.00
10/31/94 13.50 0.14 (0.12) 0.02 (0.14) (0.04) 0.00
10/31/93 11.27 0.11 2.73 2.84 (0.11) (0.50) 0.00
10/31/92 11.02 0.14 1.05 1.19 (0.14) (0.72) (0.08)
10/31/91(a) 10.00 0.09 1.02 1.11 (0.09) 0.00 0.00
CADENCE MID CAP GROWTH FUND
Institutional Class
6/30/96 $18.16 $ 0.32 $ 1.53 $ 1.85 $(0.14) $(0.43) $ 0.00
10/31/95 13.97 0.07 4.19 4.26 (0.07) 0.00 0.00
10/31/94 13.97 0.06 0.01 0.07 (0.06) (0.01) 0.00
10/31/93 11.29 0.07 2.70 2.77 (0.07) (0.02) 0.00
10/31/92 10.28 0.10 1.03 1.13 (0.10) 0.00 (0.02)
10/31/91(f) 10.00 0.02 0.27 0.29 (0.01) 0.00 0.00
Administrative Class
6/30/96 18.17 0.28 1.53 1.81 (0.11) (0.43) 0.00
10/31/95(b) 13.31 0.03 4.85 4.88 (0.02) 0.00 0.00
CADENCE MICRO CAP GROWTH FUND
Institutional Class
6/30/96 $15.38 $ 0.00 $ 3.43 $ 3.43 $ 0.00 $(0.34) $ 0.00
10/31/95 11.87 (0.04) 3.55 3.51 0.00 0.00 0.00
10/31/94 11.06 (0.03) 0.84 0.81 0.00 0.00 0.00
10/31/93(g) 10.00 0.00 1.07 1.07 0.00 0.00 0.00
Administrative Class
6/30/96(h) 16.73 0.03 1.70 1.73 0.00 0.00 0.00
</TABLE>
- --------
(a) From commencement of operations, March 8, 1991.
(b) From commencement of operations, November 30, 1994.
(c) From commencement of operations, December 30, 1991.
(d) From commencement of operations, October 1, 1991.
(e) From commencement of operations, November 1, 1995.
(f) From commencement of operations, August 26, 1991.
(g) From commencement of operations, June 25, 1993.
(h) From commencement of operations, April 1, 1996.
* Annualized.
<PAGE>
9
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
DISTRIBUTIONS VALUE END EXPENSES TO INCOME TO PORTFOLIO AVERAGE
FROM RETURN TOTAL END TOTAL OF PERIOD AVERAGE AVERAGE TURNOVER COMMISSION
OF CAPITAL DISTRIBUTIONS OF PERIOD RETURN (000'S) NET ASSETS NET ASSETS RATE RATE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $(0.82) $14.36 16.35% $116,714 0.70%* 3.41%* 52.30% $0.06
0.00 (0.79) 13.09 19.36 118,015 0.70 3.83 46.49 0.06
0.00 (0.46) 11.75 2.25 92,365 0.70 3.77 35.56
0.00 (0.77) 11.95 16.65 67,854 0.70 3.55 38.60
0.00 (1.23) 10.92 12.89 30,506 0.70 3.83 46.74
0.00 (0.39) 10.77 11.81 15,628 0.74* 4.18* 61.51
0.00 (0.84) 14.35 16.08 6,097 0.95* 3.19* 52.30 0.06
0.00 (0.73) 13.13 25.69 140 0.95* 3.43* 43.27 N/A
$ 0.00 $(1.94) $12.46 16.24% $ 52,727 0.70%* 2.40%* 28.53% $0.06
0.00 (1.50) 12.53 24.98 14,443 0.70 2.50 71.02 0.06
0.00 (0.39) 11.55 0.15 15,442 0.70 2.34 43.70
0.00 (0.77) 11.92 26.35 22,930 0.70 2.43 28.19
0.00 (0.42) 10.05 4.68 18,083 0.70* 2.57* 72.77
$ 0.00 $(0.95) $14.20 16.35% $ 29,017 0.85%* 2.12%* 35.21% $0.04
0.00 (1.17) 13.10 19.88 35,093 0.85 2.25 49.57 0.04
0.00 (0.38) 12.07 (2.89) 31,236 0.85 2.23 48.12
0.00 (0.74) 12.81 23.60 46,523 0.85 2.05 41.80
0.00 (0.50) 10.98 13.75 18,261 0.85 2.16 26.77
0.00 (0.03) 10.09 1.19 5,060 1.09* 3.06* 0.00
0.00 (0.93) 14.20 15.64 4,433 1.10* 1.86* 35.21 0.04
$ 0.00 $(1.18) $18.10 14.65% $348,728 0.70%* 1.33%* 73.48% $0.04
0.00 (0.18) 16.94 28.47 236,220 0.70 1.22 82.69 0.05
0.00 (0.18) 13.34 0.15 165,441 0.70 1.17 76.75
0.00 (0.61) 13.50 25.30 84,990 0.70 0.94 81.15
0.00 (0.94) 11.27 10.75 36,334 0.70 1.13 134.17
0.00 (0.09) 11.02 11.19 18,813 0.75* 1.55* 40.54
$ 0.00 $(0.57) $19.44 10.37% $231,011 0.70%* 1.11%* 78.81% $0.04
0.00 (0.07) 18.16 30.54 189,320 0.70 0.43 78.29 0.04
0.00 (0.07) 13.97 0.58 121,791 0.70 0.45 60.85
0.00 (0.09) 13.97 24.57 67,625 0.70 0.56 97.87
0.00 (0.12) 11.29 10.91 21,213 0.70 0.87 65.92
0.00 (0.01) 10.28 2.98 2,748 0.82* 0.92* 13.41
0.00 (0.54) 19.44 10.17 1,071 0.95* 0.89* 78.81 0.04
0.00 (0.02) 18.17 36.64 892 0.94* 0.23* 71.73 N/A
$ 0.00 $(0.34) $18.47 22.64% $ 83,973 1.50%* (0.45%)* 53.96% $0.02
0.00 0.00 15.38 29.54 69,775 1.50 (0.37) 86.68 0.03
0.00 0.00 11.87 7.31 32,605 1.50 (0.25) 58.81
(0.01) (0.01) 11.06 10.81 10,827 1.50* (0.02)* 15.98
0.00 0.00 18.46 10.34 566 1.73* (0.74)* 53.96 0.02
</TABLE>
PIMCO FUNDS
<PAGE>
10
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS DISTRIBUTIONS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET FROM NET DISTRIBUTIONS
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED FROM
ENDED OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS EQUALIZATION
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CADENCE SMALL CAP GROWTH FUND
Institutional Class
6/30/96 $21.02 $2.02+ $(0.61)+ $ 1.41 $ 0.00 $(1.60) $ 0.00
10/31/95 19.38 (0.05) 3.12 3.07 0.00 (1.43) 0.00
10/31/94 19.15 (0.02) 0.89 0.87 0.00 (0.64) 0.00
10/31/93 15.80 (0.06) 6.19 6.13 0.00 (2.78) 0.00
10/31/92 14.87 0.01 1.50 1.51 (0.01) (0.57) 0.00
10/31/91(i) 10.00 0.02 5.03 5.05 (0.02) (0.16) 0.00
Administrative Class
6/30/96 21.01 2.02 (0.61) 1.41 0.00 (1.60) 0.00
10/31/95(j) 21.90 (0.02) (0.87) (0.89) 0.00 0.00 0.00
COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND
Institutional Class
6/30/96 $12.72 $0.51 $ 0.65 $ 1.16 $(0.05)+ $(0.28) $ 0.00
10/31/95(k) 10.00 0.07 2.71 2.78 (0.06) 0.00 0.00
Administrative Class
6/30/96 12.73 0.49 0.65 1.14 (0.03)+ (0.28) 0.00
10/31/95(l) 11.45 0.02 1.28 1.30 (0.02) 0.00 0.00
COLUMBUS CIRCLE INVESTORS MID CAP EQUITY
FUND
Institutional Class
6/30/96 $12.92 $0.49 $ 1.62 $ 2.11 $ 0.00 $(0.37) $ 0.00
10/31/95(k) 10.00 0.02 2.92 2.94 (0.02) 0.00 0.00
PARAMETRIC ENHANCED EQUITY FUND
Institutional Class
6/30/96 $14.44 $0.34 $ 1.67 $ 2.01 $(0.16) $(0.38) $ 0.00
10/31/95 11.99 0.25 2.62 2.87 (0.25) (0.17) 0.00
10/31/94 12.08 0.25 (0.04) 0.21 (0.25) (0.05) 0.00
10/31/93 11.76 0.23 0.74 0.97 (0.23) (0.42) 0.00
10/31/92 10.80 0.16 1.06 1.22 (0.16) (0.04) (0.06)
10/31/91(m) 10.00 0.16 0.80 0.96 (0.16) 0.00 0.00
BLAIRLOGIE EMERGING MARKETS FUND
Institutional Class
6/30/96 $11.27 $0.03 $ 1.40 $ 1.43 $(0.04) $ 0.00 $ 0.00
10/31/95 16.53 0.07 (4.55) (4.48) (0.06) (0.72) 0.00
10/31/94 12.27 (0.01) 4.45 4.44 0.00 (0.18) 0.00
10/31/93(n) 10.00 0.03 2.52 2.55 (0.02) (0.26) 0.00
Administrative Class
6/30/96 11.24 0.02 1.40 1.42 (0.03) 0.00 0.00
10/31/95 16.95 0.00 (4.95) (4.95) (0.05) (0.71) 0.00
BLAIRLOGIE INTERNATIONAL ACTIVE FUND
Institutional Class
6/30/96 $11.74 $0.72 $ 0.72 $ 1.44 $(0.43)++ $(0.21) $ 0.00
10/31/95 11.86 0.10 0.30 0.40 (0.09) (0.43) 0.00
10/31/94 10.69 0.09 1.15 1.24 (0.03) (0.04) 0.00
10/31/93(o) 10.00 0.05 0.69 0.74 (0.04) (0.01) 0.00
Administrative Class
6/30/96 11.73 0.69 0.72 1.41 (0.42)+++ (0.21) 0.00
10/31/95(b) 11.21 0.02 1.01 1.03 (0.08) (0.43) 0.00
BALANCED FUND#
Institutional Class
6/30/96 $11.89 $0.27 $ 0.76 $ 1.03 $(0.27) $(1.01) $ 0.00
10/31/95 10.35 0.44 1.54 1.98 (0.44) 0.00 0.00
10/31/94 10.84 0.34 (0.34) 0.00 (0.34) (0.15) 0.00
10/31/93 10.42 0.35 0.68 1.03 (0.35) (0.26) 0.00
10/31/92(p) 10.00 0.12 0.52 0.64 (0.12) (0.10) 0.00
</TABLE>
- --------
(i) From commencement of operations, January 7, 1991.
+ Per share amounts based on average
number of shares outstanding during
the period.
(j) From commencement of operations, September 27, 1995.
(k) From commencement of operations, December 28, 1994.
+ Including dividend in excess of
$0.01.
(l) From commencement of operations, May 31, 1995.
(m) From commencement of operations, February 11, 1991.
++ Including dividend in excess of
$0.36.
(n) From commencement of operations, June 1, 1993.
(o) From commencement of operations, June 8, 1993.
+++ Including dividend in excess of
$0.35.
(p) From commencement of operations, June 25, 1992.
# NFJ and Cadence began serving as
Portfolio Managers of the portion
of the Balanced Fund allocated for
investment in common stock on
August 1, 1996. Prior to August 1,
1996, a different firm served as
Portfolio Manager.
* Annualized.
<PAGE>
11
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
DISTRIBUTIONS VALUE END EXPENSES TO INCOME TO PORTFOLIO AVERAGE
FROM RETURN TOTAL END TOTAL OF PERIOD AVERAGE AVERAGE TURNOVER COMMISSION
OF CAPITAL DISTRIBUTIONS OF PERIOD RETURN (000'S) NET ASSETS NET ASSETS RATE RATE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $(1.60) $20.83 7.22% $ 32,954 1.25%* (0.20%)* 59.00% $0.02
0.00 (1.43) 21.02 17.39 73,977 1.25 (0.27) 85.61 0.02
0.00 (0.64) 19.38 4.62 50,425 1.25 (0.33) 65.53
0.00 (2.78) 19.15 38.80 43,308 1.25 (0.35) 62.15
0.00 (0.58) 15.80 10.20 33,734 1.25 0.09 66.05
0.00 (0.18) 14.87 50.68 33,168 1.29* 0.11* 47.84
0.00 (1.60) 20.82 7.18 112 1.50* (0.41)* 59.00 0.02
0.00 0.00 21.01 (5.34) 544 1.60* (0.82)* 8.80 N/A
$0.00 $(0.33) $13.55 9.41% $ 10,452 0.82%* 0.53%* 73.16% $0.04
0.00 (0.06) 12.72 27.86 7,791 0.82* 0.79* 122.88 0.03
0.00 (0.31) 13.56 9.23 33,575 1.07* 0.28* 73.16 0.04
0.00 (0.02) 12.73 11.34 24,645 1.06* 0.34* 57.96 N/A
$0.00 $(0.37) $14.66 16.72% $ 8,378 0.88%* (0.32%)* 96.62% $0.03
0.00 (0.02) 12.92 29.34 8,357 0.88 0.24 131.58 0.04
$0.00 $(0.54) $15.91 14.21% $ 83,425 0.70%* 1.58%* 52.83% $0.05
0.00 (0.42) 14.44 24.46 73,999 0.70 1.91 20.59 0.05
0.00 (0.30) 11.99 1.83 65,915 0.70 2.20 43.58
0.00 (0.65) 12.08 8.20 46,724 0.70 1.89 15.02
0.00 (0.26) 11.76 11.46 36,515 0.70 1.81 16.85
0.00 (0.16) 10.80 9.59 4,451 0.73* 2.14* 0.15
$0.00 $(0.04) $12.66 12.70% $ 80,545 1.35%* 0.84%* 74.04% $0.01
0.00 (0.78) 11.27 (27.70) 73,539 1.35 0.57 118.18 0.03
0.00 (0.18) 16.53 36.31 79,620 1.35 (0.06) 79.04
0.00 (0.28) 12.27 25.55 14,625 1.34* 0.64* 36.51
0.00 (0.03) 12.63 12.70 368 1.61* 0.18* 74.04 0.01
0.00 (0.76) 11.24 (27.96) 830 1.62 0.02 118.18 N/A
$0.00 $(0.64) $12.54 12.54% $ 70,207 1.10%* 0.81%* 59.56% $0.02
0.00 (0.52) 11.74 3.83 63,607 1.10 1.10 63.12 0.03
0.00 (0.07) 11.86 11.68 22,569 1.10 1.12 88.55
0.00 (0.05) 10.69 7.39 8,299 1.10* 0.91* 19.61
0.00 (0.63) 12.51 12.33 5,624 1.35* 1.04* 59.56 0.02
0.00 (0.51) 11.73 9.61 675 1.34* 0.50* 58.07 N/A
$0.00 $(1.28) $11.64 9.07% $ 82,562 0.70%* 3.46%* 139.59% $0.05
0.00 (0.44) 11.89 19.47 72,638 0.70 3.73 43.10 0.04
0.00 (0.49) 10.35 0.08 130,694 0.70 3.25 46.72
0.00 (0.61) 10.84 10.06 126,410 0.70 3.10 19.32
0.00 (0.22) 10.42 6.40 99,198 0.70* 3.36* 38.51
</TABLE>
PIMCO FUNDS
<PAGE>
12
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and general investment policies of each Fund are
described below. There can be no assurance that the investment objective of
any Fund will be achieved. Because the market value of each Fund's investments
will change, the net asset value per share of each Fund also will vary.
NFJ Equity Income Fund seeks current income as a primary investment
objective, and long-term growth of capital as a secondary objective. In
pursuing these objectives, the Fund invests primarily in common stocks
characterized by having below-average price to earnings ("P/E") ratios and
higher dividend yields relative to their industry groups. In selecting
securities, the Portfolio Manager classifies a universe of approximately 2,000
stocks by industry, each of which has a minimum market capitalization of $200
million at the time of investment. The universe is then screened to find the
lowest P/E ratios in each industry, subject to application of quality and
price momentum screens. From this group, approximately 25 stocks with the
highest yields are chosen for the Fund. The universe is then rescreened to
find the highest yielding stock in each industry, subject to application of
quality and price momentum screens. From this group, approximately 25 stocks
with the lowest P/E ratios are added to the Fund. Although quarterly
rebalancing is a general rule, replacements are made whenever an alternative
stock within the same industry has a significantly lower P/E ratio or higher
dividend yield than the current Fund holding. For information on other
investment policies, see "Investment Objectives and Policies--Equity Funds."
See "Characteristics and Risks of Securities and Investment Techniques" in the
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices.
NFJ Diversified Low P/E Fund seeks long-term growth of capital and income.
In pursuing this objective, the Fund invests primarily in common stocks
characterized by having below-average P/E ratios relative to their industry
group. In selecting securities, the Portfolio Manager classifies a universe of
approximately 2,000 stocks by industry, each of which has a minimum market
capitalization of $200 million at the time of investment. The universe is then
screened to find the stocks with the lowest P/E ratios in each industry,
subject to application of quality and price momentum screens. The stocks in
each industry with the lowest P/E ratios that pass the quality and price
momentum screens are then selected for the Fund. The Fund usually invests in
approximately 50 stocks. Although quarterly rebalancing is a general rule,
replacements are made whenever an alternative stock within the same industry
has a significantly lower P/E ratio than the current Fund holdings. For
information on other investment policies, see "Investment Objectives and
Policies--Equity Funds." See "Characteristics and Risks of Securities and
Investment Techniques" in the Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices.
NFJ Small Cap Value Fund seeks long-term growth of capital and income. In
pursuing this objective, the Fund invests primarily in common stocks from
companies with market capitalizations between $50 million and $1 billion at
the time of investment. In selecting securities, the Portfolio Manager divides
a universe of up to approximately 2,000 stocks into quartiles based upon P/E
ratio. The lowest quartile in P/E ratio is screened for market capitalizations
between $50 million and $1 billion, subject to application of quality and
price momentum screens. Approximately 100 stocks with the lowest P/E ratios
are combined in the Fund, subject to limits on the weighting for any one
industry. Although quarterly rebalancing is a general rule, replacements are
made whenever a holding achieves a higher P/E ratio than the Standard & Poor's
500 Composite Stock Price Index ("S&P 500") P/E ratio or its industry average
P/E ratio, or when an alternative stock within the same industry has a
significantly lower P/E ratio than the current Fund holding. For information
on other investment policies, see "Investment Objectives and Policies--Equity
Funds." See "Characteristics and Risks of Securities and Investment
Techniques" in the Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment practices.
Cadence Capital Appreciation Fund seeks growth of capital. In pursuing this
objective, the Fund invests primarily in common stocks of companies that have
improving fundamentals (such as growth of earnings and dividends) and whose
stock is reasonably valued by the market. Stocks for the Fund are chosen from
companies with market capitalizations of at least $100 million at the time of
investment. The Fund usually invests in approximately 60 to 100 common stocks
selected from a universe of the approximately 1,000 largest market
capitalization stocks. Each issue is screened and ranked using five distinct
computerized models, including: (i) a dividend growth screen, (ii) an equity
growth screen, (iii) an earnings growth screen, (iv) an earnings momentum
<PAGE>
13
screen, and (v) an earnings surprise screen. The Portfolio Manager believes
that the models identify the stocks in the universe exhibiting growth
characteristics with reasonable valuations. Stocks are replaced when they
score worse-than-median screen ranks, have negative earnings surprises, or
show poor relative price performance. The universe is rescreened frequently to
obtain a favorable composition of growth and value characteristics for the
entire Fund. For information on other investment policies, see "Investment
Objectives and Policies--Equity Funds." See "Characteristics and Risks of
Securities and Investment Techniques" in the Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices.
Cadence Mid Cap Growth Fund seeks growth of capital. In pursuing this
objective, the Fund invests primarily in common stocks of middle
capitalization companies that have improving fundamentals (such as growth of
earnings and dividends) and whose stock is reasonably valued by the market.
Stocks for the Fund are selected from a universe of companies with market
capitalizations in excess of $500 million at the time of investment, excluding
the 200 companies with the highest market capitalization. The Fund usually
invests in approximately 60 to 100 common stocks. Each issue is screened and
ranked using five distinct computerized models, including: (i) a dividend
growth screen, (ii) an equity growth screen, (iii) an earnings growth screen,
(iv) an earnings momentum screen, and (v) an earnings surprise screen. The
Portfolio Manager believes that the models identify the stocks in the universe
exhibiting growth characteristics with reasonable valuations. Stocks are
replaced when they score worse-than-median screen ranks, have negative
earnings surprises, or show poor relative price performance. The universe is
rescreened frequently to obtain a favorable composition of growth and value
characteristics for the entire Fund. For information on other investment
policies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of Securities and Investment Techniques" in the
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices.
Cadence Micro Cap Growth Fund seeks long-term growth of capital. In pursuing
this objective, the Fund invests primarily in common stocks of companies that
have improving fundamentals (such as growth of earnings and dividends) and
whose stock is reasonably valued by the market. The Fund usually invests in
approximately 60 to 100 common stocks selected from a universe of stocks with
publicly available market capitalizations of less than $100 million at the
time of investment. Each issue is screened and ranked using five distinct
computerized models, including: (i) a dividend growth screen, (ii) an equity
growth screen, (iii) an earnings growth screen, (iv) an earnings momentum
screen, and (v) an earnings surprise screen. The Portfolio Manager believes
that the models identify the stocks in the universe exhibiting growth
characteristics with reasonable valuations. Stocks are replaced when they
score worse-than-median screen ranks, have negative earnings surprises, or
show poor relative price performance. The universe is rescreened frequently to
obtain a favorable composition of growth and value characteristics for the
entire Fund. For information on other investment policies, see "Investment
Objectives and Policies--Equity Funds." See "Characteristics and Risks of
Securities and Investment Techniques" in the Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices.
Cadence Small Cap Growth Fund seeks growth of capital. In pursuing this
objective, the Fund invests primarily in common stocks of companies that have
improving fundamentals (such as growth of earnings and dividends) and whose
stock is reasonably valued by the market. The Fund usually invests in
approximately 60 to 100 common stocks selected from a universe of stocks with
market capitalizations of $50 million to $1 billion at the time of investment.
Each issue is screened and ranked using five distinct computerized models,
including: (i) a dividend growth screen, (ii) an equity growth screen, (iii)
an earnings growth screen, (iv) an earnings momentum screen, and (v) an
earnings surprise screen. The Portfolio Manager believes that the models
identify the stocks in the universe exhibiting growth characteristics with
reasonable valuations. Stocks are replaced when they score worse-than-median
screen ranks, have negative earnings surprises, or show poor relative price
performance. The universe is rescreened frequently to obtain a favorable
composition of growth and value characteristics for the entire Fund. For
information on other investment policies, see "Investment Objectives and
Policies--Equity Funds." See "Characteristics and Risks of Securities and
Investment Techniques" in the Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices.
PIMCO FUNDS
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14
Columbus Circle Investors Core Equity Fund seeks long-term growth of
capital, with income as a secondary objective. In pursuing these objectives,
the Fund attempts to exceed the total return performance of the S&P 500 over a
reasonable measurement period. The Fund usually invests in approximately 40 to
50 common stocks from companies with market capitalizations in excess of $3
billion at the time of investment. In selecting securities, the Portfolio
Manager uses an investment discipline called "Positive Momentum & Positive
Surprise." It is based on the premise that companies performing better than
expected will have rising securities prices, while companies producing less
than expected results will not. Through thorough analysis of company
fundamentals in the context of the prevailing economic environment, the
companies selected for purchase remain in the Fund only if they continue to
achieve or exceed expectations, and are sold when business or earnings results
are disappointing. Stock selection may include a significant portion of middle
capitalization companies combined with the large capitalization stocks.
The Fund may invest a portion of its assets in securities of foreign issuers
traded in foreign securities markets, which will not exceed 15% of the Fund's
net assets at the time of investment. Investing in the securities of foreign
issuers involves special risks and considerations not typically associated
with investing in U.S. companies. The Fund may also purchase and write call
and put options on securities, securities indexes and on foreign currencies;
enter into futures contracts and use options on futures contracts; and engage
in forward foreign currency contracts. For information on other investment
policies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of Securities and Investment Techniques" in the
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices.
Columbus Circle Investors Mid Cap Equity Fund seeks long-term growth of
capital. In pursuing this objective, the Fund usually invests in approximately
40 to 60 common stocks from companies with market capitalizations of $800
million to $3 billion at the time of investment. In selecting securities, the
Portfolio Manager uses an investment discipline called "Positive Momentum &
Positive Surprise." It is based on the premise that companies performing
better than expected will have rising securities prices, while companies
producing less than expected results will not. Through thorough analysis of
company fundamentals in the context of the prevailing economic environment,
the companies selected for purchase remain in the Fund only if they continue
to achieve or exceed expectations, and are sold when business or earnings
results are disappointing. Stock selection may include companies that have
grown rapidly from small capitalization status.
The Fund may invest a portion of its assets in securities of foreign issuers
traded in foreign securities markets, which will not exceed 15% of the Fund's
net assets at the time of investment. Investing in the securities of foreign
issuers involves special risks and considerations not typically associated
with investing in U.S. companies. The Fund may also purchase and write call
and put options on securities, securities indexes and on foreign currencies;
enter into futures contracts and use options on futures contracts; and engage
in forward foreign currency contracts. For information on other investment
policies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of Securities and Investment Techniques" in the
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices.
Parametric Enhanced Equity Fund seeks to provide a total return which equals
or exceeds the total return performance of an index that represents the
performance of a reasonably broad spectrum of common stocks that are publicly
traded in the United States. In pursuing this objective, the Fund attempts to
equal or exceed the total return performance of the S&P 500. The Portfolio
Manager uses quantitative techniques to construct a portfolio that consists of
some, but not all, of the common stocks that are represented in the S&P 500.
The Fund may invest in common stock of foreign issuers if included in the
index. The Fund is designed to simultaneously meet all of the following
criteria: (i) higher returns than the S&P 500 in both up and down markets,
(ii) no greater volatility than the S&P 500, and (iii) consistent performance
on a period-to-period basis. A computer optimization model analyzes the return
pattern of thousands of portfolios that could be constructed from the
securities in the S&P 500. The Portfolio Manager's optimization process
reweights or eliminates stocks that have not historically improved the
performance or lowered the volatility of the Fund. The Fund is rebalanced
quarterly. The Trust reserves the right to change the index whose total return
the Fund will attempt to equal or exceed without shareholder approval,
although it is not anticipated that such a change would be made in the
ordinary course of the Fund's operations.
<PAGE>
15
The Fund may engage in the purchase and writing of options on securities
indexes, and may also invest in stock index futures contracts and options
thereon. For information on other investment policies, see "Investment
Objectives and Policies--Equity Funds." See "Characteristics and Risks of
Securities and Investment Techniques" in the Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices.
Parametric Structured Emerging Markets Fund seeks long-term growth of
capital. In pursuing this objective, the Fund invests primarily in equity
securities of companies located in, or whose business relates to, emerging
markets. The Portfolio Manager will identify those markets that it considers
to be emerging markets, relying primarily on those countries listed on the
Morgan Stanley Capital International Emerging Markets Free Index ("MSCI Free
Index") or the Baring Emerging Markets Index (the "Baring Index"). However,
the Portfolio Manager has discretion in identifying other countries that
qualify as emerging markets on the basis of market capitalization and
liquidity, as well as their inclusion, or consideration for inclusion, as
emerging market countries in other broad-based market indexes. The Fund seeks
to achieve its objective by following a disciplined and systematic methodology
for selecting and weighting countries, industries, and stocks. Diversification
and consistent exposure to opportunity are emphasized over tactical timing
decisions with regard to countries, industries, or stocks. A disciplined
methodology for maintaining the allocation to countries, industries, and
stocks is utilized in portfolio composition, rather than discretionary
shifting in country and industry concentration levels. First, countries are
selected based upon their level of development and equity market institutions.
GNP per capita, local economic diversification, and freedom of investment
flows are the primary considerations in country selection decisions. Most
countries are assigned an equal weight in the Fund unless the size of their
equity market is prohibitive; countries with smaller markets (i.e., less than
$5 billion of market capitalization) are assigned one-half of the weight
assigned to countries with larger markets. Secondly, all stocks in each
eligible country are divided into five broad economic sector groups:
financial, industrial, consumer, utilities, and natural resources. The
Portfolio Manager will generally endeavor to maintain exposure across all five
sectors in each country. Finally, stocks are selected and purchased to fill
out the country and industry structure. Stock purchase candidates are examined
for liquidity, industry representation, performance relative to industry, and
profitability. Under normal market conditions and assuming Fund size of at
least $5 million, the Portfolio Manager will endeavor to maintain investment
exposure to roughly 20 countries and hold in excess of 200 securities in the
Fund. The allocation methodology described above may be changed from time to
time based on evaluations of economic trends by the Portfolio Manager,
consistent with the principles of broad country and company diversification of
the Fund's investments.
For purposes of implementing its investment objective, the Fund invests
primarily in some or all of the following emerging market countries:
Argentina Hong Kong Morocco South Africa
Brazil Hungary Pakistan South Korea
Chile India Peru Sri Lanka
China Indonesia Philippines Taiwan
Colombia Israel Poland Thailand
Czech Republic Jordan Portugal Turkey
Estonia Malaysia Slovakia Venezuela
Greece Mexico Slovenia Zimbabwe
For purposes of allocating the Fund's investments, a company is considered to
be located in the country in which the company is domiciled, and a company's
business "relates to" any emerging market country in which the company's
securities are primarily traded, from which the company derives a significant
portion of its revenues, or in which a significant portion of the company's
goods or services are produced.
Most of the foreign securities in which the Fund invests will be denominated
in foreign currencies. The Fund may engage in foreign currency transactions to
protect itself against fluctuations in currency exchange rates in relation to
the U.S. dollar or to the weighting of a particular foreign currency on the
MSCI Free Index or the Baring Index. Such foreign currency transactions may
include forward foreign currency contracts, currency exchange transactions on
a spot (i.e., cash) basis, put and call options on foreign currencies, and
foreign exchange futures contracts. The Fund may invest in stock index futures
contracts, foreign exchange futures contracts, and options thereon, and may
sell (write) call and put options. The Fund may also engage in equity index
swap transactions.
PIMCO FUNDS
<PAGE>
16
For information on other investment policies, see "Investment Objectives and
Policies--Equity Funds." For a discussion of certain risks posed by investing
in emerging market countries, see "Characteristics and Risks of Securities and
Investment Techniques--Foreign Securities." See "Characteristics and Risks of
Securities and Investment Techniques" in the Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices.
Blairlogie Emerging Markets Fund seeks long-term growth of capital. In
pursuing this objective, the Fund invests primarily in common stocks of
companies located in countries identified as emerging market countries. The
MSCI Free Index and the International Finance Corporation Emerging Markets
Index ("IFC Index") are used as the bases for choosing the countries in which
the Fund invests. However, the Fund is not limited to the countries and
weightings of these indexes. The Portfolio Manager applies two levels of
screening in selecting investments for the Fund. First, an active country
selection model analyzes world markets and assigns a relative value ranking,
or "favorability weighting," to each country in the relevant country universe
to determine markets which are relatively undervalued. Second, at the stock
selection level, quality analysis and value analysis are applied to each
security, assessing variables such as balance sheet strength and earnings
growth (quality factors) and performance relative to the industry, price to
earnings ratios, and price to book ratios (value factors). This two-level
screening method identifies undervalued securities for purchase as well as
provides a sell discipline for fully valued securities. In selecting
securities, the Portfolio Manager considers, to the extent practicable and on
the basis of information available to it for research, a company's
environmental business practices.
For purposes of implementing its investment objective, the Fund invests
primarily in some or all of the following emerging market countries.
Argentina Greece Jordan Poland Thailand
Brazil Hong Kong Malaysia Portugal Turkey
Chile Hungary Mexico South Africa Venezuela
China India Pakistan South Korea Zimbabwe
Colombia Indonesia Peru Sri Lanka
Czech Republic Israel Philippines Taiwan
For purposes of allocating the Fund's investments, a company is considered to
be located in the country in which it is domiciled, in which it is primarily
traded, from which it derives a significant portion of its revenues, or in
which a significant portion of its goods or services are produced.
Most of the foreign securities in which the Fund invests will be denominated
in foreign currencies. The Fund may engage in foreign currency transactions to
protect itself against fluctuations in currency exchange rates in relation to
the U.S. dollar or to the weighting of a particular foreign currency on the
MSCI Free Index or the IFC Index. Such foreign currency transactions may
include forward foreign currency contracts, currency exchange transactions on
a spot (i.e., cash) basis, put and call options on foreign currencies, and
foreign exchange futures contracts. The Fund may invest in stock index futures
contracts, foreign exchange futures contracts, and options thereon, and may
sell (write) call and put options. The Fund may also engage in equity index
swap transactions.
For information on other investment policies, see "Investment Objectives and
Policies--Equity Funds." For a discussion of certain risks posed by investing
in emerging market countries, see "Characteristics and Risks of Securities and
Investment Techniques--Foreign Securities." See "Characteristics and Risks of
Securities and Investment Techniques" in the Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices.
Blairlogie International Active Fund seeks long-term growth of capital. In
pursuing this objective, the Fund invests primarily in a diversified portfolio
of international equity securities. The Morgan Stanley Capital International
EAFE (Europe, Australasia, Far East) Index ("EAFE Index") is used as a basis
for choosing the countries in which the Fund invests, however, the Fund is not
limited to the countries and weightings of the EAFE Index. The Portfolio
Manager applies two levels of screening in selecting investments for the Fund.
First, an active country selection model analyzes world markets and assigns a
relative value ranking, or "favorability weighting," to each country in the
relevant country universe to determine markets which are relatively
<PAGE>
17
undervalued. Second, at the stock selection level, quality analysis and value
analysis are applied to each security, assessing variables such as balance
sheet strength and earnings growth (quality factors) and performance relative
to the industry, price to earnings ratios and price to book ratios (value
factors). This two-level screening method identifies undervalued securities
for purchase as well as provides a sell discipline for fully valued
securities. In selecting securities, the Portfolio Manager considers, to the
extent practicable and on the basis of information available to it for
research, a company's environmental business practices.
For purposes of allocating the Fund's investments, a company is considered
to be located in the country in which it is domiciled, in which it is
primarily traded, from which it derives a significant portion of its revenues,
or in which a significant portion of its goods or services are produced.
Most of the foreign securities in which the Fund invests will be denominated
in foreign currencies. The Fund may engage in foreign currency transactions to
protect itself against fluctuations in currency exchange rates in relation to
the U.S. dollar or to the weighting of a particular foreign currency on the
EAFE Index. Such foreign currency transactions may include forward foreign
currency contracts, currency exchange transactions on a spot (i.e., cash)
basis, put and call options on foreign currencies, and foreign exchange
futures contracts. The Fund may invest in stock index futures contracts,
foreign exchange futures contracts, and options thereon, and may sell (write)
call and put options. The Fund also may engage in equity index swap
transactions.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. For
information on other investment policies, see "Investment Objectives and
Policies--Equity Funds." See "Characteristics and Risks of Securities and
Investment Techniques" in the Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices.
Balanced Fund seeks total return consistent with prudent investment
management. The Fund attempts to achieve this objective through a management
policy of investing in the following asset classes: common stock, fixed income
securities, and money market instruments. The proportion of the Fund's total
assets allocated among common stocks, fixed income securities, and money
market instruments will vary from time to time and will be determined by the
Adviser. In determining the allocation of the Fund's assets among the three
asset classes, the Adviser will employ asset allocation principles which take
into account certain economic factors, market conditions, and the expected
relative total return and risk of the various asset classes. Under normal
circumstances, it is anticipated that the Fund will generally maintain a
balance among the types of securities in which it invests. Thus, the Fund will
normally maintain 40% to 65% of its assets in common stock, at least 25% of
its assets in fixed income securities, and less than 10% of its assets in
money market instruments. However, in no event would the Fund invest in any
common stock if, at the time of investment, more than 80% of the Fund's assets
would be invested in common stock; in no event would the Fund invest in a
fixed income security (other than a short-term instrument) if, at the time of
investment, more than 80% of the Fund's assets would be invested in fixed
income securities; nor would the Fund invest in a money market instrument if,
at the time of investment, more than 60% of its assets would be invested in
money market instruments.
In managing the Fund, the Adviser uses a specialist approach and has engaged
three of the Trust's Portfolio Managers to manage certain portions of the
Fund's assets. The portion of the assets of the Fund allocated by the Adviser
for investment in common stock (the "Common Stock Segment") will be further
allocated by the Adviser for investment by NFJ and Cadence. The portion of the
Common Stock Segment allocated to NFJ will be managed in accordance with the
investment policies of the NFJ Diversified Low P/E Fund; the portion allocated
to Cadence will be managed in accordance with the investment policies of the
Cadence Capital Appreciation Fund. Allocations of the Common Stock Segment to
NFJ and Cadence will vary from time to time as determined by the Adviser.
The portion of the assets of the Fund allocated by the Adviser for
investment in fixed income debt securities (the "Fixed Income Securities
Segment") will be managed by PIMCO. The Fund invests the Fixed Income
Securities Segment in fixed income securities of varying maturities. Portfolio
holdings will be concentrated in areas of the bond market (based on quality,
sector, coupon or maturity) that the Portfolio Manager believes to be
relatively undervalued. Fixed income securities in which the Fund may invest
will, at the time of investment, be
PIMCO FUNDS
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18
rated Baa or better by Moody's Investors Service, Inc. ("Moody's"), BBB or
better by Standard & Poor's ("S&P") or, if not rated by Moody's or S&P, will
be of comparable quality as determined by the Portfolio Manager, except that
up to 10% of the Fixed Income Securities Segment may be invested in lower
rated securities that are rated B or higher by Moody's or S&P or, if not rated
by Moody's or S&P, determined by the Portfolio Manager to be of comparable
quality. High yield fixed income securities rated lower than Baa by Moody's or
BBB by S&P, or of equivalent quality, are not considered to be investment
grade, and are commonly referred to as "junk bonds." The Fund also may invest
up to 20% of the Fixed Income Securities Segment in securities denominated in
foreign currencies, and may invest beyond this limit in U.S. dollar-
denominated securities of foreign issuers.
Investments in corporate debt securities that are rated Baa by Moody's or
BBB by S&P have certain "speculative characteristics." Such securities may be
subject to greater market fluctuations, less liquidity and greater risk of
loss of income or principal, including a greater possibility of default or
bankruptcy of the issuer of such securities, than more highly rated debt
securities. Securities rated below investment grade are described as
"speculative" by both Moody's and S&P. Securities rated B are judged to be
predominately speculative with respect to their capacity to pay interest and
repay principal under the terms of the obligations. In the event that an
existing holding is downgraded, the Fund may nonetheless retain the security.
PIMCO Advisors will manage directly the assets of the Fund allocated for
investment in money market instruments (the "Money Market Segment"). Because
of the Fund's flexible investment policy, portfolio turnover may be greater
than for a fund that does not allocate assets among various types of
securities.
The Fund may engage in the purchase and writing of put and call options on
debt securities and securities indexes and may also purchase or sell interest
rate futures contracts, stock index futures contracts, and options thereon.
The Fund also may enter into swap agreements with respect to foreign
currencies, interest rates, and securities indexes. With respect to securities
of the Fixed Income Securities Segment denominated in foreign currencies, the
Fund may engage in foreign currency exchange transactions by means of buying
or selling foreign currencies on a spot basis, entering into foreign currency
forward contracts, and buying and selling foreign currency options, foreign
currency futures, and options on foreign currency futures. Foreign currency
exchange transactions may be entered into for the purpose of hedging against
foreign currency exchange risk arising from a Fund's investment or anticipated
investment in securities denominated in foreign currencies and for purposes of
increasing exposure to a particular foreign currency or to shift exposure to
foreign currency fluctuations from one country to another. See
"Characteristics and Risks of Securities and Investment Techniques" in the
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices.
EQUITY FUNDS
The NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value, Cadence
Capital Appreciation, Cadence Mid Cap Growth, Cadence Micro Cap Growth,
Cadence Small Cap Growth, Columbus Circle Investors Core Equity, Columbus
Circle Investors Mid Cap Equity, Parametric Enhanced Equity, Parametric
Structured Emerging Markets, Blairlogie Emerging Markets, and Blairlogie
International Active Funds will each invest primarily (normally at least 65%
of its assets) in common stock. Each Equity Fund may maintain a portion of its
assets, which will usually not exceed 10%, in U.S. Government securities,
high-quality debt securities (whose maturity or remaining maturity will not
exceed five years), money market obligations, and in cash to provide for
payment of the Fund's expenses and to meet redemption requests. The Equity
Funds that invest primarily in securities of foreign issuers may invest in
debt securities and money market obligations issued by U.S. and foreign
issuers and that are either U.S. dollar-denominated or denominated in foreign
currency.
Any of the Equity Funds may temporarily not be invested primarily in equity
securities after the commencement of operations or after receipt of
significant new monies. Any of the Equity Funds may temporarily not contain
the number of stocks in which the Fund normally invests if the Fund does not
have sufficient assets to be fully invested, or pending the Portfolio
Manager's ability to prudently invest new monies. It is the policy of all of
the Equity Funds to be as fully invested in common stock as practicable at all
times. This policy precludes the Equity Funds from investing in debt
securities as a defensive investment posture
<PAGE>
19
(although the Funds may invest in such securities to provide for payment of
expenses and to meet redemption requests). Accordingly, investors in these
Funds bear the risk of general declines in stock prices and the risk that a
Fund's exposure to such declines cannot be lessened by investment in debt
securities.
The Equity Funds may also invest in convertible securities, preferred stock,
warrants subject to certain limitations, and American Depository Receipts
("ADRs"). The Columbus Circle Investors Core Equity, Columbus Circle Investors
Mid Cap Equity, Parametric Structured Emerging Markets, Blairlogie Emerging
Markets, and Blairlogie International Active Funds may also invest in European
Depository Receipts ("EDRs") or Global Depository Receipts ("GDRs"). For more
information on these investment practices, see "Characteristics and Risks of
Securities and Investment Techniques" in the Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information.
DURATION
Under normal circumstances, the average portfolio duration of the Fixed
Income Securities Segment of the Balanced Fund will vary within a three- to
six-year time frame based on the Portfolio Manager's forecast for interest
rates. Duration is a measure of the expected life of a fixed income security
that was developed as a more precise alternative to the concept of "term to
maturity." Traditionally, a fixed income security's "term to maturity" has
been used as proxy for the sensitivity of the security's price to changes in
interest rates (which is the "interest rate risk" or "volatility" of the
security). However, "term to maturity" measures only the time until a fixed
income security provides its final payment, taking no account of the pattern
of the security's payments prior to maturity. In contrast, duration
incorporates a bond's yield, coupon interest payments, final maturity and call
features into one measure of the average life of a fixed income security on a
present value basis. Duration management is one of the fundamental tools used
by the Portfolio Manager for the Fixed Income Securities Segment of the
Balanced Fund.
INVESTMENT RESTRICTIONS
Each Fund's investment objective, as set forth under "Investment Objectives
and Policies," and the investment restrictions set forth below are fundamental
policies of the Fund and may not be changed with respect to a Fund without
shareholder approval by vote of a majority of the outstanding shares of that
Fund. Under these restrictions, a Fund may not:
(1) invest in a security if, as a result of such investment, more than
25% of its total assets (taken at market value at the time of such
investment) would be invested in the securities of issuers in any
particular industry, except that this restriction does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (or repurchase agreements with respect thereto);
(2) with respect to 75% of its assets, invest in a security if, as a
result of such investment, more than 5% of its total assets (taken at
market value at the time of such investment) would be invested in the
securities of any one issuer, except that this restriction does not apply
to securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities;
(3) with respect to 75% of its assets, invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time
of such investment) of the outstanding voting securities of any one issuer,
except that this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities;
(4) purchase or sell real estate, although it may purchase securities
secured by real estate or interests therein, or securities issued by
companies in the real estate industry or which invest in real estate or
interests therein;
(5) purchase or sell commodities or commodities contracts (which, for the
purpose of this restriction, shall not include foreign currency or forward
foreign currency contracts), except that any Fund may engage in interest
rate futures contracts, stock index futures contracts, futures contracts
based on other financial instruments or one or more groups of instruments,
and on options on such futures contracts;
PIMCO FUNDS
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20
(6) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities, but
it may make margin deposits in connection with transactions in options,
futures, and options on futures, and except that effecting short sales will
be deemed not to constitute a margin purchase for purposes of this
restriction;
(7) borrow money, or pledge, mortgage or hypothecate its assets, except
that a Fund may (i) borrow from banks or enter into reverse repurchase
agreements, or employ similar investment techniques, and pledge its assets
in connection therewith, but only if immediately after each borrowing and
continuing thereafter, there is asset coverage of 300% and (ii) enter into
reverse repurchase agreements and transactions in options, futures, options
on futures, and forward foreign currency contracts as described in this
Prospectus and in the Statement of Additional Information (the deposit of
assets in escrow in connection with the writing of covered put and call
options and the purchase of securities on a when-issued or delayed delivery
basis, and collateral arrangements with respect to initial or variation
margin deposits for futures contracts, options on futures contracts, and
forward foreign currency contracts will not be deemed to be pledges of a
Fund's assets);
(8) issue senior securities, except insofar as a Fund may be deemed to
have issued a senior security by reason of borrowing money in accordance
with the Fund's borrowing policies, and except for purposes of this
investment restriction, collateral, escrow, or margin or other deposits
with respect to the making of short sales, the purchase or sale of futures
contracts or related options, purchase or sale of forward foreign currency
contracts, and the writing of options on securities are not deemed to be an
issuance of a senior security;
(9) lend any funds or other assets, except that a Fund may, consistent
with its investment objective and policies: (a) invest in debt obligations,
including bonds, debentures, or other debt securities, bankers' acceptances
and commercial paper, even though the purchase of such obligations may be
deemed to be the making of loans, (b) enter into repurchase agreements and
reverse repurchase agreements, and (c) lend its portfolio securities in an
amount not to exceed one-third of the value of its total assets, provided
such loans are made in accordance with applicable guidelines established by
the Securities and Exchange Commission ("SEC") and the Trustees of the
Trust; or
(10) act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under the federal securities laws.
Each Fund is also subject to the following non-fundamental restrictions and
policies (which may be changed without shareholder approval) relating to the
investment of its assets and activities. Unless otherwise indicated, a Fund
may not:
(A) invest for the purpose of exercising control or management;
(B) invest in securities of another open-end investment company;
(C)(a) for the NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small Cap
Value, Cadence Capital Appreciation, Cadence Mid Cap Growth, Cadence Small
Cap Growth, Parametric Enhanced Equity, and Balanced Funds: invest more
than 10% of the net assets of a Fund (taken at market value at the time of
the investment) in "illiquid securities," illiquid securities being defined
to include repurchase agreements maturing in more than seven days, certain
loan participation interests, fixed time deposits which are not subject to
prepayment or provide withdrawal penalties upon prepayment (other than
overnight deposits), or other securities which legally or in the Adviser's
or Portfolio Manager's opinion may be deemed illiquid (other than
securities issued pursuant to Rule 144A under the Securities Act of 1933
and certain commercial paper that the Adviser or Portfolio Manager has
determined to be liquid under procedures approved by the Board of
Trustees); nor invest more than 5% of the net assets of a Fund in
securities that are illiquid because they are subject to legal or
contractual restrictions on resale;
(b) for the Columbus Circle Investors Core Equity, Columbus Circle
Investors Mid Cap Equity, Cadence Micro Cap Growth, Parametric Structured
Emerging Markets, Blairlogie Emerging Markets, and Blairlogie International
Active Funds: invest more than 15% of the net assets of a Fund (taken at
market value at the time of the investment) in securities that are illiquid
because they are subject to legal or
<PAGE>
21
contractual restrictions on resale, in repurchase agreements maturing in
more than seven days, or other securities which are illiquid;
(D) purchase any security if, as a result, the Fund will then have more
than 5% of its total assets invested in securities of companies (including
predecessor companies) that have been in continuous operation for less than
three years;
(E) purchase or retain securities of any issuer if, to the knowledge of
the Fund, any of the Fund's officers or Trustees, or any officer or
Director of PIMCO Advisors or the Portfolio Manager of the Fund,
individually owns more than one-half of 1% of the outstanding securities of
the issuer and together own beneficially more than 5% of such issuer's
securities;
(F) purchase securities for the Fund from, or sell portfolio securities
to, any of the officers and Directors or Trustees of the Trust or the
Adviser;
(G) invest in a security if, with respect to 100% of the total assets,
the Fund would own more than 10% (taken at the time of such investment) of
the outstanding voting securities of any one issuer, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities;
(H) invest more than 5% of the assets of a Fund (taken at market value at
the time of investment) in any combination of interest only, principal
only, or inverse floating rate securities;
(I) borrow money (excluding reverse repurchase agreements which are
subject to the Fund's fundamental borrowing restriction), except for
temporary administrative purposes;
(J) sell securities or property short, except short sales against the
box;
(K) purchase, write, or sell puts, calls, straddles, spreads, or
combinations thereof, except that this restriction does not apply to puts
that are a feature of floating rate securities or to puts that are a
feature of other corporate debt securities, and except that any Fund may
engage in options on securities, options on securities indexes, options on
foreign currencies, options on futures contracts, and options on other
financial instruments or one or more groups of instruments;
(L) invest in warrants (other than warrants acquired by the Fund as part
of a unit or attached to securities at the time of purchase) if, as a
result, the investment in warrants (valued to the lower of cost or market)
would exceed 5% of the value of the Fund's net assets, of which not more
than 2% of the Fund's net assets may be invested in warrants not listed on
a recognized U.S. or foreign stock exchange;
(M) invest in securities sold in foreign over-the-counter markets unless
the foreign dealers effecting such transactions have a minimum net worth of
$20 million; or
(N) invest in oil, gas or other mineral exploration or development
programs (including oil, gas, or other mineral leases), except that a Fund
may invest in the securities of companies that invest in or sponsor those
programs.
For purposes of fundamental investment restriction (5), swap agreements are
not deemed to be commodities contracts. Unless otherwise indicated, all
limitations applicable to Fund investments apply only at the time a
transaction is entered into. Any subsequent change in a rating assigned by any
rating service to a security (or, if unrated, deemed to be of comparable
quality), or change in the percentage of Fund assets invested in certain
securities or other instruments resulting from market fluctuations or other
changes in a Fund's total assets will not require a Fund to dispose of an
investment until the Adviser or Portfolio Manager determines that it is
practicable to sell or close out the investment without undue market or tax
consequences to the Fund. In the event that ratings services assign different
ratings to the same security, the Adviser or Portfolio Manager will determine
which rating it believes best reflects the security's quality and risk at that
time, which may be the higher of the several assigned ratings.
PIMCO FUNDS
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22
CHARACTERISTICS AND RISKS OF SECURITIES
AND INVESTMENT TECHNIQUES
The different types of securities and investment techniques used by the
individual Funds all have attendant risks of varying degrees. For example,
with respect to common stock, there can be no assurance of capital
appreciation, and there is a risk of market decline. With respect to debt
securities, including money market instruments, there is the risk that the
issuer of a security may not be able to meet its obligation to make scheduled
interest or principal payments. In addition, the value of debt securities
generally rises and falls inversely with interest rates, and the longer the
maturity of the debt security, the more volatile it may be in terms of changes
in value. Because each Fund seeks a different investment objective and has
different investment policies, each is subject to varying degrees of
financial, market, and credit risks. Therefore, investors should carefully
consider the investment objective, investment policies, and potential risks of
any Fund or Funds before investing.
The following describes potential risks associated with different types of
investment techniques that may be used by the individual Funds. For more
detailed information on these investment techniques, as well as information on
the types of securities in which some or all of the Funds may invest, see the
Statement of Additional Information.
LOW CAPITALIZATION STOCKS
The NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value, Cadence
Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small Cap Growth, Parametric
Structured Emerging Markets, Blairlogie Emerging Markets, and Blairlogie
International Active Funds may invest in common stock of companies with market
capitalization that is low compared to other publicly traded companies. Under
normal market conditions, NFJ Small Cap Value and Cadence Small Cap Growth
Funds will invest in companies with market capitalizations of $1 billion or
less, and Cadence Micro Cap Growth Fund will invest in companies with market
capitalizations of $100 million or less. Investments in larger companies
present certain advantages in that such companies generally have greater
financial resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater depth of
management and technical personnel. Investments in smaller, less seasoned
companies may present greater opportunities for growth but also may involve
greater risks than customarily are associated with more established companies.
The securities of smaller companies may be subject to more abrupt or erratic
market movements than larger, more established companies. These companies may
have limited product lines, markets or financial resources, or they may be
dependent upon a limited management group. Their securities may be traded only
in the over-the-counter market or on a regional securities exchange. As a
result, the disposition of securities to meet redemptions may require a Fund
to sell these securities at a disadvantageous time, or at disadvantageous
prices, or to make many small sales over a lengthy period of time.
REPURCHASE AGREEMENTS
For the purposes of maintaining liquidity and achieving income, each Fund
may enter into repurchase agreements, which entail the purchase of a portfolio
eligible security from a bank or broker-dealer that agrees to repurchase the
security at the Fund's cost plus interest within a specified time (normally
one day). If the party agreeing to repurchase should default, as a result of
bankruptcy or otherwise, the Fund will seek to sell the securities which it
holds, which action could involve procedural costs or delays in addition to a
loss on the securities if their value should fall below their repurchase
price. Those Funds whose investment objectives do not include the earning of
income will invest in repurchase agreements only as a cash management
technique with respect to that portion of the portfolio maintained in cash.
Each Fund will limit its investment in repurchase agreements maturing in more
than seven days consistent with the Fund's policy on investment in illiquid
securities.
REVERSE REPURCHASE AGREEMENTS AND OTHER BORROWINGS
A reverse repurchase agreement is a form of leverage that involves the sale
of a security by a Fund and its agreement to repurchase the instrument at a
specified time and price. The Fund will maintain a segregated
<PAGE>
23
account consisting of liquid assets, such as cash, U.S. Government securities
or high grade debt obligations, maturing not later than the expiration of the
reverse repurchase agreement, to cover its obligations under reverse
repurchase agreements.
Reverse repurchase agreements will be subject to the Funds' limitations on
borrowings, which will restrict the aggregate of such transactions (plus any
other borrowings) to 33 1/3% of a Fund's total assets. Apart from transactions
involving reverse repurchase agreements, a Fund will not borrow money, except
for temporary administrative purposes.
LOANS OF PORTFOLIO SECURITIES
For the purpose of achieving income, each Fund may lend its portfolio
securities to brokers, dealers, and other financial institutions, provided:
(i) the loan is secured continuously by collateral consisting of U.S.
Government securities, cash or cash equivalents (negotiable certificates of
deposit, bankers' acceptances or letters of credit) maintained on a daily
mark-to-market basis in an amount at least equal to the current market value
of the securities loaned; (ii) the Fund may at any time call the loan and
obtain the return of the securities loaned; (iii) the Fund will receive any
interest or dividends paid on the loaned securities; and (iv) the aggregate
market value of securities loaned will not at any time exceed 33 1/3% of the
total assets of the Fund.
FOREIGN SECURITIES
The Parametric Structured Emerging Markets, Blairlogie Emerging Markets, and
Blairlogie International Active Funds may invest directly in foreign equity
securities; U.S. dollar- or foreign currency-denominated foreign corporate
debt securities; foreign preferred securities; certificates of deposit, fixed
time deposits and bankers' acceptances issued by foreign banks; obligations of
foreign governments or their subdivisions, agencies and instrumentalities,
international agencies and supranational entities; and securities represented
by EDRs, ADRs, or GDRs. ADRs are dollar-denominated receipts issued generally
by domestic banks and representing the deposit with the bank of a security of
a foreign issuer, and are publicly traded on exchanges or over-the-counter in
the United States. EDRs are receipts similar to ADRs and are issued and traded
in Europe. GDRs may be offered privately in the United States and also trade
in public or private markets in other countries. The Columbus Circle Investors
Core Equity and Columbus Circle Investors Mid Cap Equity Funds each may invest
up to 15% of their respective net assets in securities which are traded
principally in securities markets outside the United States (Eurodollar
certificates of deposit are excluded for purposes of these limitations). In
addition, the Funds may invest up to 35% of their respective assets in ADRs,
EDRs, and GDRs, reduced by such amount that may be reserved for investments in
high quality debt securities, money market obligations, and cash or other
permissible investments. The NFJ Equity Income, NFJ Diversified Low P/E, NFJ
Small Cap Value, Cadence Capital Appreciation, Cadence Mid Cap Growth, Cadence
Micro Cap Growth, Cadence Small Cap Growth, Parametric Enhanced Equity, and
Balanced Funds may also invest in ADRs. The Parametric Enhanced Equity Fund
may invest in common stock of foreign issuers if included in the index from
which stocks are selected. The Balanced Fund may invest up to 20% of its Fixed
Income Securities Segment in securities denominated in foreign currencies, and
may invest beyond this limit in U.S. dollar-denominated securities of foreign
issuers.
Investing in the securities of issuers in any foreign country involves
special risks and considerations not typically associated with investing in
U.S. companies. Shareholders should consider carefully the substantial risks
involved in investing in securities issued by companies and governments of
foreign nations. These risks include: differences in accounting, auditing and
financial reporting standards; generally higher commission rates on foreign
portfolio transactions; the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or exchange control
regulations (which may include suspension of the ability to transfer currency
from a country); and political instability which could affect U.S. investments
in foreign countries. Additionally, foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes,
including taxes withheld from payments on those securities. Foreign securities
often trade with less frequency and volume than domestic securities and
therefore may exhibit greater price volatility. Additional costs associated
with an investment in foreign securities may include higher custodial fees
than apply to domestic custodial arrangements and transaction costs of foreign
currency conversions. Changes in foreign exchange rates also will affect the
value of securities denominated or quoted in currencies other than the U.S.
dollar.
PIMCO FUNDS
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24
The Parametric Structured Emerging Markets and Blairlogie Emerging Markets
Funds may invest in the securities of issuers based in countries with
developing economies. Investing in developing countries involves certain risks
not typically associated with investing in U.S. securities, and imposes risks
greater than, or in addition to, risks of investing in foreign, developed
countries. A number of emerging market countries restrict, to varying degrees,
foreign investment in stocks. Repatriation of investment income, capital, and
the proceeds of sales by foreign investors may require governmental
registration and/or approval in some emerging market countries. A number of
the currencies of developing countries have experienced significant declines
against the U.S. dollar in recent years, and devaluation may occur subsequent
to investments in these currencies by a Fund. Inflation and rapid fluctuations
in inflation rates have had, and may continue to have, negative effects on the
economies and securities markets of certain emerging market countries. Many of
the emerging securities markets are relatively small, have low trading
volumes, suffer periods of relative illiquidity, and are characterized by
significant price volatility. There is a risk in emerging market countries
that a future economic or political crisis could lead to price controls,
forced mergers of companies, expropriation or confiscatory taxation, seizure,
nationalization, or creation of government monopolies, any of which may have a
detrimental effect on a Fund's investment.
Additional risks of investing in emerging market countries may include:
currency exchange rate fluctuations; greater social, economic and political
uncertainty and instability (including the risk of war); more substantial
government involvement in the economy; less government supervision and
regulation of the securities markets and participants in those markets;
unavailability of currency hedging techniques in certain developing countries;
the fact that companies in developing countries may be smaller, less seasoned
and newly organized companies; the difference in, or lack of, auditing and
financial reporting standards, which may result in unavailability of material
information about issuers; the risk that it may be more difficult to obtain
and/or enforce a judgment in a court outside the United States; and
significantly smaller market capitalization of securities markets.
FOREIGN CURRENCY TRANSACTIONS
Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and
other complex factors, as seen from an international perspective. Currency
exchange rates also can be affected unpredictably by intervention (or the
failure to intervene) by U.S. or foreign governments or central banks, by
currency controls or political developments in the U.S. or abroad. Currencies
in which the Funds' assets are denominated may be devalued against the U.S.
dollar, resulting in a loss to the Funds.
The Columbus Circle Investors Core Equity, Columbus Circle Investors Mid Cap
Equity, Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
Blairlogie International Active, and Balanced Funds may, in addition to buying
and selling foreign currency futures contracts and options on foreign
currencies and foreign currency futures, enter into forward foreign currency
exchange contracts to reduce the risks of adverse changes in foreign exchange
rates. A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. By entering into a forward foreign
currency contract, the Fund "locks in" the exchange rate between the currency
it will deliver and the currency it will receive for the duration of the
contract. As a result, a Fund reduces its exposure to changes in the value of
the currency it will deliver and increases its exposure to changes in the
value of the currency it will exchange into. The effect on the value of a Fund
is similar to selling securities denominated in one currency and purchasing
securities denominated in another. Contracts to sell foreign currency would
limit any potential gain which might be realized by a Fund if the value of the
hedged currency increases. A Fund may enter into these contracts for the
purpose of hedging against foreign exchange risk arising from the Fund's
investment or anticipated investment in securities denominated in foreign
currencies. A Fund also may enter into these contracts for purposes of
increasing exposure to a foreign currency or to shift exposure to foreign
currency fluctuations from one country to another. A Fund may use one currency
(or a basket of currencies) to hedge against adverse changes in the value of
another currency (or a basket of currencies) when exchange rates between the
two currencies are positively correlated. A Fund will segregate liquid assets,
such as cash or high grade debt obligations, in a segregated account to cover
forward currency contracts entered into for non-hedging purposes.
<PAGE>
25
HIGH YIELD SECURITIES ("JUNK BONDS")
The Balanced Fund may invest up to 10% of its Fixed Income Securities
Segment in fixed income securities rated lower than Baa by Moody's or lower
than BBB by S&P but rated at least B by Moody's or S&P or, if not rated,
determined by the Portfolio Manager to be of comparable quality. Securities
rated lower than Baa by Moody's or lower than BBB by S&P are sometimes
referred to as "high yield" or "junk" bonds. Investors should consider the
risks associated with high yield securities before investing in this Fund.
Investing in high yield securities involves special risks in addition to the
risks associated with investments in higher rated fixed income securities.
While offering a greater potential opportunity for capital appreciation and
higher yields than investments in higher rated debt securities, high yield
securities typically entail greater potential price volatility and may be less
liquid than investment grade debt. High yield securities may be regarded as
predominately speculative with respect to the issuer's continuing ability to
meet principal and interest payments. Analysis of the creditworthiness of
issuers of high yield securities may be more complex than for issuers of
higher quality debt securities, and achievement of the Balanced Fund's
investment objective may, to the extent of its investments in high yield
securities, depend more heavily on the Portfolio Manager's creditworthiness
analysis than would be the case if the Fund were investing in higher quality
securities. High yield securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than higher grade
securities.
For additional discussion of the characteristics of lower rated fixed income
securities, see the Statement of Additional Information. Ratings assigned to
fixed income securities are described in the Appendix to the Statement of
Additional Information.
DERIVATIVE INSTRUMENTS
Certain Funds may purchase and write call and put options on securities,
securities indexes and foreign currencies, and enter into futures contracts
and use options on futures contracts as further described below. In pursuit of
their investment objectives, the Columbus Circle Investors Core Equity,
Columbus Circle Investors Mid Cap Equity, Parametric Structured Emerging
Markets, Blairlogie Emerging Markets, Blairlogie International Active, and
Balanced Funds may engage in the purchase and writing of call and put options
on securities; each of these Funds, along with the Parametric Enhanced Equity
Fund, may engage in the purchase and writing of options on securities indexes.
The Columbus Circle Investors Core Equity, Columbus Circle Investors Mid Cap
Equity, Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
Blairlogie International Active, and Balanced Funds may engage in the purchase
and writing of call and put options on foreign currencies. The Blairlogie
Emerging Markets, Blairlogie International Active, and Balanced Funds also may
enter into swap agreements with respect to securities indexes. The Balanced
Fund may also enter into swap agreements with respect to foreign currencies
and interest rates. The Funds may use these techniques to hedge against
changes in interest rates, foreign currency exchange rates or securities
prices; to increase exposure to a foreign currency; to shift exposure to
foreign currency fluctuations from one country to another; or as part of their
overall investment strategies. Each Fund will maintain segregated accounts
consisting of liquid assets, such as cash, U.S. Government securities, or
other high-grade debt obligations (or, as permitted by applicable regulation,
enter into certain offsetting positions) to cover its obligations under
options, futures, and swaps to avoid leveraging of the Fund.
The Funds consider derivative instruments to consist of securities or other
instruments whose value is derived from or related to the value of some other
instrument or asset, and not to include those securities whose payment of
principal and/or interest depend upon cash flows from underlying assets, such
as mortgage or asset-backed securities. The value of some derivative
instruments in which the Funds invest may be particularly sensitive to changes
in prevailing interest rates, and, like the other investments of the Funds,
the ability of a Fund to successfully utilize these instruments may depend in
part upon the ability of the Portfolio Manager to forecast interest rates and
other economic factors correctly. If the Portfolio Manager incorrectly
forecasts such factors and has taken positions in derivative instruments
contrary to prevailing market trends, the Funds could be exposed to the risk
of loss.
PIMCO FUNDS
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26
The Funds might not employ any of the strategies described below, and no
assurance can be given that any strategy used will succeed. If the Portfolio
Manager incorrectly forecasts interest rates, market values or other economic
factors in utilizing a derivatives strategy for a Fund, the Fund might have
been in a better position if it had not entered into the transaction at all.
The use of these strategies involves certain special risks, including a
possible imperfect correlation, or even no correlation, between price
movements of derivative instruments and price movements of related
investments. While some strategies involving derivative instruments can reduce
the risk of loss, they can also reduce the opportunity for gain or even result
in losses by offsetting favorable price movements in related investments, or
due to the possible inability of a Fund to purchase or sell a portfolio
security at a time that otherwise would be favorable for it to do so, or the
possible need for a Fund to sell a portfolio security at a disadvantageous
time, because the Fund is required to maintain asset coverage or offsetting
positions in connection with transactions in derivative instruments, and the
possible inability of a Fund to close out or to liquidate its derivatives
positions.
Options on Securities, Securities Indexes, and Currencies Certain Funds may
purchase put options on securities. One purpose of purchasing put options is
to protect holdings in an underlying or related security against a substantial
decline in market value. These Funds may also purchase call options on
securities. One purpose of purchasing call options is to protect against
substantial increases in prices of securities the Fund intends to purchase
pending its ability to invest in such securities in an orderly manner. A Fund
may sell put or call options it has previously purchased, which could result
in a net gain or loss depending on whether the amount realized on the sale is
more or less than the premium and other transaction costs paid on the put or
call option which is sold. A Fund may write a call or put option only if the
option is "covered" by the Fund holding a position in the underlying
securities or by other means which would permit immediate satisfaction of the
Fund's obligation as writer of the option. Prior to exercise or expiration, an
option may be closed out by an offsetting purchase or sale of an option of the
same series.
The purchase and writing of options involves certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot
effect a closing purchase transaction in order to terminate its obligation
under the option and must deliver the underlying securities at the exercise
price. If a put or call option purchased by the Fund is not sold when it has
remaining value, and if the market price of the underlying security remains
equal to or greater than the exercise price (in the case of a put), or remains
less than or equal to the exercise price (in the case of a call), the Fund
will lose its entire investment in the option. Also, where a put or call
option on a particular security is purchased to hedge against price movements
in a related security, the price of the put or call option may move more or
less than the price of the related security. There can be no assurance that a
liquid market will exist when a Fund seeks to close out an option position.
Furthermore, if trading restrictions or suspensions are imposed on the options
markets, a Fund may be unable to close out a position.
The Columbus Circle Investors Core Equity, Columbus Circle Investors Mid Cap
Equity, Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
Blairlogie International Active, and Balanced Funds may buy or sell put and
call options on foreign currencies as a hedge against changes in the value of
the U.S. dollar (or another currency) in relation to a foreign currency in
which a Fund's securities may be denominated. Currency options traded on U.S.
or other exchanges may be subject to position limits which may limit the
ability of a Fund to reduce foreign currency risk using such options. Over-
the-counter options differ from traded options in that they are two-party
contracts with price and other terms negotiated between buyer and seller and
generally do not have as much market liquidity as exchange-traded options. The
Funds may be required to treat as illiquid over-the-counter options purchased
and securities being used to cover certain written over-the-counter options.
Swap Agreements The Parametric Structured Emerging Markets, Blairlogie
Emerging Markets, and Blairlogie International Active Funds may enter into
equity index swap agreements for purposes of gaining exposure to the stocks
making up an index of securities in a foreign market without actually
purchasing those stocks. The Balanced Fund may enter into swap agreements to
hedge against changes in interest rates, foreign
<PAGE>
27
currency exchange rates or securities prices. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods
ranging from a few weeks to more than one year. In a standard swap
transaction, two parties agree to exchange the returns (or differentials in
rates of return) earned or realized on particular predetermined investments or
instruments, which may be adjusted for an interest factor. The gross returns
to be exchanged or "swapped" between the parties are generally calculated with
respect to a "notional amount," i.e., the return on or increase in value of a
particular dollar amount invested at a particular interest rate, or in a
"basket" of securities representing a particular index.
Most swap agreements entered into by the Funds would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, a
Fund's current obligations (or rights) under a swap agreement will generally
be equal only to the net amount to be paid or received under the agreement
based on the relative values of the positions held by each party to the
agreement (the "net amount"). A Fund's current obligations under a swap
agreement will be accrued daily (offset against amounts owed to the Fund), and
any accrued but unpaid net amounts owed to a swap counterparty will be covered
by the maintenance of a segregated account consisting of liquid assets such as
cash, U.S. Government securities, or high grade debt obligations, to avoid any
potential leveraging of the Fund's portfolio. Obligations under swap
agreements so covered will not be construed to be "senior securities" for
purposes of the Funds' investment restriction concerning senior securities. A
Fund will not enter into a swap agreement with any single party if the net
amount owed or to be received under existing contracts with that party would
exceed 5% of the Fund's assets.
Whether a Fund's use of swap agreements will be successful in furthering its
investment objective will depend on the Portfolio Manager's ability to predict
correctly whether certain types of investments are likely to produce greater
returns than other investments. Because they are two-party contracts and
because they may have terms of greater than seven days, swap agreements may be
considered to be illiquid investments. Moreover, a Fund bears the risk of loss
of the amount expected to be received under a swap agreement in the event of
the default or bankruptcy of a swap agreement counterparty. The Funds will
enter into swap agreements only with counterparties that meet certain
standards for creditworthiness (generally, such counterparties would have to
be eligible counterparties under the terms of the Funds' repurchase agreement
guidelines). Certain restrictions imposed on the Funds by the Internal Revenue
Code may limit the Funds' ability to use swap agreements. The swaps market is
a relatively new market and is largely unregulated. It is possible that
developments in the swaps market, including potential government regulation,
could adversely affect a Fund's ability to terminate existing swap agreements
or to realize amounts to be received under such agreements.
Futures Contracts and Options on Futures Contracts The Balanced Fund may
invest in interest rate futures contracts and options thereon. The Columbus
Circle Investors Core Equity, Columbus Circle Investors Mid Cap Equity,
Parametric Enhanced Equity, Parametric Structured Emerging Markets, Blairlogie
Emerging Markets, Blairlogie International Active, and Balanced Funds may
invest in stock index futures contracts and options thereon. The Columbus
Circle Investors Core Equity, Columbus Circle Investors Mid Cap Equity,
Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
Blairlogie International Active, and Balanced Funds may invest in foreign
exchange futures contracts and options thereon ("futures options") that are
traded on a U.S. or foreign exchange or board of trade, or similar entity, or
quoted on an automated quotation system. These Funds may engage in such
futures transactions as an adjunct to their securities activities.
There are several risks associated with the use of futures and futures
options for hedging purposes. There can be no guarantee that there will be a
correlation between price movements in the hedging vehicle and in the
portfolio securities being hedged. An incorrect correlation could result in a
loss on both the hedged securities in a Fund and the hedging vehicle so that
the portfolio return might have been greater had hedging not been attempted.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures contract or a futures option position. Most
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single day; once the daily limit
has been reached on a particular contract, no trades may be made that day at a
price beyond that limit. In addition, certain of these instruments are
relatively new and without a significant trading history. As a result, there
is no assurance that an active secondary market will develop or continue to
exist. Lack of a liquid market for any reason may prevent a Fund from
liquidating an unfavorable position, and the Fund would remain obligated to
meet margin requirements until the position is closed.
PIMCO FUNDS
<PAGE>
28
The Funds will only enter into futures contracts or futures options which
are standardized and traded on a U.S. or foreign exchange or board of trade,
or similar entity, or quoted on an automated quotation system. Each Fund will
use financial futures contracts and related options only for "bona fide
hedging" purposes, as such term is defined in applicable regulations of the
Commodity Futures Trading Commission ("CFTC"), or, with respect to positions
in financial futures and related options that do not qualify as "bona fide
hedging" positions, will enter such positions only to the extent that
aggregate initial margin deposits plus premiums paid by it for open futures
option positions, less the amount by which any such positions are "in-the-
money," would not exceed 5% of the Fund's net assets.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
The Balanced Fund may invest in mortgage-related securities, and in other
asset-backed securities (unrelated to mortgage loans) that are offered to
investors in the future. The value of some mortgage-related or asset-backed
securities in which the Fund invests may be particularly sensitive to changes
in prevailing interest rates, and, like the other investments of the Funds,
the ability of the Fund to successfully utilize these instruments may depend
in part upon the ability of the Portfolio Manager to forecast interest rates
and other economic factors correctly.
Mortgage Pass-Through Securities are securities representing interests in
"pools" of mortgage loans secured by residential or commercial real property
in which payments of both interest and principal on the securities are
generally made monthly, in effect "passing through" monthly payments made by
the individual borrowers on the mortgage loans which underlie the securities
(net of fees paid to the issuer or guarantor of the securities). Early
repayment of principal on some mortgage-related securities (arising from
prepayments of principal due to sale of the underlying property, refinancing,
or foreclosure, net of fees and costs which may be incurred) may expose the
Fund to a lower rate of return upon reinvestment of principal. Also, if a
security subject to prepayment has been purchased at a premium, the value of
the premium would be lost in the event of prepayment. Like other fixed income
securities, when interest rates rise, the value of a mortgage-related security
generally will decline; however, when interest rates are declining, the value
of mortgage-related securities with prepayment features may not increase as
much as other fixed income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by
the full faith and credit of the U.S. Government (in the case of securities
guaranteed by the Government National Mortgage Association ("GNMA")); or
guaranteed by agencies or instrumentalities of the U.S. Government (in the
case of securities guaranteed by the Federal National Mortgage Association
("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"), which are
supported only by the discretionary authority of the U.S. Government to
purchase the agency's obligations). Mortgage-related securities created by
non-governmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers) may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit, which may be issued by governmental entities, private
insurers or the mortgage poolers.
Collateralized Mortgage Obligations ("CMOs") are hybrid mortgage-related
instruments. Similar to a bond, interest and pre-paid principal on a CMO are
paid, in most cases, semi-annually. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are
structured into multiple classes, with each class bearing a different stated
maturity. Monthly payments of principal, including prepayments, are first
returned to investors holding the shortest maturity class; investors holding
the longer maturity classes receive principal only after the first class has
been retired. CMOs that are issued or guaranteed by the U.S. Government or by
any of its agencies or instrumentalities will be considered U.S. Government
securities by the Fund, while other CMOs, even if collateralized by U.S.
Government securities, will have the same status as other privately issued
securities for purposes of applying the Fund's diversification tests.
Commercial Mortgage-Backed Securities include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property.
The market for commercial mortgage-backed securities developed
<PAGE>
29
more recently and in terms of total outstanding principal amount of issues is
relatively small compared to the market for residential single-family
mortgage-backed securities. Many of the risks of investing in commercial
mortgage-backed securities reflect the risks of investing in the real estate
securing the underlying mortgage loans. These risks reflect the effects of
local and other economic conditions on real estate markets, the ability of
tenants to make loan payments, and the ability of a property to attract and
retain tenants. Commercial mortgage-backed securities may be less liquid and
exhibit greater price volatility than other types of mortgage- or asset-backed
securities.
Mortgage-Related Securities include securities other than those described
above that directly or indirectly represent a participation in, or are secured
by and payable from, mortgage loans on real property, such as CMO residuals or
stripped mortgage-backed securities ("SMBS"), and may be structured in classes
with rights to receive varying proportions of principal and interest.
A common type of SMBS will have one class receiving some of the interest and
most of the principal from the mortgage assets, while the other class will
receive most of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest (the "IO" class),
while the other class will receive all of the principal (the principal-only,
or "PO" class). The yield to maturity on an IO class is extremely sensitive to
the rate of principal payments (including prepayments) on the related
underlying mortgage assets, and a rapid rate of principal payments may have a
material adverse effect on the Fund's yield to maturity from these securities.
The Fund has adopted a policy under which it will not invest more than 5% of
its net assets in any combination of IO, PO, or inverse floater securities.
For a discussion of the characteristics of some of these instruments, see the
Statement of Additional Information.
ILLIQUID SECURITIES
The NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value, Cadence
Capital Appreciation, Cadence Mid Cap Growth, Cadence Small Cap Growth,
Parametric Enhanced Equity, and Balanced Funds may invest in securities that
are illiquid, but will not acquire such securities if they would compose more
than 10% of the value of a Fund's net assets (taken at market value at the
time of investment), and will not invest in securities that are illiquid
because they are subject to legal or contractual restrictions on resale if
such securities would compose more than 5% of the value of the Fund's net
assets (taken at market value at the time of investment). The Columbus Circle
Investors Core Equity, Columbus Circle Investors Mid Cap Equity, Cadence Micro
Cap Growth, Parametric Structured Emerging Markets, Blairlogie Emerging
Markets, and Blairlogie International Active Funds may invest in securities
that are illiquid so long as no more than 15% of the net assets of the Fund
(taken at market value at the time of investment), would be invested in such
securities. Certain illiquid securities may require pricing at fair value as
determined in good faith under the supervision of the Board of Trustees. A
Portfolio Manager may be subject to significant delays in disposing of
illiquid securities, and transactions in illiquid securities may entail
registration expenses and other transaction costs that are higher than
transactions in liquid securities.
The term "illiquid securities" for this purpose means securities that cannot
be disposed of within seven days in the ordinary course of business at
approximately the amount at which a Fund has valued the securities. Illiquid
securities are considered to include, among other things, written over-the-
counter options, securities or other liquid assets being used as cover for
such options, repurchase agreements with maturities in excess of seven days,
certain loan participation interests, fixed time deposits which are not
subject to prepayment or provide for withdrawal penalties upon prepayment
(other than overnight deposits), securities that are subject to legal or
contractual restrictions on resale (such as privately placed debt securities),
and other securities whose disposition is restricted under the federal
securities laws (other than securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper that the Adviser or a
Portfolio Manager has determined to be liquid under procedures approved by the
Board of Trustees).
MANAGEMENT OF THE TRUST
The business affairs of the Trust are managed under the direction of the
Board of Trustees. The Trustees are William D. Cvengros, Richard L. Nelson,
Lyman W. Porter, and Alan Richards. Additional information about the Trustees
and the Trust's executive officers may be found in the Statement of Additional
Information under the heading "Management--Trustees and Officers."
PIMCO FUNDS
<PAGE>
30
INVESTMENT ADVISER
PIMCO Advisors serves as Investment Adviser to the Funds pursuant to an
investment advisory agreement with the Trust. PIMCO Advisors is a Delaware
limited partnership organized in 1987. PIMCO Advisors provides investment
management and advisory services to private accounts of institutional and
individual clients and to mutual funds. Total assets under management by PIMCO
Advisors and its subsidiary partnerships at July 31, 1996 were approximately
$99.4 billion. A portion of the units of the limited partner interest in PIMCO
Advisors is traded publicly on the New York Stock Exchange. The general
partner of PIMCO Advisors is PIMCO Partners, G.P. Pacific Mutual Life
Insurance Company and its affiliates hold a substantial interest in PIMCO
Advisors through direct or indirect ownership of units of PIMCO Advisors, and
indirectly hold a majority interest in PIMCO Partners, G.P., with the
remainder held indirectly by a group composed of the Managing Directors of
PIMCO. PIMCO Advisors is governed by an Operating Board and Equity Board,
which exercise substantially all of the governance powers of the general
partner and serve as the functional equivalent of a board of directors. PIMCO
Advisors' address is 800 Newport Center Drive, Newport Beach, California
92660. PIMCO Advisors is registered as an investment adviser with the SEC.
PIMCO Advisors currently has six subsidiary partnerships: PIMCO, Parametric,
Cadence, NFJ, Blairlogie, and Columbus Circle.
Under the investment advisory agreement, PIMCO Advisors, subject to the
supervision of the Board of Trustees, is responsible for providing advice and
guidance with respect to the Funds and for managing, either directly or
through others selected by the Adviser, the investment of the Funds. PIMCO
Advisors also furnishes to the Board of Trustees periodic reports on the
investment performance of each Fund.
PORTFOLIO MANAGERS
Pursuant to portfolio management agreements, PIMCO Advisors employs its
affiliates as Portfolio Managers for all of the Funds. PIMCO Advisors
compensates these Portfolio Managers from its advisory fee (not from the
Trust). Under these agreements, a Portfolio Manager has full investment
discretion and makes all determinations with respect to the investment of a
Fund's assets, or, for the Balanced Fund, with respect to the portion of the
Fund's assets allocated to the Portfolio Manager for investment, and makes all
determinations respecting the purchase and sale of a Fund's securities and
other investments.
PIMCO manages the Fixed Income Securities Segment of the Balanced Fund.
PIMCO is an investment management firm organized as a general partnership.
PIMCO has two partners: PIMCO Advisors as the supervisory partner, and PIMCO
Management, Inc. as the managing partner. Pacific Investment Management
Company, the predecessor investment adviser to PIMCO, commenced operations in
1971. PIMCO had approximately $80.0 billion of assets under management as of
July 31, 1996. PIMCO's address is 840 Newport Center Drive, Suite 360, Newport
Beach, California 92660. PIMCO is registered as an investment adviser with the
SEC and as a commodity trading adviser with the CFTC.
William H. Gross is responsible for the day-to-day management of the Fixed
Income Securities Segment of the Balanced Fund. Mr. Gross is a founder and
Managing Director of PIMCO and has been associated with PIMCO or its
predecessor for 24 years. He has extensive investment experience in both
credit research and fixed income portfolio management. He received his
bachelor's degree from Duke University and his MBA from UCLA Graduate School
of Business. Mr. Gross is a Chartered Financial Analyst and a member of The
Los Angeles Society of Financial Analysts.
Parametric manages the Parametric Enhanced Equity Fund and the Parametric
Structured Emerging Markets Fund (the "Parametric Funds"). Parametric is an
investment management firm organized as a general partnership. Parametric has
two partners: PIMCO Advisors as the supervisory partner, and Parametric
Management, Inc. as the managing partner. Parametric Portfolio Associates,
Inc., the predecessor investment adviser to Parametric, commenced operations
in 1987. Accounts managed by Parametric had combined assets as of July 31,
1996 of approximately $1.6 billion. Parametric's address is 7310 Columbia
Center, 701 Fifth Avenue, Seattle, Washington 98104-7090. Parametric is
registered as an investment adviser with the SEC and as a commodity trading
adviser with the CFTC.
<PAGE>
31
David Stein, Linda Mauzy, and Cliff Quisenberry are primarily responsible
for the day-to-day management of the Parametric Funds. Mr. Stein is a Managing
Director of Parametric and has been associated with Parametric since June,
1996. He also directs research and product development for Parametric. Mr.
Stein graduated with bachelor's and master's degrees in Applied Mathematics
from the University of Witwatersrand, South Africa, and received a Ph.D. in
Applied Mathematics from Harvard University. Prior to joining Parametric, Mr.
Stein served as the Director of Investment Research at GTE Investment
Management, Director of Active Equity Strategies at the Vanguard Group, and
Director of Quantitative Portfolio Management and Research at IBM. Ms. Mauzy
is a Senior Investment Manager of Parametric and has been with Parametric
since 1988. Ms. Mauzy graduated from the California State University with a
bachelor's degree in Chemistry, and from the University of California with a
master's degree in Economics. She is a Chartered Financial Analyst. Mr.
Quisenberry is a Senior Investment Manager and Research Manager of Parametric
and has been with Parametric since 1994. He previously served as a Vice
President and Portfolio manager at Cutler & Co., and as a security analyst and
portfolio manager at Fred Alger Management. Mr. Quisenberry graduated from
Yale University with a bachelor's degree in Economics. He is a Chartered
Financial Analyst.
NFJ manages the NFJ Equity Income Fund, the NFJ Diversified Low P/E Fund,
the NFJ Small Cap Value Fund, and a portion of the Common Stock Segment of the
Balanced Fund. NFJ is an investment management firm organized as a general
partnership. NFJ has two partners: PIMCO Advisors as the supervisory partner,
and NFJ Management, Inc. as the managing partner. NFJ Investment Group, Inc.,
the predecessor investment adviser to NFJ, commenced operations in 1989.
Accounts managed by NFJ had combined assets as of July 31, 1996 of
approximately $1.6 billion. NFJ's address is 2121 San Jacinto, Suite 1440,
Dallas, Texas 75201. NFJ is registered as an investment adviser with the SEC.
Chris Najork is responsible for the day-to-day management of the NFJ Equity
Income Fund, the NFJ Diversified Low P/E Fund, and the portion of the Common
Stock Segment of the Balanced Fund allocated to NFJ. Mr. Najork is a Managing
Director and a founding partner of NFJ and has 27 years' experience
encompassing equity research and portfolio management. He received his
bachelor's degree and MBA from Southern Methodist University. Mr. Najork is a
Chartered Financial Analyst. Mr. Najork and Paul A. Magnuson are primarily
responsible for the day-to-day management of the NFJ Small Cap Value Fund. Mr.
Magnuson, a research analyst at NFJ, has 11 years' experience in equity
research and portfolio management. He received his bachelor's degree in
Finance from the University of Nebraska-Lincoln.
Cadence manages the Cadence Capital Appreciation Fund, the Cadence Mid Cap
Growth Fund, the Cadence Micro Cap Growth Fund, the Cadence Small Cap Growth
Fund, and a portion of the Common Stock Segment of the Balanced Fund (the
"Cadence Funds"). Cadence is an investment management firm organized as a
general partnership. Cadence has two partners: PIMCO Advisors as the
supervisory partner, and Cadence Capital Management, Inc. as the managing
partner. Cadence Capital Management Corporation, the predecessor investment
adviser to Cadence, commenced operations in 1988. Accounts managed by Cadence
had combined assets as of July 31, 1996 of approximately $2.7 billion.
Cadence's address is Exchange Place, 53 State Street, Boston, Massachusetts
02109. Cadence is registered as an investment adviser with the SEC.
David B. Breed, William B. Bannick, Katherine A. Burdon, Eric M. Wetlaufer,
and Peter B. McManus, are primarily responsible for the day-to-day management
of the Cadence Funds. Mr. Breed is a Managing Director, Chief Executive
Officer, and founding partner of Cadence and has 23 years' investment
management experience. He has been the driving force in developing the firm's
growth-oriented stock screening and selection process and has been with
Cadence since its inception. Mr. Breed graduated from the University of
Massachusetts and received his MBA from the Wharton School of Business. He is
a Chartered Financial Analyst. Mr. Bannick is a Managing Director and
Executive Vice President of Cadence and has 11 years' investment management
experience. He previously served as Executive Vice President of George D.
Bjurman & Associates and as Supervising Portfolio Manager of Trinity
Investment Management Corporation. Mr. Bannick joined Cadence in 1992. He
graduated from the University of Massachusetts and received his MBA from
Boston University. Mr. Bannick is a Chartered Financial Analyst. Ms. Burdon is
a Managing Director and Portfolio Manager of Cadence and has nine years'
investment management experience. She previously served as a Vice President
and Portfolio Manager of The Boston Company. Ms. Burdon joined Cadence in
1993. She graduated from Stanford University and received a Master of Science
degree from Northeastern University. Ms. Burdon is a Chartered Financial
PIMCO FUNDS
<PAGE>
32
Analyst and Certified Public Accountant. Mr. Wetlaufer is a Managing Director
and Portfolio Manager of Cadence and has 11 years' investment management
experience. He previously served as Vice President of Northfield Information
Services. Mr. Wetlaufer joined Cadence in 1991. He graduated from Wesleyan
University and is a Chartered Financial Analyst. Mr. McManus is Director of
Fund Management of Cadence and has 19 years' investment management experience.
He previously served as a Vice President of Bank of Boston. Mr. McManus joined
Cadence in 1994. He graduated from the University of Massachusetts, and is
certified as a Financial Planner.
Columbus Circle manages the Columbus Circle Investors Core Equity Fund and
the Columbus Circle Investors Mid Cap Equity Fund (the "Columbus Circle
Funds"). Columbus Circle is an investment management firm organized as a
general partnership. Columbus Circle has two partners: PIMCO Advisors as the
supervisory partner, and Columbus Circle Investors Management, Inc. as the
managing partner. Columbus Circle Investors Division of Thomson Advisory Group
L.P. ("TAG"), the predecessor investment adviser to Columbus Circle, commenced
operations in 1975 as a division of Gulf + Western Industries (now Paramount
Communications). In 1985, the business was acquired by Thomson McKinnon Asset
Management, and in 1990, Irwin S. Smith and Donald A. Chiboucas, Chairman and
Managing Director, and President and Managing Director, respectively, of
Columbus Circle, participated in a management led purchase of the controlling
interest in TAG, of which Columbus Circle was a division. Accounts managed by
Columbus Circle had combined assets as of July 31, 1996 of approximately $12.8
billion. Columbus Circle's address is Metro Center, One Station Place, 8th
Floor, Stamford, Connecticut 06902. Columbus Circle is registered as an
investment adviser with the SEC.
The investment decisions made by Columbus Circle with respect to the
Columbus Circle Funds are made by a committee rather than by a single person
acting as portfolio manager. No person is primarily responsible for making
recommendations to that committee.
Blairlogie manages the Blairlogie Emerging Markets Fund and the Blairlogie
International Active Fund (the "Blairlogie Funds"). Blairlogie is an
investment management firm, organized as a limited partnership under the laws
of Scotland, United Kingdom, with two general partners and one limited
partner. The general partners are PIMCO Advisors, which serves as the
supervisory partner, and Blairlogie Holdings Limited, a wholly owned corporate
subsidiary of PIMCO Advisors, which serves as the managing partner. The
limited partner is Blairlogie Partners L.P., a limited partnership, the
general partner of which is Pacific Financial Asset Management Corporation,
and the limited partners of which are the principal executive officers of
Blairlogie Capital Management. Blairlogie Partners L.P. has agreed with PIMCO
Advisors that PIMCO Advisors will acquire one-fifth of its 25% interest
annually, beginning December 31, 1997. Blairlogie Capital Management Ltd., the
predecessor investment adviser to Blairlogie, commenced operations in 1992.
Accounts managed by Blairlogie had combined assets as of July 31, 1996 of
approximately $.7 billion. Blairlogie's address is 4th Floor, 125 Princes
Street, Edinburgh EH2 4AD, Scotland. Blairlogie is registered as an investment
adviser with the SEC in the United States and with the Investment Management
Regulatory Organisation ("IMRO") in the United Kingdom.
James Smith is primarily responsible for the day-to-day management of the
Blairlogie Funds. Mr. Smith is a Managing Director and Chief Investment
Officer of Blairlogie and is responsible for managing an investment team of
seven professionals who, in turn, specialize in selection of stocks within
Europe, Asia, the Americas and in currency and derivatives. He previously
served as a senior portfolio manager at Murray Johnstone in Glasgow, Scotland,
responsible for international investment management for North American
clients, and at Schroder Investment Management in London. Mr. Smith received
his bachelor's degree in Economics from London University and his MBA from
Edinburgh University. He is an Associate of the Institute of Investment
Management and Research.
PIMCO Advisors determines the allocation of the Balanced Fund's assets among
various asset classes and manages the Money Market Segment of that Fund.
Registration as an investment adviser with the SEC does not involve
supervision by the SEC over investment advice, and registration with the CFTC
as a commodity trading adviser does not involve supervision by the CFTC over
commodities trading. The portfolio management agreements are not exclusive,
and PIMCO,
<PAGE>
33
Parametric, NFJ, Cadence, Columbus Circle, and Blairlogie may provide, and
currently are providing, investment management services to other clients,
including other investment companies.
FUND ADMINISTRATOR
PIMCO serves as administrator to the Funds pursuant to an administration
agreement. PIMCO provides administrative services to the Funds, which include
clerical help and accounting, bookkeeping, internal audit services, and
certain other services required by the Funds, preparation of reports to the
Funds' shareholders and regulatory filings. In addition, PIMCO, at its own
expense, arranges for the provision of legal, audit, custody, transfer agency
and other services for the Funds, and is responsible for the costs of
registration of the Trust's shares and the printing of prospectuses and
shareholder reports for current shareholders.
The Trust is responsible for the following expenses: (i) salaries and other
compensation of any of the Trust's executive officers and employees who are
not officers, directors, stockholders, or employees of PIMCO Advisors, PIMCO,
or their subsidiaries or affiliates; (ii) taxes and governmental fees; (iii)
brokerage fees and commissions and other portfolio transaction expenses; (iv)
the costs of borrowing money, including interest expenses; (v) fees and
expenses of the Trustees who are not "interested persons" of the Adviser,
PIMCO, Portfolio Managers, or the Trust, and any counsel retained exclusively
for their benefit; (vi) extraordinary expenses, including costs of litigation
and indemnification expenses; (vii) expenses which are capitalized in
accordance with generally accepted accounting principles; and (viii) any
expenses allocated or allocable to a specific class of shares, which include
service fees payable with respect to the Administrative Class shares and may
include certain other expenses as permitted by the Trust's Multiple Class Plan
adopted pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the
"1940 Act") and subject to review and approval by the Trustees.
ADVISORY AND ADMINISTRATIVE FEES
The Funds feature fixed advisory and administrative fees. For providing
investment advisory services to the Funds, PIMCO Advisors receives monthly
fees from each Fund at an annual rate based on the average daily net assets of
the Fund as follows:
<TABLE>
<CAPTION>
ADVISORY
FUND FEE RATE
---- --------
<S> <C>
NFJ Equity Income, NFJ Diversified Low P/E, Cadence Capital Appreci-
ation,
Cadence Mid Cap Growth, Parametric Enhanced Equity, Parametric
Structured Emerging Markets, and Balanced Funds.................... .45%
Columbus Circle Investors Core Equity Fund.......................... .57%
NFJ Small Cap Value and Blairlogie International Active Funds....... .60%
Columbus Circle Investors Mid Cap Equity Fund....................... .63%
Blairlogie Emerging Markets Fund.................................... .85%
Cadence Small Cap Growth Fund....................................... 1.00%
Cadence Micro Cap Growth Fund....................................... 1.25%
</TABLE>
For providing administrative services to the Funds as described above, PIMCO
receives monthly fees from each Fund at an annual rate based on the average
daily net assets of the Fund as follows:
<TABLE>
<CAPTION>
ADMINISTRATIVE
FUND FEE RATE
---- --------------
<S> <C>
Parametric Structured Emerging Markets, Blairlogie Interna-
tional Active, and Blairlogie Emerging Markets Funds......... .50%
All Other Funds............................................... .25%
</TABLE>
Both the investment advisory and administration agreements for the Funds may
be terminated by the Trustees, or by PIMCO Advisors or PIMCO (as the case may
be), on 60 days' written notice. Following their initial two-year terms, the
agreements will continue from year to year if approved by the Trustees.
Pursuant to the portfolio management agreements between the Adviser and each
of the Portfolio Managers, PIMCO Advisors (not the Trust) pays each Portfolio
Manager a fee based on a percentage of the average daily net assets of a Fund
as follows: PIMCO--.25% for the Fixed Income Securities Segment of the
Balanced Fund; Parametric--.45% for the Parametric Enhanced Equity Fund and
.45% for the Parametric Structured Emerging Markets Fund; NFJ--.45% for the
NFJ Equity Income Fund, .45% for the NFJ Diversified Low P/E
PIMCO FUNDS
<PAGE>
34
Fund, .45% for the portion of the Common Stock Segment of the Balanced Fund
allocated to NFJ, and .60% for the NFJ Small Cap Value Fund; Cadence--.45% for
the Cadence Capital Appreciation Fund, .45% for the portion of the Common
Stock Segment of the Balanced Fund allocated to Cadence, .45% for the Cadence
Mid Cap Growth Fund, 1.00% for the Cadence Small Cap Growth Fund, and 1.25%
for the Cadence Micro Cap Growth Fund; Columbus Circle--.57% for the Columbus
Circle Investors Core Equity Fund and .63% for the Columbus Circle Investors
Mid Cap Equity Fund; and Blairlogie--.60% for the Blairlogie International
Active Fund and .85% for the Blairlogie Emerging Markets Fund.
SERVICE FEES
Under the terms of the Multiple Class Plan, PIMCO is permitted to
compensate, in an amount up to 0.25% on an annual basis of the average daily
net assets of the Administrative Class, financial intermediaries that provide
services in connection with the administration of plans or programs that use
Fund shares as their funding medium. For more complete disclosure regarding
the Multiple Class Plan and its terms, see the Statement of Additional
Information.
Institutional Class shares of the Trust may also be offered through certain
brokers and financial intermediaries ("service agents") that have established
a shareholder servicing relationship with the Trust on behalf of their
customers. The Trust pays no compensation to such entities. Service agents may
impose additional or different conditions on the purchase or redemption of
Trust shares by their customers and may charge their customers transaction or
other account fees on the purchase and redemption of Trust shares. Each
service agent is responsible for transmitting to its customers a schedule of
any such fees and information regarding any additional or different conditions
regarding purchases and redemptions. Shareholders who are customers of service
agents should consult their service agent for information regarding these fees
and conditions.
DISTRIBUTOR
Shares of the Trust are distributed through PIMCO Advisors Distribution
Company (the "Distributor"), an indirect wholly owned subsidiary of PIMCO
Advisors. The Distributor, which is located at 2187 Atlantic Street, Stamford,
Connecticut 06902, is a broker-dealer registered with the SEC.
PURCHASE OF SHARES
Each Fund offers its shares in two classes: the "Institutional Class" and
the "Administrative Class." Shares of the Institutional Class are offered
primarily for direct investment by institutional investors and high net worth
individuals. They also are offered through certain financial intermediaries
that charge their customers transaction or other fees with respect to their
customers' investment in the Funds. Shares of the Administrative Class are
offered primarily through broker-dealers, retirement plan administrators and
other financial intermediaries. Administrative Class shares indirectly pay
service fees to such entities for services they provide to shareholders of
that class.
Shares of either class of the Funds may be purchased at the relevant net
asset value of that class without a sales charge. The minimum initial
investment for shares of either class is $200,000.
INITIAL INVESTMENT
An account may be opened by completing and signing a Client Registration
Application and mailing it to PIMCO Funds at the following address: 840
Newport Center Drive, Suite 360, Newport Beach, California 92660. A Client
Registration Application may be obtained by calling (800) 800-0952.
Except as provided below, purchases of shares can only be made by wiring
federal funds to Investors Fiduciary Trust Company (the "Transfer Agent"), 127
West 10th Street, Kansas City, Missouri 64105. Before wiring federal funds,
the investor must first telephone the Trust at (800) 927-4648 to receive
instructions for
<PAGE>
35
wire transfer, and the following information will be requested: name of
authorized person; shareholder name; shareholder account number; name of Fund
and share class; amount being wired; and wiring bank name.
Shares may be purchased without first wiring federal funds if the proceeds
of the investment are derived from an advisory account maintained by the
investor with PIMCO Advisors or one of its affiliates; from surrender or other
payment from an annuity, insurance, or other contract held by Pacific Mutual
Life Insurance Company; or from an investment by broker-dealers, institutional
clients or other financial intermediaries which have established a shareholder
servicing relationship with the Trust on behalf of their customers.
All purchase orders are effected at the relevant net asset value for that
class next determined after receipt of the purchase order. A purchase order,
together with payment in proper form, received by the Transfer Agent prior to
the close of business (ordinarily 4:00 p.m., Eastern time) on a day the Trust
is open for business will be effected at that day's net asset value. An order
received after the close of business will be effected at the net asset value
determined on the next business day. The Trust is "open for business" on each
day the New York Stock Exchange is open for trading, which excludes the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Purchase
orders will be accepted only on days on which the Trust is open for business.
ADDITIONAL INVESTMENTS
Additional investments may be made at any time at the relevant net asset
value for that class by calling the Trust and wiring federal funds to the
Transfer Agent as outlined above.
OTHER PURCHASE INFORMATION
Purchases of a Fund's shares will be made in full and fractional shares. In
the interest of economy and convenience, certificates for shares will not be
issued.
The Trust and the Distributor each reserves the right, in its sole
discretion, to suspend the offering of shares of the Funds or to reject any
purchase order, in whole or in part, when, in the judgment of management, such
suspension or rejection is in the best interests of the Trust; to waive the
minimum initial investment for certain investors; and to redeem shares if
information provided in the Client Registration Application should prove to be
incorrect in any manner judged by the Trust to be material (e.g., in a manner
such as to render the shareholder ineligible to purchase shares of the Trust).
Purchases and sales should be made for long-term investment purposes only.
The Trust and Adviser each reserves the right to restrict purchases of Fund
shares (including exchanges) when a pattern of frequent purchases and sales
made in response to short-term fluctuations in share price appears evident.
Shares of the Trust are not qualified or registered for sale in all states.
Prospective investors should inquire as to whether shares of a particular Fund
are available for offer and sale in their state of residence. Shares of the
Trust may not be offered or sold in any state unless registered or qualified
in that jurisdiction or unless an exemption from registration or qualification
is available.
Investors may, subject to the approval of the Trust, purchase shares of a
Fund with liquid securities that are eligible for purchase by the Fund
(consistent with such Fund's investment policies and restrictions) and that
have a value that is readily ascertainable in accordance with the Trust's
valuation policies. These transactions will be effected only if the Portfolio
Manager intends to retain the security in the Fund as an investment. Assets so
purchased by a Fund will be valued in generally the same manner as they would
be valued for purposes of pricing the Fund's shares, if such assets were
included in the Fund's assets at the time of purchase. The Trust reserves the
right to amend or terminate this practice at any time.
CONTRIBUTED CAPITAL LIMITATIONS
The Cadence Micro Cap Growth Fund limits the purchase of shares (contributed
capital) by any one investor to $10,000,000, exclusive of shares purchased
through reinvestment of dividends and distributions.
PIMCO FUNDS
<PAGE>
36
Additionally, the Trust has determined to limit the aggregate contributed
capital by all investors in the Fund to $100,000,000. Therefore, when the
aggregate contributed capital in the Fund reaches such amount, the Fund will
no longer be available for additional investment, until such time as an
existing investor redeems a dollar amount sufficient to allow a new investment
into the Fund. In addition, shares of the Cadence Small Cap Growth Fund and
the Parametric Structured Emerging Markets Fund are not offered as of the date
of this Prospectus; however, investment opportunities in these Funds may be
available in the future. These limitations may be changed or eliminated at any
time at the discretion of the Trust's Board of Trustees.
RETIREMENT PLANS
The Funds are available as an investment option for participants in
retirement and savings plans, including Keogh plans, 401(k) plans, 403(b)
plans, and Individual Retirement Accounts. The administrator of a plan or
employee benefits office can provide participants or employees with detailed
information on how to participate in the plan and how to elect a Fund as an
investment option. Participants in a retirement or savings plan may be
permitted to elect different investment options, alter the amounts contributed
to the plan, or change how contributions are allocated among investment
options in accordance with the plan's specific provisions. The plan
administrator or employee benefits office should be consulted for details. For
questions about participant accounts, participants should contact their
employee benefits office, the plan administrator, or the organization that
provides recordkeeping services for the plan. Investors who purchase shares
through retirement plans should be aware that plan administrators may
aggregate purchase and redemption orders for participants in the plan.
Therefore, there may be a delay between the time the investor places his order
with the plan administrator, and the time the order is forwarded to the
Transfer Agent for execution.
REDEMPTION OF SHARES
REDEMPTIONS BY MAIL
Shares may be redeemed by submitting a written request to PIMCO Funds, 840
Newport Center Drive, Suite 360, Newport Beach, California 92660, stating the
Fund from which the shares are to be redeemed, the class of shares, the number
or dollar amount of the shares to be redeemed and the account number. The
request must be signed exactly as the names of the registered owners appear on
the Trust's account records, and the request must be signed by the minimum
number of persons designated on the Client Registration Application that are
required to effect a redemption.
REDEMPTIONS BY TELEPHONE OR OTHER WIRE COMMUNICATION
If an election is made on the Client Registration Application (or
subsequently in writing), redemptions of shares may be requested by calling
the Trust at (800) 927-4648, by sending a facsimile to (714) 760-4456, or by
other means of wire communication. Investors should state the Fund and class
from which the shares are to be redeemed, the number or dollar amount of the
shares to be redeemed and the account number. Redemption requests of an amount
of $10,000,000 or more may be initiated by telephone, but must be confirmed in
writing by an authorized party prior to processing.
In electing a telephone redemption, the investor authorizes PIMCO and the
Transfer Agent to act on telephone instructions from any person representing
himself to be the investor, and reasonably believed by PIMCO and the Transfer
Agent to be genuine. Neither the Trust nor its Transfer Agent will be liable
for any loss, cost or expense for acting on instructions (whether in writing
or by telephone) believed by the party receiving such instructions to be
genuine and in accordance with the procedures described in this Prospectus.
Shareholders should realize that by electing the telephone or wire redemption
option, they may be giving up a measure of security that they might have if
they were to redeem their shares in writing. Furthermore, interruptions in
telephone service may mean that a shareholder will be unable to effect a
redemption by telephone when desired. The Transfer Agent provides written
confirmation of transactions initiated by telephone as a procedure designed to
confirm that telephone instructions are genuine (written confirmation is also
provided for redemption requests received in writing). All telephone
transactions are recorded, and PIMCO or the Transfer Agent may request certain
information in order to verify that the person giving instructions is
authorized to do
<PAGE>
37
so. If the Trust or Transfer Agent fails to employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, they may be
liable for any losses due to unauthorized or fraudulent telephone
transactions. All redemptions, whether initiated by letter or telephone, will
be processed in a timely manner, and proceeds will be forwarded by wire in
accordance with the redemption policies of the Trust detailed below. See
"Redemption of Shares--Other Redemption Information."
Shareholders may decline telephone exchange or redemption privileges after
an account is opened by instructing the Transfer Agent in writing at least
seven business days prior to the date the instruction is to be effective.
Shareholders may experience delays in exercising telephone redemption
privileges during periods of abnormal market activity. During periods of
volatile economic or market conditions, shareholders may wish to consider
transmitting redemption orders by telegram, facsimile or overnight courier.
Defined contribution plan participants may request redemptions by contacting
the employee benefits office, the plan administrator or the organization that
provides recordkeeping services for the plan.
OTHER REDEMPTION INFORMATION
Payment of the redemption price will ordinarily be wired to the investor's
bank three business days after the tender request, but may take up to seven
business days. Redemption proceeds will be sent by wire only to the bank name
designated on the Client Registration Application. The Trust may suspend the
right of redemption or postpone the payment date at times when the New York
Stock Exchange is closed, or during certain other periods as permitted under
the federal securities laws.
For shareholder protection, a request to change information contained in an
account registration (for example, a request to change the bank designated to
receive wire redemption proceeds) must be received in writing, signed by the
minimum number of persons designated on the Client Registration Application
that are required to effect a redemption, and accompanied by a signature
guarantee from any eligible guarantor institution, as determined in accordance
with the Trust's procedures. Shareholders should inquire as to whether a
particular institution is an eligible guarantor institution. A signature
guarantee cannot be provided by a notary public. In addition, corporations,
trusts and other institutional organizations are required to furnish evidence
of the authority of the persons designated on the Client Registration
Application to effect transactions for the organization.
Due to the relatively high cost of maintaining small accounts, the Trust
reserves the right to redeem shares in any account for their then-current
value (which will be promptly paid to the investor) if at any time, due to
redemption by the investor, the shares in the account do not have a value of
at least $100,000. A shareholder will receive advance notice of a mandatory
redemption and will be given at least 30 days to bring the value of its
account up to at least $100,000.
The Trust agrees to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for
any one shareholder. In consideration of the best interests of the remaining
shareholders, the Trust reserves the right to pay any redemption proceeds
exceeding this amount in whole or in part by a distribution in kind of
securities held by a Fund in lieu of cash. It is highly unlikely that shares
would ever be redeemed in kind. If shares are redeemed in kind, however, the
redeeming shareholder should expect to incur transaction costs upon the
disposition of the securities received in the distribution.
EXCHANGE PRIVILEGE
Shares of a Fund may be exchanged for shares of the same class of any other
Fund based on the respective net asset values of the shares involved. An
exchange may be made by following the redemption procedure described above
under "Redemptions by Mail" or, if the telephone redemption option has been
elected, by calling the Trust at (800) 927-4648. Shares of a Fund may also be
exchanged for shares of the same class of a series of the PIMCO Funds: Pacific
Investment Management Series, an affiliated no-load mutual fund family
composed primarily of fixed income portfolios managed by PIMCO. Shareholders
interested in such an exchange may request a prospectus for these funds by
contacting the PIMCO Funds at the same address and telephone number as the
Trust.
PIMCO FUNDS
<PAGE>
38
Exchanges may be made only with respect to Funds or PIMCO Funds series
registered in the state of residence of the investor or where an exemption
from registration is available. An exchange order is treated the same as a
redemption followed by a purchase and may result in a capital gain or loss for
tax purposes, and special rules may apply in computing tax basis when
determining gain or loss. See "Taxation" in the Statement of Additional
Information.
The Trust reserves the right to modify or revoke the exchange privilege of
any shareholder or to limit or reject any exchange. Although each Fund will
attempt to give shareholders prior notice whenever it is reasonably able to do
so, it may impose these restrictions at any time.
PORTFOLIO TRANSACTIONS
Pursuant to the portfolio management agreements, a Portfolio Manager places
orders for the purchase and sale of portfolio investments for the Funds'
accounts with brokers or dealers selected by it in its discretion. In
effecting purchases and sales of portfolio securities for the account of the
Funds, the Portfolio Manager will seek the best price and execution of the
Funds' orders. In doing so, a Fund may pay higher commission rates than the
lowest available when the Portfolio Manager believes it is reasonable to do so
in light of the value of the brokerage and research services provided by the
broker effecting the transaction. The Portfolio Manager also may consider
sales of shares of the Trust as a factor in the selection of broker-dealers to
execute portfolio transactions for the Trust.
The Portfolio Managers manage the Funds without regard generally to
restrictions on portfolio turnover, except those imposed on its ability to
engage in short-term trading by provisions of the federal tax laws. The use of
futures contracts and other derivative instruments with relatively short
maturities may tend to exaggerate the portfolio turnover rate for some of the
Funds. The use of futures contracts may involve the payment of commissions to
futures commission merchants. The higher the rate of portfolio turnover of a
Fund, the higher the transaction costs borne by the Fund generally will be.
Some securities considered for investment by the Funds may also be
appropriate for other clients served by the Portfolio Manager. If a purchase
or sale of securities consistent with the investment policies of a Fund and
one or more of these clients served by the Portfolio Manager is considered at
or about the same time, transactions in such securities will be allocated
among the Fund and clients in a manner deemed fair and reasonable by the
Portfolio Manager.
NET ASSET VALUE
The net asset value per share of each class of each Fund is determined as of
the close of trading on the New York Stock Exchange (ordinarily 4:00 p.m.,
Eastern time) by dividing the total market value of a Fund's portfolio
investments and other assets attributable to that class, less any liabilities,
by the number of total outstanding shares of that class. Net asset value will
not be determined on days on which the New York Stock Exchange is closed.
Portfolio securities and other assets for which market quotations are
readily available are stated at market value. Market value is determined on
the basis of last reported sales prices, or if no sales are reported, as is
the case for most securities traded over-the-counter, at the mean between
representative bid and asked quotations obtained from a quotation reporting
system or from established market makers. Fixed income securities, including
those to be purchased under firm commitment agreements (other than obligations
having a maturity of 60 days or less), are normally valued on the basis of
quotations obtained from brokers and dealers or pricing services, which take
into account appropriate factors such as institutional-sized trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
Quotations of foreign securities in foreign currency are converted to U.S.
dollar equivalents using foreign exchange quotations received from independent
dealers. The calculation of the net asset value of the Parametric Structured
Emerging Markets, Blairlogie Emerging Markets, and Blairlogie International
Active Funds may not
<PAGE>
39
take place contemporaneously with the determination of the prices of certain
portfolio securities of foreign issuers used in such calculation. Further,
under the Trust's procedures, the prices of foreign securities are determined
using information derived from pricing services and other sources. Prices
derived under these procedures will be used in determining daily net asset
value. Information that becomes known to the Trust or its agents after the
time that net asset value is calculated on any business day may be assessed in
determining net asset value per share after the time of receipt of the
information, but will not be used to retroactively adjust the price of the
security so determined earlier or on a prior day. Events affecting the values
of portfolio securities that occur between the time their prices are
determined and 4:00 p.m., Eastern time, may not be reflected in the
calculation of net asset value. If events materially affecting the value of
such securities occur during such period, then these securities may be valued
at fair value as determined by the management and approved in good faith by
the Board of Trustees.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, when the Board of Trustees determines that amortized cost is
their fair value. Certain fixed income securities for which daily market
quotations are not readily available may be valued, pursuant to guidelines
established by the Board of Trustees, with reference to fixed income
securities whose prices are more readily obtainable and whose durations are
comparable to the securities being valued. Subject to the foregoing, other
securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Shares begin earning dividends on the effective date of purchase, provided
notification deadlines are met. See "Purchase of Shares." Net investment
income from interest and dividends, if any, will be declared and paid
quarterly to shareholders of record by the NFJ Equity Income, NFJ Diversified
Low P/E, and Balanced Funds. Net Investment income from interest and
dividends, if any, will be declared and paid at least annually to shareholders
of record by the NFJ Small Cap Value, Cadence Capital Appreciation, Cadence
Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small Cap Growth, Columbus
Circle Investors Core Equity, Columbus Circle Investors Mid Cap Equity,
Parametric Enhanced Equity, Parametric Structured Emerging Markets, Blairlogie
Emerging Markets, and Blairlogie International Active Funds. Any net realized
capital gains from the sale of portfolio securities will be distributed no
less frequently than once yearly. Net realized short-term capital gains may be
paid more frequently. Dividend and capital gain distributions of a Fund will
be reinvested in additional shares of that Fund unless the shareholder elects
to have them paid in cash. Dividends from net investment income with respect
to Administrative Class shares will be lower than those paid with respect to
Institutional Class shares, reflecting the payment of service fees by that
class.
Each Fund intends to qualify as a regulated investment company annually and
to elect to be treated as a regulated investment company under the Internal
Revenue Code of 1986, as amended. As such, a Fund generally will not pay
federal income tax on the income and gains it pays as dividends to its
shareholders. In order to avoid a 4% federal excise tax, each Fund intends to
distribute each year substantially all of its net income and gains.
Distributions received by tax-exempt shareholders will not be subject to
federal income tax to the extent permitted under applicable tax law. To the
extent that a shareholder is not exempt from tax on Fund distributions, such
shareholder will be subject to tax on dividends received from a Fund,
regardless of whether received in cash or reinvested in additional shares. All
shareholders must treat dividends, other than capital gain dividends or
dividends that represent a return of capital to shareholders, as ordinary
income. Dividends designated by a Fund as capital gain dividends are taxable
to shareholders as long-term capital gain except as provided by an applicable
tax exemption. Any distributions that are not from a Fund's net investment
income or net capital gain may be characterized as a return of capital to
shareholders or, in some cases, as capital gain. Certain dividends declared in
October, November or December of a calendar year are taxable to shareholders
(who otherwise are subject to tax on dividends) as though received on December
31 of that year if paid to shareholders during January of the following
calendar year. Each Fund will advise shareholders annually of the amount and
nature of the dividends paid to them.
PIMCO FUNDS
<PAGE>
40
Taxable shareholders should note that the timing of their investment could
have undesirable tax consequences. If shares are purchased on or just before
the day a Fund declares a dividend, taxable shareholders will pay full price
for the shares and may receive a portion of their investment back as a taxable
distribution.
The preceding discussion relates only to federal income tax; the
consequences under other tax laws may differ. For additional information
relating to the tax aspects of investing in a Fund, see the Statement of
Additional Information.
OTHER INFORMATION
CAPITALIZATION
The Trust was organized as a Massachusetts business trust on August 24,
1990. The Board of Trustees may establish additional portfolios in the future.
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 each. When issued,
shares of the Trust are fully paid, non-assessable and freely transferable.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Amended
and Restated Agreement and Declaration of Trust (the "Declaration of Trust")
disclaims liability of the shareholders, Trustees or officers of the Trust for
acts or obligations of the Trust, which are binding only on the assets and
property of the Trust, and requires that notice of the disclaimer be given in
each contract or obligation entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of Trust
property for all loss and expense of any shareholder held personally liable
for the obligations of the Trust. The risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations, and thus
should be considered remote.
VOTING
Shareholders have the right to vote on the election of Trustees and on any
and all matters on which the law or the Declaration of Trust states they may
be entitled to vote. The Trust is not required to hold regular annual meetings
of Trust shareholders and does not intend to do so. Shareholders of a class of
shares have separate voting rights with respect to matters that only affect
that class. See "Other Information--Voting Rights" in the Statement of
Additional Information.
The Declaration of Trust provides that the holders of not less than two-
thirds of the outstanding shares of the Trust may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As of August 21, 1996, Pacific Mutual Life
Insurance Company (Newport Beach, California) owned controlling interests (as
that term is defined in the 1940 Act) of the NFJ Diversified Low P/E Fund, the
Parametric Enhanced Equity Fund, and the Columbus Circle Investors Mid Cap
Equity Fund; The Jewish Federation of Metropolitan Chicago (Chicago, Illinois)
owned a controlling interest of the Cadence Small Cap Growth Fund; First
Interstate Bank of California as Custodian for the San Francisco Bay Area
Rapid Transit District (Calabasas, California) owned a controlling interest of
the Parametric Enhanced Equity Fund; The Bank of New York as Trustee for
Melville Corporation (Rye, New York) owned a controlling interest of the
Columbus Circle Investors Core Equity Fund; and Charles Schwab & Company, Inc.
(San Francisco, California) owned a controlling interest of the Blairlogie
Emerging Markets Fund. As used in this Prospectus, the phrase "vote of a
majority of the outstanding shares" of a Fund (or the Trust) means the vote of
the lesser of: (1) 67% of the shares of the Fund (or the Trust) present at a
meeting, if the holders of more than 50% of the outstanding shares are present
in person or by proxy; or (2) more than 50% of the outstanding shares of the
Fund (or the Trust).
<PAGE>
41
PERFORMANCE INFORMATION
The Trust may, from time to time, include the yield and total return for
each class of shares of its Funds in advertisements or reports to shareholders
or prospective investors. Quotations of yield for a Fund or class will be
based on the investment income per share (as defined by the SEC) during a
particular 30-day (or one-month) period (including dividends and interest),
less expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the maximum public offering
price per share on the last day of the period. Quotations of average annual
total return for a Fund or class will be expressed in terms of the average
annual compounded rate of return of a hypothetical investment in the Fund or
class over periods of one, five and ten years (up to the life of the Fund),
reflect the deduction of a proportional share of Fund or class expenses (on an
annual basis), and assume that all dividends and distributions are reinvested
when paid.
The Trust also may provide current distribution information to its
shareholders in shareholder reports or other shareholder communications, or in
certain types of sales literature provided to prospective investors. Current
distribution information for a particular class of a Fund will be based on
distributions for a specified period (i.e., total dividends from net
investment income), divided by the relevant class net asset value per share on
the last day of the period and annualized. The rate of current distributions
does not reflect deductions for unrealized losses from transactions in
derivative instruments such as options and futures, which may reduce total
return. Current distribution rates differ from standardized yield rates in
that they represent what a class of a Fund has declared and paid to
shareholders as of the end of a specified period rather than the Fund's actual
net investment income for that period.
Performance information for the Trust may also be compared to: (i) the S&P
500, the Dow Jones Industrial Average, the EAFE Index, the MSCI Free Index,
the Baring Index, the IFC Index, the Russell 1000 Value Index, the Russell
1000 Growth Index, the Standard & Poor's Mid Cap Index, the Russell 2000
Index, the Lehman Brothers Aggregate Bond Index, or other unmanaged indexes
that measure performance of a pertinent group of securities; (ii) other groups
of mutual funds tracked by Lipper Analytical Services ("Lipper"), a widely
used independent research firm which ranks mutual funds by overall
performance, investment objectives, and assets, or tracked by other services,
companies, publications, or persons who rank mutual funds on overall
performance or other criteria; and (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an investment in the Funds.
Unmanaged indexes (i.e., other than Lipper) generally do not reflect
deductions for administrative and management costs and expenses. The Adviser
and any of the Portfolio Managers may also report to shareholders or to the
public in advertisements concerning the performance of the Adviser and the
Portfolio Manager as advisers to clients other than the Trust, and on the
comparative performance or standing of the Adviser or the Portfolio Managers
in relation to other money managers. Such comparative information may be
compiled or provided by independent ratings services or by news organizations.
Any performance information, whether related to the Funds, the Adviser or the
Portfolio Managers, should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the Funds, and the
market conditions during the time period indicated, and should not be
considered to be representative of what may be achieved in the future. For a
description of the methods used to determine yield and total return for the
Funds, see the Statement of Additional Information.
Investment results of the Funds will fluctuate over time, and any
representation of the Funds' total return or yield for any prior period should
not be considered as a representation of what an investor's total return or
yield may be in any future period. The Trust's Annual Report contains
additional performance information for the Funds and is available upon
request, without charge, by calling (800) 927-4648 (Current Shareholders), or
(800) 800-0952 (New Accounts).
PIMCO FUNDS
<PAGE>
[PIMCO LOGO]
PIMCO FUNDS
Equity Advisors Series
INVESTMENT ADVISER
PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
ADMINISTRATOR
Pacific Investment Management Company
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
ACCOUNTANTS
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, DC 20005
PROSPECTUS
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September 15, 1996
<PAGE>
P I M C O
PIMCO FUNDS
Equity Advisors Series
Cadence Capital Appreciation Fund
Cadence Mid Cap Growth Fund
Cadence Micro Cap Growth Fund
Cadence Small Cap Growth Fund
PROSPECTUS
- --------------------------------------------------------------------------------
September 15, 1996
<PAGE>
(This page left blank intentionally)
<PAGE>
PROSPECTUS
September 15, 1996
PIMCO Funds: Equity Advisors Series (the "Trust"), formerly PIMCO Advisors
Institutional Funds, is a no-load, open-end management investment company
("mutual fund") which currently offers fourteen separate investment
portfolios, four of which, the Cadence Capital Appreciation Fund, the Cadence
Mid Cap Growth Fund, the Cadence Micro Cap Growth Fund, and the Cadence Small
Cap Growth Fund (the "Funds") are described in this Prospectus. The Cadence
Small Cap Growth Fund is not currently available for investment. PIMCO
Advisors L.P. ("PIMCO Advisors" or "Adviser") serves as investment adviser to
the Trust.
Information about the investment objective of each Fund, along with a
detailed description of the types of securities in which each Fund may invest,
and of investment policies and restrictions applicable to each Fund, are set
forth in this Prospectus. There can be no assurance that the investment
objective of any Fund will be achieved. Because the market value of the Funds'
investments will change, the investment returns and net asset value per share
of each Fund also will vary.
Each Fund offers two classes of shares: the "Institutional Class" and the
"Administrative Class." Shares of the Institutional Class are offered
primarily for direct investment by investors such as pension and profit
sharing plans, employee benefit trusts, endowments, foundations, corporations,
other institutions, and high net worth individuals. They also are offered
through certain financial intermediaries that charge their customers
transaction or other fees with respect to the customers' investment in the
Funds. Shares of the Administrative Class are offered primarily through
brokers, retirement plan administrators, and other financial intermediaries.
Administrative Class shares indirectly pay service fees to such entities for
services they provide to shareholders of that class. Administrative Class
shares of certain Funds are not currently available for investment. Shares of
each class of the Funds are offered for sale at the relevant next determined
net asset value for that class with no sales charge.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Funds. It should be read and retained for
ready reference to information about the Funds. A Statement of Additional
Information, dated September 15, 1996, as supplemented from time to time,
containing additional and more detailed information about the Funds, has been
filed with the Securities and Exchange Commission and is hereby incorporated
by reference into this Prospectus. It is available without charge and may be
obtained by writing or calling:
PIMCO Funds
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
Telephone:(800) 927-4648 (Current Shareholders)
(800) 800-0952 (New Accounts)
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PIMCO FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................................................... 3
Expense Information..................................................... 5
Financial Highlights.................................................... 6
Investment Objectives and Policies...................................... 8
Investment Restrictions................................................. 9
Characteristics and Risks of Securities and Investment Techniques....... 12
Management of the Trust................................................. 13
Purchase of Shares...................................................... 16
Redemption of Shares.................................................... 18
Portfolio Transactions.................................................. 20
Net Asset Value......................................................... 20
Dividends, Distributions and Taxes...................................... 21
Other Information....................................................... 21
</TABLE>
<PAGE>
3
PROSPECTUS SUMMARY
PIMCO Funds: Equity Advisors Series (the "Trust") is a no-load, open-end
management investment company ("mutual fund"), organized as a Massachusetts
business trust on August 24, 1990. The Trust currently offers fourteen separate
investment portfolios, four of which are described in this Prospectus.
COMPARISON OF FUNDS
The following chart provides general information about each of the Funds. It
is qualified in its entirety by the more complete descriptions of the Funds
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FUND INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS
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<C> <S>
Cadence Capital Seeks growth of capital; invests primarily in common
Appreciation stocks of companies with market capitalizations of at
least $100 million that have improving fundamentals and
whose stock is reasonably valued by the market.
- ------------------------------------------------------------------------------
Cadence Mid Cap Seeks growth of capital; invests primarily in common
Growth stocks of companies with market capitalizations in excess
of $500 million that have improving fundamentals and
whose stock is reasonably valued by the market.
- ------------------------------------------------------------------------------
Cadence Micro Cap Seeks long-term growth of capital; invests primarily in
Growth common stocks of companies with market capitalizations of
less than $100 million that have improving fundamentals
and whose stock is reasonably valued by the market.
- ------------------------------------------------------------------------------
Cadence Small Cap Seeks growth of capital; invests primarily in common
Growth stocks of companies with market capitalizations between
$50 million and $1 billion that have improving
fundamentals and whose stock is reasonably valued by the
market.
- ------------------------------------------------------------------------------
</TABLE>
INVESTMENT RISKS AND CONSIDERATIONS
The following are some of the primary risks relevant to an investment in the
Funds and to the securities in which the Funds invest. Investors should read
the Prospectus carefully for a more complete discussion of the risks relating
to an investment in the Funds. The value of all securities and other
instruments held by the Funds vary from time to time in response to a wide
variety of market factors. Consequently, the net asset value per share of each
Fund will vary. The net asset value per share of any Fund may be less at the
time of redemption than it was at the time of investment. It is the policy of
all of the Funds to be as fully invested as practicable in common stock at all
times. This policy precludes any of the Funds from investing in debt securities
as a defensive investment posture (although the Funds may invest in such
securities to provide for payment of expenses and to meet redemption requests).
Accordingly, investors in these Funds bear the risk of general declines in
stock prices, and bear any risk that a Fund's exposure to such declines cannot
be lessened by investment in debt securities. For further information, see
"Investment Objectives and Policies--General."
Certain of the Funds' investment techniques may involve a form of borrowing,
which may tend to exaggerate the effect on net asset value of any increase or
decrease in the market value of a Fund's portfolio and may require liquidation
of portfolio positions when it is not advantageous to do so.
INVESTMENT ADVISER AND PORTFOLIO MANAGER
PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser") serves as investment
adviser to the Trust. Subject to the supervision of the Board of Trustees of
the Trust, the Adviser supervises the investment program for the Funds in
accordance with each Fund's investment objective, policies, and restrictions.
For all of the Funds, the Adviser has engaged its affiliate, Cadence Capital
Management ("Cadence" or "Portfolio Manager"), to serve as Portfolio Manager.
Under the supervision of PIMCO Advisors, the Portfolio Manager makes
determinations with respect to the purchase and sale of portfolio securities
and places, in the names of the Funds, orders for execution of the Funds'
transactions.
For its services, the Adviser receives fees based on the average daily net
assets of each Fund. The Portfolio Manager is compensated by the Adviser out of
the Adviser's fees (not by the Trust). See "Management of the Trust."
PIMCO FUNDS
<PAGE>
4
PURCHASE OF SHARES
Each Fund offers two classes of shares: the "Institutional Class" and the
"Administrative Class." Shares of the Institutional Class are offered primarily
for direct investment by institutional investors and high net worth
individuals. They are also offered through certain financial intermediaries
that charge their customers transaction or other fees with respect to the
customers' investment in the Funds. Shares of the Administrative Class are
offered primarily through brokers, retirement plan administrators and other
financial intermediaries. Administrative Class shares indirectly pay service
fees to such entities for services they provide to shareholders of that class.
Administrative Class shares of certain Funds are not currently available for
investment.
Shares of each class of the Funds are offered at the relevant next determined
net asset value with no sales charge. The minimum initial investment for shares
of either class is $200,000. The Cadence Micro Cap Growth Fund limits the
purchase of shares (contributed capital) by any one investor to $10,000,000,
exclusive of shares purchased through reinvestment of dividends and
distributions. Additionally, the Trust has determined to limit the aggregate
contributed capital by all investors in the Cadence Micro Cap Growth Fund to
$100,000,000. Therefore, when the aggregate contributed capital in the Fund
reaches such amount, the Fund will no longer be available for additional
investment, until such time as an existing investor redeems a dollar amount
sufficient to allow a new investment into the Fund. In addition, shares of the
Cadence Small Cap Growth Fund are not offered as of the date of this
Prospectus; however, additional investment in the Fund may be available in the
event that an existing shareholder redeems a sufficient dollar amount. These
limitations may be changed or eliminated at any time at the discretion of the
Trust's Board of Trustees. See "Purchase of Shares."
REDEMPTIONS AND EXCHANGES
Shares of each class of each Fund may be redeemed without cost at the
relevant net asset value per share of the class of that Fund next determined
after receipt of the redemption request. The redemption price may be more or
less than the purchase price.
Shares of a class of any Fund may be exchanged for shares of the same class
of any other Fund of the Trust offered generally to the public on the basis of
relative net asset values, or for shares of the same class of a series of the
PIMCO Funds: Pacific Investment Management Series, an affiliated no-load mutual
fund family composed primarily of fixed income portfolios managed by PIMCO. See
"Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute dividends from net investment income and any net
realized capital gains at least annually. All dividends and distributions will
be reinvested automatically at net asset value in additional shares of the same
class of the same Fund, unless cash payment is requested. Dividends from net
investment income with respect to Administrative Class shares will be lower
than those paid with respect to Institutional Class shares, reflecting the
payment of service fees by that class. See "Dividends, Distributions and
Taxes."
<PAGE>
5
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (EACH CLASS):
<TABLE>
<S> <C>
Sales Load Imposed on Purchases.......................................... None
Sales Load Imposed on Reinvested Dividends............................... None
Redemption Fee........................................................... None
Exchange Fee............................................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS):
<TABLE>
<CAPTION>
ADVISORY ADMINISTRATIVE TOTAL
INSTITUTIONAL CLASS SHARES FEE FEE EXPENSES
--------------------------------------------- -------- -------------- --------
<S> <C> <C> <C>
Cadence Capital Appreciation Fund............ 0.45 0.25 0.70
Cadence Mid Cap Growth Fund.................. 0.45 0.25 0.70
Cadence Micro Cap Growth Fund................ 1.25 0.25 1.50
Cadence Small Cap Growth Fund................ 1.00 0.25 1.25
</TABLE>
<TABLE>
<CAPTION>
ADVISORY ADMINISTRATIVE SERVICE TOTAL
ADMINISTRATIVE CLASS SHARES FEE FEE FEE EXPENSES
------------------------------------- -------- -------------- ------- --------
<S> <C> <C> <C> <C>
Cadence Capital Appreciation Fund.... 0.45 0.25 0.25 0.95
Cadence Mid Cap Growth Fund.......... 0.45 0.25 0.25 0.95
Cadence Micro Cap Growth Fund........ 1.25 0.25 0.25 1.75
Cadence Small Cap Growth Fund........ 1.00 0.25 0.25 1.50
</TABLE>
For a more detailed discussion of the Funds' fees and expenses, see "Fund
Administrator," "Advisory and Administrative Fees," and "Service Fees" under
the caption "Management of the Trust."
EXAMPLE OF FUND EXPENSES:
An investor would pay the following expenses on a $1,000 investment assuming
(1) a hypothetical 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Cadence Capital Appreciation Fund............ $ 7 $22 $39 $ 87
Cadence Mid Cap Growth Fund.................. $ 7 $22 $39 $ 87
Cadence Micro Cap Growth Fund................ $15 $47 $82 $179
Cadence Small Cap Growth Fund................ $13 $40 $69 $151
<CAPTION>
ADMINISTRATIVE CLASS SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Cadence Capital Appreciation Fund............ $10 $30 $53 $117
Cadence Mid Cap Growth Fund.................. $10 $30 $53 $117
Cadence Micro Cap Growth Fund................ $18 $55 $95 $206
Cadence Small Cap Growth Fund................ $15 $47 $82 $179
</TABLE>
The above tables are provided to assist investors in understanding the
various expenses which may be borne directly or indirectly in connection with
an investment in the Funds. This example should not be considered a
representation of past or future expenses or performance. Actual expenses may
be higher or lower than those shown.
PIMCO FUNDS
<PAGE>
6
FINANCIAL HIGHLIGHTS
The following information regarding selected per share data and ratios for
shares of each Fund is part of the Trust's financial statements which are
included in the Trust's Annual Report dated June 30, 1996 and incorporated by
reference in the Statement of Additional Information. The Trust's audited
financial statements and selected per share data and ratios as of June 30, 1996
have been examined by Price Waterhouse LLP, independent accountants, whose
opinion thereon is also included in the Annual Report, which may be obtained
without charge. Information is presented for each Fund, and class thereof,
which had investment operations during the reporting periods. Prior to November
1, 1995, the Trust's fiscal year end was October 31, and information for each
of the five years in the period ended October 31, 1995 has been audited by the
Funds' former independent accountants.
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS DISTRIBUTIONS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET FROM NET DISTRIBUTIONS
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED FROM
ENDED OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS EQUALIZATION
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CADENCE CAPITAL APPRECIATION FUND
Institutional Class
6/30/96 $16.94 $ 0.35 $ 1.99 $2.34 $ (0.15) $(1.03) $ 0.00
10/31/95 13.34 0.18 3.60 3.78 (0.18) 0.00 0.00
10/31/94 13.50 0.14 (0.12) 0.02 (0.14) (0.04) 0.00
10/31/93 11.27 0.11 2.73 2.84 (0.11) (0.50) 0.00
10/31/92 11.02 0.14 1.05 1.19 (0.14) (0.72) (0.08)
10/31/91(a) 10.00 0.09 1.02 1.11 (0.09) 0.00 0.00
CADENCE MID CAP GROWTH FUND
Institutional Class
6/30/96 $18.16 $ 0.32 $ 1.53 $1.85 $ (0.14) $(0.43) $ 0.00
10/31/95 13.97 0.07 4.19 4.26 (0.07) 0.00 0.00
10/31/94 13.97 0.06 0.01 0.07 (0.06) (0.01) 0.00
10/31/93 11.29 0.07 2.70 2.77 (0.07) (0.02) 0.00
10/31/92 10.28 0.10 1.03 1.13 (0.10) 0.00 (0.02)
10/31/91(b) 10.00 0.02 0.27 0.29 (0.01) 0.00 0.00
Administrative Class
6/30/96 18.17 0.28 1.53 1.81 (0.11) (0.43) 0.00
10/31/95(c) 13.31 0.03 4.85 4.88 (0.02) 0.00 0.00
CADENCE MICRO CAP
GROWTH FUND
Institutional Class
6/30/96 $15.38 $ 0.00 $ 3.43 $3.43 $ 0.00 $(0.34) $ 0.00
10/31/95 11.87 (0.04) 3.55 3.51 0.00 0.00 0.00
10/31/94 11.06 (0.03) 0.84 0.81 0.00 0.00 0.00
10/31/93(d) 10.00 0.00 1.07 1.07 0.00 0.00 0.00
Administrative Class
6/30/96(e) 16.73 0.03 1.70 1.73 0.00 0.00 0.00
CADENCE SMALL CAP
GROWTH FUND
Institutional Class
6/30/96 $21.02 $ 2.02 $ (0.61) $1.41 $ 0.00 $(1.60) $ 0.00
10/31/95 19.38 (0.05) 3.12 3.07 0.00 (1.43) 0.00
10/31/94 19.15 (0.02) 0.89 0.87 0.00 (0.64) 0.00
10/31/93 15.80 (0.06) 6.19 6.13 0.00 (2.78) 0.00
10/31/92 14.87 0.01 1.50 1.51 (0.01) (0.57) 0.00
10/31/91(f) 10.00 0.02 5.03 5.05 (0.02) (0.16) 0.00
Administrative Class
6/30/96 21.01 2.02+ (0.61)+ 1.41 0.00 (1.60) 0.00
10/31/95(g) 21.90 (0.02) (0.87) (0.89) 0.00 0.00 0.00
</TABLE>
- --------
(a) From commencement of operations, March 8, 1991.
(b) From commencement of operations, August 26, 1991.
(c) From commencement of operations, November 30, 1994.
(d) From commencement of operations, June 25, 1993.
(e) From commencement of operations, April 1, 1996.
(f) From commencement of operations, January 7, 1991.
(g) From commencement of operations, September 27, 1995.
+ Per share amounts based on average number of shares outstanding during the
period.
* Annualized.
<PAGE>
7
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
DISTRIBUTIONS VALUE END EXPENSES TO INCOME TO PORTFOLIO AVERAGE
FROM RETURN TOTAL END TOTAL OF PERIOD AVERAGE AVERAGE TURNOVER COMMISSION
OF CAPITAL DISTRIBUTIONS OF PERIOD RETURN (000'S) NET ASSETS NET ASSETS RATE RATE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $(1.18) $18.10 14.65% $348,728 0.70%* 1.33%* 73.48% $0.04
0.00 (0.18) 16.94 28.47 236,220 0.70 1.22 82.69 0.05
0.00 (0.18) 13.34 0.15 165,441 0.70 1.17 76.75
0.00 (0.61) 13.50 25.30 84,990 0.70 0.94 81.15
0.00 (0.94) 11.27 10.75 36,334 0.70 1.13 134.17
0.00 (0.09) 11.02 11.19 18,813 0.75* 1.55* 40.54
$ 0.00 $(0.57) $19.44 10.37% $231,011 0.70%* 1.11%* 78.81% $0.04
0.00 (0.07) 18.16 30.54 189,320 0.70 0.43 78.29 0.04
0.00 (0.07) 13.97 0.58 121,791 0.70 0.45 60.85
0.00 (0.09) 13.97 24.57 67,625 0.70 0.56 97.87
0.00 (0.12) 11.29 10.91 21,213 0.70 0.87 65.92
0.00 (0.01) 10.28 2.98 2,748 0.82* 0.92* 13.41
0.00 (0.54) 19.44 10.17 1,071 0.95* 0.89* 78.81 0.04
0.00 (0.02) 18.17 36.64 892 0.94* 0.23* 71.73 N/A
$ 0.00 $(0.34) $18.47 22.64% $ 83,973 1.50%* (0.45)%* 53.96% $0.02
0.00 0.00 15.38 29.54 69,775 1.50 (0.37) 86.68 0.03
0.00 0.00 11.87 7.31 32,605 1.50 (0.25) 58.81
(0.01) (0.01) 11.06 10.81 10,827 1.50* (0.02)* 15.98
0.00 0.00 18.46 10.34 566 1.73* (0.74)* 53.96 0.02
$ 0.00 $(1.60) $20.83 7.22% $ 32,954 1.25%* (0.20)%* 59.00% $0.02
0.00 (1.43) 21.02 17.39 73,977 1.25 (0.27) 85.61 0.02
0.00 (0.64) 19.38 4.62 50,425 1.25 (0.33) 65.53
0.00 (2.78) 19.15 38.80 43,308 1.25 (0.35) 62.15
0.00 (0.58) 15.80 10.20 33,734 1.25 0.09 66.05
0.00 (0.18) 14.87 50.68 33,168 1.29* 0.11* 47.84
0.00 (1.60) 20.82 7.18 112 1.50* (0.41)* 59.00 0.02
0.00 0.00 21.01 (5.34) 544 1.60* (0.82)* 8.80 N/A
</TABLE>
PIMCO FUNDS
<PAGE>
8
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and general investment policies of each Fund are
described below. There can be no assurance that the investment objective of
any Fund will be achieved. Because the market value of each Fund's investments
will change, the net asset value per share of each Fund also will vary.
Specific portfolio securities eligible for purchase by the Funds, investment
techniques that may be used by the Funds, and the risks associated with these
securities and techniques are described more fully under "Characteristics and
Risks of Securities and Investment Techniques" in the Prospectus and
"Investment Objectives and Policies" in the Statement of Additional
Information.
Cadence Capital Appreciation Fund seeks growth of capital. In pursuing this
objective, the Fund invests primarily in common stocks of companies that have
improving fundamentals (such as growth of earnings and dividends) and whose
stock is reasonably valued by the market. Stocks for the Fund are chosen from
companies with market capitalizations of at least $100 million at the time of
investment. The Fund usually invests in approximately 60 to 100 common stocks
selected from a universe of the approximately 1,000 largest market
capitalization stocks. Each issue is screened and ranked using five distinct
computerized models, including: (i) a dividend growth screen, (ii) an equity
growth screen, (iii) an earnings growth screen, (iv) an earnings momentum
screen, and (v) an earnings surprise screen. The Portfolio Manager believes
that the models identify the stocks in the universe exhibiting growth
characteristics with reasonable valuations. Stocks are replaced when they
score worse-than-median screen ranks, have negative earnings surprises, or
show poor relative price performance. The universe is rescreened frequently to
obtain a favorable composition of growth and value characteristics for the
entire Fund. For information on other investment policies, see "Investment
Objectives and Policies--General."
Cadence Mid Cap Growth Fund seeks growth of capital. In pursuing this
objective, the Fund invests primarily in common stocks of middle
capitalization companies that have improving fundamentals (such as growth of
earnings and dividends) and whose stock is reasonably valued by the market.
Stocks for the Fund are selected from a universe of companies with market
capitalizations in excess of $500 million at the time of investment, excluding
the 200 companies with the highest market capitalization. The Fund usually
invests in approximately 60 to 100 common stocks. Each issue is screened and
ranked using five distinct computerized models, including: (i) a dividend
growth screen, (ii) an equity growth screen, (iii) an earnings growth screen,
(iv) an earnings momentum screen, and (v) an earnings surprise screen. The
Portfolio Manager believes that the models identify the stocks in the universe
exhibiting growth characteristics with reasonable valuations. Stocks are
replaced when they score worse-than-median screen ranks, have negative
earnings surprises, or show poor relative price performance. The universe is
rescreened frequently to obtain a favorable composition of growth and value
characteristics for the entire Fund. For information on other investment
policies, see "Investment Objectives and Policies--General."
Cadence Micro Cap Growth Fund seeks long-term growth of capital. In pursuing
this objective, the Fund invests primarily in common stocks of companies that
have improving fundamentals (such as growth of earnings and dividends) and
whose stock is reasonably valued by the market. The Fund usually invests in
approximately 60 to 100 common stocks selected from a universe of stocks with
publicly available market capitalizations of less than $100 million at the
time of investment. Each issue is screened and ranked using five distinct
computerized models, including: (i) a dividend growth screen, (ii) an equity
growth screen, (iii) an earnings growth screen, (iv) an earnings momentum
screen, and (v) an earnings surprise screen. The Portfolio Manager believes
that the models identify the stocks in the universe exhibiting growth
characteristics with reasonable valuations. Stocks are replaced when they
score worse-than-median screen ranks, have negative earnings surprises, or
show poor relative price performance. The universe is rescreened frequently to
obtain a favorable composition of growth and value characteristics for the
entire Fund. For information on other investment policies, see "Investment
Objectives and Policies--General."
Cadence Small Cap Growth Fund seeks growth of capital. In pursuing this
objective, the Fund invests primarily in common stocks of companies that have
improving fundamentals (such as growth of earnings and dividends) and whose
stock is reasonably valued by the market. The Fund usually invests in
approximately 60 to 100 common stocks selected from a universe of stocks with
market capitalizations of $50 million to $1 billion at the time of investment.
Each issue is screened and ranked using five distinct computerized models,
including:
<PAGE>
9
(i) a dividend growth screen, (ii) an equity growth screen, (iii) an earnings
growth screen, (iv) an earnings momentum screen, and (v) an earnings surprise
screen. The Portfolio Manager believes that the models identify the stocks in
the universe exhibiting growth characteristics with reasonable valuations.
Stocks are replaced when they score worse-than-median screen ranks, have
negative earnings surprises, or show poor relative price performance. The
universe is rescreened frequently to obtain a favorable composition of growth
and value characteristics for the entire Fund. For information on other
investment policies, see "Investment Objectives and Policies--General."
GENERAL
The Funds will each invest primarily (normally at least 65% of its assets)
in common stock. Each Fund may maintain a portion of its assets, which will
usually not exceed 10%, in U.S. Government securities, high-quality debt
securities (whose maturity or remaining maturity will not exceed five years),
money market obligations, and in cash to provide for payment of the Fund's
expenses and to meet redemption requests.
Any of the Funds may temporarily not be invested primarily in equity
securities after the commencement of operations or after receipt of
significant new monies. Any of the Funds may temporarily not contain the
number of stocks in which the Fund normally invests if the Fund does not have
sufficient assets to be fully invested, or pending the Portfolio Manager's
ability to prudently invest new monies. It is the policy of all of the Funds
to be as fully invested in common stock as practicable at all times. This
policy precludes the Funds from investing in debt securities as a defensive
investment posture (although the Funds may invest in such securities to
provide for payment of expenses and to meet redemption requests). Accordingly,
investors in the Funds bear the risk of general declines in stock prices and
the risk that a Fund's exposure to such declines cannot be lessened by
investment in debt securities.
The Funds may also invest in convertible securities, preferred stock,
warrants subject to certain limitations, and American Depository Receipts
("ADRs"). ADRs are dollar-denominated receipts issued generally by domestic
banks and representing the deposit with the bank of a security of a foreign
issuer, and are publicly traded on exchanges or over-the-counter in the United
States. For more information on these investment practices, see
"Characteristics and Risks of Securities and Investment Techniques" in the
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information.
INVESTMENT RESTRICTIONS
Each Fund's investment objective, as set forth under "Investment Objectives
and Policies," and the investment restrictions set forth below are fundamental
policies of the Fund and may not be changed with respect to a Fund without
shareholder approval by vote of a majority of the outstanding shares of that
Fund. Under these restrictions, a Fund may not:
(1) invest in a security if, as a result of such investment, more than
25% of its total assets (taken at market value at the time of such
investment) would be invested in the securities of issuers in any
particular industry, except that this restriction does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (or repurchase agreements with respect thereto);
(2) with respect to 75% of its assets, invest in a security if, as a
result of such investment, more than 5% of its total assets (taken at
market value at the time of such investment) would be invested in the
securities of any one issuer, except that this restriction does not apply
to securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities;
(3) with respect to 75% of its assets, invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time
of such investment) of the outstanding voting securities of any one issuer,
except that this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities;
(4) purchase or sell real estate, although it may purchase securities
secured by real estate or interests therein, or securities issued by
companies in the real estate industry or which invest in real estate or
interests therein;
PIMCO FUNDS
<PAGE>
10
(5) purchase or sell commodities or commodities contracts (which, for the
purpose of this restriction, shall not include foreign currency or forward
foreign currency contracts), except that any Fund may engage in interest
rate futures contracts, stock index futures contracts, futures contracts
based on other financial instruments or one or more groups of instruments,
and on options on such futures contracts;
(6) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities, but
it may make margin deposits in connection with transactions in options,
futures, and options on futures, and except that effecting short sales will
be deemed not to constitute a margin purchase for purposes of this
restriction;
(7) borrow money, or pledge, mortgage or hypothecate its assets, except
that a Fund may (i) borrow from banks or enter into reverse repurchase
agreements, or employ similar investment techniques, and pledge its assets
in connection therewith, but only if immediately after each borrowing and
continuing thereafter, there is asset coverage of 300% and (ii) enter into
reverse repurchase agreements and transactions in options, futures, options
on futures, and forward foreign currency contracts as described in this
Prospectus and in the Statement of Additional Information (the deposit of
assets in escrow in connection with the writing of covered put and call
options and the purchase of securities on a when-issued or delayed delivery
basis, and collateral arrangements with respect to initial or variation
margin deposits for futures contracts, options on futures contracts, and
forward foreign currency contracts will not be deemed to be pledges of a
Fund's assets);
(8) issue senior securities, except insofar as a Fund may be deemed to
have issued a senior security by reason of borrowing money in accordance
with the Fund's borrowing policies, and except for purposes of this
investment restriction, collateral, escrow, or margin or other deposits
with respect to the making of short sales, the purchase or sale of futures
contracts or related options, purchase or sale of forward foreign currency
contracts, and the writing of options on securities are not deemed to be an
issuance of a senior security;
(9) lend any funds or other assets, except that a Fund may, consistent
with its investment objective and policies: (a) invest in debt obligations,
including bonds, debentures, or other debt securities, bankers' acceptances
and commercial paper, even though the purchase of such obligations may be
deemed to be the making of loans, (b) enter into repurchase agreements and
reverse repurchase agreements, and (c) lend its portfolio securities in an
amount not to exceed one-third of the value of its total assets, provided
such loans are made in accordance with applicable guidelines established by
the Securities and Exchange Commission ("SEC") and the Trustees of the
Trust; or
(10) act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under the federal securities laws.
Each Fund is also subject to the following non-fundamental restrictions and
policies (which may be changed without shareholder approval) relating to the
investment of its assets and activities. Unless otherwise indicated, a Fund
may not:
(A) invest for the purpose of exercising control or management;
(B) invest in securities of another open-end investment company;
(C)(a) for the Cadence Capital Appreciation, Cadence Mid Cap Growth, and
Cadence Small Cap Growth Funds: invest more than 10% of the net assets of a
Fund (taken at market value at the time of the investment) in "illiquid
securities," illiquid securities being defined to include repurchase
agreements maturing in more than seven days, certain loan participation
interests, fixed time deposits which are not subject to prepayment or
provide withdrawal penalties upon prepayment (other than overnight
deposits), or other securities which legally or in the Adviser's or
Portfolio Manager's opinion may be deemed illiquid (other than securities
issued pursuant to Rule 144A under the Securities Act of 1933 and certain
commercial paper that the Adviser or Portfolio Manager has determined to be
liquid under procedures approved by the Board of Trustees); nor invest more
than 5% of the net assets of a Fund in securities that are illiquid because
they are subject to legal or contractual restrictions on resale;
<PAGE>
11
(b) for the Cadence Micro Cap Growth Fund: invest more than 15% of the
net assets of the Fund (taken at market value at the time of the
investment) in securities that are illiquid because they are subject to
legal or contractual restrictions on resale, in repurchase agreements
maturing in more than seven days, or other securities which are illiquid;
(D) purchase any security if, as a result, the Fund will then have more
than 5% of its total assets invested in securities of companies (including
predecessor companies) that have been in continuous operation for less than
three years;
(E) purchase or retain securities of any issuer if, to the knowledge of
the Fund, any of the Fund's officers or Trustees, or any officer or
Director of PIMCO Advisors or the Portfolio Manager, individually owns more
than one-half of 1% of the outstanding securities of the issuer and
together own beneficially more than 5% of such issuer's securities;
(F) purchase securities for the Fund from, or sell portfolio securities
to, any of the officers and Directors or Trustees of the Trust or the
Adviser;
(G) invest in a security if, with respect to 100% of the total assets,
the Fund would own more than 10% (taken at the time of such investment) of
the outstanding voting securities of any one issuer, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities;
(H) invest more than 5% of the assets of a Fund (taken at market value at
the time of investment) in any combination of interest only, principal
only, or inverse floating rate securities;
(I) borrow money (excluding reverse repurchase agreements which are
subject to the Fund's fundamental borrowing restriction), except for
temporary administrative purposes;
(J) sell securities or property short, except short sales against the
box;
(K) purchase, write, or sell puts, calls, straddles, spreads, or
combinations thereof, except that this restriction does not apply to puts
that are a feature of floating rate securities or to puts that are a
feature of other corporate debt securities, and except that any Fund may
engage in options on securities, options on securities indexes, options on
foreign currencies, options on futures contracts, and options on other
financial instruments or one or more groups of instruments;
(L) invest in warrants (other than warrants acquired by the Fund as part
of a unit or attached to securities at the time of purchase) if, as a
result, the investment in warrants (valued to the lower of cost or market)
would exceed 5% of the value of the Fund's net assets, of which not more
than 2% of the Fund's net assets may be invested in warrants not listed on
a recognized U.S. or foreign stock exchange;
(M) invest in securities sold in foreign over-the-counter markets unless
the foreign dealers effecting such transactions have a minimum net worth of
$20 million; or
(N) invest in oil, gas or other mineral exploration or development
programs (including oil, gas, or other mineral leases), except that a Fund
may invest in the securities of companies that invest in or sponsor those
programs.
Unless otherwise indicated, all limitations applicable to Fund investments
apply only at the time a transaction is entered into. Any subsequent change in
a rating assigned by any rating service to a security (or, if unrated, deemed
to be of comparable quality), or change in the percentage of Fund assets
invested in certain securities or other instruments resulting from market
fluctuations or other changes in a Fund's total assets will not require a Fund
to dispose of an investment until the Adviser or Portfolio Manager determines
that it is practicable to sell or close out the investment without undue
market or tax consequences to the Fund. In the event that ratings services
assign different ratings to the same security, the Adviser or Portfolio
Manager will determine which rating it believes best reflects the security's
quality and risk at that time, which may be the higher of the several assigned
ratings.
PIMCO FUNDS
<PAGE>
12
CHARACTERISTICS AND RISKS OF SECURITIES
AND INVESTMENT TECHNIQUES
The different types of securities and investment techniques used by the
individual Funds all have attendant risks of varying degrees. For example,
with respect to common stock, there can be no assurance of capital
appreciation, and there is a risk of market decline. With respect to debt
securities, including money market instruments, there is the risk that the
issuer of a security may not be able to meet its obligation to make scheduled
interest or principal payments. In addition, the value of debt securities
generally rises and falls inversely with interest rates, and the longer the
maturity of the debt security, the more volatile it may be in terms of changes
in value. Because each Fund seeks a different investment objective and has
different investment policies, each is subject to varying degrees of
financial, market, and credit risks. Therefore, investors should carefully
consider the investment objective, investment policies, and potential risks of
any Fund or Funds before investing.
The following describes potential risks associated with different types of
investment techniques that may be used by the individual Funds. For more
detailed information on these investment techniques, as well as information on
the types of securities in which some or all of the Funds may invest, see the
Statement of Additional Information.
LOW CAPITALIZATION STOCKS
The Cadence Mid Cap Growth, Cadence Micro Cap Growth, and Cadence Small Cap
Growth Funds may invest in common stock of companies with market
capitalization that is low compared to other publicly traded companies. Under
normal market conditions, Cadence Small Cap Growth Fund will invest in
companies with market capitalizations of $1 billion or less, and Cadence Micro
Cap Growth Fund will invest in companies with market capitalizations of $100
million or less. Investments in larger companies present certain advantages in
that such companies generally have greater financial resources, more extensive
research and development, manufacturing, marketing and service capabilities,
and more stability and greater depth of management and technical personnel.
Investments in smaller, less seasoned companies may present greater
opportunities for growth but also may involve greater risks than customarily
are associated with more established companies. The securities of smaller
companies may be subject to more abrupt or erratic market movements than
larger, more established companies. These companies may have limited product
lines, markets or financial resources, or they may be dependent upon a limited
management group. Their securities may be traded only in the over-the-counter
market or on a regional securities exchange. As a result, the disposition of
securities to meet redemptions may require a Fund to sell these securities at
a disadvantageous time, or at disadvantageous prices, or to make many small
sales over a lengthy period of time.
REPURCHASE AGREEMENTS
For the purposes of maintaining liquidity and achieving income, each Fund
may enter into repurchase agreements, which entail the purchase of a portfolio
eligible security from a bank or broker-dealer that agrees to repurchase the
security at the Fund's cost plus interest within a specified time (normally
one day). If the party agreeing to repurchase should default, as a result of
bankruptcy or otherwise, the Fund will seek to sell the securities which it
holds, which action could involve procedural costs or delays in addition to a
loss on the securities if their value should fall below their repurchase
price. Those Funds whose investment objectives do not include the earning of
income will invest in repurchase agreements only as a cash management
technique with respect to that portion of the portfolio maintained in cash.
Each Fund will limit its investment in repurchase agreements maturing in more
than seven days consistent with the Fund's policy on investment in illiquid
securities.
REVERSE REPURCHASE AGREEMENTS AND OTHER BORROWINGS
A reverse repurchase agreement is a form of leverage that involves the sale
of a security by a Fund and its agreement to repurchase the instrument at a
specified time and price. The Fund will maintain a segregated account
consisting of liquid assets, such as cash, U.S. Government securities or high
grade debt obligations, maturing not later than the expiration of the reverse
repurchase agreement, to cover its obligations under reverse repurchase
agreements.
<PAGE>
13
Reverse repurchase agreements will be subject to the Funds' limitations on
borrowings, which will restrict the aggregate of such transactions (plus any
other borrowings) to 33 1/3% of a Fund's total assets. Apart from transactions
involving reverse repurchase agreements, a Fund will not borrow money, except
for temporary administrative purposes.
LOANS OF PORTFOLIO SECURITIES
For the purpose of achieving income, each Fund may lend its portfolio
securities to brokers, dealers, and other financial institutions, provided:
(i) the loan is secured continuously by collateral consisting of U.S.
Government securities, cash or cash equivalents (negotiable certificates of
deposit, bankers' acceptances or letters of credit) maintained on a daily
mark-to-market basis in an amount at least equal to the current market value
of the securities loaned; (ii) the Fund may at any time call the loan and
obtain the return of the securities loaned; (iii) the Fund will receive any
interest or dividends paid on the loaned securities; and (iv) the aggregate
market value of securities loaned will not at any time exceed 33 1/3% of the
total assets of the Fund.
ILLIQUID SECURITIES
The Cadence Capital Appreciation, Cadence Mid Cap Growth, and Cadence Small
Cap Growth Funds may invest in securities that are illiquid, but will not
acquire such securities if they would compose more than 10% of the value of a
Fund's net assets (taken at market value at the time of investment), and will
not invest in securities that are illiquid because they are subject to legal
or contractual restrictions on resale if such securities would compose more
than 5% of the value of the Fund's net assets (taken at market value at the
time of investment). The Cadence Micro Cap Growth Fund may invest in
securities that are illiquid so long as no more than 15% of the net assets of
the Fund (taken at market value at the time of investment), would be invested
in such securities. Certain illiquid securities may require pricing at fair
value as determined in good faith under the supervision of the Board of
Trustees. A Portfolio Manager may be subject to significant delays in
disposing of illiquid securities, and transactions in illiquid securities may
entail registration expenses and other transaction costs that are higher than
transactions in liquid securities.
The term "illiquid securities" for this purpose means securities that cannot
be disposed of within seven days in the ordinary course of business at
approximately the amount at which a Fund has valued the securities. Illiquid
securities are considered to include, among other things, written over-the-
counter options, securities or other liquid assets being used as cover for
such options, repurchase agreements with maturities in excess of seven days,
certain loan participation interests, fixed time deposits which are not
subject to prepayment or provide for withdrawal penalties upon prepayment
(other than overnight deposits), securities that are subject to legal or
contractual restrictions on resale (such as privately placed debt securities),
and other securities whose disposition is restricted under the federal
securities laws (other than securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper that the Adviser or the
Portfolio Manager has determined to be liquid under procedures approved by the
Board of Trustees).
MANAGEMENT OF THE TRUST
The business affairs of the Trust are managed under the direction of the
Board of Trustees. The Trustees are William D. Cvengros, Richard L. Nelson,
Lyman W. Porter, and Alan Richards. Additional information about the Trustees
and the Trust's executive officers may be found in the Statement of Additional
Information under the heading "Management--Trustees and Officers."
PIMCO FUNDS
<PAGE>
14
INVESTMENT ADVISER
PIMCO Advisors serves as Investment Adviser to the Funds pursuant to an
investment advisory agreement with the Trust. PIMCO Advisors is a Delaware
limited partnership organized in 1987. PIMCO Advisors provides investment
management and advisory services to private accounts of institutional and
individual clients and to mutual funds. Total assets under management by PIMCO
Advisors and its subsidiary partnerships at July 31, 1996 were approximately
$99.4 billion. A portion of the units of the limited partner interest in PIMCO
Advisors is traded publicly on the New York Stock Exchange. The general
partner of PIMCO Advisors is PIMCO Partners, G.P. Pacific Mutual Life
Insurance Company ("Pacific Mutual") and its affiliates hold a substantial
interest in PIMCO Advisors through direct or indirect ownership of units of
PIMCO Advisors, and indirectly hold a majority interest in PIMCO Partners,
G.P., with the remainder held indirectly by a group composed of the Managing
Directors of PIMCO. PIMCO Advisors is governed by an Operating Board and
Equity Board, which exercise substantially all of the governance powers of the
general partner and serve as the functional equivalent of a board of
directors. PIMCO Advisors' address is 800 Newport Center Drive, Newport Beach,
California 92660. PIMCO Advisors is registered as an investment adviser with
the SEC. PIMCO Advisors currently has six subsidiary partnerships: PIMCO,
Parametric Portfolio Associates, Cadence, NFJ Investment Group, Blairlogie
Capital Management, and Columbus Circle Investors.
Under the investment advisory agreement, PIMCO Advisors, subject to the
supervision of the Board of Trustees, is responsible for providing advice and
guidance with respect to the Funds and for managing, either directly or
through others selected by the Adviser, the investment of the Funds. PIMCO
Advisors also furnishes to the Board of Trustees periodic reports on the
investment performance of each Fund.
PORTFOLIO MANAGER
Pursuant to a portfolio management agreement, PIMCO Advisors employs its
affiliate, Cadence, as Portfolio Manager for all of the Funds. PIMCO Advisors
compensates the Portfolio Manager from its advisory fee (not from the Trust).
Under this agreement, the Portfolio Manager has full investment discretion and
makes all determinations with respect to the investment of a Fund's assets,
and makes all determinations respecting the purchase and sale of a Fund's
securities and other investments.
Cadence is an investment management firm organized as a general partnership.
Cadence has two partners: PIMCO Advisors as the supervisory partner, and
Cadence Capital Management, Inc. as the managing partner. Cadence Capital
Management Corporation, the predecessor investment adviser to Cadence,
commenced operations in 1988. Accounts managed by Cadence had combined assets
as of July 31, 1996 of approximately $2.7 billion. Cadence's address is
Exchange Place, 53 State Street, Boston, Massachusetts 02109. Cadence is
registered as an investment adviser with the SEC.
David B. Breed, William B. Bannick, Katherine A. Burdon, Eric M. Wetlaufer,
and Peter B. McManus are primarily responsible for the day-to-day management
of the Funds. Mr. Breed is a Managing Director, Chief Executive Officer, and
founding partner of Cadence and has 23 years' investment management
experience. He has been the driving force in developing the firm's growth-
oriented stock screening and selection process and has been with Cadence since
its inception. Mr. Breed graduated from the University of Massachusetts and
received his MBA from the Wharton School of Business. He is a Chartered
Financial Analyst. Mr. Bannick is a Managing Director and Executive Vice
President of Cadence and has 11 years' investment management experience. He
previously served as Executive Vice President of George D. Bjurman &
Associates and as Supervising Portfolio Manager of Trinity Investment
Management Corporation. Mr. Bannick joined Cadence in 1992. He graduated from
the University of Massachusetts and received his MBA from Boston University.
Mr. Bannick is a Chartered Financial Analyst. Ms. Burdon is a Managing
Director and Portfolio Manager of Cadence and has nine years' investment
management experience. She previously served as Vice President and Portfolio
Manager of The Boston Company. Ms. Burdon joined Cadence in 1993. She
graduated from Stanford University and received a Master of Science degree
from Northeastern University. Ms. Burdon is a Chartered Financial Analyst and
Certified Public Accountant. Mr. Wetlaufer is a Managing Director and
Portfolio Manager of Cadence and has 11 years' investment management
experience. He previously served as Vice President of Northfield Information
Services. Mr. Wetlaufer joined Cadence in 1991. He graduated from Wesleyan
University
<PAGE>
15
and is a Chartered Financial Analyst. Mr. McManus is Director of Fund
Management of Cadence and has 19 years' investment management experience. He
previously served as a Vice President of Bank of Boston. Mr. McManus joined
Cadence in 1994. He graduated from the University of Massachusetts, and is
certified as a Financial Planner.
Registration as an investment adviser with the SEC does not involve
supervision by the SEC over investment advice. The portfolio management
agreement is not exclusive, and Cadence may provide, and currently is
providing, investment management services to other clients, including other
investment companies.
FUND ADMINISTRATOR
PIMCO serves as administrator to the Funds pursuant to an administration
agreement. PIMCO provides administrative services to the Funds, which include
clerical help and accounting, bookkeeping, internal audit services, and
certain other services required by the Funds, preparation of reports to the
Funds' shareholders and regulatory filings. In addition, PIMCO, at its own
expense, arranges for the provision of legal, audit, custody, transfer agency
and other services for the Funds, and is responsible for the costs of
registration of the Trust's shares and the printing of prospectuses and
shareholder reports for current shareholders.
The Trust is responsible for the following expenses: (i) salaries and other
compensation of any of the Trust's executive officers and employees who are
not officers, directors, stockholders, or employees of PIMCO Advisors, PIMCO,
or their subsidiaries or affiliates; (ii) taxes and governmental fees; (iii)
brokerage fees and commissions and other portfolio transaction expenses; (iv)
the costs of borrowing money, including interest expenses; (v) fees and
expenses of the Trustees who are not "interested persons" of the Adviser,
PIMCO, the Portfolio Managers of the Trust's investment portfolios, or the
Trust, and any counsel retained exclusively for their benefit; (vi)
extraordinary expenses, including costs of litigation and indemnification
expenses; (vii) expenses which are capitalized in accordance with generally
accepted accounting principles; and (viii) any expenses allocated or allocable
to a specific class of shares, which include service fees payable with respect
to the Administrative Class shares and may include certain other expenses as
permitted by the Trust's Multiple Class Plan adopted pursuant to Rule 18f-3
under the Investment Company Act of 1940 (the "1940 Act") and subject to
review and approval by the Trustees.
ADVISORY AND ADMINISTRATIVE FEES
The Funds feature fixed advisory and administrative fees. For providing
investment advisory services to the Funds, PIMCO Advisors receives monthly
fees from each Fund at an annual rate based on the average daily net assets of
the Fund as follows:
<TABLE>
<CAPTION>
ADVISORY
FUND FEE RATE
---- --------------
<S> <C>
Cadence Capital Appreciation and Cadence Mid Cap Growth Funds
............................................................. .45%
Cadence Small Cap Growth Fund................................. 1.00%
Cadence Micro Cap Growth Fund................................. 1.25%
For providing administrative services to the Funds as described above, PIMCO
receives monthly fees from each Fund at an annual rate based on the average
daily net assets of the Fund as follows:
<CAPTION>
ADMINISTRATIVE
FUND FEE RATE
---- --------------
<S> <C>
All Funds..................................................... .25%
</TABLE>
Both the investment advisory and administration agreements for the Funds may
be terminated by the Trustees, or by PIMCO Advisors or PIMCO (as the case may
be), on 60 days' written notice. Following their initial two-year terms, the
agreements will continue from year to year if approved by the Trustees.
Pursuant to the portfolio management agreement between the Adviser and the
Portfolio Manager, PIMCO Advisors (not the Trust) pays Cadence a fee based on
a percentage of the average daily net assets of a Fund as follows: .45% for
the Cadence Capital Appreciation Fund, .45% for the Cadence Mid Cap Growth
Fund, 1.00% for the Cadence Small Cap Growth Fund, and 1.25% for the Cadence
Micro Cap Growth Fund.
PIMCO FUNDS
<PAGE>
16
SERVICE FEES
Under the terms of the Multiple Class Plan, PIMCO is permitted to
compensate, in an amount up to 0.25% on an annual basis of the average daily
net assets of the Administrative Class, financial intermediaries that provide
services in connection with the administration of plans or programs that use
Fund shares as their funding medium. For more complete disclosure regarding
the Multiple Class Plan and its terms, see the Statement of Additional
Information.
Institutional Class shares of the Trust may also be offered through certain
brokers and financial intermediaries ("service agents") that have established
a shareholder servicing relationship with the Trust on behalf of their
customers. The Trust pays no compensation to such entities. Service agents may
impose additional or different conditions on the purchase or redemption of
Trust shares by their customers and may charge their customers transaction or
other account fees on the purchase and redemption of Trust shares. Each
service agent is responsible for transmitting to its customers a schedule of
any such fees and information regarding any additional or different conditions
regarding purchases and redemptions. Shareholders who are customers of service
agents should consult their service agent for information regarding these fees
and conditions.
DISTRIBUTOR
Shares of the Trust are distributed through PIMCO Advisors Distribution
Company (the "Distributor"), an indirect wholly owned subsidiary of PIMCO
Advisors. The Distributor, located at 2187 Atlantic Street, Stamford,
Connecticut 06902, is a broker-dealer registered with the SEC.
PURCHASE OF SHARES
Each Fund offers its shares in two classes: the "Institutional Class" and
the "Administrative Class." Shares of the Institutional Class are offered
primarily for direct investment by institutional investors and high net worth
individuals. They also are offered through certain financial intermediaries
that charge their customers transaction or other fees with respect to their
customers' investment in the Funds. Shares of the Administrative Class are
offered primarily through broker-dealers, retirement plan administrators and
other financial intermediaries. Administrative Class shares indirectly pay
service fees to such entities for services they provide to shareholders of
that class.
Shares of either class of the Funds may be purchased at the relevant net
asset value of that class without a sales charge. The minimum initial
investment for shares of either class is $200,000.
INITIAL INVESTMENT
An account may be opened by completing and signing a Client Registration
Application and mailing it to PIMCO Funds at the following address: 840
Newport Center Drive, Suite 360, Newport Beach, California 92660. A Client
Registration Application may be obtained by calling (800) 800-0952.
Except as provided below, purchases of shares can only be made by wiring
federal funds to Investors Fiduciary Trust Company (the "Transfer Agent"), 127
West 10th Street, Kansas City, Missouri 64105. Before wiring federal funds,
the investor must first telephone the Trust at (800) 927-4648 to receive
instructions for wire transfer, and the following information will be
requested: name of authorized person; shareholder name; shareholder account
number; name of Fund and share class; amount being wired; and wiring bank
name.
Shares may be purchased without first wiring federal funds if the proceeds
of the investment are derived from an advisory account maintained by the
investor with PIMCO Advisors or one of its affiliates; from surrender or other
payment from an annuity, insurance, or other contract held by Pacific Mutual
Life Insurance Company; or from an investment by broker-dealers, institutional
clients or other financial intermediaries which have established a shareholder
servicing relationship with the Trust on behalf of their customers.
All purchase orders are effected at the relevant net asset value for that
class next determined after receipt of the purchase order. A purchase order,
together with payment in proper form, received by the Transfer Agent
<PAGE>
17
prior to the close of business (ordinarily 4:00 p.m., Eastern time) on a day
the Trust is open for business will be effected at that day's net asset value.
An order received after the close of business will be effected at the net
asset value determined on the next business day. The Trust is "open for
business" on each day the New York Stock Exchange is open for trading, which
excludes the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Purchase orders will be accepted only on days on which the Trust is open for
business.
ADDITIONAL INVESTMENTS
Additional investments may be made at any time at the relevant net asset
value for that class by calling the Trust and wiring federal funds to the
Transfer Agent as outlined above.
OTHER PURCHASE INFORMATION
Purchases of a Fund's shares will be made in full and fractional shares. In
the interest of economy and convenience, certificates for shares will not be
issued.
The Trust and the Distributor each reserves the right, in its sole
discretion, to suspend the offering of shares of the Funds or to reject any
purchase order, in whole or in part, when, in the judgment of management, such
suspension or rejection is in the best interests of the Trust; to waive the
minimum initial investment for certain investors; and to redeem shares if
information provided in the Client Registration Application should prove to be
incorrect in any manner judged by the Trust to be material (e.g., in a manner
such as to render the shareholder ineligible to purchase shares of the Trust).
Purchases and sales should be made for long-term investment purposes only.
The Trust and Adviser each reserves the right to restrict purchases of Fund
shares (including exchanges) when a pattern of frequent purchases and sales
made in response to short-term fluctuations in share price appears evident.
Shares of the Trust are not qualified or registered for sale in all states.
Prospective investors should inquire as to whether shares of a particular Fund
are available for offer and sale in their state of residence. Shares of the
Trust may not be offered or sold in any state unless registered or qualified
in that jurisdiction or unless an exemption from registration or qualification
is available.
Investors may, subject to the approval of the Trust, purchase shares of a
Fund with liquid securities that are eligible for purchase by the Fund
(consistent with such Fund's investment policies and restrictions) and that
have a value that is readily ascertainable in accordance with the Trust's
valuation policies. These transactions will be effected only if the Portfolio
Manager intends to retain the security in the Fund as an investment. Assets so
purchased by a Fund will be valued in generally the same manner as they would
be valued for purposes of pricing the Fund's shares, if such assets were
included in the Fund's assets at the time of purchase. The Trust reserves the
right to amend or terminate this practice at any time.
CONTRIBUTED CAPITAL LIMITATIONS
The Cadence Micro Cap Growth Fund limits the purchase of shares (contributed
capital) by any one investor to $10,000,000, exclusive of shares purchased
through reinvestment of dividends and distributions. Additionally, the Trust
has determined to limit the aggregate contributed capital by all investors in
the Fund to $100,000,000. Therefore, when the aggregate contributed capital in
the Fund reaches such amount, the Fund will no longer be available for
additional investment, until such time as an existing investor redeems a
dollar amount sufficient to allow a new investment into the Fund. In addition,
shares of the Cadence Small Cap Growth Fund are not offered as of the date of
this Prospectus; however, additional investment in the Fund may be available
in the event that an existing shareholder redeems a sufficient dollar amount.
These limitations may be changed or eliminated at any time at the discretion
of the Trust's Board of Trustees.
PIMCO FUNDS
<PAGE>
18
RETIREMENT PLANS
The Funds are available as an investment option for participants in
retirement and savings plans, including Keogh plans, 401(k) plans, 403(b)
plans, and Individual Retirement Accounts. The administrator of a plan or
employee benefits office can provide participants or employees with detailed
information on how to participate in the plan and how to elect a Fund as an
investment option. Participants in a retirement or savings plan may be
permitted to elect different investment options, alter the amounts contributed
to the plan, or change how contributions are allocated among investment
options in accordance with the plan's specific provisions. The plan
administrator or employee benefits office should be consulted for details. For
questions about participant accounts, participants should contact their
employee benefits office, the plan administrator, or the organization that
provides recordkeeping services for the plan. Investors who purchase shares
through retirement plans should be aware that plan administrators may
aggregate purchase and redemption orders for participants in the plan.
Therefore, there may be a delay between the time the investor places his order
with the plan administrator, and the time the order is forwarded to the
Transfer Agent for execution.
REDEMPTION OF SHARES
REDEMPTIONS BY MAIL
Shares may be redeemed by submitting a written request to PIMCO Funds, 840
Newport Center Drive, Suite 360, Newport Beach, California 92660, stating the
Fund from which the shares are to be redeemed, the class of shares, the number
or dollar amount of the shares to be redeemed and the account number. The
request must be signed exactly as the names of the registered owners appear on
the Trust's account records, and the request must be signed by the minimum
number of persons designated on the Client Registration Application that are
required to effect a redemption.
REDEMPTIONS BY TELEPHONE OR OTHER WIRE COMMUNICATION
If an election is made on the Client Registration Application (or
subsequently in writing), redemptions of shares may be requested by calling
the Trust at (800) 927-4648, by sending a facsimile to (714) 760-4456, or by
other means of wire communication. Investors should state the Fund and class
from which the shares are to be redeemed, the number or dollar amount of the
shares to be redeemed and the account number. Redemption requests of an amount
of $10,000,000 or more may be initiated by telephone, but must be confirmed in
writing by an authorized party prior to processing.
In electing a telephone redemption, the investor authorizes PIMCO and the
Transfer Agent to act on telephone instructions from any person representing
himself to be the investor, and reasonably believed by PIMCO and the Transfer
Agent to be genuine. Neither the Trust nor its Transfer Agent will be liable
for any loss, cost or expense for acting on instructions (whether in writing
or by telephone) believed by the party receiving such instructions to be
genuine and in accordance with the procedures described in this Prospectus.
Shareholders should realize that by electing the telephone or wire redemption
option, they may be giving up a measure of security that they might have if
they were to redeem their shares in writing. Furthermore, interruptions in
telephone service may mean that a shareholder will be unable to effect a
redemption by telephone when desired. The Transfer Agent provides written
confirmation of transactions initiated by telephone as a procedure designed to
confirm that telephone instructions are genuine (written confirmation is also
provided for redemption requests received in writing). All telephone
transactions are recorded, and PIMCO or the Transfer Agent may request certain
information in order to verify that the person giving instructions is
authorized to do so. If the Trust or Transfer Agent fails to employ reasonable
procedures to confirm that instructions communicated by telephone are genuine,
they may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All redemptions, whether initiated by letter or telephone, will
be processed in a timely manner, and proceeds will be forwarded by wire in
accordance with the redemption policies of the Trust detailed below. See
"Redemption of Shares--Other Redemption Information."
Shareholders may decline telephone exchange or redemption privileges after
an account is opened by instructing the Transfer Agent in writing at least
seven business days prior to the date the instruction is to be effective.
Shareholders may experience delays in exercising telephone redemption
privileges during periods of
<PAGE>
19
abnormal market activity. During periods of volatile economic or market
conditions, shareholders may wish to consider transmitting redemption orders
by telegram, facsimile or overnight courier.
Defined contribution plan participants may request redemptions by contacting
the employee benefits office, the plan administrator or the organization that
provides recordkeeping services for the plan.
OTHER REDEMPTION INFORMATION
Payment of the redemption price will ordinarily be wired to the investor's
bank three business days after the tender request, but may take up to seven
business days. Redemption proceeds will be sent by wire only to the bank name
designated on the Client Registration Application. The Trust may suspend the
right of redemption or postpone the payment date at times when the New York
Stock Exchange is closed, or during certain other periods as permitted under
the federal securities laws.
For shareholder protection, a request to change information contained in an
account registration (for example, a request to change the bank designated to
receive wire redemption proceeds) must be received in writing, signed by the
minimum number of persons designated on the Client Registration Application
that are required to effect a redemption, and accompanied by a signature
guarantee from any eligible guarantor institution, as determined in accordance
with the Trust's procedures. Shareholders should inquire as to whether a
particular institution is an eligible guarantor institution. A signature
guarantee cannot be provided by a notary public. In addition, corporations,
trusts and other institutional organizations are required to furnish evidence
of the authority of the persons designated on the Client Registration
Application to effect transactions for the organization.
Due to the relatively high cost of maintaining small accounts, the Trust
reserves the right to redeem shares in any account for their then-current
value (which will be promptly paid to the investor) if at any time, due to
redemption by the investor, the shares in the account do not have a value of
at least $100,000. A shareholder will receive advance notice of a mandatory
redemption and will be given at least 30 days to bring the value of its
account up to at least $100,000.
The Trust agrees to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for
any one shareholder. In consideration of the best interests of the remaining
shareholders, the Trust reserves the right to pay any redemption proceeds
exceeding this amount in whole or in part by a distribution in kind of
securities held by a Fund in lieu of cash. It is highly unlikely that shares
would ever be redeemed in kind. If shares are redeemed in kind, however, the
redeeming shareholder should expect to incur transaction costs upon the
disposition of the securities received in the distribution.
EXCHANGE PRIVILEGE
Shares of a Fund may be exchanged for shares of the same class of any other
Fund or other investment portfolio of the Trust based on the respective net
asset values of the shares involved. Shareholders interested in an exchange
for shares of another portfolio of the Trust may request a prospectus for such
portfolio by contacting the Trust at the address and telephone number listed
above. An exchange may be made by following the redemption procedure described
above under "Redemptions by Mail" or, if the telephone redemption option has
been elected, by calling the Trust at (800) 927-4648. Shares of a Fund may
also be exchanged for shares of the same class of a series of the PIMCO Funds:
Pacific Investment Management Series, an affiliated no-load mutual fund family
composed primarily of fixed income portfolios managed by PIMCO. Shareholders
interested in such an exchange may request a prospectus for these funds by
contacting the PIMCO Funds at the same address and telephone number as the
Trust.
Exchanges may be made only with respect to Funds, other portfolios of the
Trust, or PIMCO Funds series registered in the state of residence of the
investor or where an exemption from registration is available. An exchange
order is treated the same as a redemption followed by a purchase and may
result in a capital gain or loss for tax purposes, and special rules may apply
in computing tax basis when determining gain or loss. See "Taxation" in the
Statement of Additional Information.
PIMCO FUNDS
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20
The Trust reserves the right to modify or revoke the exchange privilege of
any shareholder or to limit or reject any exchange. Although each Fund will
attempt to give shareholders prior notice whenever it is reasonably able to do
so, it may impose these restrictions at any time.
PORTFOLIO TRANSACTIONS
Pursuant to the portfolio management agreement, the Portfolio Manager places
orders for the purchase and sale of portfolio investments for the Funds'
accounts with brokers or dealers selected by it in its discretion. In
effecting purchases and sales of portfolio securities for the account of the
Funds, the Portfolio Manager will seek the best price and execution of the
Funds' orders. In doing so, a Fund may pay higher commission rates than the
lowest available when the Portfolio Manager believes it is reasonable to do so
in light of the value of the brokerage and research services provided by the
broker effecting the transaction. The Portfolio Manager also may consider
sales of shares of the Trust as a factor in the selection of broker-dealers to
execute portfolio transactions for the Trust.
The Portfolio Manager manages the Funds without regard generally to
restrictions on portfolio turnover, except those imposed on its ability to
engage in short-term trading by provisions of the federal tax laws. The higher
the rate of portfolio turnover of a Fund, the higher the transaction costs
borne by the Fund generally will be.
Some securities considered for investment by the Funds may also be
appropriate for other clients served by the Portfolio Manager. If a purchase
or sale of securities consistent with the investment policies of a Fund and
one or more of these clients served by the Portfolio Manager is considered at
or about the same time, transactions in such securities will be allocated
among the Fund and clients in a manner deemed fair and reasonable by the
Portfolio Manager.
NET ASSET VALUE
The net asset value per share of each class of each Fund is determined as of
the close of trading on the New York Stock Exchange (ordinarily 4:00 p.m.,
Eastern time) by dividing the total market value of a Fund's portfolio
investments and other assets attributable to that class, less any liabilities,
by the number of total outstanding shares of that class. Net asset value will
not be determined on days on which the New York Stock Exchange is closed.
Portfolio securities and other assets for which market quotations are
readily available are stated at market value. Market value is determined on
the basis of last reported sales prices, or if no sales are reported, as is
the case for most securities traded over-the-counter, at the mean between
representative bid and asked quotations obtained from a quotation reporting
system or from established market makers. Fixed income securities, including
those to be purchased under firm commitment agreements (other than obligations
having a maturity of 60 days or less), are normally valued on the basis of
quotations obtained from brokers and dealers or pricing services, which take
into account appropriate factors such as institutional-sized trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
Short-term investments having a maturity of 60 days or less are valued at
amortized cost, when the Board of Trustees determines that amortized cost is
their fair value. Certain fixed income securities for which daily market
quotations are not readily available may be valued, pursuant to guidelines
established by the Board of Trustees, with reference to fixed income
securities whose prices are more readily obtainable and whose durations are
comparable to the securities being valued. Subject to the foregoing, other
securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Board of Trustees.
<PAGE>
21
DIVIDENDS, DISTRIBUTIONS AND TAXES
Shares begin earning dividends on the effective date of purchase, provided
notification deadlines are met. See "Purchase of Shares." Net investment
income from interest and dividends, if any, will be declared and paid at least
annually to shareholders of record by the Funds. Any net realized capital
gains from the sale of portfolio securities will be distributed no less
frequently than once yearly. Net realized short-term capital gains may be paid
more frequently. Dividend and capital gain distributions of a Fund will be
reinvested in additional shares of that Fund unless the shareholder elects to
have them paid in cash. Dividends from net investment income with respect to
Administrative Class shares will be lower than those paid with respect to
Institutional Class shares, reflecting the payment of service fees by that
class.
Each Fund intends to qualify as a regulated investment company annually and
to elect to be treated as a regulated investment company under the Internal
Revenue Code of 1986, as amended. As such, a Fund generally will not pay
federal income tax on the income and gains it pays as dividends to its
shareholders. In order to avoid a 4% federal excise tax, each Fund intends to
distribute each year substantially all of its net income and gains.
Distributions received by tax-exempt shareholders will not be subject to
federal income tax to the extent permitted under applicable tax law. To the
extent that a shareholder is not exempt from tax on Fund distributions, such
shareholder will be subject to tax on dividends received from a Fund,
regardless of whether received in cash or reinvested in additional shares. All
shareholders must treat dividends, other than capital gain dividends or
dividends that represent a return of capital to shareholders, as ordinary
income. Dividends designated by a Fund as capital gain dividends are taxable
to shareholders as long-term capital gain except as provided by an applicable
tax exemption. Any distributions that are not from a Fund's net investment
income or net capital gain may be characterized as a return of capital to
shareholders or, in some cases, as capital gain. Certain dividends declared in
October, November or December of a calendar year are taxable to shareholders
(who otherwise are subject to tax on dividends) as though received on December
31 of that year if paid to shareholders during January of the following
calendar year. Each Fund will advise shareholders annually of the amount and
nature of the dividends paid to them.
Taxable shareholders should note that the timing of their investment could
have undesirable tax consequences. If shares are purchased on or just before
the day a Fund declares a dividend, taxable shareholders will pay full price
for the shares and may receive a portion of their investment back as a taxable
distribution.
The preceding discussion relates only to federal income tax; the
consequences under other tax laws may differ. For additional information
relating to the tax aspects of investing in a Fund, see the Statement of
Additional Information.
OTHER INFORMATION
CAPITALIZATION
The Trust was organized as a Massachusetts business trust on August 24,
1990. The Board of Trustees may establish additional portfolios in the future.
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 each. When issued,
shares of the Trust are fully paid, non-assessable and freely transferable.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Amended
and Restated Agreement and Declaration of Trust (the "Declaration of Trust")
disclaims liability of the shareholders, Trustees or officers of the Trust for
acts or obligations of the Trust, which are binding only on the assets and
property of the Trust, and requires that notice of the disclaimer be given in
each contract or obligation entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of Trust
property for all loss and expense of any shareholder held personally liable
for the obligations of the Trust. The risk of a shareholder incurring
financial
PIMCO FUNDS
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22
loss on account of shareholder liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations, and thus should be
considered remote.
VOTING
Shareholders have the right to vote on the election of Trustees and on any
and all matters on which the law or the Declaration of Trust states they may
be entitled to vote. The Trust is not required to hold regular annual meetings
of Trust shareholders and does not intend to do so. Shareholders of a class of
shares have separate voting rights with respect to matters that only affect
that class. See "Other Information--Voting Rights" in the Statement of
Additional Information.
The Declaration of Trust provides that the holders of not less than two-
thirds of the outstanding shares of the Trust may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As of August 21, 1996, The Jewish Federation of
Metropolitan Chicago (Chicago, Illinois) owned a controlling interest (as that
term is defined in the 1940 Act) of the Cadence Small Cap Growth Fund. As used
in this Prospectus, the phrase "vote of a majority of the outstanding shares"
of a Fund (or the Trust) means the vote of the lesser of: (1) 67% of the
shares of the Fund (or the Trust) present at a meeting, if the holders of more
than 50% of the outstanding shares are present in person or by proxy; or
(2) more than 50% of the outstanding shares of the Fund (or the Trust).
PERFORMANCE INFORMATION
The Trust may, from time to time, include the yield and total return for
each class of shares of the Funds in advertisements or reports to shareholders
or prospective investors. Quotations of yield for a Fund or class will be
based on the investment income per share (as defined by the SEC) during a
particular 30-day (or one-month) period (including dividends and interest),
less expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the maximum public offering
price per share on the last day of the period. Quotations of average annual
total return for a Fund or class will be expressed in terms of the average
annual compounded rate of return of a hypothetical investment in the Fund or
class over periods of one, five and ten years (up to the life of the Fund),
reflect the deduction of a proportional share of Fund or class expenses (on an
annual basis), and assume that all dividends and distributions are reinvested
when paid.
The Trust also may provide current distribution information to its
shareholders in shareholder reports or other shareholder communications, or in
certain types of sales literature provided to prospective investors. Current
distribution information for a particular class of a Fund will be based on
distributions for a specified period (i.e., total dividends from net
investment income), divided by the relevant class net asset value per share on
the last day of the period and annualized. The rate of current distributions
does not reflect deductions for unrealized losses from transactions in
derivative instruments such as options and futures, which may reduce total
return. Current distribution rates differ from standardized yield rates in
that they represent what a class of a Fund has declared and paid to
shareholders as of the end of a specified period rather than the Fund's actual
net investment income for that period.
Performance information for the Trust may also be compared to: (i) the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500"), the Dow Jones
Industrial Average, the Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, the Morgan Stanley Capital International
Emerging Markets Free Index, the Baring Emerging Markets Index, the
International Finance Corporation Emerging Markets Index, the Russell 1000
Value Index, the Russell 1000 Growth Index, the Standard & Poor's Mid Cap
Index, the Russell 2000 Index, the Lehman Brothers Aggregate Bond Index, or
other unmanaged indexes that measure performance of a pertinent group of
securities; (ii) other groups of mutual funds tracked by Lipper Analytical
Services ("Lipper"), a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets, or
tracked by other services, companies, publications, or persons who rank mutual
funds on overall performance or other criteria; and (iii) the Consumer Price
Index (measure for inflation)
<PAGE>
23
to assess the real rate of return from an investment in the Funds. Unmanaged
indexes (i.e., other than Lipper) generally do not reflect deductions for
administrative and management costs and expenses. The Adviser and the
Portfolio Manager may also report to shareholders or to the public in
advertisements concerning the performance of the Adviser and the Portfolio
Manager as advisers to clients other than the Trust, and on the comparative
performance or standing of the Adviser or the Portfolio Manager in relation to
other money managers. Such comparative information may be compiled or provided
by independent ratings services or by news organizations. Any performance
information, whether related to the Funds, the Adviser or the Portfolio
Manager, should be considered in light of the Funds' investment objectives and
policies, characteristics and quality of the Funds, and the market conditions
during the time period indicated, and should not be considered to be
representative of what may be achieved in the future. For a description of the
methods used to determine yield and total return for the Funds, see the
Statement of Additional Information.
Investment results of the Funds will fluctuate over time, and any
representation of the Funds' total return or yield for any prior period should
not be considered as a representation of what an investor's total return or
yield may be in any future period. The Trust's Annual Report contains
additional performance information for the Funds and is available upon
request, without charge, by calling (800) 927-4648 (Current Shareholders), or
(800) 800-0952 (New Accounts).
PIMCO FUNDS
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PIMCO FUNDS
<PAGE>
P I M C O
PIMCO FUNDS
Equity Advisors Series
INVESTMENT ADVISER
PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
ADMINISTRATOR
Pacific Investment Management Company
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
ACCOUNTANTS
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, DC 20005
PROSPECTUS
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September 15, 1996
<PAGE>
PIMCO FUNDS
EQUITY ADVISORS SERIES
STATEMENT OF ADDITIONAL INFORMATION
PIMCO Funds: Equity Advisor Series (the "Trust"), formerly PIMCO Advisors
Institutional Funds, PFAMCo Funds, and PFAMCo Fund, is a no-load, open-end
management investment company ("mutual fund") currently offering fourteen
separate investment portfolios (the "Funds"): the NFJ EQUITY INCOME FUND, the
NFJ DIVERSIFIED LOW P/E FUND, the NFJ SMALL CAP VALUE FUND, the CADENCE CAPITAL
APPRECIATION FUND, the CADENCE MID CAP GROWTH FUND, the CADENCE MICRO CAP GROWTH
FUND, the CADENCE SMALL CAP GROWTH FUND, the COLUMBUS CIRCLE INVESTORS CORE
EQUITY FUND, the COLUMBUS CIRCLE INVESTORS MID CAP EQUITY FUND, the PARAMETRIC
ENHANCED EQUITY FUND, the PARAMETRIC STRUCTURED EMERGING MARKETS FUND, the
BLAIRLOGIE EMERGING MARKETS FUND, the BLAIRLOGIE INTERNATIONAL ACTIVE FUND, and
the BALANCED FUND.
The Trust's investment adviser is PIMCO Advisors L.P. ("PIMCO Advisors" or
the "Adviser"), 800 Newport Center Drive, Newport Beach, California 92660.
This Statement of Additional Information is not a Prospectus, and should be
used in conjunction with the Prospectus for the Trust dated September 15, 1996.
A copy of the Prospectus may be obtained free of charge from the Trust at the
address and telephone number listed below.
PIMCO Funds
840 Newport Center Drive
Suite 360
Newport Beach, California 92660
Telephone: (800) 927-4648
September 15, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES................................. 2
U.S. Government Securities.................................... 2
Borrowing..................................................... 2
Preferred Stocks.............................................. 3
Corporate Debt Securities..................................... 3
Variable and Floating Rate Securities......................... 4
Mortgage-Related and Asset-Backed Securities.................. 4
Foreign Securities............................................ 8
Bank Obligations.............................................. 10
Commercial Paper.............................................. 11
Derivative Instruments........................................ 11
Delayed Delivery Transactions................................. 17
Warrants to Purchase Securities............................... 18
Illiquid Securities........................................... 18
INVESTMENT RESTRICTIONS............................................ 19
MANAGEMENT OF THE TRUST............................................ 22
Trustees and Officers......................................... 22
Compensation Table............................................ 24
Investment Adviser............................................ 24
Portfolio Management Agreements............................... 26
Fund Administrator............................................ 29
Expense Limitations........................................... 31
Distribution of Trust Shares.................................. 31
Service Fees.................................................. 32
Purchases and Redemptions..................................... 32
PORTFOLIO TRANSACTIONS AND BROKERAGE............................... 33
Investment Decisions.......................................... 33
Brokerage and Research Services............................... 33
Portfolio Turnover............................................ 35
NET ASSET VALUE.................................................... 35
TAXATION........................................................... 36
Distributions................................................. 37
Sales of Shares............................................... 37
Backup Withholding............................................ 37
Options, Futures and Forward Contracts, and Swap Agreements... 38
Passive Foreign Investment Companies.......................... 39
Foreign Currency Transactions................................. 39
Foreign Taxation.............................................. 39
Original Issue Discount....................................... 40
Other Taxation................................................ 41
</TABLE>
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<TABLE>
<S> <C>
OTHER INFORMATION............................................ 41
Capitalization............................................ 41
Performance Information................................... 42
Voting Rights............................................. 44
Code of Ethics............................................ 51
Custodian, Transfer Agent and Dividend Disbursing Agent... 51
Independent Accountants................................... 52
Counsel................................................... 52
Registration Statement.................................... 52
Financial Statements...................................... 52
APPENDIX A................................................... A-1
</TABLE>
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INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and general investment policies of each Fund are
described in the Prospectus. Additional information concerning the
characteristics of certain of the Funds' investments is set forth below.
U.S. GOVERNMENT SECURITIES
U.S. Government securities are obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities. The U.S. Government does not
guarantee the net asset value of the Funds' shares. Some U.S. Government
securities, such as Treasury bills, notes and bonds, and securities guaranteed
by the Government National Mortgage Association ("GNMA"), are supported by the
full faith and credit of the United States; others, such as those of the Federal
Home Loan Banks, are supported by the right of the issuer to borrow from the
U.S. Treasury; others, such as those of the Federal National Mortgage
Association ("FNMA"), are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; and still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the instrumentality. U.S. Government securities include securities that have no
coupons, or have been stripped of their unmatured interest coupons, individual
interest coupons from such securities that trade separately, and evidences of
receipt of such securities. Such securities may pay no cash income, and are
purchased at a deep discount from their value at maturity. Because interest on
zero coupon securities is not distributed on a current basis but is, in effect,
compounded, zero coupon securities tend to be subject to greater market risk
than interest-paying securities of similar maturities. Custodial receipts
issued in connection with so-called trademark zero coupon securities, such as
CATs and TIGRs, are not issued by the U.S. Treasury, and are therefore not U.S.
Government securities, although the underlying bond represented by such receipt
is a debt obligation of the U.S. Treasury. Other zero coupon Treasury
securities (STRIPs and CUBEs) are direct obligations of the U.S. Government.
BORROWING
A Fund may borrow for temporary administrative purposes. This borrowing may
be unsecured. Provisions of the Investment Company Act of 1940 ("1940 Act")
require a Fund to maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed, with an exception for borrowings not in excess of 5% of the
Fund's total assets made for temporary administrative purposes. Any borrowings
for temporary administrative purposes in excess of 5% of the Fund's total assets
must maintain continuous asset coverage. If the 300% asset coverage should
decline as a result of market fluctuations or other reasons, a Fund may be
required to sell some of its portfolio holdings within three days to reduce the
debt and restore the 300% asset coverage, even though it may be disadvantageous
from an investment standpoint to sell securities at that time. Borrowing will
tend to exaggerate the effect on net asset value of any increase or decrease in
the market value of a Fund's portfolio. Money borrowed will be subject to
interest costs which may or may not be recovered by appreciation of the
securities purchased. A Fund also may be required to maintain minimum average
balances in connection with such borrowing or to pay a commitment or other fee
to maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate.
In addition to borrowing for temporary purposes, a Fund may enter into
reverse repurchase agreements. A reverse repurchase agreement involves the sale
of a portfolio-eligible security by a Fund, coupled with its agreement to
repurchase the instrument at a specified time and price. The Fund will maintain
a segregated account with its custodian consisting of liquid assets, such as
cash, U.S. Government securities or high quality debt securities equal (on a
daily mark-to-market basis) to its obligations under reverse repurchase
agreements with broker-dealers (but not banks). However, reverse
2
<PAGE>
repurchase agreements involve the risk that the market value of securities
retained by the Fund may decline below the repurchase price of the securities
sold by the Fund which it is obligated to repurchase. Reverse repurchase
agreements will be subject to the Funds' limitations on borrowings, which will
restrict the aggregate of such transactions (plus any other borrowings) to
33 1/3% of a Fund's total assets.
PREFERRED STOCKS
All Funds may invest in preferred stocks. Preferred stock is a form of
equity ownership in a publicly held corporation. The dividend on a preferred
stock is a fixed payment. In these securities, the firm is not legally bound to
pay the dividend. Certain classes of preferred stock are convertible, meaning
the preferred stock is convertible into shares of common stock of the issuing
company. By holding convertible preferred stock, a Fund can receive a steady
stream of dividends and still have the option to convert it to common stock.
CORPORATE DEBT SECURITIES
All Funds may invest in corporate debt securities. The NFJ Equity Income,
NFJ Diversified Low P/E, NFJ Small Cap Value, Cadence Capital Appreciation,
Cadence Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small Cap Growth,
Columbus Circle Investors Core Equity, Columbus Circle Investors Mid Cap Equity,
Parametric Enhanced Equity, Parametric Structured Emerging Markets, Blairlogie
Emerging Markets, and Blairlogie International Active Funds' investments in
corporate debt securities are limited to short term corporate debt securities.
The investment return of corporate debt securities reflects interest earnings
and changes in the market value of the security. The market value of a corporate
debt obligation may also be expected to rise and fall inversely with interest
rates generally. There also exists the risk that the issuers of the securities
may not be able to meet their obligations on interest or principal payments at
the time called for by an instrument.
A Fund's investments in U.S. dollar or foreign currency-denominated
corporate debt securities of domestic or foreign issuers are limited to
corporate debt securities (corporate bonds, debentures, notes and other similar
corporate debt instruments, including convertible securities) which meet the
minimum ratings criteria set forth for the Fund, or, if unrated, are deemed to
be comparable in quality to corporate debt securities in which the Fund may
invest. The rate of return or return of principal on some debt obligations may
be linked or indexed to the level of exchange rates between the U.S. dollar and
a foreign currency or currencies.
Among the corporate bonds in which the Funds may invest are convertible
securities. A convertible security is a bond, debenture, note, or other
security that entitles the holder to acquire common stock or other equity
securities of the same or a different issuer. A convertible security generally
entitles the holder to receive interest paid or accrued until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible debt
securities. Convertible securities rank senior to common stock in a
corporation's capital structure and, therefore, generally entail less risk than
the corporation's common stock, although the extent to which such risk is
reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security.
A convertible security may be subject to redemption at the option of the
issuer at a predetermined price. If a convertible security held by a Fund is
called for redemption, the Fund would be required to permit the issuer to redeem
the security and convert it to underlying common stock, or would sell the
convertible security to a third party. A Fund generally would invest in
convertible securities for their favorable price characteristics and total
return potential and would normally not exercise an option to convert.
3
<PAGE>
Securities rated Baa and BBB are the lowest which are considered
"investment grade" obligations. Moody's Investors Services, Inc. ("Moody's")
describes securities rated Baa as "medium-grade" obligations; they are "neither
highly protected nor poorly secured...[i]nterest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have speculative
characteristics as well." Standard & Poor's ("S&P") describes securities rated
BBB as "regarded as having an adequate capacity to pay interest and repay
principal...[w]hereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal...than in higher rated
categories."
Prices of high yield/high risk securities have been found to be less
sensitive to interest rate changes than more highly rated investments, but more
sensitive to economic downturns or individual corporate developments. The
markets on which lower rated securities are traded may be less liquid than for
higher grade securities, and adverse publicity and investor perceptions may
decrease the liquidity of these markets. Lower liquidity in secondary markets
could adversely affect the value of high yield/high risk securities held by the
Balanced Fund. [While lower rated securities typically are less sensitive to
interest rate changes than higher rated debt, the market prices of high
yield/high risk securities structured as "zero coupon" or "payment-in-kind"
securities may be affected to a greater extent by interest rate changes.] See
"Appendix A - Description of Securities Ratings," for further information.
VARIABLE AND FLOATING RATE SECURITIES
Variable and floating rate securities provide for a periodic adjustment in
the interest rate paid on the obligations. The terms of such obligations must
provide that interest rates are adjusted periodically based upon an interest
rate adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be event
based, such as based on a change in the prime rate.
The Balanced Fund may invest in floating rate debt instruments
("floaters"). The interest rate on a floater is a variable rate which is tied
to another interest rate, such as a money-market index or Treasury bill rate.
The interest rate on a floater resets periodically, typically every six months.
While, because of the interest rate reset feature, floaters provide the Fund
with a certain degree of protection against rises in interest rates, the Fund
will participate in any declines in interest rates as well.
The Balanced Fund may also invest in inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction from the market rate of interest to which the inverse floater
is indexed. An inverse floating rate security may exhibit greater price
volatility than a fixed rate obligation of similar credit quality. The Trust
has adopted a policy under which the Balanced Fund will invest no more than 5%
of its net assets in any combination of inverse floater, interest only ("IO"),
or principal only ("PO") securities. See "Mortgage-Related and Asset-Backed
Securities" for a discussion of IOs and POs.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
Mortgage-related securities are interests in pools of residential or
commercial mortgage loans, including mortgage loans made by savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled as securities for sale to investors by various governmental,
government-related and private organizations, see "Mortgage Pass-Through
Securities." The Balanced Fund may also invest in debt securities which are
secured with collateral consisting of mortgage-related securities, see
"Collateralized Mortgage Obligations," and in other types of mortgage-related
securities.
MORTGAGE PASS-THROUGH SECURITIES Interests in pools of mortgage-related
securities differ from other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential or commercial mortgage loans, net of
any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities (such as securities issued by the
GNMA) are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.
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The principal governmental guarantor of mortgage-related securities is the
GNMA. GNMA is a wholly owned U.S. Government corporation within the Department
of Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the U.S. Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of mortgages insured by the Federal Housing Administration (the "FHA"), or
guaranteed by the Department of Veterans Affairs (the "VA").
Government-related guarantors (i.e., not backed by the full faith and
credit of the United States Government) include the FNMA and the Federal Home
Loan Mortgage Corporation ("FHLMC"). FNMA is a government-sponsored corporation
owned entirely by private stockholders. It is subject to general regulation by
the Secretary of Housing and Urban Development. FNMA purchases conventional
(i.e., not insured or guaranteed by any government agency) residential mortgages
from a list of approved seller/servicers which include state and federally
chartered savings and loan associations, mutual savings banks, commercial banks,
and credit unions and mortgage bankers. Pass-through securities issued by FNMA
are guaranteed as to timely payment of principal and interest by FNMA but are
not backed by the full faith and credit of the United States Government.
FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a government-
sponsored corporation formerly owned by the twelve Federal Home Loan Banks and
now owned entirely by private stockholders. FHLMC issues Participation
Certificates ("Pcs") which represent interests in conventional mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but Pcs are not backed by the full faith and
credit of the United States Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create pass-
through pools of conventional residential mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in the former pools. However,
timely payment of interest and principal of these pools may be supported by
various forms of insurance or guarantees, including individual loan, title, pool
and hazard insurance and letters of credit. The insurance and guarantees are
issued by governmental entities, private insurers and the mortgage poolers.
Such insurance and guarantees, and the creditworthiness of the issuers thereof,
will be considered in determining whether a mortgage-related security meets the
Trust's investment quality standards. There can be no assurance that the
private insurers or guarantors can meet their obligations under the insurance
policies or guarantee arrangements. The Balanced Fund may buy mortgage-related
securities without insurance or guarantees if, through an examination of the
loan experience and practices of the originator/servicers and poolers, the
Portfolio Manager determines that the securities meet the Trust's quality
standards. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be readily
marketable. The Balanced Fund will not purchase mortgage-related securities or
any other assets which in the Portfolio Manager's opinion are illiquid if, as a
result, more than 10% of the value of the Fund's total assets will be illiquid.
Mortgage-related securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to the Balanced
Fund's industry concentration restrictions, see "Investment Restrictions," by
virtue of the exclusion from that test available to all U.S. Government
securities. In the case of privately issued mortgage-related securities, the
Balanced Fund takes the position that mortgage-related securities do not
represent interests in any particular "industry" or group of industries. The
assets underlying such securities may be represented by a portfolio of first
lien residential mortgages (including both whole mortgage loans and mortgage
participation interests) or portfolios of mortgage pass-through securities
issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a
mortgage-related security may in turn be insured or guaranteed by the FHA or the
VA. In
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the case of private issue mortgage-related securities whose underlying
assets are neither U.S. Government securities nor U.S. Government-insured
mortgages, to the extent that real properties securing such assets may be
located in the same geographical region, the security may be subject to a
greater risk of default than other comparable securities in the event of adverse
economic, political or business developments that may affect such region and,
ultimately, the ability of residential homeowners to make payments of principal
and interest on the underlying mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") A CMO is a hybrid between a
mortgage-backed bond and a mortgage pass-through security. Similar to a bond,
interest and prepaid principal is paid, in most cases, semi-annually. CMOs may
be collateralized by whole mortgage loans, but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
--------
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding
the longer maturity classes receive principal only after the first class has
been retired. An investor is partially guarded against a sooner than desired
return of principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering
are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C
Bonds all bear current interest. Interest on the Series Z Bond is accrued and
added to principal and a like amount is paid as principal on the Series A, B, or
C Bond currently being paid off. When the Series A, B, and C Bonds are paid in
full, interest and principal on the Series Z Bond begins to be paid currently.
With some CMOs, the issuer serves as a conduit to allow loan originators
(primarily builders or savings and loan associations) to borrow against their
loan portfolios.
FHLMC COLLATERALIZED MORTGAGE OBLIGATIONS FHLMC CMOs are debt obligations
of FHLMC issued in multiple classes having different maturity dates which are
secured by the pledge of a pool of conventional mortgage loans purchased by
FHLMC. Unlike FHLMC Pcs, payments of principal and interest on the CMOs are
made semi-annually, as opposed to monthly. The amount of principal payable on
each semi-annual payment date is determined in accordance with FHLMC's mandatory
sinking fund schedule, which in turn, is equal to approximately 100% of FHA
prepayment experience applied to the mortgage collateral pool. All sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payment of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum
sinking fund obligation for any payment date are paid to the holders of the CMOs
as additional sinking fund payments. Because of the "pass-through" nature of
all principal payments received on the collateral pool in excess of FHLMC's
minimum sinking fund requirement, the rate at which principal of the CMOs is
actually repaid is likely to be such that each class of bonds will be retired in
advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans
during any semi-annual payment period is not sufficient to meet FHLMC's minimum
sinking fund obligation on the next sinking fund payment date, FHLMC agrees to
make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC Pcs. FHLMC has the right to substitute collateral
in the event of delinquencies and/or defaults.
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COMMERCIAL MORTGAGE-BACKED SECURITIES include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property.
The market for commercial mortgage-backed securities developed more recently and
in terms of total outstanding principal amount of issues is relatively small
compared to the market for residential single-family mortgage-backed securities.
Many of the risks of investing in commercial mortgage-backed securities reflect
the risks of investing in the real estate securing the underlying mortgage
loans. These risks reflect the effects of local and other economic conditions
on real estate markets, the ability of tenants to make loan payments, and the
ability of a property to attract and retain tenants. Commercial mortgage-backed
securities may be less liquid and exhibit greater price volatility than other
types of mortgage- or asset-backed securities.
OTHER MORTGAGE-RELATED SECURITIES Other mortgage-related securities
include securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including CMO residuals or stripped mortgage-backed
securities. Other mortgage-related securities may be equity or debt securities
issued by agencies or instrumentalities of the U.S. Government or by private
originators of, or investors in, mortgage loans, including savings and loan
associations, homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing.
CMO Residuals CMO residuals are mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.
The cash flow generated by the mortgage assets underlying a series of CMOs
is applied first to make required payments of principal and interest on the CMOs
and second to pay the related administrative expenses of the issuer. The
residual in a CMO structure generally represents the interest in any excess cash
flow remaining after making the foregoing payments. Each payment of such excess
cash flow to a holder of the related CMO residual represents income and/or a
return of capital. The amount of residual cash flow resulting from a CMO will
depend on, among other things, the characteristics of the mortgage assets, the
coupon rate of each class of CMO, prevailing interest rates, the amount of
administrative expenses and the prepayment experience on the mortgage assets.
In particular, the yield to maturity on CMO residuals is extremely sensitive to
prepayments on the related underlying mortgage assets, in the same manner as an
IO class of stripped mortgage-backed securities. See "Other Mortgage-Related
Securities--Stripped Mortgage-Backed Securities." In addition, if a series of a
CMO includes a class that bears interest at an adjustable rate, the yield to
maturity on the related CMO residual will also be extremely sensitive to changes
in the level of the index upon which interest rate adjustments are based. As
described below with respect to stripped mortgage-backed securities, in certain
circumstances the Balanced Fund may fail to recoup fully its initial investment
in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not have
been registered under the Securities Act of 1933, as amended (the "1933 Act").
CMO residuals, whether or not registered under the 1933 Act, may be subject to
certain restrictions on transferability, and may be deemed "illiquid" and
subject to the Balanced Fund's limitations on investment in illiquid securities.
Stripped Mortgage-Backed Securities Stripped mortgage-backed securities
("SMBS") are derivative multi-class mortgage securities. SMBS may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose entities
of the foregoing.
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SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of SMBS will have one class receiving some of the
interest and most of the principal from the mortgage assets, while the other
class will receive most of the interest and the remainder of the principal. In
the most extreme case, one class will receive all of the interest (the IO
class), while the other class will receive all of the principal (the "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on the Balanced Fund's yield to maturity from these securities. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Balanced Fund may fail to fully recoup its initial investment in
these securities even if the security is in one of the highest rating
categories.
Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were only recently developed. As a result, established trading markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and
subject to the Balanced Fund's limitations on investment in illiquid securities.
OTHER ASSET-BACKED SECURITIES Similarly, the Adviser and Portfolio Managers
expect that other asset-backed securities (unrelated to mortgage loans) will be
offered to investors in the future. Several types of asset-backed securities
have already been offered to investors, including Certificates for Automobile
Receivables/SM/ ("CARS/SM"/). CARS/SM/ represent undivided fractional interests
in a trust whose assets consist of a pool of motor vehicle retail installment
sales contracts and security interests in the vehicles securing the contracts.
Payments of principal and interest on CARS/SM/ are passed through monthly to
certificate holders, and are guaranteed up to certain amounts and for a certain
time period by a letter of credit issued by a financial institution unaffiliated
with the trustee or originator of the trust. An investor's return on CARS/SM/
may be affected by early prepayment of principal on the underlying vehicle sales
contracts. If the letter of credit is exhausted, the trust may be prevented from
realizing the full amount due on a sales contract because of state law
requirements and restrictions relating to foreclosure sales of vehicles and the
obtaining of deficiency judgments following such sales or because of
depreciation, damage or loss of a vehicle, the application of federal and state
bankruptcy and insolvency laws, or other factors. As a result, certificate
holders may experience delays in payments or losses if the letter of credit is
exhausted.
Consistent with a Fund's investment objectives and policies, the Adviser
and Portfolio Manager also may invest in other types of asset-backed securities.
FOREIGN SECURITIES
The Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
and Blairlogie International Active Funds may invest in U.S. dollar or foreign
currency-denominated corporate debt securities of foreign issuers; preferred
securities of foreign issuers; certain foreign bank obligations; and U.S.
dollar-or foreign currency-denominated obligations of foreign governments or
their subdivisions, agencies and instrumentalities, international agencies and
supranational entities. The Parametric Structured Emerging Markets, Blairlogie
Emerging Markets, and Blairlogie International Active Funds may also invest in
common stocks issued by foreign companies or in securities represented by
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs), or
Global Depository Receipts ("GDRs"). ADRs are dollar-denominated receipts issued
generally by domestic banks and represent the deposit with the bank of a
security of a foreign issuer. EDRs are foreign currency-denominated receipts
similar to ADRs and are issued and traded in Europe, and are publicly traded on
exchanges or over-the-counter in the United States. GDRs may be offered
privately in the United States and also trade in public or private markets in
other countries. ADRs, EDRs and GDRs may be issued as sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements to have its
securities trade in the form of ADRs, EDRs or GDRs. In unsponsored programs, the
issuer may not be directly involved in the creation of the program. Although
regulatory requirements with respect to sponsored and unsponsored programs are
generally similar, in some cases it may be easier to obtain
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financial information from an issuer that has participated in the creation of a
sponsored program. The Columbus Circle Investors Core Equity and Columbus
Circle Investors Mid Cap Equity Funds each may invest up to 15% of their
respective net assets in securities which are traded principally in securities
markets outside the United States (Eurodollar certificates of deposit are
excluded for purposes of these limitations). In addition, the Funds may invest
up to 35% of their respective assets in ADRs, EDRs, and GDRs, reduced by such
amount that may be reserved for investments in high quality debt securities,
money market obligations, and cash or other permissible investments. The NFJ
Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value, Cadence Capital
Appreciation, Cadence Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small
Cap Growth, and Parametric Enhanced Equity Funds may also invest in ADRs. The
Parametric Enhanced Equity Fund may invest in common stock of foreign issuers if
it is included in the index from which stocks are selected. The Balanced Fund
may invest up to 20% of its assets allocated for investment in fixed income
securities in securities denominated in foreign currencies, and may invest
beyond this limit in U.S. dollar-denominated securities of foreign issuers.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
include: differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country), political instability which can
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. In addition, foreign securities and dividends
and interest payable on those securities may be subject to foreign taxes,
including taxes withheld from payments on those securities. Foreign securities
often trade with less frequency and volume than domestic securities and
therefore may exhibit greater price volatility. Changes in foreign exchange
rates will affect the value of those securities which are denominated or quoted
in currencies other than the U.S. dollar.
The Parametric Structured Emerging Markets and Blairlogie Emerging Markets
Funds may invest in the securities of issuers based in developing countries.
Investing in developing countries involves certain risks not typically
associated with investing in U.S. securities, and imposes risks greater than, or
in addition to, risks of investing in foreign, developed countries. These risks
include: greater risks of nationalization or expropriation of assets or
confiscatory taxation; currency devaluations and other currency exchange rate
fluctuations; greater social, economic and political uncertainty and instability
(including the risk of war); more substantial government involvement in the
economy; higher rates of inflation; less government supervision and regulation
of the securities markets and participants in those markets; controls on foreign
investment and limitations on repatriation of invested capital and on the Fund's
ability to exchange local currencies for U.S. dollars; unavailability of
currency hedging techniques in certain developing countries; the fact that
companies in developing countries may be smaller, less seasoned and newly
organized companies; the difference in, or lack of, auditing and financial
reporting standards, which may result in unavailability of material information
about issuers; the risk that it may be more difficult to obtain and/or enforce a
judgment in a court outside the United States; and greater price volatility,
substantially less liquidity and significantly smaller market capitalization of
securities markets.
The Columbus Circle Investors Core Equity, Columbus Circle Investors Mid
Cap Equity, Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
Blairlogie International Active, and Balanced Funds may also purchase and sell
foreign currency options and foreign currency futures contracts and related
options (see "Derivative Instruments"), and enter into forward foreign currency
exchange contracts in order to protect against uncertainty in the level of
future foreign exchange rates in the purchase and sale of securities. The Funds
may also use foreign currency options and foreign currency forward contracts to
increase exposure to a foreign currency or to shift exposure to foreign currency
fluctuations from one country to another.
A forward foreign currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts may be bought or sold to protect a Fund
against a possible loss resulting from an adverse change in the relationship
between foreign currencies and the U.S. dollar or to increase exposure to a
particular foreign currency. Open positions in forward contracts used for non-
hedging purposes will be covered by the segregation with the Trust's custodian
of
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liquid assets, such as cash, U.S. Government securities and high quality
short-term investments and are marked to market daily. Although forward
contracts are intended to minimize the risk of loss due to a decline in the
value of the hedged currencies, at the same time, they tend to limit any
potential gain which might result should the value of such currencies increase.
BANK OBLIGATIONS
Bank obligations in which the Funds invest include certificates of deposit,
bankers' acceptances, and fixed time deposits. Certificates of deposit are
negotiable certificates issued against funds deposited in a commercial bank for
a definite period of time and earning a specified return. Bankers' acceptances
are negotiable drafts or bills of exchange, normally drawn by an importer or
exporter to pay for specific merchandise, which are "accepted" by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value
of the instrument on maturity. Fixed time deposits are bank obligations payable
at a stated maturity date and bearing interest at a fixed rate. Fixed time
deposits may be withdrawn on demand by the investor, but may be subject to early
withdrawal penalties which vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits. A Fund will not invest in
fixed time deposits which (1) are not subject to prepayment or (2) provide for
withdrawal penalties upon prepayment (other than overnight deposits) if, in the
aggregate, more than 10% (in the case of the NFJ Equity Income, NFJ Diversified
Low P/E, NJF Small Cap Value, Cadence Capital Appreciation, Cadence Mid Cap
Growth, Cadence Small Cap Growth, Parametric Enhanced Equity and Balanced
Funds), or 15% (in the case of the Columbus Circle Investors Core Equity,
Columbus Circle Investors Mid Cap Equity, Cadence Micro Cap Growth, Parametric
Structured Emerging Markets, Blairlogie Emerging Markets, and Blairlogie
International Active Funds) of its net assets would be invested in such
deposits, repurchase agreements maturing in more than seven days and other
illiquid assets. Each Fund may also hold funds on deposit with its sub-custodian
bank in an interest-bearing account for temporary purposes.
Each Fund limits its investments in United States bank obligations to
obligations of United States banks (including foreign branches) which have more
than $1 billion in total assets at the time of investment and are members of the
Federal Reserve System or are examined by the Comptroller of the Currency or
whose deposits are insured by the Federal Deposit Insurance Corporation. A Fund
also may invest in certificates of deposit of savings and loan associations
(federally or state chartered and federally insured) having total assets in
excess of $1 billion.
The Columbus Circle Investors Core Equity, Columbus Circle Investors Mid
Cap Equity, Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
Blairlogie International Active, and Balanced Funds limit their investments in
foreign bank obligations to United States dollar or foreign currency-denominated
obligations of foreign banks (including United States branches of foreign banks)
which at the time of investment (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) in terms of assets are
among the 75 largest foreign banks in the world; (iii) have branches or agencies
(limited purpose offices which do not offer all banking services) in the United
States; and (iv) in the opinion of the Portfolio Managers, are of an investment
quality comparable to obligations of United States banks in which the Funds may
invest. Subject to the Trust's limitation on concentration of no more than 25%
of its assets in the securities of issuers in a particular industry, there is no
limitation on the amount of a Fund's assets which may be invested in obligations
of foreign banks which meet the conditions set forth herein.
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Obligations of foreign banks involve somewhat different investment risks
than those affecting obligations of United States banks, including the
possibilities that their liquidity could be impaired because of future political
and economic developments, that their obligations may be less marketable than
comparable obligations of United States banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely
affect the payment of principal and interest on those obligations and that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks or the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to United States
banks. Foreign banks are not generally subject to examination by any U.S.
Government agency or instrumentality.
COMMERCIAL PAPER
All Funds may invest in commercial paper. Commercial paper represents
short-term unsecured promissory notes issued in bearer form by banks or bank
holding companies, corporations and finance companies. The commercial paper
purchased by the Funds consists of U.S. dollar-denominated obligations of
domestic issuers, or, additionally for the Columbus Circle Investors Core
Equity, Columbus Circle Investors Mid Cap Equity, Parametric Structured Emerging
Markets, Blairlogie Emerging Markets, and Blairlogie International Active Funds,
foreign currency-denominated obligations of domestic or foreign issuers which,
at the time of investment, are (i) rated "P-1" or "P-2" by Moody's or "A-1" or
"A-2" or better by S&P, (ii) issued or guaranteed as to principal and interest
by issuers or guarantors having an existing debt security rating of "A" or
better by Moody's or "A" or better by S&P, or (iii) securities which, if not
rated, are, in the opinion of the Portfolio Manager, of an investment quality
comparable to rated commercial paper in which the Fund may invest. The rate of
return on commercial paper may be linked or indexed to the level of exchange
rates between the U.S. dollar and a foreign currency or currencies.
DERIVATIVE INSTRUMENTS
Certain Funds may purchase and sell (write) both call options and put
options on securities, securities indexes and foreign currencies, and enter into
futures contracts as further described below. In pursuit of their investment
objectives, the Columbus Circle Investors Core Equity, Columbus Circle Investors
Mid Cap Equity, Parametric Structured Emerging Markets, Blairlogie Emerging
Markets, Blairlogie International Active, and Balanced Funds may engage in the
purchase and writing of call and put options on securities; each of these Funds,
along with the Parametric Enhanced Equity Fund, also may engage in the purchase
and writing of options on securities indexes. The Columbus Circle Investors Core
Equity, Columbus Circle Investors Mid Cap Equity, Parametric Structured Emerging
Markets, Blairlogie Emerging Markets, Blairlogie International Active, and
Balanced Funds may engage in the purchase and writing of call and put options on
foreign currencies for purposes of increasing exposure to a foreign currency or
to shift exposure to foreign currency fluctuations from one country to another.
If other types of financial instruments, including other types of options,
futures contracts, or futures options are traded in the future, a Fund may also
use those instruments, provided that the Trustees determine that their use is
consistent with the Fund's investment objective, and provided that their use is
consistent with restrictions applicable to options and futures contracts
currently eligible for use by the Trust (i.e., that written call or put options
will be "covered" or "secured," and that futures and futures options will be
used only for hedging purposes).
OPTIONS ON SECURITIES AND INDEXES A Fund may, as specified for the Fund
in the Prospectus, purchase and sell both put and call options on fixed income
or other securities or indexes in standardized contracts traded on foreign or
domestic securities exchanges, boards of trade, or similar entities, or quoted
on National Association of Securities Dealers Automated Quotations ("NASDAQ") or
on a regulated foreign over-the-counter market, and agreements, sometimes called
cash puts, which may accompany the purchase of a new issue of bonds from a
dealer.
An option on a security (or index) is a contract that gives the holder of
the option, in return for a premium, the right to buy from (in the case of a
call) or sell to (in the case of a put) the writer of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at
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any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an index is obligated to pay the difference between the cash value of
the index and the exercise price multiplied by the specified multiplier for the
index option. (An index is designed to reflect specified facets of a particular
financial or securities market, a specific group of financial instruments or
securities, or certain economic indicators.)
A Fund will write call options and put options only if they are "covered."
In the case of a call option on a security, the option is "covered" if the Fund
owns the security underlying the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or, if additional
cash consideration is required, cash or other liquid assets such as U.S.
Government securities or high grade debt obligations in such amount are placed
in a segregated account by its custodian) upon conversion or exchange of other
securities held by the Fund. For a call option on an index, the option is
covered if the Fund maintains with its custodian liquid assets such as cash,
U.S. Government securities or high grade debt obligations in an amount equal to
the contract value of the index. A call option is also covered if the Fund
holds a call on the same security or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call
written, provided the difference is maintained by the Fund in liquid assets such
as cash, U.S. Government securities or high grade debt obligations in a
segregated account with its custodian. A put option on a security or an index
is "covered" if the Fund maintains liquid assets such as cash, U.S. Government
securities or high grade debt obligations equal to the exercise price in a
segregated account with its custodian. A put option is also covered if the Fund
holds a put on the same security or index as the put written where the exercise
price of the put held is (i) equal to or greater than the exercise price of the
put written, or (ii) less than the exercise price of the put written, provided
the difference is maintained by the Fund in cash or cash equivalents in a
segregated account with its custodian.
If an option written by a Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by a Fund expires unexercised, the Fund realizes a capital loss equal
to the premium paid. Prior to the earlier of exercise or expiration, an option
may be closed out by an offsetting purchase or sale of an option of the same
series (type, exchange, underlying security or index, exercise price, and
expiration). There can be no assurance, however, that a closing purchase or
sale transaction can be effected when the Fund desires.
A Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the market
value of a put or a call option include supply and demand, interest rates, the
current market price of the underlying security or index in relation to the
exercise price of the option, the volatility of the underlying security or
index, and the time remaining until the expiration date.
The premium paid for a put or call option purchased by a Fund is an asset
of the Fund. The premium received for an option written by a Fund is recorded
as a deferred credit. The value of an option purchased or written is marked to
market daily and is valued at the closing price on the exchange on which it is
traded or, if not traded on an exchange or no closing price is available, at the
mean between the last bid and asked prices.
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RISKS ASSOCIATED WITH OPTIONS ON SECURITIES AND INDEXES There are several
risks associated with transactions in options on securities and on indexes. For
example, there are significant differences between the securities and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when a Fund seeks
to close out an option position. If a Fund were unable to close out an option
that it had purchased on a security, it would have to exercise the option in
order to realize any profit or the option may expire worthless. If a Fund were
unable to close out a covered call option that it had written on a security, it
would not be able to sell the underlying security unless the option expired
without exercise. As the writer of a covered call option, a Fund forgoes,
during the option's life, the opportunity to profit from increases in the market
value of the security covering the call option above the sum of the premium and
the exercise price of the call.
If trading were suspended in an option purchased by a Fund, the Fund would
not be able to close out the option. If restrictions on exercise were imposed,
the Fund might be unable to exercise an option it has purchased. Except to the
extent that a call option on an index written by the Fund is covered by an
option on the same index purchased by the Fund, movements in the index may
result in a loss to the Fund; however, such losses may be mitigated by changes
in the value of the Fund's securities during the period the option was
outstanding.
FOREIGN CURRENCY OPTIONS The Columbus Circle Investors Core Equity,
Columbus Circle Investors Mid Cap Equity, Parametric Structured Emerging
Markets, Blairlogie Emerging Markets, Blairlogie International Active, and
Balanced Funds may buy or sell put and call options on foreign currencies either
on exchanges or in the over-the-counter market. A put option on a foreign
currency gives the purchaser of the option the right to sell a foreign currency
at the exercise price until the option expires. A call option on a foreign
currency gives the purchaser of the option the right to purchase the currency at
the exercise price until the option expires. Currency options traded on U.S. or
other exchanges may be subject to position limits which may limit the ability of
a Fund to reduce foreign currency risk using such options. Over-the-counter
options differ from traded options in that they are two-party contracts with
price and other terms negotiated between buyer and seller, and generally do not
have as much market liquidity as exchange-traded options.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS A Fund may use
interest rate, foreign currency or index futures contracts, as specified for
that Fund in the Prospectus. An interest rate, foreign currency or index
futures contract provides for the future sale by one party and purchase by
another party of a specified quantity of a financial instrument, foreign
currency or the cash value of an index at a specified price and time. A futures
contract on an index is an agreement pursuant to which two parties agree to take
or make delivery of an amount of cash equal to the difference between the value
of the index at the close of the last trading day of the contract and the price
at which the index contract was originally written. Although the value of an
index might be a function of the value of certain specified securities, no
physical delivery of these securities is made. A public market exists in
futures contracts covering a number of indexes as well as financial instruments
and foreign currencies, including: the S&P 500; the S&P Midcap 400; the Nikkei
225; the NYSE composite; U.S. Treasury bonds; U.S. Treasury notes; GNMA
Certificates; three-month U.S. Treasury bills; 90-day commercial paper; bank
certificates of deposit; Eurodollar certificates of deposit; the Australian
dollar; the Canadian dollar; the British pound; the German mark; the Japanese
yen; the French franc; the Swiss franc; the Mexican peso; and certain
multinational currencies, such as the European Currency Unit ("ECU"). It is
expected that other futures contracts will be developed and traded in the
future.
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Certain Funds may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position
(put) in a futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of a call option, the holder acquires a
long position in the futures contract and the writer is assigned the opposite
short position. In the case of a put option, the opposite is true.
To comply with applicable rules of the Commodity Futures Trading Commission
("CFTC") under which the Trust and the Funds avoid being deemed a "commodity
pool" or a "commodity pool operator," each Fund intends generally to limit its
use of futures contracts and futures options to "bona fide hedging"
transactions, as such term is defined in applicable regulations, interpretations
and practice. For example, a Fund might use futures contracts to hedge against
anticipated changes in interest rates that might adversely affect either the
value of the Fund's securities or the price of the securities which the Fund
intends to purchase. A Fund's hedging activities may include sales of futures
contracts as an offset against the effect of expected increases in interest
rates, and purchases of futures contracts as an offset against the effect of
expected declines in interest rates. Although other techniques could be used to
reduce that Fund's exposure to interest rate fluctuations, the Fund may be able
to hedge its exposure more effectively and perhaps at a lower cost by using
futures contracts and futures options.
A Fund will only enter into futures contracts and futures options which are
standardized and traded on a U.S. or foreign exchange, board of trade, or
similar entity, or in the case of futures options, for which an established
over-the-counter market exists.
When a purchase or sale of a futures contract is made by a Fund, the Fund
is required to deposit with its custodian (or broker, if legally permitted) a
specified amount of liquid assets, such as cash, U.S. Government securities or
high grade debt obligations ("initial margin"). The margin required for a
futures contract is set by the exchange on which the contract is traded and may
be modified during the term of the contract. Margin requirements on foreign
exchanges may be different than U.S. exchanges. The initial margin is in the
nature of a performance bond or good faith deposit on the futures contract which
is returned to the Fund upon termination of the contract, assuming all
contractual obligations have been satisfied. Each Fund expects to earn interest
income on its initial margin deposits. A futures contract held by a Fund is
valued daily at the official settlement price of the exchange on which it is
traded. Each day the Fund pays or receives cash, called "variation margin,"
equal to the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a borrowing
or loan by a Fund but is instead a settlement between the Fund and the broker of
the amount one would owe the other if the futures contract expired. In
computing daily net asset value, each Fund will mark to market its open futures
positions.
A Fund is also required to deposit and maintain margin with respect to put
and call options on futures contracts written by it. Such margin deposits will
vary depending on the nature of the underlying futures contract (and the related
initial margin requirements), the current market value of the option, and other
futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund realizes a capital
gain, or if it is more, the Fund realizes a capital loss. Conversely, if an
offsetting sale price is more than the original purchase price, the Fund
realizes a capital gain, or if it is less, the Fund realizes a capital loss.
The transaction costs must also be included in these calculations.
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LIMITATIONS ON USE OF FUTURES AND FUTURES OPTIONS In general, the Funds
intend to enter into positions in futures contracts and related options only for
"bona fide hedging" purposes. With respect to positions in futures and related
options that do not constitute bona fide hedging positions, a Fund will not
enter into a futures contract or futures option contract if, immediately
thereafter, the aggregate initial margin deposits relating to such positions
plus premiums paid by it for open futures option positions, less the amount by
which any such options are "in-the-money," would exceed 5% of the Fund's net
assets. A call option is "in-the-money" if the value of the futures contract
that is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures contract
that is the subject of the option.
When purchasing a futures contract, a Fund will maintain with its custodian
(and mark-to-market on a daily basis) liquid assets, such as cash, U.S.
Government securities, or other highly liquid debt securities that, when added
to the amounts deposited with a futures commission merchant as margin, are equal
to the market value of the futures contract. Alternatively, the Fund may
"cover" its position by purchasing a put option on the same futures contract
with a strike price as high or higher than the price of the contract held by the
Fund.
When selling a futures contract, a Fund will maintain with its custodian
(and mark-to-market on a daily basis) liquid assets, such as cash, U.S.
Government securities or high grade debt obligations that are equal to the
market value of the instruments underlying the contract. Alternatively, the
Fund may "cover" its position by owning the instruments underlying the contract
(or, in the case of an index futures contract, a portfolio with a volatility
substantially similar to that of the index on which the futures contract is
based), or by holding a call option permitting the Fund to purchase the same
futures contract at a price no higher than the price of the contract written by
the Fund (or at a higher price if the difference is maintained in liquid assets
with the Trust's custodian).
When selling a call option on a futures contract, a Fund will maintain with
its custodian (and mark-to-market on a daily basis) liquid assets, such as cash,
U.S. Government securities, or other highly liquid debt securities that, when
added to the amounts deposited with a futures commission merchant as margin,
equal the total market value of the futures contract underlying the call option.
Alternatively, the Fund may cover its position by entering into a long position
in the same futures contract at a price no higher than the strike price of the
call option, by owning the instruments underlying the futures contract, or by
holding a separate call option permitting the Fund to purchase the same futures
contract at a price not higher than the strike price of the call option sold by
the Fund.
When selling a put option on a futures contract, a Fund will maintain with
its custodian (and mark-to-market on a daily basis) cash, U.S. Government
securities, or other highly liquid debt securities that equal the purchase price
of the futures contract, less any margin on deposit. Alternatively, the Fund
may cover the position either by entering into a short position in the same
futures contract, or by owning a separate put option permitting it to sell the
same futures contract so long as the strike price of the purchased put option is
the same or higher than the strike price of the put option sold by the Fund.
The requirements for qualification as a regulated investment company also
may limit the extent to which a Fund may enter into futures, futures options or
forward contracts. See "Taxation".
RISKS ASSOCIATED WITH FUTURES AND FUTURES OPTIONS There are several risks
associated with the use of futures contracts and futures options as hedging
techniques. A purchase or sale of a futures contract may result in losses in
excess of the amount invested in the futures contract. There can be no
guarantee that there will be a correlation between price movements in the
hedging vehicle and in the Fund securities being hedged. In addition, there are
significant differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a given hedge
not to achieve its objectives. The degree of imperfection of correlation
depends on circumstances such as variations in speculative market demand for
futures and futures options on securities, including technical influences in
futures trading and futures options, and differences between the financial
instruments being
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hedged and the instruments underlying the standard contracts available for
trading in such respects as interest rate levels, maturities, and
creditworthiness of issuers. A decision as to whether, when and how to hedge
involves the exercise of skill and judgment, and even a well-conceived hedge may
be unsuccessful to some degree because of market behavior or unexpected interest
rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures or a futures option position, and that Fund
would remain obligated to meet margin requirements until the position is closed.
In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue to exist.
ADDITIONAL RISKS OF OPTIONS ON SECURITIES, FUTURES CONTRACTS, OPTIONS ON
FUTURES CONTRACTS, AND FORWARD CURRENCY EXCHANGE CONTRACTS AND OPTIONS THEREON
Options on securities, futures contracts, options on futures contracts, and
options on currencies may be traded on foreign exchanges. Such transactions may
not be regulated as effectively as similar transactions in the United States;
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions, (iii) delays in the Trust's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and (v) lesser trading
volume.
SWAP AGREEMENTS The Parametric Structured Emerging Markets, Blairlogie
Emerging Markets, Blairlogie International Active, and Balanced Funds may enter
into equity index swap agreements for purposes of attempting to gain exposure to
the stocks making up an index of securities in a foreign market without actually
purchasing those stocks. Swap agreements are two party contracts entered into
primarily by institutional investors for periods ranging from a few weeks to
more than one year. In a standard "swap" transaction, two parties agree to
exchange the returns (or differentials in rates of return) earned or realized on
particular predetermined investments or instruments. The gross returns to be
exchanged or "swapped" between the parties are calculated with respect to a
"notional amount," i.e., the return on or increase in value of a particular
dollar amount invested in a "basket" of securities representing a particular
index.
Most swap agreements entered into by the Funds would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, a
Fund's current obligations (or rights) under a swap agreement will generally be
equal only to the net amount to be paid or received under the agreement based on
the relative values of the positions held by each party to the agreement (the
"net amount"). A Fund's current obligations under a swap agreement will be
accrued daily (offset against any amounts owing to the Fund) and any accrued but
unpaid net amounts owed to a swap counterparty will be covered by the
maintenance of a segregated account consisting of liquid assets such as cash,
U.S. Government securities, or high grade debt obligations, to avoid any
potential leveraging of the Fund's portfolio. Obligations under swap agreements
so covered will not be construed to be "senior securities" for purposes of the
Funds' investment restriction concerning senior securities. A Fund will not
enter into a swap agreement with any single party if the net amount owed or to
be received under existing contracts with that party would exceed 5% of the
Fund's assets.
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Whether a Fund's use of swap agreements will be successful in furthering
its investment objective will depend on the Portfolio Manager's ability to
predict correctly whether certain types of investments are likely to produce
greater returns than other investments. Because they are two party contracts and
because they may have terms of greater than seven days, swap agreements may be
considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount
expected to be received under a swap agreement in the event of the default or
bankruptcy of a swap agreement counterparty. The Funds will enter into swap
agreements only with counterparties that meet certain standards of
creditworthiness (generally, such counterparties would have to be eligible
counterparties under the terms of the Funds' repurchase agreement guidelines).
Certain restrictions imposed on the Funds by the Internal Revenue Code may limit
the Funds' ability to use swap agreements. The swaps market is a relatively new
market and is largely unregulated. It is possible that developments in the swaps
market, including potential government regulation, could adversely affect a
Fund's ability to terminate existing swap agreements or to realize amounts to be
received under such agreements.
Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations approved by the CFTC
effective February 22, 1993. To qualify for this exemption, a swap agreement
must be entered into by "eligible participants," which includes the following,
provided the participants' total assets exceed established levels: a bank or
trust company, savings association or credit union, insurance company,
investment company subject to regulation under the 1940 Act, commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employee benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through
a multilateral transaction execution facility.
This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy
Statement applies to swap transactions settled in cash that (1) have
individually tailored terms, (2) lack exchange-style offset and the use of a
clearing organization or margin system, (3) are undertaken in conjunction with a
line of business, and (4) are not marketed to the public.
DELAYED DELIVERY TRANSACTIONS
A Fund may purchase or sell securities on a when-issued or delayed delivery
basis. These transactions involve a commitment by the Fund to purchase or sell
securities for a predetermined price or yield, with payment and delivery taking
place more than seven days in the future, or after a period longer than the
customary settlement period for that type of security. When delayed delivery
purchases are outstanding, the Fund will set aside and maintain until the
settlement date in a segregated account, liquid assets, such as cash, U.S.
Government securities or high grade debt obligations in an amount sufficient to
meet the purchase price. Typically, no income accrues on securities purchased
on a delayed delivery basis prior to the time delivery of the securities is
made, although a Fund may earn income on securities it has deposited in a
segregated account. When purchasing a security on a delayed delivery basis, the
Fund assumes the rights and risks of ownership of the security, including the
risk of price and yield fluctuations, and takes such fluctuations into account
when determining its net asset value. Because the Fund is not required to pay
for the security until the delivery date, these risks are in addition to the
risks associated with the Fund's other investments. If the Fund remains
substantially fully invested at a time when delayed delivery purchases are
outstanding, the delayed delivery purchases may result in a form of leverage,
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although a Fund will not enter into such a transaction for the purpose of
investment leverage. When the Fund has sold a security on a delayed delivery
basis, the Fund does not participate in future gains or losses with respect to
the security. If the other party to a delayed delivery transaction fails to
deliver or pay for the securities, the Fund could miss a favorable price or
yield opportunity or could suffer a loss. A Fund may dispose of or renegotiate
a delayed delivery transaction after it is entered into, and may sell when-
issued securities before they are delivered, which may result in a capital gain
or loss. There is no percentage limitation on the extent to which the Funds may
purchase or sell securities on a delayed delivery basis.
WARRANTS TO PURCHASE SECURITIES
All Funds may invest in warrants to purchase equity or fixed income
securities. Bonds with warrants attached to purchase equity securities have
many characteristics of convertible bonds and their prices may, to some degree,
reflect the performance of the underlying stock. Bonds also may be issued with
warrants attached to purchase additional fixed income securities at the same
coupon rate. A decline in interest rates would permit a Fund to buy additional
bonds at the favorable rate or to sell the warrants at a profit. If interest
rates rise, the warrants would generally expire with no value.
A Fund will not invest more than 5% of its net assets, valued at the lower
of cost or market, in warrants to purchase securities. Included within that
amount, but not to exceed 2% of the Fund's net assets, may be warrants that are
not listed on the New York or American Stock Exchanges. Warrants acquired in
units or attached to securities will be deemed to be without value for purposes
of this restriction.
ILLIQUID SECURITIES
The NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value,
Cadence Capital Appreciation, Cadence Mid Cap Growth, Cadence Small Cap Growth,
Parametric Enhanced Equity, and Balanced Funds may invest in securities that are
illiquid, but will not acquire such securities if they would compose more than
10% of the value of a Fund's net assets (taken at market value at the time of
investment), and will not invest in securities that are illiquid because they
are subject to legal or contractual restrictions on resale if such securities
would compose more than 5% of the value of the Fund's net assets (taken at
market value at the time of investment). The Columbus Circle Investors Core
Equity, Columbus Circle Investors Mid Cap Equity, Cadence Micro Cap Growth,
Parametric Structured Emerging Markets, Blairlogie Emerging Markets, and
Blairlogie International Active Funds may invest in securities that are illiquid
so long as no more than 15% of the net assets of the Fund (taken at market value
at the time of investment), would be invested in such securities.
The term "illiquid securities" for this purpose means securities that
cannot be disposed of within seven days in the ordinary course of business at
approximately the amount at which a Fund has valued the securities. Illiquid
securities are considered to include, among other things, written over-the-
counter options, securities or other liquid assets being used as cover for such
options, repurchase agreements with maturities in excess of seven days, certain
loan participation interests, fixed time deposits which are not subject to
prepayment or provide for withdrawal penalties upon prepayment (other than
overnight deposits), securities that are subject to legal or contractual
restrictions on resale (such as privately placed debt securities), and other
securities whose disposition is restricted under the federal securities laws
(other than securities issued pursuant to Rule 144A under the 1933 Act and
certain commercial paper that the Adviser or a Portfolio Manager has determined
to be liquid under procedures approved by the Board of Trustees).
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INVESTMENT RESTRICTIONS
Each Fund's investment objective as set forth in the Prospectus under
"Investment Objectives and Policies," together with the investment restrictions
set forth below, are fundamental policies of the Fund and may not be changed
with respect to a Fund without shareholder approval by vote of a majority of the
outstanding shares of that Fund. Under these restrictions, a Fund may not:
(1) invest in a security if, as a result of such investment, more than
25% of its total assets (taken at market value at the time of such
investment) would be invested in the securities of issuers in any particular
industry, except that this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities (or
repurchase agreements with respect thereto);
(2) with respect to 75% of its assets, invest in a security if, as a
result of such investment, more than 5% of its total assets (taken at market
value at the time of such investment) would be invested in the securities of
any one issuer, except that this restriction does not apply to securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities;
(3) with respect to 75% of its assets, invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time of
such investment) of the outstanding voting securities of any one issuer,
except that this restriction does not apply to securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities;
(4) purchase or sell real estate, although it may purchase securities
secured by real estate or interests therein, or securities issued by
companies in the real estate industry or which invest in real estate or
interests therein;
(5) purchase or sell commodities or commodities contracts (which, for
the purpose of this restriction, shall not include foreign currency or
forward foreign currency contracts), except that any Fund may engage in
interest rate futures contracts, stock index futures contracts, futures
contracts based on other financial instruments or one or more groups of
instruments, and on options on such futures contracts;
(6) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities, but
it may make margin deposits in connection with transactions in options,
futures, and options on futures, and except that effecting short sales will
be deemed not to constitute a margin purchase for purposes of this
restriction;
(7) borrow money, or pledge, mortgage or hypothecate its assets, except
that a Fund may (i) borrow from banks or enter into reverse repurchase
agreements, or employ similar investment techniques, and pledge its assets in
connection therewith, but only if immediately after each borrowing and
continuing thereafter, there is asset coverage of 300% and (ii) enter into
reverse repurchase agreements and transactions in options, futures, options
on futures, and forward foreign currency contracts as described in the
Prospectus and in this Statement of Additional Information (the deposit of
assets in escrow in connection with the writing of covered put and call
options and the purchase of securities on a when-issued or delayed delivery
basis and collateral arrangements with respect to initial or variation margin
deposits for futures contracts, options on futures contracts, and forward
foreign currency contracts will not be deemed to be pledges of a Fund's
assets);
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(8) issue senior securities, except insofar as a Fund may be deemed to
have issued a senior security by reason of borrowing money in accordance with
the Fund's borrowing policies, and except for purposes of this investment
restriction, collateral, escrow, or margin or other deposits with respect to
the making of short sales, the purchase or sale of futures contracts or
related options, purchase or sale of forward foreign currency contracts, and
the writing of options on securities are not deemed to be an issuance of a
senior security;
(9) lend any funds or other assets, except that a Fund may, consistent
with its investment objective and policies: (a) invest in debt obligations,
including bonds, debentures, or other debt securities, bankers' acceptances
and commercial paper, even though the purchase of such obligations may be
deemed to be the making of loans, (b) enter into repurchase agreements and
reverse repurchase agreements, and (c) lend its portfolio securities in an
amount not to exceed one-third of the value of its total assets, provided
such loans are made in accordance with applicable guidelines established by
the Securities and Exchange Commission ("SEC") and the Trustees of the Trust;
or
(10) act as an underwriter of securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under the federal securities laws.
Each Fund is also subject to the following non-fundamental restrictions
and policies (which may be changed without shareholder approval) relating to
the investment of its assets and activities. Unless otherwise indicated, a
Fund may not:
(A) invest for the purpose of exercising control or management;
(B) invest in securities of another open-end investment company;
(C) (a) for the NFJ Equity Income, NFJ Diversified Low P/E, NFJ Small
Cap Value, Cadence Capital Appreciation, Cadence Mid Cap Growth, Cadence
Small Cap Growth, Parametric Enhanced Equity, and Balanced Funds: invest
more than 10% of the net assets of a Fund (taken at market value at the time
of the investment) in "illiquid securities," illiquid securities being
defined to include repurchase agreements maturing in more than seven days,
certain loan participation interests, fixed time deposits which are not
subject to prepayment or provide withdrawal penalities upon prepayment (other
than overnight deposits), or other securities which legally or in the
Adviser's or Portfolio Manager's opinion may be deemed illiquid (other than
securities issued pursuant to Rule 144A under the 1933 Act and certain
commercial paper that the Adviser or Portfolio Manager has determined to be
liquid under procedures approved by the Board of Trustees); nor invest more
than 5% of the net assets of a Fund in securities that are illiquid because
they are subject to legal or contractual restrictions on resale;
(b) for the Columbus Circle Investors Core Equity, Columbus Circle
Investors Mid Cap Equity, Cadence Micro Cap Growth, Parametric Structured
Emerging Markets, Blairlogie Emerging Markets, and Blairlogie International
Active Funds: invest more than 15% of the net assets of a Fund (taken at
market value at the time of the investment) in securities that are illiquid
because they are subject to legal or contractual restrictions on resale, in
repurchase agreements maturing in more than seven days, or other securities
which are illiquid;
(D) purchase any security if, as a result, the Fund will then have more
than 5% of its total assets invested in securities of companies (including
predecessor companies) that have been in continuous operation for less than
three years;
20
<PAGE>
(E) purchase or retain securities of any issuer if, to the knowledge of
the Fund, any of the Fund's officers or Trustees, or any officer or Director
of PIMCO Advisors or the Portfolio Manager of the Fund, individually owns
more than one-half of 1% of the outstanding securities of the issuer and
together own beneficially more than 5% of such issuer's securities;
(F) purchase securities for the Fund from, or sell portfolio securities
to, any of the officers and Directors or Trustees of the Trust or the
Adviser;
(G) invest in a security if, with respect to 100% of the total assets,
the Fund would own more than 10% (taken at the time of such investment) of
the outstanding voting securities of any one issuer, except that this
restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities;
(H) invest more than 5% of the assets of a Fund (taken at market value
at the time of investment) in any combination of interest only, principal
only, or inverse floating rate securities;
(I) borrow money (excluding reverse repurchase agreements which are
subject to the Fund's fundamental borrowing restriction), except for
temporary administrative purposes;
(J) sell securities or property short, except short sales against the
box;
(K) purchase, write, or sell puts, calls, straddles, spreads, or
combinations thereof, except that this restriction does not apply to puts
that are a feature of floating rate securities or to puts that are a feature
of other corporate debt securities, and except that any Fund may engage in
options on securities, options on securities indexes, options on foreign
currencies, options on futures contracts, and options on other financial
instruments or one or more groups of instruments;
(L) invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if as a
result, the investment in warrants (valued to the lower of cost or market)
would exceed 5% of the value of the Fund's net assets, of which not more than
2% of the Fund's net assets may be invested in warrants not listed on a
recognized U.S. or foreign stock exchange;
(M) invest in securities sold in foreign over-the-counter markets
unless the foreign dealers effecting such transactions have a minimum net
worth of $20 million; or
(N) invest in oil, gas or other mineral exploration or development
programs (including oil, gas, or other mineral leases), except that a Fund
may invest in the securities of companies that invest in or sponsor those
programs.
For purposes of fundamental investment restriction (5), swap agreements are
not deemed to be commodities contracts. Unless otherwise indicated, all
limitations applicable to Fund investments apply only at the time a transaction
is entered into. Any subsequent change in a rating assigned by any rating
service to a security (or, if unrated, deemed to be of comparable quality), or
change in the percentage of Fund assets invested in certain securities or other
instruments resulting from market fluctuations or other changes in a Fund's
total assets will not require a Fund to dispose of an investment until the
Adviser or Portfolio Manager determines that it is practicable to sell or close
out the investment without undue market or tax consequences to the Fund. In the
event that ratings services assign different ratings to the same security, the
Adviser or Portfolio Manager will determine which rating it believes best
reflects the security's quality and risk at that time, which may be the higher
of the several assigned ratings.
Under the 1940 Act, a "senior security" does not include any promissory
note or evidence of indebtedness where such loan is for temporary purposes only
and in an amount not exceeding 5% of the value of the total assets of the
issuer at the time the loan is made. A loan is presumed to be for temporary
purposes if it is repaid within sixty days and is not extended or renewed.
Nothwithstanding the provisions of fundamental investment restrictions (7) and
(8) above, a Fund may borrow money for temporary administrative purposes. To the
extent that borrowings for temporary administrative purposes exceed 5% of the
total assets of a Fund, such excess shall be subject to the 300% asset coverage
requirement of fundamental investment restriction (7).
21
<PAGE>
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Trust, their business address
and principal occupations during the past five years are as follows (unless
otherwise indicated, the address of all persons below is 840 Newport Center
Drive, Suite 360, Newport Beach, California 92660):
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION WITH PRINCIPAL OCCUPATION(S)
AND AGE THE TRUST DURING THE PAST FIVE YEARS
- --------------------------------------------------------------------------------
<S> <C> <C>
William D. Cvengros* Chairman of the Chief Executive Officer
800 Newport Center Drive Board, President President, and member of
Newport Beach, CA 92660 and Trustee the Operating Board,
Age 47 Operating Committee,
and Equity Board,
PIMCO Advisors. Formerly,
Director, Vice Chairman,
and Chief Executive
Officer, Pacific
Mutual Life Insurance
Company ("Pacific
Mutual").
Richard L. Nelson Trustee President, Nelson
8 Cherry Hills Lane Financial Consultants.
Newport Beach, CA 92660 Formerly, Partner,
Age 66 Ernst & Young.
Lyman W. Porter Trustee Professor of Management at
2639 Bamboo Street the University of
Newport Beach, CA 92660 California, Irvine.
Age 66
Alan Richards Trustee Consultant. Formerly,
P.O. Box 675760 President, Chief Executive
15401 Pimlico Corte Officer and Director, E.F.
Rancho Santa Fe, CA Hutton Insurance Group
92067 Inc.; Chairman of the
Age 66 Board, Chief Executive
Officer and President,
E.F. Hutton Life Insurance
Company; Director, E.F.
Hutton & Company, Inc.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS POSITION WITH PRINCIPAL OCCUPATION(S)
AND AGE THE TRUST DURING THE PAST FIVE YEARS
- ---------------------------------------------------------------------------------
<S> <C> <C>
Michele Mitchell Sr. Vice President Sr. Vice President, PIMCO
800 Newport Center Drive Advisors Institutional
Newport Beach, CA 92660 Services; Vice President,
Age 51 PIMCO Advisors. Formerly,
Sr. Vice President,
Pacific Financial Asset
Management Corporation
("PFAMCo").
Sharon A. Cheever Vice President and Vice President and
700 Newport Center Drive General Counsel Investment Counsel,
Newport Beach, CA 92660 Pacific Mutual.
Age 41 Formerly, Assistant Vice
President and Associate
Counsel, Pacific Mutual.
R. Mark Brandenberger Treasurer Project Lead, PIMCO.
Age 30 Formerly, Finance Manager,
PIMCO Advisors
Institutional Services;
Financial Analyst, PFAMCo;
Senior Accountant, Deloitte &
Touche.
R. Wesley Burns Vice President Executive Vice President,
Age 36 PIMCO. Formerly, Vice
President, PIMCO.
Garlin G. Flynn Secretary Sr. Fund Administrator,
Age 50 PIMCO. Formerly, Senior
Mutual Fund Analyst, PIMCO
Advisors Institutional
Services; Senior Mutual
Fund Analyst, PFAMCo.
John P. Hardaway Vice President Vice President and Manager
Age 39 of Fund Operations, PIMCO.
Jeffrey M. Sargent Vice President Vice President and
Age 33 Manager of Fund
Shareholder Servicing,
PIMCO. Formerly,
Project Specialist,
PIMCO.
Teresa A. Wagner Vice President Vice President and Manager
Age 34 of Fund Administration,
PIMCO. Formerly, Vice
President, PIMCO Advisors
Institutional Services;
Finance Director, PFAMCo.
</TABLE>
* Mr. Cvengros is an "interested person" of the Trust (as that term is defined
in the 1940 Act) because of his affiliations with PIMCO Advisors.
23
<PAGE>
COMPENSATION TABLE
The following table sets forth information regarding compensation received
by the Trustees for the fiscal period ended June 30, 1996:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
FROM TRUST
AND FUND
AGGREGATE COMPLEX
COMPENSATION PAID TO
NAME AND POSITION FROM TRUST/1/ TRUSTEES
----------------------------------------------------------
<S> <C> <C>
William D. Cvengros 0 0
Chairman, President
and Trustee
Richard L. Nelson $14,333.33 $14,133.33
Trustee
Lyman W. Porter $12,166.67 $12,166.67
Trustee
Alan Richards $14,133.33 $14,133.33
Trustee
</TABLE>
/1/ Trustees other than those affiliated with the Adviser, a Portfolio Manager,
or Pacific Mutual, receive an annual retainer of $10,000, plus $1,000 for
each Board of Trustees meeting attended, and $1,000 for each Audit,
Nominating or Policy Committee meeting attended, plus reimbursement of
related expenses. The Chairmen of the Audit and Policy Committees receive
an additional annual retainer of $1,000. Trustees do not receive any
pension or retirement benefits from the Trust or Fund Complex.
INVESTMENT ADVISER
PIMCO Advisors serves as investment adviser to the Funds pursuant to an
investment advisory agreement ("Advisory Agreement") between PIMCO Advisors and
the Trust. A majority interest of PIMCO Advisors is held by PIMCO Partners,
G.P., a general partnership between PIMCO, a California corporation and indirect
wholly owned subsidiary of Pacific Mutual, and PIMCO Partners, LLC ("PIMCO
Partners"), a limited liability company controlled by the PIMCO Managing
Directors. PIMCO Advisors had approximately $99.4 billion of assets under
management as of July 31, 1996.
PIMCO Advisors, subject to the supervision of the Board of Trustees, is
responsible for providing advice and guidance with respect to the Funds and for
managing, either directly or through others selected by the Adviser, the
investment of the Funds. PIMCO Advisors also furnishes to the Board of Trustees
periodic reports on the investment performance of each Fund. For all of the
Funds, PIMCO Advisors has engaged its affiliates to serve as Portfolio Managers.
24
<PAGE>
Under the terms of the Advisory Agreement, PIMCO Advisors is obligated to
manage the Funds in accordance with applicable laws and regulations. The
investment advisory services of PIMCO Advisors to the Trust are not exclusive
under the terms of the Advisory Agreement. PIMCO Advisors is free to, and does,
render investment advisory services to others. The current Advisory Agreement
was approved by the Board of Trustees, including a majority of the Trustees who
are not "interested persons" of the Trust (as defined in the 1940 Act)
("Independent Trustees") and who have no direct or indirect financial interest
in the Advisory Agreement or a party thereto, at a meeting held on August 12,
1994, and was last approved by shareholders of the NFJ Equity Income, NFJ
Diversified Low P/E, NFJ Small Cap Value, Cadence Capital Appreciation, Cadence
Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small Cap Growth, Parametric
Enhanced Equity, Blairlogie Emerging Markets, Blairlogie International Active,
and Balanced Funds at a meeting of shareholders on October 26, 1994; by the
sole shareholder of the Columbus Circle Investors Core Equity and Columbus
Circle Investors Mid Cap Equity Funds at a meeting on December 28, 1994.
------
The Advisory Agreement will continue in effect until November 15, 1996, and
thereafter on a yearly basis, provided such continuance is approved annually (i)
by the holders of a majority of the outstanding voting securities of the Trust
or by the Board of Trustees and (ii) by a majority of the Independent Trustees.
The Advisory Agreement may be terminated without penalty by vote of the Trustees
or the shareholders of the Trust, or by the Adviser, on 60 days' written notice
by either party to the contract and will terminate automatically if assigned.
PIMCO Advisors succeeded to the investment advisory and other businesses of
PFAMCo, the Trust's former investment adviser and administrator, as a result of
the consolidation of the investment advisory and other businesses of PFAMCo and
its subsidiaries with Thomson Advisory Group L.P. ("TAG"), the former name for
PIMCO Advisors, which closed on November 15, 1994 (the "Consolidation"). Prior
to the Consolidation, and since the inception of each of the Funds, PFAMCo had
served as investment adviser to the Funds, pursuant to an advisory agreement,
last approved by the Trustees on October 29, 1993, and last approved by
shareholders of the then-operational Funds on April 30, 1992 (the "Prior
Advisory Agreement"). The terms and conditions of the Advisory Agreement are
identical in all material respects to the Prior Advisory Agreement, with the
exception of the identity of the service provider and its effective date and
termination date.
The Adviser currently receives a monthly investment advisory fee from each
Fund at an annual rate based on average daily net assets of the Funds as
follows:
<TABLE>
<CAPTION>
ADVISORY
FUND FEE RATE
- ---- --------
<S> <C>
NFJ Equity Income, NFJ Diversified Low P/E, Cadence Capital Appreciation,
Cadence Mid Cap Growth, Parametric Enhanced Equity, Parametric Structured
Emerging Markets and Balanced Funds......................................... .45%
Columbus Circle Investors Core Equity Fund................................... .57%
NFJ Small Cap Value and Blairlogie International Active Funds................ .60%
Columbus Circle Investors Mid Cap Equity Fund................................ .63%
Blairlogie Emerging Markets Fund............................................. .85%
Cadence Small Cap Growth Fund................................................ 1.00%
Cadence Micro Cap Growth Fund................................................ 1.25%
</TABLE>
25
<PAGE>
For the fiscal periods ended June 30, 1996, October 31, 1995, and
October 31, 1994, the aggregate amount of the advisory fees paid by each
operational Fund was as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/96 10/31/95 10/31/94
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
NFJ Equity Income Fund $425,899 $ 445,739 $ 368,971
NFJ Diversified Low P/E Fund 65,873 60,686 85,078
NFJ Small Cap Value Fund 156,721 203,158 214,936
Cadence Capital Appreciation Fund 883,498 881,358 595,724
Cadence Mid Cap Growth Fund 617,546 650,017 453,846
Cadence Micro Cap Growth Fund 669,726 609,540 251,431
Cadence Small Cap Growth Fund 426,098 594,905 456,981
Columbus Circle Investors Core Equity 145,931 73,930 N/A
Fund*
Columbus Circle Investors Mid Cap Equity
Fund* 35,315 26,276 N/A
Parametric Enhanced Equity Fund 274,512 319,036 267,252
Blairlogie Emerging Markets Fund 440,978 638,097 319,725
Blairlogie International Active Fund 294,777 282,055 84,712
Balanced Fund 235,529 417,190 597,672
</TABLE>
*These Funds had not commenced operations as of the indicated date.
PORTFOLIO MANAGEMENT AGREEMENTS
PIMCO Advisors employs certain of its affiliates as Portfolio Managers
for all of the Funds to provide investment advisory services to the Funds under
portfolio management agreements. PIMCO Advisors currently has six subsidiary
partnerships called PIMCO, Parametric Portfolio Associates ("Parametric"),
Cadence Capital Management ("Cadence"), NFJ Investment Group ("NFJ"), Columbus
Circle Investors ("Columbus Circle"), and Blairlogie Capital Management
("Blairlogie").
Pursuant to a portfolio management agreement between the Adviser and
PIMCO, PIMCO is the Portfolio Manager and provides investment advice and makes
and implements investment decisions with respect to the portion of the assets of
the Balanced Fund allocated by the Adviser for investment in fixed income
securities. For the services provided, PIMCO Advisors (not the Trust) pays PIMCO
a fee at an annual rate of .25% of the average daily net assets of the portion
of the Balanced Fund allocated to PIMCO for investment in fixed income
securities.
PIMCO is an investment management firm organized as a general
partnership. PIMCO is the successor investment adviser to Pacific Investment
Management Company, a wholly owned subsidiary of PFAMCo. PIMCO has two partners:
PIMCO Advisors as the supervisory partner, and PIMCO Management, Inc. as the
managing partner. Pacific Investment Management Company, the predecessor
investment adviser to PIMCO, commenced operations in 1971. PIMCO is located at
840 Newport Center Drive, Suite 360, Newport Beach, California 92660. PIMCO also
provides investment advisory services to the PIMCO Funds, Harbor Fund, various
funds advised by Frank Russell Investment Management Company, Total Return Bond
Portfolio and Intermediate Term Bond Portfolio of Prudential Securities Target
Portfolio Trust, PIMCO Commercial Mortgage Securities Trust, Inc., Total Return
Bond and Limited Maturity Bond Portfolios of American Skandia Trust, Total
Return Fund of Fremont Mutual Fund, Inc., Managed Bond and Government Securities
Series of Pacific Select Fund, and the PaineWebber Short-Term U.S. Government
Income Fund, a series of PaineWebber Managed Investments Trust, all of which are
open-end management investment companies, as well as to managed accounts
consisting of proceeds from pension and profit sharing plans. PIMCO had
approximately $80.0 billion of assets under management as of July 31, 1996.
26
<PAGE>
Pursuant to a portfolio management agreement between the Adviser and
Parametric, Parametric is the Portfolio Manager and provides investment advisory
services to the Parametric Enhanced Equity Fund and the Parametric Structured
Emerging Markets Fund. For the services provided, PIMCO Advisors (not the Trust)
pays Parametric a fee at an annual rate based on a percentage of the average
daily net assets of each of the Funds as follows: .45% for the Parametric
Enhanced Equity Fund and the Parametric Structured Emerging Markets Fund.
Parametric is an investment management firm organized as a general
partnership. Parametric is the successor investment adviser to Parametric
Portfolio Associates, Inc., a wholly owned corporate subsidiary of PFAMCo.
Parametric has two partners: PIMCO Advisors as the supervisory partner, and
Parametric Management, Inc. as the managing partner. Parametric Portfolio
Associates, Inc., the predecessor investment adviser to Parametric, commenced
operations in 1987. Parametric is located at 7310 Columbia Center, 701 Fifth
Avenue, Seattle, Washington 98104-7090. Parametric provides investment
management services to a limited number of large accounts, such as employee
benefit plans, college endowment funds and foundations. Accounts managed by
Parametric had combined assets, as of July 31, 1996, of approximately $1.6
billion.
Pursuant to a portfolio management agreement between the Adviser and
Cadence, Cadence is the Portfolio Manager and provides investment advisory
services to the Cadence Capital Appreciation Fund, the Cadence Mid Cap Growth
Fund, the Cadence Micro Cap Growth Fund, the Cadence Small Cap Growth Fund, and
a portion of the Balanced Fund allocated by the Adviser for investment in
common stock. For the services provided, PIMCO Advisors (not the Trust) pays
Cadence a fee at an annual rate based on a percentage of the average daily net
assets of each of the Funds as follows: .45% for the Cadence Capital
Appreciation Fund, the Cadence Mid Cap Growth Fund, and for the portion of the
Balanced Fund allocated to Cadence for investment in common stock; 1.00% for the
Cadence Small Cap Growth Fund; and 1.25% for the Cadence Micro Cap Growth
Fund.
Cadence is an investment management firm organized as a general
partnership. Cadence is the successor investment adviser to Cadence Capital
Management Corporation, a wholly owned subsidiary of PFAMCo. Cadence has two
partners: PIMCO Advisors as the supervisory partner, and Cadence Capital
Management, Inc. as the managing partner. Cadence Capital Management
Corporation, the predecessor investment adviser to Cadence, commenced operations
in 1988. Cadence is located at Exchange Place, 53 State Street, Boston,
Massachusetts 02109. Cadence provides investment management services to a
limited number of large accounts, such as employee benefit plans, college
endowment funds and foundations. Accounts managed by Cadence had combined
assets, as of July 31, 1996, of approximately $2.7 billion.
Pursuant to a portfolio management agreement between the Adviser and NFJ,
NFJ is the Portfolio Manager and provides investment advisory services to the
NFJ Equity Income Fund, the NFJ Diversified Low P/E Fund, the NFJ Small Cap
Value Fund, and a portion of the Balanced Fund allocated by the Adviser for
investment in common stock. For the services provided, PIMCO Advisors (not the
Trust) pays NFJ a fee at an annual rate based on a percentage of the average
daily net assets of each of the Funds as follows: .45% for the NFJ Equity Income
Fund, the NFJ Diversified Low P/E Fund, and for the portion of the Balanced Fund
allocated to NFJ for investment in common stock; and 60% for the NFJ Small Cap
Value Fund.
NFJ is an investment management firm organized as a general partnership. NFJ
is the successor investment adviser to NFJ Investment Group, Inc., a wholly
owned subsidiary of PFAMCo. NFJ has two partners: PIMCO Advisors as the
supervisory partner, and NFJ Management, Inc. as the managing partner. NFJ
Investment Group, Inc., the predecessor investment adviser to NFJ, commenced
operations in 1989. NFJ is located at 2121 San Jacinto, Suite 1440, Dallas,
Texas 75201. NFJ provides investment management services to a limited number of
large accounts, such as employee benefit plans, college endowment funds and
foundations. Accounts managed by NFJ had combined assets, as of July 31, 1996,
of approximately $1.6 billion.
27
<PAGE>
Pursuant to a portfolio management agreement between the Adviser and
Columbus Circle, Columbus Circle is the Portfolio Manager and provides
investment advisory services to the Columbus Circle Investors Core Equity Fund
and Columbus Circle Investors Mid Cap Equity Fund. For the services provided,
PIMCO Advisors (not the Trust) pays Columbus Circle a fee at an annual rate
based on a percentage of the average daily net assets of each of the Funds as
follows: .57% for the Columbus Circle Investors Core Equity Fund and .63% for
the Columbus Circle Investors Mid Cap Equity Fund.
Columbus Circle is an investment management firm organized as a
general partnership. Columbus Circle is the successor investment adviser to the
Columbus Circle Investors Division of TAG. Columbus Circle has two partners:
PIMCO Advisors as the supervisory partner, and Columbus Circle Investors
Management, Inc. as the managing partner. Columbus Circle Investors Division of
TAG, the predecessor investment adviser to Columbus Circle, commenced operations
in 1975. Columbus Circle is located at Metro Center, One Station Place, 8th
Floor, Stamford, Connecticut 06902. Columbus Circle manages discretionary
accounts for institutions, such as corporate, government and union pension and
profit-sharing plans, foundations and educational institutions, as well as
several funds in the PIMCO Advisors Funds and the Cash Accumulation Trust.
Accounts managed by Columbus Circle had combined assets, as of July 31, 1996,
of $12.8 billion.
Pursuant to a portfolio management agreement between the Adviser and
Blairlogie, Blairlogie is the Portfolio Manager and provides investment advisory
services to the Blairlogie Emerging Markets Fund and the Blairlogie
International Active Fund. For the services provided, PIMCO Advisors (not the
Trust) pays Blairlogie a fee at an annual rate based on a percentage of the
average daily net assets of each of the Funds as follows: .85% for the
Blairlogie Emerging Markets Fund and .60% for the Blairlogie International
Active Fund.
Blairlogie is an investment management firm, organized as a limited
partnership under the laws of Scotland, United Kingdom. Blairlogie is the
successor investment adviser to Blairlogie Capital Management Ltd., an indirect
subsidiary of PFAMCo. Blairlogie has two general partners and one limited
partner. The general partners are PIMCO Advisors, which serves as the
supervisory partner, and Blairlogie Holdings Limited, a wholly owned corporate
subsidiary of PIMCO Advisors, which serves as the managing partner. The limited
partner is Blairlogie Partners L.P., a limited partnership, the general partner
of which is PFAMCo, and the limited partners of which are the principal
executive officers of Blairlogie Capital Management. Blairlogie Partners L.P.
has agreed with PIMCO Advisors that PIMCO Advisors will acquire one-fifth of its
25% interest annually, beginning December 31, 1997. Blairlogie Capital
Management Ltd., the predecessor investment adviser to Blairlogie, commenced
operations in 1992. Blairlogie is located at 4th Floor, 125 Princes Street,
Edinburgh EH2 4AD, Scotland. Blairlogie provides investment management services
to a limited number of large accounts, such as employee benefit plans, college
endowment funds and foundations. Accounts managed by Blairlogie had combined
assets, as of July 31, 1996, of approximately $.7 billion.
PIMCO Advisors determines the allocation of the Balanced Fund's assets
among the various asset classes, and manages the portion of that Fund's assets
allocated for investment in money market instruments.
28
<PAGE>
For the fiscal periods ended June 30, 1996, October 31, 1995, and
October 31, 1994, the amount of net portfolio management fees accrued by PIMCO
Advisors or its predecessor to the Portfolio Managers or their predecessors for
each operational Fund was as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/96 10/31/95 10/31/94
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
NFJ Equity Income Fund $ 425,899 $ 445,739 $ 368,971
NFJ Diversified Low P/E Fund 65,873 60,686 85,078
NFJ Small Cap Value Fund 156,721 203,158 214,936
Cadence Capital Appreciation Fund 883,498 881,358 595,724
Cadence Mid Cap Growth Fund 617,546 650,017 453,846
Cadence Micro Cap Growth Fund 669,726 609,540 251,431
Cadence Small Cap Growth Fund 426,098 594,905 456,981
Columbus Circle Investors Core Equity
Fund* 136,615 62,906 N/A
Columbus Circle Investors Mid Cap Equity
Fund* 23,814 13,832 N/A
Parametric Enhanced Equity Fund 274,512 319,036 267,252
Blairlogie Emerging Markets Fund 385,438 550,590 195,258
Blairlogie International Active Fund 237,138 241,135 34,947
Balanced Fund 161,345 332,255 481,304
</TABLE>
*These funds had not commenced operations as of the indicated date.
FUND ADMINISTRATOR
PIMCO serves as administrator to the Funds pursuant to an
administration agreement (the "Administration Agreement") between PIMCO and the
Trust. PIMCO provides the Funds with certain administrative and shareholder
services necessary for Fund operations and is responsible for the supervision of
other Fund service providers. The administrative services provided by PIMCO
include, but are not limited to: (1) shareholder servicing functions, including
preparation of shareholder reports and communications, (2) regulatory
compliance, such as reports and filings with the SEC and state securities
commissions, and (3) general supervision of the operations of the Funds,
including coordination of the services performed by the Funds' transfer agent,
custodian, legal counsel, independent accountants, and others. PIMCO (or an
affiliate of PIMCO) also furnishes the Funds with office space and facilities
required for conducting the business of the Funds, and pays the compensation of
those officers, employees and Trustees of the Trust affiliated with PIMCO. In
addition, PIMCO, at its own expense, arranges for the provision of legal, audit,
custody, transfer agency and other services for the Funds, and is responsible
for the costs of registration of the Trust's shares and the printing of
prospectuses and shareholder reports for current shareholders. PIMCO has
contractually agreed to provide these services, and to bear these expenses, at
the following rates (each expressed as a percentage of the Fund's average daily
net assets on an annual basis):
<TABLE>
<CAPTION>
ADMINISTRATIVE
FUND FEE RATE
- ---- --------------
<S> <C>
Parametric Structured Emerging Markets, Blairlogie Emerging Markets,
and Blairlogie International Active Funds................................ 0.50%
All Other Funds.......................................................... 0.25%
</TABLE>
Except for the expenses paid by PIMCO, the Trust bears all costs of
its operations. The Funds are responsible for: (i) salaries and other
compensation of any of the Trust's executive officers and employees who are not
officers, directors, stockholders, or employees of PIMCO Advisors, PIMCO, or
their subsidiaries or affiliates; (ii) taxes and governmental fees; (iii)
brokerage fees and commissions and other portfolio transaction expenses; (iv)
costs of borrowing money, including interest expenses; (v) fees and expenses of
the Trustees who are not "interested persons" of the Adviser, PIMCO, the
29
<PAGE>
Portfolio Managers, or the Trust, and any counsel retained exclusively for their
benefit; (vi) extraordinary expenses, including costs of litigation and
indemnification expenses; (vii) expenses which are capitalized in accordance
with generally accepted accounting principals; and (viii) any expenses allocated
or allocable to a specific class of shares ("Class-specific expenses").
Class-specific expenses include service fees payable with respect to
the Administrative Class shares and may include certain other expenses as
permitted by the Trust's multiple class plan ("Multiple Class Plan") adopted
pursuant to Rule 18f-3 under the 1940 Act and subject to review and approval by
the Trustees. It is not presently anticipated that any expenses other than
service fees will be allocated on a class-specific basis.
The Administration Agreement for the Funds may be terminated by the
Trustees or PIMCO at any time on 60 days' written notice. Following its initial
two-year term, the contract would continue from year to year if approved by the
Trustees.
The Administration Agreement is subject to annual approval by the
Board, including a majority of the Trust's Independent Trustees. The current
Administration Agreement was approved by the Board of Trustees, including all of
the Independent Trustees at a meeting held on August 11, 1995. In approving the
Administration Agreement, the Trustees determined that: (1) the Administration
Agreement is in the best interests of the Funds and their shareholders; (2) the
services to be performed under the Administration Agreement are services
required for the operation of the Funds; (3) PIMCO is able to provide, or to
procure, services for the Funds which are at least equal in nature and quality
to services that could be provided by others; and (4) the fees to be charged
pursuant to the Administration Agreement are fair and reasonable in light of the
usual and customary charges made by others for services of the same nature and
quality.
A previous administration agreement ("Prior Agreement") between the
Trust and PFAMCo was initially approved by the Trustees at a meeting held on
November 16, 1990 (and thereafter by the then-sole shareholder of the Funds).
The Prior Agreement was last approved by the Board of Trustees on October 28,
1994. In connection with the Consolidation, PIMCO Advisors assumed the duties of
PFAMCo as administrator to the Funds. The terms and conditions of the
Administration Agreement are substantially identical in all material respects to
those of the Prior Agreement and addenda thereto, with the primary exception of
the identity of the service provider and its effective date and termination
date.
30
<PAGE>
For the fiscal periods ended June 30, 1996, October 31, 1995, and
October 31, 1994, the aggregate amount of the administration fees paid
by each operational Fund was as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/96 10/31/95 10/31/94
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
NFJ Equity Income Fund $ $ 247,633 $ 204,984
NFJ Diversified Low P/E Fund 33,714 47,265
NFJ Small Cap Value Fund 84,649 89,556
Cadence Capital Appreciation Fund 489,643 330,958
Cadence Mid Cap Growth Fund 361,121 252,137
Cadence Micro Cap Growth Fund 121,908 50,286
Cadence Small Cap Growth Fund 148,726 114,245
Columbus Circle Investors Core Equity 32,425 N/A
Fund*
Columbus Circle Investors Mid Cap Equity
Fund* 10,427 N/A
Parametric Enhanced Equity Fund 177,243 148,474
Blairlogie Emerging Markets Fund 375,351 188,073
Blairlogie International Active Fund 235,046 70,593
Balanced Fund 231,772 332,040
</TABLE>
*These Funds had not commenced operations as of the indicated date.
EXPENSE LIMITATIONS
Certain of the states in which the shares of the Trust are qualified
for sale impose limitations on the expenses of the Trust. If, in any fiscal
year, the total expenses of the Trust (excluding taxes, interest, brokerage
commissions and other portfolio transaction expenses, other expenditures which
are capitalized in accordance with generally accepted accounting principles and
extraordinary expenses, but including the advisory and administrative fees)
exceed the expense limitations applicable to the Trust imposed by the securities
regulations of any state, PIMCO will reimburse the Trust for the excess.
Fees foregone for payments made by PIMCO with respect to a Fund
pursuant to the expense limitation are contingent liabilities of the Fund which
are subject to potential reimbursement to be made without causing the covered
expenses of the Fund to exceed the amount as may be imposed by any state expense
limit to which the Trust is subject, and provided such reimbursement is made
within four years of the recognition of the contingent liability of the Fund.
If a reimbursement appears probable, it will be accounted for as an expense of
the Fund regardless of the time period over which the reimbursement may actually
be paid by the Fund.
DISTRIBUTION OF TRUST SHARES
Each Fund offers two classes of shares: the "Institutional Class" and
the "Administrative Class." Shares of the Institutional Class are offered
primarily for direct investment by institutional investors and high net worth
individuals. They also are offered through certain financial intermediaries
that charge their customers transaction or other fees with respect to the
customer's investment in the Funds. Shares of the Administrative Class are
offered primarily through brokers, retirement plan administrators and other
financial intermediaries. Administrative Class shares indirectly pay service
fees to such entities for services they provide to shareholders of that class.
31
<PAGE>
Under the Trust's Multiple Class Plan, shares of each class of a Fund
represent an equal pro rata interest in such Fund and, generally, have identical
voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class has a different designation; (b) each class of shares bears any
class-specific expenses allocated to it; and (c) each class has separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class.
PIMCO Advisors Distribution Company ("PADCO" or the "Distributor")
serves as the Trust's Distributor pursuant to a distribution agreement
("Distribution Agreement") dated November 15, 1994, which is subject to annual
approval by the Board. The Distributor is a wholly owned subsidiary of PIMCO
Advisors. The Distribution Agreement is terminable with respect to a Fund
without penalty, at any time, by vote of a majority of the Independent Trustees,
by the Trust upon 60 days' notice to the Distributor, by vote of the holders of
a majority of the shares of that Fund, or by the Distributor upon 60 days'
notice to the Trust. The Distributor is not obligated to sell any specific
amount of Trust shares.
SERVICE FEES
Under the terms of the Multiple Class Plan adopted by the Trust, PIMCO
is permitted to compensate, out of the Administrative Class assets of each Fund,
in an amount up to 0.25% on an annual basis of the average daily net assets of
that class, financial intermediaries that provide services in connection with
the administration of shareholder accounts or of plans or programs that use Fund
shares as their funding medium. Under the terms of the Plan, the services may
include, but are not limited to, the following functions: receiving, aggregating
and processing shareholder orders; furnishing sub-accounting; providing and
maintaining elective shareholder services such as check writing and wire
transfer services; providing and maintaining pre-authorized investment plans;
communicating periodically with shareholders; acting as the sole shareholder of
record and nominee for shareholders; maintaining accounting records for
shareholders; answering questions and handling correspondence from shareholders
about their accounts; and performing similar account administrative services.
The Plan provides that it may not be materially amended without the approval by
vote of a majority of the Trustees of the Trust.
32
<PAGE>
PURCHASES AND REDEMPTIONS
Purchases and redemptions are discussed in the Prospectus under the
headings "Purchase of Shares," "Redemption of Shares," and "Net Asset Value,"
and that information is incorporated herein by reference.
Certain managed account clients of the Adviser may purchase shares of
the Trust. To avoid the imposition of duplicative fees, the Adviser may be
required to make adjustments in the management fees charged separately by the
Adviser to these clients to offset the generally higher level of management fees
and expenses resulting from a client's investment in the Trust.
Certain clients of the Adviser whose assets would be eligible for
purchase by one or more of the Funds may purchase shares of the Trust with such
assets. Assets so purchased by a Fund will be valued in accordance with
procedures adopted by the Board of Trustees.
Shares of the Funds are not qualified or registered for sale in all
states. Prospective investors should inquire as to whether shares of a
particular Fund are available for offer and sale in their state of domicile or
residence. Shares of a Fund may not be offered or sold in any state unless
registered or qualified in that jurisdiction, unless an exemption from
registration or qualification is available.
The Trust reserves the right to suspend or postpone redemptions during
any period when: (a) trading on the New York Stock Exchange is restricted, as
determined by the SEC, or that Exchange is closed for other than customary
weekend and holiday closings; (b) the SEC has by order permitted such
suspension; or (c) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
Due to the relatively high cost of maintaining smaller accounts, the
Trust reserves the right to redeem shares in any account for their then-current
value (which will be promptly paid to the investor) if at any time, due to
shareholder redemption, the shares in the account do not have a value of at
least $100,000. An investor will be notified that the value of his account is
less than the minimum and allowed at least 30 days to bring the value of the
account up to at least $100,000 before the redemption is processed. The Trust's
Amended and Restated Agreement and Declaration of Trust ("Declaration of Trust")
also authorizes the Trust to redeem shares under certain other circumstances as
may be specified by the Board of Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
INVESTMENT DECISIONS
Investment decisions for the Trust and for the other investment
advisory clients of the Adviser and Portfolio Managers are made with a view to
achieving their respective investment objectives. Investment decisions are the
product of many factors in addition to basic suitability for the particular
client involved (including the Trust). Thus, a particular security may be
bought or sold for certain clients even though it could have been bought or sold
for other clients at the same time. Likewise, a particular security may be
bought for one or more clients when one or more clients are selling the
security. In some instances, one client may sell a particular security to
another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged as to price and
allocated between such clients in a manner which in the Adviser's or the
Portfolio Manager's opinion is equitable to each and in accordance with the
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients.
33
<PAGE>
BROKERAGE AND RESEARCH SERVICES
There is generally no stated commission in the case of fixed income
securities, which are traded in the over-the-counter markets, but the price paid
by the Trust usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Trust includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. Transactions on
U.S. stock exchanges and other agency transactions involve the payment by the
Trust of negotiated brokerage commissions. Such commissions vary among
different brokers. Also, a particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
Transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the United
States.
Each Portfolio Manager places all orders for the purchase and sale of
portfolio securities, options and futures contracts for the Trust and buys and
sells such securities, options and futures for the Trust through a substantial
number of brokers and dealers. In so doing, a Portfolio Manager uses its best
efforts to obtain for the Trust the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable price and
execution, the Portfolio Manager, having in mind the Trust's best interests,
considers all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker-dealer involved and the quality of service rendered by the broker-
dealer in other transactions. The Trust reserves the right to direct portfolio
brokerage to affiliated persons of the Adviser or any Portfolio Manager.
For the fiscal periods ended June 30, 1996, October 31, 1995, and
October 31, 1994, the amount of brokerage commissions paid by each operational
Fund was as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/96 10/31/95 10/31/94
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
NFJ Equity Income Fund $221,694 $ 170,712 $ 172,646
NFJ Diversified Low P/E Fund 65,062 39,801 39,671
NFJ Small Cap Value Fund 74,170 74,739 115,477
Cadence Capital Appreciation Fund 467,569 411,595 368,018
Cadence Mid Cap Growth Fund 382,764 332,045 258,765
Cadence Micro Cap Growth Fund 124,194 202,678 118,750
Cadence Small Cap Growth Fund 76,333 111,918 87,362
Columbus Circle Investors Core Equity 57,047 40,203 N/A
Fund*
Columbus Circle Investors Mid Cap 16,961 20,084 N/A
Equity Fund*
Parametric Enhanced Equity Fund 114,363 47,226 106,389
Blairlogie Emerging Markets Fund 622,328 1,061,823 618,574
Blairlogie International Active Fund 306,741 302,313 150,878
Balanced Fund 32,346 95,606 108,394
</TABLE>
*These Funds had not commenced operations as of the indicated date.
All or substantially all of the broker-dealers through which brokerage
transactions were executed for all of the Funds provided research services to
the pertinent Portfolio Manager or its predecessor.
34
<PAGE>
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other institutional
investors to receive research services from broker-dealers which execute
portfolio transactions for the clients of such advisers. Consistent with this
practice, the Adviser or Portfolio Manager receives research services from many
broker-dealers with which the Adviser or Portfolio Manager places the Trust's
portfolio transactions. These services, which in some cases may also be
purchased for cash, include such matters as general economic and security market
reviews, industry and company reviews, evaluations of securities and
recommendations as to the purchase and sale of securities. Some of these
services are of value to the Adviser or Portfolio Manager in advising various of
its clients (including the Trust), although not all of these services are
necessarily useful and of value in managing the Trust. The management fee paid
by the Trust is not reduced because the Adviser or Portfolio Manager and its
affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
the Adviser or Portfolio Manager may cause the Trust to pay a broker-dealer
which provides "brokerage and research services" (as defined in the Act) to the
Adviser or Portfolio Manager an amount of disclosed commission for effecting a
securities transaction for the Trust in excess of the commission which another
broker-dealer would have charged for effecting that transaction.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Adviser or Portfolio Manager may also consider sales of shares of the Trust as a
factor in the selection of broker-dealers to execute portfolio transactions for
the Trust.
A Portfolio Manager may place orders for the purchase and sale of
exchange-listed portfolio securities with a broker-dealer that is an affiliate
of the Portfolio Manager where, in the judgment of the Portfolio Manager, such
firm will be able to obtain a price and execution at least as favorable as other
qualified broker-dealers.
35
<PAGE>
Pursuant to rules of the SEC, a broker-dealer that is an affiliate of
the Adviser or a Portfolio Manager may receive and retain compensation for
effecting portfolio transactions for a Fund on a national securities exchange of
which the broker-dealer is a member if the transaction is "executed" on the
floor of the exchange by another broker which is not an "associated person" of
the affiliated broker-dealer, and if there is in effect a written contract
between the Portfolio Manager and the Trust expressly permitting the affiliated
broker-dealer to receive and retain such compensation. The portfolio management
agreements provide that each Portfolio Manager is authorized to allocate the
orders placed by it on behalf of the Fund to its affiliate that is registered as
a broker or dealer with the SEC.
SEC rules further require that commissions paid to such an affiliated
broker-dealer or Portfolio Manager by a Fund on exchange transactions not exceed
"usual and customary brokerage commissions." The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time."
PORTFOLIO TURNOVER
The Adviser and Portfolio Managers manage the Funds without regard
generally to restrictions on portfolio turnover, except those imposed on its
ability to engage in short-term trading by provisions of the federal tax laws,
see "Taxation." The use of futures contracts and other derivative instruments
with relatively short maturities may tend to exaggerate the portfolio turnover
rate for some of the Funds. Trading in fixed income securities does not
generally involve the payment of brokerage commissions, but does involve
indirect transaction costs. The use of futures contracts may involve the
payment of commissions to futures commission merchants. The higher the rate of
portfolio turnover of a Fund, the higher these transaction costs borne by the
Fund generally will be.
The portfolio turnover rate of a Fund is calculated by dividing (a)
the lesser of purchases or sales of portfolio securities for the particular
fiscal year by (b) the monthly average of the value of the portfolio securities
owned by the Fund during the particular fiscal year. In calculating the rate of
portfolio turnover, there is excluded from both (a) and (b) all securities,
including options, whose maturities or expiration dates at the time of
acquisition were one year or less. It is anticipated that the annual rate of
portfolio turnover will not exceed 100% for the NFJ Equity Income, NFJ
Diversified Low P/E, NFJ Small Cap Value, Cadence Capital Appreciation, Cadence
Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small Cap Growth, Columbus
Circle Investors Core Equity, Columbus Circle Investors Mid Cap Equity,
Parametric Enhanced Equity, and Parametric Structured Emerging Markets Funds,
and 150% for the Blairlogie Emerging Markets, Blairlogie International Active,
and Balanced Funds.
NET ASSET VALUE
As indicated under "Net Asset Value" in the Prospectus, the Trust's
net asset value per share for the purpose of pricing purchase and redemption
orders is determined at 4:00 p.m. (Eastern time) on each day the New York Stock
Exchange is open for trading. Net asset value will not be determined on the
following holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
With respect to the Columbus Circle Investors Core Equity, Columbus
Circle Investors Mid Cap Equity, Parametric Structured Emerging Markets,
Blairlogie Emerging Markets, Blairlogie International Active, and Balanced
Funds, the value of portfolio securities that are traded on stock exchanges
outside the United States is based upon the price on the exchange as of the
close of business of the exchange immediately preceding the time of valuation.
Securities traded in over-the-counter markets in European and Pacific Basin
countries are normally completed well before 4:00 P.M. (Eastern time). In
addition, European and Pacific Basin securities trading may not take place on
all business days in New York. Furthermore, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days which are
not business days in New York and on which net asset value of these Funds is not
calculated. The calculation of the net asset value of the Parametric Structured
Emerging Markets, Blairlogie Emerging Markets, and Blairlogie International
Active Funds may not take place contemporaneously with the determination of the
prices of portfolio securities used in such calculation. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and 4:00 P.M. (Eastern time), and at other times may not be reflected
in the calculation of net asset value of these Funds. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at fair value as determined by the management and
approved in good faith by the Board of Trustees.
36
<PAGE>
TAXATION
While the Adviser anticipates that many shareholders of the Trust will
be tax-exempt institutions, the following discussion may be of general interest
to these shareholders, as well as for those shareholders of the Trust who do not
have tax-exempt status. The following discussion is general in nature and
should not be regarded as an exhaustive presentation of all possible tax
ramifications. All shareholders should consult a qualified tax adviser
regarding their investment in a Fund.
Each Fund intends to qualify annually and elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). To qualify as a regulated investment company, each Fund generally
must, among other things, (a) derive in each taxable year at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock, securities or
foreign currencies, or other income derived with respect to its business of
investing in such stock, securities or currencies ("Qualifying Income Test");
(b) derive in each taxable year less than 30% of its gross income from the sale
or other disposition of certain assets held less than three months, namely (1)
stocks or securities, (2) options, futures, or forward contracts (other than
those on foreign currencies), and (3) foreign currencies (or options, futures,
and forward contracts on foreign currencies) not directly related to the Fund's
principal business of investing in stock or securities; (c) diversify its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the market value of the Fund's assets is represented by cash, U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer limited for
the purposes of this calculation to an amount not greater than 5% of the value
of the Fund's total assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its total assets is invested
in the securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies); and (d) distribute at
least 90% of its investment company taxable income (which includes dividends,
interest and net short-term capital gains in excess of any net long-term capital
losses) each taxable year. The Treasury Department is authorized to promulgate
regulations under which gains from foreign currencies (and options, futures, and
forward contracts on foreign currency) would constitute qualifying income for
purposes of the Qualifying Income Test only if such gains are directly relating
to investing in securities. To date, such regulations have not been issued.
As a regulated investment company, a Fund generally will not be
subject to U.S. federal income tax on its investment company taxable income and
net capital gains (any net long-term capital gains in excess of the sum of net
short-term capital losses and capital loss carryovers from prior years)
designated by the Fund as capital gain dividends, if any, that it distributes to
shareholders on a timely basis. Each Fund intends to distribute to its
shareholders, at least annually, substantially all of its investment company
taxable income and any net capital gains. In addition, amounts not distributed
by a Fund on a timely basis in accordance with a calendar year distribution
requirement are subject to a nondeductible 4% excise tax. To avoid the tax, a
Fund must distribute during each calendar year an amount equal to the sum of (1)
at least 98% of its ordinary income (not taking into account any capital gains
or losses) for the calendar year, (2) at least 98% of its capital gains in
excess of its capital losses (and adjusted for certain ordinary losses) for the
twelve month period ending on October 31 of the calendar year, and (3) all
ordinary income and capital gains for previous years that were not distributed
during such years. A distribution will be treated as paid on December 31 of the
calendar year if it is declared by a Fund in October, November or December of
that year to shareholders of record on a date in such a month and paid by the
Fund during January of the following year. Such distributions will be taxable
to shareholders (other than those not subject to federal income tax) in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received. To avoid application of the
excise tax, each Fund intends to make its distributions in accordance with the
calendar year distribution requirement.
37
<PAGE>
DISTRIBUTIONS
Dividends paid out of a Fund's investment company taxable income will
be taxable to a U.S. shareholder as ordinary income. Distributions received by
tax-exempt shareholders will not be subject to federal income tax to the extent
permitted under the applicable tax exemption.
A portion of the dividends paid by Funds that invest in stock of U.S.
corporations may qualify for the deduction for dividends received by
corporations. Dividends paid by the other Funds generally are not expected to
qualify for the deduction for dividends received by corporations. Distributions
of net capital gains, if any, designated as capital gain dividends, are taxable
as long-term capital gains, regardless of how long the shareholder has held a
Fund's shares and are not eligible for the dividends received deduction. Any
distributions that are not from a Fund's investment company taxable income or
net realized capital gains may be characterized as a return of capital to
shareholders or, in some cases, as capital gain. The tax treatment of dividends
and distributions will be the same whether a shareholder reinvests them in
additional shares or elects to receive them in cash.
SALES OF SHARES
Upon the disposition of shares of a Fund (whether by redemption, sale
or exchange), a shareholder will realize a gain or loss. Such gain or loss will
be capital gain or loss if the shares are capital assets in the shareholder's
hands, and will be long-term or short-term generally depending upon the
shareholder's holding period for the shares. Any loss realized on a disposition
will be disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss. Any loss realized by a shareholder on
a disposition of shares held by the shareholder for six months or less will be
treated as a long-term capital loss to the extent of any distributions of
capital gain dividends received by the shareholder with respect to such shares.
BACKUP WITHHOLDING
A Fund may be required to withhold 31% of all taxable distributions
payable to shareholders who fail to provide the Fund with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other shareholders specified in
the Code generally are exempt from such backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. federal tax liability.
OPTIONS, FUTURES AND FORWARD CONTRACTS, AND SWAP AGREEMENTS
Some of the options, futures contracts, forward contracts, and swap
agreements used by the Funds may be "section 1256 contracts." Any gains or
losses on section 1256 contracts are generally considered 60% long-term and 40%
short-term capital gains or losses ("60/40") although certain foreign currency
gains and losses from such contracts may be treated as ordinary in character.
Also, section 1256 contracts held by a Fund at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss.
38
<PAGE>
Generally, the hedging transactions and certain other transactions in
options, futures and forward contracts undertaken by a Fund, may result in
"straddles" for U.S. federal income tax purposes. In some cases, the straddle
rules also could apply in connection with swap agreements. The straddle rules
may affect the character of gains (or losses) realized by a Fund. In addition,
losses realized by a Fund on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences of transactions in options, futures,
forward contracts, and swap agreements to a Fund are not entirely clear. The
transactions may increase the amount of short-term capital gain realized by a
Fund which is taxed as ordinary income when distributed to shareholders.
A Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a fund that did not engage in such hedging transactions.
Rules governing the tax aspects of swap agreements are in a developing
stage and are not entirely clear in certain respects. Accordingly, while the
Parametric Structured Emerging Markets, Blairlogie Emerging Markets, Blairlogie
International Active, and Balanced Funds intend to account for such transactions
in a manner they deem to be appropriate, the Internal Revenue Service might not
accept such treatment. If it did not, the status of a Fund as a regulated
investment company might be affected. The Funds intend to monitor developments
in this area. Certain requirements that must be met under the Code in order for
a Fund to qualify as a regulated investment company may limit the extent to
which a Fund will be able to engage in swap agreements.
The 30% limit on gains from the disposition of certain options,
futures, forward contracts, and swap agreements held less than three months and
the qualifying income and diversification requirements applicable to a Fund's
assets may limit the extent to which a Fund will be able to engage in
transactions in options, futures contracts, forward contracts, and swap
agreements.
PASSIVE FOREIGN INVESTMENT COMPANIES
Certain Funds may invest in the stock of foreign corporations which
may be classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign corporation is classified as a PFIC for a
taxable year if at least one-half of its assets constitute investment-type
assets or 75% or more of its gross income is investment-type income. If a Fund
receives a so-called "excess distribution" with respect to PFIC stock, the Fund
itself may be subject to tax on a portion of the excess distribution, whether or
not the corresponding income is distributed by the Fund to stockholders.
In general, under the PFIC rules, an excess distribution is treated as
having been realized ratably over the period during which the Fund held the PFIC
stock. A Fund itself will be subject to tax on the portion, if any, of an
excess distribution that is so allocated to prior taxable years and an interest
factor will be added to the tax, as if the tax had been payable in such prior
taxable years. Certain distributions from a PFIC as well as gain from the sale
of PFIC stock are treated as excess distributions. Excess distributions are
characterized as ordinary income even though, absent application of the PFIC
rules, certain excess distributions might have been classified as capital gain.
39
<PAGE>
A Fund may be eligible to elect alternative tax treatment with respect
to PFIC stock. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions are received from the PFIC in a given year. If this election were
made, the special rules, discussed above, relating to the taxation of excess
distributions, would not apply. In addition, another election may be available
that would involve marking to market a Fund's PFIC shares at the end of each
taxable year (and on certain other dates prescribed in the Code), with the
result that unrealized gains are treated as though they were realized. If this
election were made, tax at the Fund level under the PFIC rules would generally
be eliminated, but the Fund could, in limited circumstances, incur nondeductible
interest charges. A Fund's intention to qualify annually as a regulated
investment company may limit its elections with respect to PFIC shares.
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, as well as subject a Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a fund that did not invest in PFIC shares.
FOREIGN CURRENCY TRANSACTIONS
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues income or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain other instruments, gains or losses attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security or contract and the date of disposition also are
treated as ordinary gain or loss. These gains and losses, referred to under the
Code as "section 988" gains or losses, may increase or decrease the amount of a
Fund's investment company taxable income to be distributed to its shareholders
as ordinary income.
FOREIGN TAXATION
Income received by the Funds from sources within foreign countries may
be subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. In addition, the Adviser and each Portfolio Manager intends to manage
the Funds with the intention of minimizing foreign taxation in cases where it is
deemed prudent to do so. If more than 50% of the value of a Fund's total assets
at the close of its taxable year consists of securities of foreign corporations,
such Fund will be eligible to elect to "pass-through" to the Fund's shareholders
the amount of foreign income and similar taxes paid by the Fund. If this
election is made, a shareholder generally subject to tax will be required to
include in gross income (in addition to taxable dividends actually received) his
pro rata share of the foreign taxes paid by the Fund, and may be entitled either
to deduct (as an itemized deduction) his or her pro rata share of foreign taxes
in computing his taxable income or to use it (subject to limitations) as a
foreign tax credit against his or her U.S. federal income tax liability. No
deduction for foreign taxes may be claimed by a shareholder who does not itemize
deductions. Each shareholder will be notified within 60 days after the close of
the Fund's taxable year whether the foreign taxes paid by the Fund will "pass-
through" for that year.
40
<PAGE>
Generally, a credit for foreign taxes is subject to the limitation
that it may not exceed the shareholder's U.S. tax attributable to his or her
total foreign source taxable income. For this purpose, if the pass-through
election is made, the source of the electing Fund's income will flow through to
shareholders of the Trust. With respect to such Funds, gains from the sale of
securities will be treated as derived from U.S. sources and certain currency
fluctuation gains, including fluctuation gains from foreign currency-denominated
debt securities, receivables and payables will be treated as ordinary income
derived from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source passive income, and to certain other types of
income. Shareholders may be unable to claim a credit for the full amount of
their proportionate share of the foreign taxes paid by the Fund. The foreign tax
credit can be used to offset only 90% of the revised alternative minimum tax
imposed on corporations and individuals and foreign taxes generally are not
deductible in computing alternative minimum taxable income.
ORIGINAL ISSUE DISCOUNT
Some of the debt securities (with a fixed maturity date of more than
one year from the date of issuance) that may be acquired by a Fund may be
treated as debt securities that are issued originally at a discount. Generally,
the amount of the original issue discount ("OID") is treated as interest income
and is included in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the debt
security matures. A portion of the OID includable in income with respect to
certain high-yield corporate debt securities may be treated as a dividend for
Federal income tax purposes.
Some of the debt securities (with a fixed maturity date of more than
one year from the date of issuance) that may be acquired by a Fund in the
secondary market may be treated as having market discount. Generally, any gain
recognized on the disposition of, and any partial payment of principal on, a
debt security having market discount is treated as ordinary income to the extent
the gain, or principal payment, does not exceed the "accrued market discount" on
such debt security. Market discount generally accrues in equal daily
installments. A Fund may make one or more of the elections applicable to debt
securities having market discount, which could affect the character and timing
of recognition of income.
Some debt securities (with a fixed maturity date of one year or less
from the date of issuance) that may be acquired by a Fund may be treated as
having acquisition discount, or OID in the case of certain types of debt
securities. Generally, the Fund will be required to include the acquisition
discount, or OID, in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the debt
security matures. The Fund may make one or more of the elections applicable to
debt securities having acquisition discount, or OID, which could affect the
character and timing of recognition of income.
A Fund generally will be required to distribute dividends to
shareholders representing discount on debt securities that is currently
includable in income, even though cash representing such income may not have
been received by the Fund. Cash to pay such dividends may be obtained from
sales proceeds of securities held by the Fund.
41
<PAGE>
OTHER TAXATION
Pursuant to Treasury Department regulations, certain expenses of
nonpublicly offered regulated investment companies, including advisory fees, are
not deductible by those regulated investment companies for purposes of
calculating the income of certain shareholders, generally including individuals
and entities that compute their taxable income in the same manner as an
individual (thus, for example, a qualified pension plan is not subject to this
rule). The shareholder's pro rata portion of such expenses will be treated as
income to the shareholder and will be deductible by the shareholder, subject to
the 2% "floor" on miscellaneous itemized deductions and other limitations on
itemized deductions set forth in the Code. A regulated investment company
generally will be classified as nonpublicly offered unless it either has 500
shareholders at all times during a taxable year or continuously offers shares
pursuant to a public offering. However, because of a lack of guidance in this
area, there can be no assurance that the Internal Revenue Service will agree
with this treatment with respect to the Cadence Micro Cap Growth and Cadence
Small Cap Growth Funds, both of which have limitations on contributed capital.
If these Funds are regarded as nonpublicly offered regulated investment
companies, shareholders of these Funds that are subject to this rule could be
subject to income tax adjustments.
Distributions also may be subject to additional state, local and
foreign taxes, depending on each shareholder's particular situation. Under the
laws of various states, distributions of investment company taxable income
generally are taxable to shareholders even though all or a substantial portion
of such distributions may be derived from interest on certain federal
obligations which, if the interest were received directly by a resident of such
state, would be exempt from such state's income tax ("qualifying federal
obligations"). However, some states may exempt all or a portion of such
distributions from income tax to the extent the shareholder is able to establish
that the distribution is derived from qualifying federal obligations. Moreover,
for state income tax purposes, interest on some federal obligations generally is
not exempt from taxation, whether received directly by a shareholder or through
distributions of investment company taxable income (for example, interest on
FNMA Certificates and GNMA Certificates). Each Fund will provide information
annually to shareholders indicating the amount and percentage of a Fund's
dividend distribution which is attributable to interest on federal obligations,
and will indicate to the extent possible from what types of federal obligations
such dividends are derived. Shareholders are advised to consult their own tax
advisers with respect to the particular tax consequences to them of an
investment in a Fund.
OTHER INFORMATION
CAPITALIZATION
The Trust is a Massachusetts business trust established under an
Agreement and Declaration of Trust dated August 24, 1990. The capitalization of
the Trust consists solely of an unlimited number of shares of beneficial
interest with a par value of $0.001 each. The Board of Trustees may establish
additional series (with different investment objectives and fundamental
policies) at any time in the future. Establishment and offering of additional
series will not alter the rights of the Trust's shareholders. When issued,
shares are fully paid, non-assessable, redeemable and freely transferable.
Shares do not have preemptive rights or subscription rights. In liquidation of
a Fund, each shareholder is entitled to receive his pro rata share of the net
assets of that Fund.
42
<PAGE>
PERFORMANCE INFORMATION
The Trust may, from time to time, include the yield and total return
for each class of shares of all of the Funds, computed in accordance with SEC-
prescribed formulas, in advertisements or reports to shareholders or prospective
investors. The Funds also may compute current distribution rates and use this
information in their prospectuses and statement of additional information, in
reports to current shareholders, or in certain types of sales literature
provided to prospective investors.
Quotations of yield for the Funds will be based on all investment
income per share (as defined by the SEC) during a particular 30-day (or one
month) period (including dividends and interest), less expenses accrued during
the period ("net investment income"), and are computed by dividing net
investment income by the maximum offering price per share on the last day of the
period, according to the following formula:
YIELD = 2[( a-b + 1)/6/-1]
---
cd
where a = dividends and interest earned during the period,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
Quotations of average annual total return for a Fund or class will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund or class over periods of one, five, and ten
years (up to the life of the Fund), calculated pursuant to the following
formula: P (1 + T)/n/ = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and ERV =
the ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures reflect the deduction of a
proportional share of Fund or class expenses on an annual basis, and assume that
all dividend and distributions are reinvested when paid. Quotations of total
return may also be shown for other periods. Funds also may, with respect to
certain periods of less than one year, provide total return information for that
period that is unannualized. Any such information would be accomplished by
standardized total return information.
43
<PAGE>
For the period ended October 31, 1995, the total return of the Funds
was as follows:
<TABLE>
<CAPTION>
FUND TOTAL RETURN FOR PERIOD ENDED OCTOBER 31, 1995
- ---- ----------------------------------------------------------------
SINCE INCEPTION INCEPTION
1 YEAR 5 YEARS (ANNUALIZED) DATE
---------- ------------ ---------------- ----------
<S> <C> <C> <C> <C>
NFJ Equity Income Fund 24.86% 15.21% 14.89 % 03/08/91
NFJ Equity Income Fund (Administrative) 24.47% N/A 27.08 % 11/30/94
NFJ Diversified Low P/E Fund 26.66% N/A 15.71 % 12/30/91
NFJ Small Cap Value Fund 21.99% N/A 14.83 % 10/01/91
NFJ Small Cap Value Fund (Administrative) N/A N/A 15.64 % 11/01/95
Cadence Capital Appreciation Fund 24.67% 18.20% 16.74 % 03/08/91
Cadence Mid Cap Growth Fund 21.56% N/A 16.10 % 08/26/91
Cadence Mid Cap Growth Fund (Administrative) 21.25% N/A 29.60 % 11/30/94
Cadence Micro Cap Growth Fund 36.19% N/A 23.52 % 06/25/93
Cadence Micro Cap Growth Fund (Administrative) N/A N/A 10.34 % 04/01/96
Cadence Small Cap Growth Fund 17.33% 18.11% 22.47 % 01/07/91
Cadence Small Cap Growth Fund (Administrative) N/A N/A 2.88 % 09/27/95
Columbus Circle Investors Core Equity Fund 18.02% N/A 25.06 % 12/28/94
Columbus Circle Investors Core Equity Fund (Administrative) 17.81% N/A 19.87 % 05/31/95
Columbus Circle Investors Mid Cap Equity Fund 29.04% N/A 31.57 % 12/28/94
Parametric Enhanced Equity Fund 22.72% 13.45% 12.82 % 02/11/91
Blairlogie Emerging Markets Fund 7.70% N/A 11.41 % 06/01/93
Blairlogie Emerging Markets Fund (Administrative) 7.53% N/A (12.95)% 11/01/94
Blairlogie International Active Fund 18.48% N/A 11.67 % 06/08/93
Blairlogie International Active Fund (Administrative) 18.13% N/A 14.08 % 11/30/94
Balanced Fund 15.13% N/A 11.13 % 06/25/92
</TABLE>
Performance information for a Fund may also be compared to: (i) the
Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average, the Morgan Stanley Capital International EAFE (Europe, Australasia, Far
East) Index, the Morgan Stanley Capital International Emerging Markets Free
Index, the International Finance Corporation Emerging Markets Index, or other
unmanaged indexes that measure performance of a pertinent group of securities;
(ii) other groups of mutual funds tracked by Lipper Analytical Services
("Lipper"), a widely used independent research firm which ranks mutual funds by
overall performance, investment objectives, and assets, or tracked by other
services, companies, publications, or persons who rank mutual funds on overall
performance or other criteria; and (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an
44
<PAGE>
investment in the Funds. Unmanaged indexes (i.e., other than Lipper) generally
do not reflect deductions for administrative and management costs or expenses.
The Adviser and any of the Portfolio Managers may also report to shareholders or
to the public in advertisements concerning the performance of the Adviser and
the Portfolio Managers as advisers to clients other than the Trust, and on the
comparative performance or standing of the Adviser or the Portfolio Managers in
relation to other money managers. Such comparative information may be compiled
or provided by independent ratings services or by news organizations. Any
performance information, whether related to the Funds, the Adviser or the
Portfolio Managers, should be considered in light of the Funds' investment
objectives and policies, characteristics and quality of the Funds, and the
market conditions during the time period indicated, and should not be considered
to be representative of what may be achieved in the future.
VOTING RIGHTS
Under the Trust's Declaration of Trust, the Trust is not required to
hold annual meetings of Trust shareholders to elect Trustees or for other
purposes. It is not anticipated that the Trust will hold shareholders' meetings
unless required by law or the Declaration of Trust. In this regard, the Trust
will be required to hold a meeting to elect Trustees to fill any existing
vacancies on the Board if, at any time, fewer than a majority of the Trustees
have been elected by the shareholders of the Trust. In addition, the
Declaration of Trust provides that the holders of not less than two-thirds of
the outstanding shares of the Trust may remove a person serving as Trustee
either by declaration in writing or at a meeting called for such purpose. The
Trustees are required to call a meeting for the purpose of considering the
removal of a person serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the Trust. In the
event that such a request was made, the Trust has represented that it would
assist with any necessary shareholder communications. Shareholders of a class
of shares have different voting rights with respect to matters that affect only
that class.
The Trust's shares do not have cumulative voting rights, so that the
holder of more than 50% of the outstanding shares may elect the entire Board of
Trustees, in which case the holders of the remaining shares would not be able to
elect any Trustees.
As of August 21, 1996, the following persons owned of record or
beneficially 5% or more of the shares of the following Funds:
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES OWNED
------------- -------------
<S> <C> <C>
NFJ EQUITY INCOME FUND
Pacific Mutual Life Insurance
Company 1,353,423.914 15.71%
FBO PM RISP
700 Newport Center Drive
Newport Beach, California 92660
NBD Bank NA as Trustee for AM
Castle & Company Employee Pension 1,242,493.617 14.42%
P.O. Box 77975
Detroit, Michigan 48277-0975
Santa Barbara Foundation 787,412.509 9.61%
15 East Carrillo Street
Santa Barbara, California 93101-2780
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------- -------------
<S> <C> <C>
VBA Defined Benefit and Trust 499,585.362 6.10%
P.O. Box 462
Richmond, Virginia 23203-0462
Pacific Mutual Life Insurance Company 474,533.914 5.51%
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
NFJ DIVERSIFIED LOW P/E FUND
Pacific Mutual Life Insurance Company 2,094,064.258 49.87%*
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
The Northern Trust Company as 810,022.971 19.29%
Trustee for Great Lakes Chemical
Master Retirement Trust
P.O. Box 2200
West Lafayette, Indiana 47906
BAC Local 19 Pension Trust Fund 318,617.641 7.59%
777 Davis Street
San Francisco, California 84126-2500
PM Charitable Foundation 278,132.517 6.62%
700 Newport Center Drive
Newport Beach, California 92660
Pacific Corinthian Life Insurance Company 211,140.462 5.03%
10241 Wateridge Circle
San Diego, California 92121-2733
NFJ SMALL CAP VALUE FUND
Pacific Mutual Life Insurance Company 446,969.476 19.14%
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
First Union National Bank 308,326.175 13.21%
401 South Tyron Street, FRB-3
Mail Code: CMG-2-1151
Charlotte, North Carolina 28202-1911
Sheet Metal Workers' Local Unions 300,894.876 12.89%
and Councils Pension Fund
601 N. Fairfax Street, Suite 500
Alexandria, Virginia 22314-2054
Victoria Bank and Trust Company, 228,491.233 9.79%
Structural Metals, Inc. Pension Plan
One O'Connor Plaza, 6th Floor
Victoria, Texas 77901-65497
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -------------
<S> <C> <C>
CADENCE CAPITAL APPRECIATION FUND
Donaldson Lufkin & Jenrette** 3,503,618.992 17.46%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Bank of New York as Trustee for 2,999,866.508 14.95%
Coopers & Lybrand Retirement Trust
One Wall Street
New York, New York 10286-0001
Pacific Mutual Life Insurance Company 1,706,505.101 8.50%
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
Ingram Industries Inc. 1,072,408.586 5.34%
1 Belle Meade Plaza
P.O. Box 23049
Nashville, Tennessee 37202
Mellon Trust 1,009,174.742 5.03%
Mutual Funds
P.O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
CADENCE MID CAP GROWTH FUND
First Trust NA as Trustee for 2,067,933.884 19.44%
Dayton Hudson Corporation
P.O. Box 64010
St. Paul, Minnesota 55164-0100
Caremark International, Inc. 874,260.469 8.22%
c/o State Street Bank & Trust
1 Enterprise Drive
North Quincy, Massachusetts 02171-2126
Fleet Bank for 670,951.441 6.31%
University of Massachusetts
10 Tremont Street, 4th Floor
Boston, Massachusetts 02108
Berklee College of Music, Inc. 637,636.681 5.99%
1140 Boylston Street
Boston, Massachusetts 02215-3693
Staff Retirement Plan of the 535,575.625 5.04%
International Telecommunications
Satellite Organization
3400 International Drive, N.W.
Washington, D.C. 20008-3006
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------- -------------
<S> <C> <C>
CADENCE MICRO CAP GROWTH FUND
Charles Schwab & Co., Inc.** 1,104,808.400 23.36%
101 Montgomery Street
San Francisco, California 94104-4122
Dominion Resources, Inc. 854,664.929 18.07%
701 East Byrd Street
P.O. Box 26532
Richmond, Virginia 23261
University of Southern California 812,844.768 17.19%
Treasurer's Office
University Park, BKS 402
Los Angeles, California 90089-2541
The Northern Trust Company as Trustee for 385,554.673 8.15%
Toyota Directed Retirement Trust
P.O. Box 92956
Chicago, Illinois 60690
Pacific Mutual Life Insurance Company 361,010.830 7.63%
700 Newport Center Drive
Newport Beach, California 92660-6397
CADENCE SMALL CAP GROWTH FUND
The Jewish Federation of 423,780.013 26.63%*
Metropolitan Chicago
One South Franklin Street
Room 625
Chicago, Illinois 60606-4609
Pacific Mutual Life Insurance Company 260,281.104 16.36%
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 157,827.930 9.92%
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
Auburn Theological Seminary 145,018.519 9.11%
3041 Broadway
New York, New York 10027-5710
Bessemer Trust Company for 99,453,008 6.25%
Naidot & Co.
100 Woodbridge Center Drive
Woodbridge, New Jersey 07095
ESOR & Co. 81,472.788 5.12%
Associated Bank Green Bay
Trust Operations Department
P.O. Box 19006
Green Bay, Wisconsin 54307-9006
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------- -------------
<S> <C> <C>
COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND
The Bank of New York as
Trustee for Melville Corporation 2,136,421.324 64.08%*
One Theall Road
Rye, New York 10580-1404
Pacific Mutual Life Insurance Company 428,426.396 12.85%
700 Newport Center Drive
Newport Beach, California 92660
The Bank of New York as Trustee for 336,867.427 10.10%
Marshalls Association 401(k) Trust
One Wall Street
MT/MC 12th Floor
New York, New York 10286-0001
COLUMBUS CIRCLE INVESTORS MID CAP EQUITY FUND
Pacific Mutual Life Insurance Company 439,316.239 76.12%*
700 Newport Center Drive
Newport Beach, California 92660
John W. Barnum 51,713.446 8.96%
5175 Tilden Street, N.W.
Washington, D.C. 20016-1961
Pacific Mutual Charitable Foundation 30,869.559 5.35%
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------- -------------
<S> <C> <C>
PARAMETRIC ENHANCED EQUITY FUND
First Interstate Bank of CA, 1,856,812.138 34.21%*
Custodian S.F. BART
P.O. Box 9800
Calabasas, California 91372-0800
Pacific Mutual Life Insurance Company 1,493,129.804 27.51%*
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 502,431.062 9.26%
FBO Hoag Memorial Hospital Presbyterian
700 Newport Center Drive
Newport Beach, California 92660
Santa Clara Mission 299,385.088 5.52%
The Rector-Nobili Hall
Santa Clara University
Santa Clara, California 00009-5053
BLAIRLOGIE EMERGING MARKETS FUND
Charles Schwab & Co., Inc.*** 2,574,243.359 44.22%*
101 Montgomery Street
San Francisco, California 94104-4122
Donaldson Lufkin & Jenrette** 895,801.867 15.39%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Pacific Mutual Life Insurance Company 575,190.664 9.88%
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 351,942.766 6.05%
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------- -------------
<S> <C> <C>
BLAIRLOGIE INTERNATIONAL ACTIVE FUND
Pacific Financial Asset 1,158,760.796 18.97%
Management Corporation
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 711,313.030 11.65%
FBO PM Commingled Account
700 Newport Center Drive
Newport Beach, California 92660
Nissan Motor Corporation USA 611,131.423 10.01%
P.O. Box 191
Gardena, California 90248-0191
Charles Schwab & Co., Inc.** 605,730.450 9.92%
101 Montgomery Street
San Francisco, California 94104-4122
First Interstate Bank as Trustee for 545,402.510 8.93%
Cadence Design System Inc.
P.O. Box 9800
Calabasas, California 91372-0800
BALANCED FUND
Pacific Mutual Life Insurance Company 1,386,526.387 19.24%
FBO Hoag Memorial Hospital Presbyterian
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 1,106,582.406 15.35%
FBO California Race Track Association
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 996,043.304 13.82%
FBO PM RISP
700 Newport Center Drive
Newport Beach, California 92660
Key Trust Company 765,826.106 10.62%
FBO Multicare P&G
P.O. Box 94871
Cleveland, Ohio 44101-4871
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -------------
<S> <C> <C>
Trustees of the Redlands Community 634,486.626 8.80%
Hospital Retirement Plan
350 Terracina Blvd.
Redlands, California 92373-4850
Pacific Mutual Life Insurance Company 619,356.406 8.59%
FBO WESCOM Credit Union
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 613,163.421 8.51%
FBO California Hardware Company
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company 431,290.629 5.98%
FBO Dominguez Water Corporation Pension Fund
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
* Entity owned 25% or more of the outstanding shares of beneficial interest of
the Fund, and therefore may be presumed to "control" the Fund, as that term
is defined in the 1940 Act.
** Shares are held only as nominee.
As of August 27, 1996, the Trustees and Officers of the Trust, as a group,
owned less than 1% of each Fund and of all Funds in the aggregate.
52
<PAGE>
CODE OF ETHICS
The Trust, PIMCO Advisors, and the Portfolio Managers have each adopted a
Code of Ethics governing personal trading activities of all Trustees and
officers of the Trust, and Directors, officers and employees of PIMCO Advisors
and each Portfolio Manager who, in connection with their regular functions, play
a role in the recommendation of any purchase or sale of a security by the Trust
or obtain information pertaining to such purchase or sale or who have the power
to influence the management or policies of the Trust, PIMCO Advisors, or the
Portfolio Managers. Such persons are required to preclear certain security
transactions with a compliance officer or his designee and to report certain
transactions on a regular basis. PIMCO Advisors has developed procedures for
administration of the Codes of Ethics.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Investors Fiduciary Trust Company ("IFTC") serves as custodian, transfer
agent and dividend disbursing agent for assets of all Funds. Pursuant to a sub-
custody agreement between IFTC and The Chase Manhattan Bank, N.A. ("Chase"),
Chase serves as subcustodian of the Trust for the custody of the foreign
securities acquired by the Columbus Circle Investors Core Equity, Columbus
Circle Investors Mid Cap Equity, Parametric Structured Emerging Markets,
Blairlogie Emerging Markets, and Blairlogie International Active Funds. Under
the agreement, Chase may hold the foreign securities at its principal office at
One Chase Manhattan Plaza, New York, New York, 10081, and at Chase's branches,
and subject to approval by the Board of Trustees, at a foreign branch of a
qualified U.S. bank, an eligible foreign subcustodian, or an eligible foreign
securities depository.
Pursuant to rules or other exemptions under the 1940 Act, the Trust may
maintain foreign securities and cash in the custody of certain eligible foreign
banks and securities depositories. Selection of these foreign custodial
institutions is made by the Board of Trustees following a consideration of a
number of factors, including (but not limited to) the reliability and financial
stability of the institution; the ability of the institution to perform capably
custodial services for the Trust; the reputation of the institution in its
national market; the political and economic stability of the country in which
the institution is located; and further risks of potential nationalization or
expropriation of Trust assets. The Board of Trustees reviews annually the
continuance of foreign custodial arrangements for the Trust. No assurance can
be given that the Trustees' appraisal of the risks in connection with foreign
custodial arrangements will always be correct or that expropriation,
nationalization, freezes, or confiscation of assets that would impact assets of
the Funds will not occur, and shareholders bear the risk of losses arising from
these or other events.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1055 Broadway, Kansas City, Missouri 64105, serves as
the independent public accountants for the Funds. Price Waterhouse LLP provides
audit services, accounting assistance, and consultation in connection with SEC
filings.
53
<PAGE>
COUNSEL
Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C. 20005, passes
upon certain legal matters in connection with the shares offered by the Trust,
and also acts as counsel to the Trust.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain
all of the information included in the Trust's registration statement filed with
the SEC under the 1933 Act with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The registration statement, including the exhibits
filed therewith, may be examined at the offices of the SEC in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.
FINANCIAL STATEMENTS
Financial statements for the Trust as of June 30, 1996, for its fiscal year
then ended, including notes thereto, and the report of Price Waterhouse LLP
thereon dated August 12, 1996, are incorporated by reference from the Trust's
1996 Annual Report.
54
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
Certain of the Funds make use of average portfolio credit quality standards
to assist institutional investors whose own investment guidelines limit their
investments accordingly. In determining a Fund's overall dollar-weighted
average quality, unrated securities are treated as if rated, based on the
Adviser's view of their comparability to rated securities. A Fund's use of
average quality criteria is intended to be a guide for those institutional
investors whose investment guidelines require that assets be invested according
to comparable criteria. Reference to an overall average quality rating for a
Fund does not mean that all securities held by the Fund will be rated in that
category or higher. A Fund's investments may range in quality from securities
rated in the lowest category in which the Fund is permitted to invest to
securities rated in the highest category (as rated by Moody's or S&P or, if
unrated, determined by the Adviser to be of comparable quality). The percentage
of a Fund's assets invested in securities in a particular rating category will
vary. Following is a description of Moody's and S&P's ratings applicable to
fixed income securities.
MOODY'S INVESTORS SERVICE, INC.
CORPORATE AND MUNICIPAL BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than with Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
that suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
A-1
<PAGE>
Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classified from Aa through B in its corporate bond rating system. The modifier
1 indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating
category.
CORPORATE SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as
letters of credit and bonds of indemnity are excluded unless explicitly rated.
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime 1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return
on funds employed; conservative capitalization structure with moderate
reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level
of debt protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime
rating categories.
STANDARD & POOR'S
CORPORATE AND MUNICIPAL BOND RATINGS
Investment Grade
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
A-2
<PAGE>
Speculative Grade
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the lease degree of speculation and C the highest.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to adverse
conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default and
is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C: The rating C is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI: The rating CI is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating will also be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional ratings: The letter "p" indicates that the rating is provisional.
A provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
r: The "r" is attached to highlight derivative, hybrid, and certain other
obligations that S&P believes may experience high volatility or high
variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.
The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.
N.R.: Not rated.
A-3
<PAGE>
Debt obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into
account currency exchange and related uncertainties.
COMMERCIAL PAPER RATING DEFINITIONS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Ratings are graded into several categories, ranging from A for
the highest quality obligations to D for the lowest. These categories are as
follows:
A-1: This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.
B: Issues rated B are regarded as having only speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
A commercial paper rating is not a recommendation to purchase, sell or hold
a security inasmuch as it does not comment as to market price or suitability
for a particular investor. The ratings are based on current information
furnished to Standard & Poor's by the issuer or obtained from other sources it
considers reliable. Standard & Poor's does not perform an audit in connection
with any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended, or withdrawn as a result of changes in
or unavailability of such information.
A-4
<PAGE>
- -----------------------
- -------------------------------------------------------------------------------
PIMCO
- -------------------------------------------------------------------------------
CADENCE CAPITAL APPRECIATION . NFJ SMALL CAP
VALUE . PARAMETRIC ENHANCED EQUITY . CADENCE
MICRO CAP GROWTH . COLUMBUS CIRCLE INVESTORS MID
CAP EQUITY . NFJ EQUITY INCOME . COLUMBUS CIRCLE
INVESTORS CORE EQUITY . CADENCE SMALL CAP
GROWTH . BLAIRLOGIE INTERNATIONAL ACTIVE
. BLAIRLOGIE EMERGING MARKETS . NFJ DIVERSIFIED
LOW P/E . BALANCED . CADENCE MID CAP GROWTH
- -------------------------------------------------------------------------------
- -----------------------
PIMCO FUNDS: EQUITY ADVISORS SERIES
ANNUAL REPORT . JUNE 30, 1996
<PAGE>
CONTENTS
Chairman's Message 1
About the Portfolio Managers 2
Investment Performance 3
Statement of Assets and Liabilities 16
Statement of Operations 18
Statement of Changes in Net Assets 20
Financial Highlights 24
Schedules of Investments
NFJ Equity Income Fund 30
NFJ Diversified Low P/E Fund 31
NFJ Small Cap Value Fund 32
Cadence Capital Appreciation Fund 34
Cadence Mid Cap Growth Fund 35
Cadence Micro Cap Growth Fund 37
Cadence Small Cap Growth Fund 38
Columbus Circle Investors
Core Equity Fund 40
Columbus Circle Investors
Mid Cap Equity Fund 41
Parametric Enhanced Equity Fund 42
Blairlogie Emerging Markets Fund 45
Blairlogie International Active Fund 47
Balanced Fund 49
Notes to Financial Statements 53
Report of Independent Accountants 59
Federal Income Tax Information 60
<PAGE>
CHAIRMAN'S MESSAGE
Dear Shareholder:
We are pleased to present the Annual Report for the PIMCO Funds: Equity Advisors
Series for the eight months ended June 30, 1996.
As we stated in the previous annual report for this fund family, then known as
the PIMCO Advisors Institutional Funds, operations and shareholder services of
these Funds were consolidated with those of the affiliated PIMCO Funds on
November 1, 1995. This change, which has enabled us to offer full exchange
privileges among the 26 equity and fixed income Funds available from the two
families has been very well received by shareholders.
The combination represents a significant step toward streamlining operations and
enhancing services to our shareholders. As part of this process, we have changed
the fiscal year end of the Funds. Consequently, you will receive a semi-annual
report dated December 31 and an annual report dated June 30 in the future.
Daily newspaper listings of your Funds' performance now appear under the heading
"PIMCO Funds." Please note that these Funds are intended for institutional
investors, including 401(k) plans. The affiliated "PIMCO Advisors Funds" family,
which many newspapers list in an adjoining space, is comprised of funds
distributed to individuals through stockbrokers and other financial advisors.
Our Funds benefited from a strong bull market during the eight-month period
which this report covers. In addition, we are pleased to report that four of our
Funds have received Four-Star ratings from Morningstar,* based on performance
comparisons with other funds with similar investment objectives. Details of the
performance of each of our Funds during this period appear on the following
pages.
Within a few months, we will be offering you up-to-date information about the
Funds and your account toll-free around the clock. Information available 24
hours a day will include net asset value and dividend information, investment
performance, recent transaction history and account balances. We will send you
more information about this new service as soon as it is available.
Thank you for your continued investment in the PIMCO Funds: Equity Advisors
Series. We very much value the confidence you and other investors have placed in
us. Should you have any questions or desire further information about these
Funds or our other affiliated Funds, please call us at (800) 927-4648.
Sincerely,
/s/ William Cvengros
William D. Cvengros
Chairman of the Board
August 20, 1996
*Not all of the Funds received Four-Star ratings from Morningstar.
1
<PAGE>
ABOUT THE PORTFOLIO MANAGERS
Blairlogie Capital Management
Blairlogie's investment professionals have established a methodology that
applies fundamental valuation criteria first to country allocation, then to
security selection, with the objective of adding value over time at a low level
of portfolio risk. A disciplined selection process is applied to both developed
and emerging countries. Systematic screening identifies when markets become
either relatively cheap or overvalued, which results in raising or lowering the
weighting in each market. The stock selection process focuses on a variety of
quality and value factors. Sell decisions are influenced by reallocation of
country weights and changes in a stock's relative rank.
Cadence Capital Management
All portfolios from large to medium to small to micro capitalizations are
managed using a screening process developed in the mid-1970's which applies five
distinct growth and valuation screens to the stock universe. The process
identifies companies with high relative earnings growth, improving
profitability, strong earnings momentum, potentially high future earnings growth
and attractive valuations. Continuous monitoring of portfolios quickly
identifies stocks to be sold. All portfolios are broad-based with up to 100
stocks and remain fully invested to assure participation in rising equity
markets.
Columbus Circle Investors
The firm's investment philosophy is based on the premise that companies doing
better than expected will have rising securities prices, or "Positive Momentum &
Positive Surprise." This discipline adds stocks of growing companies that exceed
investors' expectations, and sells or avoids those that fall short of those
expectations.
NFJ Investment Group
NFJ Investment Group is a value-oriented equity manager specializing in a
diversified, low price-earnings (P/E) approach. Developed by the firm's managing
directors in the mid-1970's, this approach is based on research showing that
portfolios of low P/E stocks have consistently outperformed market indexes over
the long term. The firm screens more than 2,000 stocks in 55 industry groups to
find the lowest P/E, high-yield stocks, then analyzes candidates for earnings,
quality and relative price momentum. Portfolios are normally fully invested,
equally weighted and rebalanced quarterly.
Pacific Investment Management Company
Pacific Investment Management's fixed income philosophy embodies three key
principles:
. Major shifts in portfolio strategy are driven by longer-term, or secular,
trends as opposed to short-term gyrations in interest rates;
. Consistent investment performance is achieved by avoiding extreme swings in
maturity and duration of a portfolio;
. An emphasis is placed on adding value through advanced tools such as futures,
options and volatility analysis as well as through adjustments to traditional
variables such as sector, coupon and quality.
Parametric Portfolio Associates
To enhance benchmark returns, historical analysis is used to identify a group of
stocks that have the highest probability of delivering superior returns in both
up and down markets. Stocks are reweighted or eliminated from a benchmark based
on their past 60 months of performance. The result is a portfolio that has
index-like characteristics with volatility no greater than that of the selected
benchmark. To control risk, economic sectors in portfolios are kept similar to
benchmark weights.
2
<PAGE>
NFJ EQUITY INCOME FUND
Portfolio Manager: NFJ Investment Group Dallas, Texas
Investment Objectives and Primary Investments:
Seeks current income as a primary investment objective, and long-term growth of
capital as a secondary objective; invests primarily in common stocks with below-
average price to earnings ratios and higher dividend yields relative to their
industry groups.
<TABLE>
<CAPTION>
Annualized Returns Ended 6/30/96
- ----------------------------------------------------
Since
1 Yr. 3 Yrs. 5 Yrs. Inception
<S> <C> <C> <C> <C>
NFJ Equity
Income Fund
Inst. Class (%) 24.86 13.92 15.21 14.89
- ----------------------------------------------------
NFJ Equity
Income Fund
Admin. Class (%) 24.47 n/a n/a 27.08
- ----------------------------------------------------
S&P 500
Index (%) 26.12 17.25 15.73 n/a
- ----------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
NFJ EQUITY
INCOME FUND S&P 500 INDEX
<S> <C> <C>
4/01/91 $200,000 $200,000
6/30/91 $205,385 $199,586
6/30/92 $245,657 $226,465
6/30/93 $281,939 $257,278
6/30/94 $281,203 $260,695
6/30/95 $333,815 $328,749
6/30/96 $416,797 $414,612
</TABLE>
The line graph above assumes the investment of $200,000 on 4/1/91, the first
full month following the Fund's Institutional Class inception on 3/8/91,
compared with the S&P 500 Index, an unmanaged market index. The performance of
the Administrative Class from inception on 11/30/94 (shown at left), reflects
the payment of a service fee in an amount not to exceed 0.25% on an annualized
basis. Past performance is not an indication of future results.
. Relative performance was helped by good stock selection across several
sectors.
. Cyclical and financial stocks, with their improved relative performance,
were overweighted in the Fund, enhancing returns.
. The yield factor had been a drag on performance, but turned around
to become a positive influence.
. The underperformance of technology stocks during the fourth quarter of 1995
helped the Fund due to its considerably below-index weighting in this
sector.
. Emphasis on mid cap issues was a setback in a market that rewarded large
and small cap stocks.
Portfolio Composition
Top Ten Common Stocks
<TABLE>
<CAPTION>
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
Northrop Grumman Corp. 4.0%
- -----------------------------------------------------
Ultramar Corp. 3.8%
- -----------------------------------------------------
Bear Stearns Cos. 3.8%
- -----------------------------------------------------
Phelps Dodge Corp. 3.8%
- -----------------------------------------------------
Springs Industries, Inc. 2.2%
- -----------------------------------------------------
Pharmacia & Upjohn, Inc. 2.1%
- -----------------------------------------------------
Pacific Gas & Electric 2.1%
- -----------------------------------------------------
J.C. Penny Co., Inc. 2.1%
- -----------------------------------------------------
NICOR, Inc. 2.1%
- -----------------------------------------------------
PHH Corp. 2.1%
- -----------------------------------------------------
Top Ten Total 28.1%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Consumer Discretionary 16.2%
- -----------------------------------------------------
Consumer Staples 7.9%
- -----------------------------------------------------
Energy 9.8%
- -----------------------------------------------------
Financial & Business Services 19.9%
- -----------------------------------------------------
Health Care 8.1%
- -----------------------------------------------------
Materials & Processing 9.7%
- -----------------------------------------------------
Utilities 20.4%
- -----------------------------------------------------
Other 8.0%
- -----------------------------------------------------
</TABLE>
3
<PAGE>
NFJ DIVERSIFIED LOW P/E FUND
Portfolio Manager:
NFJ Investment Group
Dallas, Texas
Investment Objective and Primary Investments:
Seeks long-term growth of capital and income; invests primarily in common stocks
with below-average price to earnings ratios relative to their industry groups.
<TABLE>
<CAPTION>
Annualized Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 4Yrs. Inception
<S> <C> <C> <C> <C>
NFJ Diversified
Low P/E
Fund (%) 26.66 16.58 17.24 15.71
- -----------------------------------------------------------
S&P 500
Index (%) 26.12 17.25 n/a n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
NFJ DIVER- S&P 500
SIFIED LOW INDEX
P/E FUND
<S> <C> <C>
1/01/92 $200,000 $200,000
6/30/92 $202,697 $198,726
6/30/93 $241,679 $225,765
6/30/94 $247,669 $228,763
6/30/95 $302,310 $288,481
6/30/96 $382,897 $363,827
</TABLE>
The line graph above assumes the investment of $200,000 on 1/1/92, the first
full month following the Fund's Institutional Class inception on 12/30/91,
compared with the S&P 500 Index, an unmanaged market index. Past performance is
not an indication of future results.
. Cyclical and financial stocks, with their improved relative performance, were
overweighted in the Fund, enhancing returns.
. The underperformance of technology stocks during the fourth quarter of 1995
helped the Fund due to its considerably below-index weighting in this sector.
. Emphasis on mid cap issues was a setback in a market that rewarded large and
small cap stocks.
. The yield factor had been a drag on performance, but turned around to become
a positive influence.
Portfolio Composition
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
Sprint Corp. 2.7%
- -----------------------------------------------------
PHH Corp. 2.7%
- -----------------------------------------------------
Pharmacia & Upjohn, Inc. 2.6%
- -----------------------------------------------------
Amoco Corp. 2.6%
- -----------------------------------------------------
Repsol 2.6%
- -----------------------------------------------------
American Home Products 2.6%
- -----------------------------------------------------
Anheuser Busch 2.6%
- -----------------------------------------------------
Maytag Corp. 2.5%
- -----------------------------------------------------
Chase Manhattan Corp. 2.5%
- -----------------------------------------------------
Phillip Morris Co., Inc. 2.5%
- -----------------------------------------------------
Top Ten Total 25.9%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Consumer Discretionary 14.9%
- -----------------------------------------------------
Consumer Staples 10.0%
- -----------------------------------------------------
Energy 10.3%
- -----------------------------------------------------
Financial & Business Services 13.8%
- -----------------------------------------------------
Health Care 8.5%
- -----------------------------------------------------
Utilities 9.8%
- -----------------------------------------------------
Short-Term Instruments 11.9%
- -----------------------------------------------------
Other 20.8%
- -----------------------------------------------------
</TABLE>
4
<PAGE>
NFJ SMALL CAP VALUE FUND
PORTFOLIO MANAGER:
NFJ Investment Group
Dallas, Texas
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS:
Seeks long-term growth of capital and income; invests primarily in common stocks
of companies with market capitalizations between $50 million and $1 billion and
below-average price to earnings ratios relative to their industry groups.
<TABLE>
<CAPTION>
Annualized Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 4Yrs. Inception
--------- -------- ------ ----------
<S> <C> <C> <C> <C>
NFJ Small Cap
Value Fund
Inst. Class (%) 21.99 13.05 14.97 14.83
- -----------------------------------------------------------
Russell 2000
Index (%) 23.89 15.82 n/a n/a
- -----------------------------------------------------------
<CAPTION>
Cumulative Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 4Yrs. Inception
--------- -------- ------ ----------
<S> <C> <C> <C> <C>
NFJ Small Cap
Value Fund
Admin. Class (%) n/a n/a n/a 15.64
- -----------------------------------------------------------
Russell 2000
Index (%) n/a n/a n/a n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
NFJ SMALL
CAP VALUE RUSSELL
FUND 2000 INDEX
<S> <C> <C>
10/1/91 $200,000 $200,000
6/30/92 $220,610 $211,801
6/30/93 $266,759 $266,751
6/30/94 $273,205 $278,513
6/30/95 $315,931 $334,417
6/30/96 $385,398 $414,454
</TABLE>
The line graph above assumes the investment of $200,000 on 10/1/91, the Fund's
Institutional Class inception date, compared with the Russell 2000 Index, an
unmanaged market index. The performance of the Administrative Class from
inception on 11/1/95 (shown at left), reflects the payment of a service fee in
an amount not to exceed 0.25% on an annualized basis. Past performance is not an
indication of future results.
. The underperformance of technology stocks during the fourth quarter of 1995
helped the Fund due to its considerably below-index weighting in this sector.
. Cyclical and financial stocks, with their improved relative performance, were
overweighted in the Fund, enhancing returns.
. The Fund has less volatility than the Russell 2000 Index. The value oriented
yield stocks in the Fund fared relatively better than the Russell Small Cap
index during the recent small cap correction.
. Since each stock in the NFJ Small Cap Value Fund pays a dividend, our higher
yield factor was a positive influence on performance during the recent
correction.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
Webb Corp. 1.1%
- -----------------------------------------------------
Alex Brown, Inc. 1.1%
- -----------------------------------------------------
McGrath Rentcorp. 1.1%
- -----------------------------------------------------
Commonwealth Energy System 1.1%
- -----------------------------------------------------
Amcast Industrial Corp. 1.1%
- -----------------------------------------------------
Orion Capital Corp. 1.0%
- -----------------------------------------------------
MTS Systems Corp. 1.0%
- -----------------------------------------------------
First Financial Corp. Wisconsin 1.0%
- -----------------------------------------------------
Firstbank Puerto Rico 1.0%
- -----------------------------------------------------
Fedders USA, Inc. 1.0%
- -----------------------------------------------------
Top Ten Total 10.5%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 10.5%
- -----------------------------------------------------
Consumer Discretionary 10.5%
- -----------------------------------------------------
Consumer Staples 7.6%
- -----------------------------------------------------
Financial & Business Services 22.1%
- -----------------------------------------------------
Materials & Processing 16.2%
- -----------------------------------------------------
Utilities 7.8%
- -----------------------------------------------------
Other 25.3%
- -----------------------------------------------------
</TABLE>
5
<PAGE>
CADENCE CAPITAL APPRECIATION FUND
PORTFOLIO MANAGER:
Cadence Capital Management
Boston, Massachusetts
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS:
Seeks growth of capital; invests primarily in common stocks of companies with
market capitalizations of at least $100 million that have improving fundamentals
and whose stock is reasonably valued by the market.
<TABLE>
<CAPTION>
Annualized Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 5Yrs. Inception
----- ----- ----- ---------
<S> <C> <C> <C> <C>
Cadence Capital
Appreciation
Fund (%) 24.67 15.85 18.20 16.74
- -----------------------------------------------------------
S&P 500
Index (%) 26.12 17.25 15.73 n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
CADENCE CAPITAL
APPRECIATION
FUND S&P 500 INDEX
<S> <C> <C>
4/01/91 $200,000 $200,000
6/30/91 $192,802 $199,586
6/30/92 $225,861 $226,465
6/30/93 $286,138 $257,278
6/30/94 $287,665 $260,695
6/30/95 $356,829 $328,749
6/30/96 $444,846 $414,612
</TABLE>
The line graph above assumes the investment of $200,000 on 4/1/91, the first
full month following the Fund's Institutional Class inception on 3/8/91,
compared with the S&P 500 Index, an unmanaged market index. Past performance is
not an indication of future results.
. Technology stocks came under severe pressure in the fourth quarter of 1995,
weakening investment results.
. The Fund's best-performing stocks for the period were in financial services,
health care, and consumer services.
. Several financial services holdings benefited from merger-related activity.
. The Fund's health care holdings were led by HBO & Co., which provides
computer systems and services to hospitals; Guidant and Medtronic, both of
which address cardiovascular disease, and Schering-Plough, a leading
pharmaceutical company.
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
American Home Products 1.9%
- -----------------------------------------------------
Andrew Corp. 1.8%
- -----------------------------------------------------
Schering-Plough 1.8%
- -----------------------------------------------------
Nike, Inc. 1.8%
- -----------------------------------------------------
Mattel, Inc. 1.7%
- -----------------------------------------------------
HBO & Co. 1.7%
- -----------------------------------------------------
U.S. Robotics Corp. 1.6%
- -----------------------------------------------------
United Technologies 1.6%
- -----------------------------------------------------
La Quinta Inns, Inc. 1.6%
- -----------------------------------------------------
Allied Signal, Inc. 1.6%
- -----------------------------------------------------
Top Ten Total 17.1%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 7.5%
- -----------------------------------------------------
Consumer Discretionary 12.8%
- -----------------------------------------------------
Financial & Business Services 24.6%
- -----------------------------------------------------
Health Care 12.2%
- -----------------------------------------------------
Technology 9.0%
- -----------------------------------------------------
Utilities 7.2%
- -----------------------------------------------------
Short-Term Instruments 10.7%
- -----------------------------------------------------
Other 16.0%
- -----------------------------------------------------
</TABLE>
6
<PAGE>
CADENCE MID CAP GROWTH FUND
PORTFOLIO MANAGER:
Cadence Capital Management
Boston, Massachusetts
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS:
Seeks growth of capital; invests primarily in common stocks of companies with
market capitalizations in excess of $500 million that have improving
fundamentals and whose stock is reasonably valued by the market.
<TABLE>
<CAPTION>
Annualized Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 4Yrs. Inception
----- ----- ------ ---------
<S> <C> <C> <C> <C>
Cadence Mid Cap
Growth Fund
Inst. Class (%) 21.56 15.13 17.71 16.10
- -----------------------------------------------------------
Cadence Mid Cap
Growth Fund
Admin. Class (%) 21.25 n/a n/a 29.60
- -----------------------------------------------------------
S&P MidCap
Index (%) 21.58 14.13 n/a n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
CADENCE MID
CAP GROWTH S&P MidCap
FUND INDEX
<S> <C> <C>
9/01/91 $200,000 $200,000
6/30/92 $215,126 $215,802
6/30/93 $270,638 $264,758
6/30/94 $268,017 $264,642
6/30/95 $339,767 $323,803
6/30/96 $413,028 $393,578
</TABLE>
The line graph above assumes the investment of $200,000 on 9/1/91, the first
full month following the Fund's Institutional Class inception on 8/26/91,
compared with the S&P MidCap Index, an unmanaged market index. The performance
of the Administrative Class from inception on 11/30/94 (shown at left), reflects
the payment of a service fee in an amount not to exceed 0.25% on an annualized
basis. Past performance is not an indication of future results.
. Technology stocks came under severe pressure in the fourth quarter of 1995,
weakening investment results.
. The Fund's best-performing holdings were in health care, financial services,
and consumer services.
. HBO & Co., Guidant, Medtronic, and Health Management Associates set the pace
for the Fund's health care stocks. Financial Services was driven by
attractive valuations, strong earnings growth, and actual results that
exceeded Wall Street expectations.
. Other strong performing holdings included Callaway Golf and Mattel in the
consumer goods area, Kroger and Tiffany in consumer services, and Loral, a
defense electronics company acquired by Lockheed Martin.
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
Callaway Golf Co. 1.9%
- -----------------------------------------------------
Raychem Corp. 1.7%
- -----------------------------------------------------
First Brands Corp. 1.7%
- -----------------------------------------------------
America West Airlines 1.6%
- -----------------------------------------------------
Parametric Technology Corp. 1.6%
- -----------------------------------------------------
Mattel, Inc. 1.6%
- -----------------------------------------------------
Praxair, Inc. 1.6%
- -----------------------------------------------------
HBO & Co. 1.6%
- -----------------------------------------------------
Cytec Industries, Inc. 1.6%
- -----------------------------------------------------
McDonnell Douglas 1.6%
- -----------------------------------------------------
Top Ten Total 16.5%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Consumer Discretionary 11.0%
- -----------------------------------------------------
Capital Goods 11.9%
- -----------------------------------------------------
Financial & Business Services 30.9%
- -----------------------------------------------------
Health Care 11.1%
- -----------------------------------------------------
Materials & Processing 5.7%
- -----------------------------------------------------
Technology 10.0%
- -----------------------------------------------------
Short-Term Instruments 5.1%
- -----------------------------------------------------
Other 14.3%
- -----------------------------------------------------
</TABLE>
7
<PAGE>
CADENCE MICRO CAP GROWTH FUND
PORTFOLIO MANAGER:
Cadence Capital Management
Boston, Massachusetts
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS:
Seeks long-term growth of capital; invests primarily in common stocks of
companies with market capitalizations of less than $100 million that have
improving fundamentals and whose stock is reasonably valued by the market.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 5Yrs. Inception
<S> <C> <C> <C> <C>
Cadence Micro
Cap Growth Fund
Inst. Class (%) 36.19 23.65 n/a 23.52
- -----------------------------------------------------------
Russell 2000
Index (%) 23.89 15.82 n/a n/a
- -----------------------------------------------------------
<CAPTION>
Cumulative Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 5Yrs. Inception
<S> <C> <C> <C> <C>
Cadence Micro
Cap. Growth Fund
Admin. Class (%) n/a n/a n/a 10.34
- -----------------------------------------------------------
Russell 2000
Index (%) n/a n/a n/a n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
CADENCE MICRO
CAP GROWTH RUSSELL
FUND 2000 INDEX
<S> <C> <C>
7/01/93 $200,000 $200,000
6/30/94 $219,510 $208,818
6/30/95 $277,646 $250,733
6/30/96 $378,117 $310,741
</TABLE>
The line graph above assumes the investment of $200,000 on 7/1/93, the first
full month following the Fund's Institutional Class inception on 6/25/93,
compared with the Russell 2000 Index, an unmanaged market index. The performance
of the Administrative Class from inception on 4/1/96 (shown at left), reflects
the payment of a service fee in an amount not to exceed 0.25% on an annualized
basis. Past performance is not an indication of future results.
. The Fund's strength was broad-based, with the best performing stocks coming
from many different industries.
. Gaming stocks, such as Anchor Gaming and Penn National Gaming, were among the
best performers for the year.
. Consumer staples were also strong, led by Rexall Sundown, a leader in the
manufacture and distribution of vitamins.
. Financial stocks made a strong contribution to performance, including Aames
Financial and Charter Bancshares.
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
United Video Satellite 2.4%
- -----------------------------------------------------
Rexall Sundown, Inc. 2.3%
- -----------------------------------------------------
STB Systems, Inc. 2.3%
- -----------------------------------------------------
TCSI Corp. 2.3%
- -----------------------------------------------------
Watsco, Inc. 'A' 2.2%
- -----------------------------------------------------
Castle (A.M.) & Co. 2.2%
- -----------------------------------------------------
Penn National Gaming, Inc. 2.0%
- -----------------------------------------------------
Health Images, Inc. 2.0%
- -----------------------------------------------------
Culp, Inc. 2.0%
- -----------------------------------------------------
Ciber, Inc. 1.9%
- -----------------------------------------------------
Top Ten Total 21.6%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 9.1%
- -----------------------------------------------------
Consumer Discretionary 8.0%
- -----------------------------------------------------
Consumer Services 19.5%
- -----------------------------------------------------
Consumer Staples 5.3%
- -----------------------------------------------------
Financial & Business Services 14.8%
- -----------------------------------------------------
Health Care 11.2%
- -----------------------------------------------------
Technology 19.2%
- -----------------------------------------------------
Other 12.9%
- -----------------------------------------------------
</TABLE>
8
<PAGE>
CADENCE SMALL CAP GROWTH FUND
Portfolio Manager:
Cadence Capital Management
Boston, Massachusetts
Investment Objective and Primary Investments:
Seeks growth of capital; invests primarily in common stocks of companies with
market capitalizations between $50 million and $500 million that have improving
fundamentals and whose stock is reasonably valued by the market.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 5Yrs. Inception
<S> <C> <C> <C> <C>
Cadence Small
Cap Growth Fund
Inst. Class (%) 17.33 12.24 18.11 22.47
- -----------------------------------------------------------
Russell 2000
Index (%) 23.89 15.82 17.52 n/a
- -----------------------------------------------------------
<CAPTION>
Cumulative Returns Ended 6/30/96
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 5Yrs. Inception
<S> <C> <C> <C> <C>
Cadence Small
Cap. Growth Fund
Admins. Class (%) n/a n/a n/a 2.88
- -----------------------------------------------------------
Russell 2000
Index (%) n/a n/a n/a n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
CADENCE
SMALL CAP RUSSELL
GROWTH FUND 2000 INDEX
<S> <C> <C>
2/01/91 $200,000 $200,000
6/30/91 $230,647 $234,339
6/30/92 $267,777 $268,408
6/30/93 $374,976 $338,044
6/30/94 $385,279 $352,949
6/30/95 $451,848 $423,795
6/30/96 $530,138 $525,222
</TABLE>
The line graph above assumes the investment of $200,000 on 2/1/91, the first
full month following the Fund's Institutional Class inception on 1/7/91,
compared with the Russell 2000 Index, an unmanaged market index. The performance
of the Administrative Class from inception on 9/27/95 (shown at left), reflects
the payment of a service fee in an amount not to exceed 0.25% on an annualized
basis. Past performance is not an indication of future results.
. Technology stocks came under severe pressure in the fourth quarter of 1995,
weakening investment results.
. While it was difficult to offset the negative impact of technology, the
Fund's best-performing stocks came from many different industries and
sectors.
. Health care provided strong returns across such holdings as Orthodontic
Centers of America, Physician Reliance Network, Rotech Medical, and Universal
Health Services.
. Financial Services, which averaged around 30% of equities over the year, was
a source of strength, led by American Travellers Corp., Executive Risk, HCC
Insurance Holdings, Money Store, and Penncorp Financial, all of which gained
40% or more for the period.
Portfolio Composition
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
Mueller Industries, Inc. 2.2%
- -----------------------------------------------------
United Waste Systems, Inc. 2.2%
- -----------------------------------------------------
Universal Health Services, Inc. 2.0%
- -----------------------------------------------------
Methode Electronics 'A' 1.9%
- -----------------------------------------------------
Roper Industries, Inc. 1.9%
- -----------------------------------------------------
Rational Software Corp. 1.9%
- -----------------------------------------------------
K2, Inc. 1.8%
- -----------------------------------------------------
Allied Group, Inc. 1.7%
- -----------------------------------------------------
IDEX Corp. 1.7%
- -----------------------------------------------------
American Travellers Co. 1.7%
- -----------------------------------------------------
Top Ten Total 19.0%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 15.7%
- -----------------------------------------------------
Consumer Services 6.9%
- -----------------------------------------------------
Financial & Business Services 30.5%
- -----------------------------------------------------
Health Care 13.2%
- -----------------------------------------------------
Materials & Processing 12.8%
- -----------------------------------------------------
Technology 10.2%
- -----------------------------------------------------
Other 10.7%
- -----------------------------------------------------
</TABLE>
9
<PAGE>
COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND
Portfolio Manager:
Columbus Circle Investors
Stamford, Connecticut
Investment Objectives and Primary Investments:
Seeks long-term growth of capital, with income as a secondary objective; invests
primarily in common stocks of companies with market capitalizations in excess of
$3 billion.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Since
1Yr. 3Yrs. 5Yrs. Inception
<S> <C> <C> <C> <C>
Columbus Circle
Investors Core
Equity Fund
Inst. Class (%) 18.02 n/a n/a 25.06
- -----------------------------------------------------------
Columbus Circle
Investors Core
Equity Fund
Admin. Class (%) 17.81 n/a n/a 19.87
- -----------------------------------------------------------
S&P 500
Index (%) 26.12 n/a n/a n/a
- -----------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
COLUMBUS CIRCLE
INVESTORS CORE
EQUITY FUND S&P 500 INDEX
<S> <C> <C>
1/01/95 $200,000 $200,000
6/30/95 $236,844 $240,390
6/30/96 $279,520 $303,175
</TABLE>
The line graph above assumes the investment of $200,000 on 1/1/95, the first
full month following the Fund's Institutional Class inception on 12/28/94,
compared with the S&P 500 Index, an unmanaged market index. The performance of
the Administrative Class from inception on 5/31/95 (shown at left), reflects the
payment of a service fee in an amount not to exceed 0.25% on an annualized
basis. Past performance is not an indication of future results.
. The portfolio manager's investment process tends to avoid utilities, which
was a drag on performance, as this group was a strong performer over the last
eight months.
. The Fund's significant overweighting of the dominant technology sector
(relative to the S&P 500), combined with good stock selection, contributed to
performance.
. Holdings in companies that provide products and services to consumers have
generally been among the Fund's best performers.
Portfolio Composition
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- -----------------------------------------------------
<S> <C>
Microsoft Corp. 4.0%
- -----------------------------------------------------
Johnson & Johnson 3.8%
- -----------------------------------------------------
Pepsico 3.4%
- -----------------------------------------------------
Boeing 3.4%
- -----------------------------------------------------
Schlumberger Limited 3.1%
- -----------------------------------------------------
Cisco Systems 3.1%
- -----------------------------------------------------
Columbia HCA Healthcare Corp. 3.1%
- -----------------------------------------------------
Intel Corp. 3.0%
- -----------------------------------------------------
Chase Manhattan Corp. 2.7%
- -----------------------------------------------------
American Home Products 2.6%
- -----------------------------------------------------
Top Ten Total 32.2%
</TABLE>
Industry Classifications as a Percent of Total Investments
<TABLE>
<S> <C>
Technology 38.1%
- -----------------------------------------------------
Consumer Staples 6.0%
- -----------------------------------------------------
Energy 4.7%
- -----------------------------------------------------
Financial & Business Services 8.6%
- -----------------------------------------------------
Health Care 11.4%
- -----------------------------------------------------
Consumer Discretionary 13.0%
- -----------------------------------------------------
Utilities 4.6%
- -----------------------------------------------------
Other 13.6%
- -----------------------------------------------------
</TABLE>
10
<PAGE>
COLUMBUS CIRCLE INVESTORS MID CAP EQUITY FUND
PORTFOLIO MANAGER:
Columbus Circle Investors
Stamford, Connecticut
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS:
Seeks long-term growth of capital; invests primarily in common stocks of
companies with market capitalizations between $800 million and $3 billion.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Since
1 Yr. 3 Yrs. 5 Yrs. Inception
<S> <C> <C> <C> <C>
Columbus
Circle Investors
Mid Cap
Equity Fund (%) 29.04 n/a n/a 31.57
- ----------------------------------------------------------------------
S&P MidCap
Index (%) 21.58 n/a n/a n/a
- ----------------------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
COLUMBUS CIRCLE
INVESTORS MID CAP S&P MIDCAP
EQUITY FUND INDEX
<S> <C> <C>
1/01/95 $200,000 $200,000
6/30/95 $234,000 $235,260
6/30/96 $301,947 $285,955
</TABLE>
The line graph above assumes the investment of $200,000 on 1/1/95, the first
full month following the Fund's Institutional Class inception on 12/28/94,
compared with the S&P MidCap Index, an unmanaged market index. Past performance
is not an indication of future results.
. Technology holdings were a meaningful contributor to the Fund's performance.
To reduce the risk of overweighting, the Fund's holdings were diversified
across a variety of technology-related themes.
. Another group that has enhanced performance are those companies that we
classify as "special situations." Special situation stocks are eclectic
holdings with unique story drivers detached from economic or sector gyrations.
Examples of holdings in this group are HFS, USA Waste Services, and Callaway
Golf.
. Although the energy sector makes up less than 10% of the Fund, new holdings
in 1996 have already performed well and offer further upside potential.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- --------------------------------------------
<S> <C>
HFS, Inc. 4.6%
- --------------------------------------------
Gucci, Inc. 3.3%
- --------------------------------------------
Guidant Corp. 3.3%
- --------------------------------------------
Healthsouth Corp. 3.1%
- --------------------------------------------
Diebold, Inc. 2.9%
- --------------------------------------------
APAC Teleservices, Inc. 2.8%
- --------------------------------------------
Newbridge Networks Corp. 2.8%
- --------------------------------------------
Tidewater, Inc. 2.6%
- --------------------------------------------
Raychem Corp. 2.6%
- --------------------------------------------
Everest Reinsurance Holdings 2.6%
- --------------------------------------------
Top Ten Total 30.6%
</TABLE>
Industry Classifications
as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 5.0%
- --------------------------------------------
Consumer Discretionary 24.8%
- --------------------------------------------
Consumer Services 22.4%
- --------------------------------------------
Energy 5.4%
- --------------------------------------------
Health Care 7.6%
- --------------------------------------------
Technology 22.3%
- --------------------------------------------
Transportation 5.4%
- --------------------------------------------
Other 7.1%
- --------------------------------------------
</TABLE>
11
<PAGE>
PARAMETRIC ENHANCED EQUITY FUND
Portfolio Manager:
Parametric Portfolio Associates
Seattle, Washington
Investment Objective and Primary Investments:
Seeks to provide a total return which equals or exceeds total return performance
of the Standard & Poor's 500 Composite Stock Price Index; invests in common
stocks represented in that Index.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Since
1 Yr. 3 Yrs. 5 Yrs. Inception
<S> <C> <C> <C> <C>
Parametric
Enhanced Equity
Fund (%) 22.72 14.27 13.45 12.82
- ----------------------------------------------------------------------
S&P 500
Index (%) 26.12 17.25 15.73 n/a
- ----------------------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
PARAMETRIC
ENHANCED S&P 500
EQUITY FUND INDEX
<S> <C> <C>
3/01/91 $200,000 $200,000
6/30/91 $203,003 $204,316
6/30/92 $227,564 $231,833
6/30/93 $255,734 $263,376
6/30/94 $252,014 $266,873
6/30/95 $310,922 $336,541
6/30/96 $381,557 $424,438
</TABLE>
The line graph above assumes the investment of $200,000 on 3/1/91, the first
full month following the Fund's Institutional Class inception on 2/11/91,
compared with the S&P 500 Index, an unmanaged market index. Past performance is
not an indication of future results.
. Best-performing index sectors were capital goods (+30.5%), retail (+26.9%) and
energy (+23.1%). The fund maintained an above-index weight in retail but was
below-index weight in capital goods and energy, which hindered performance.
. Stock selection had the largest impact on performance. The Fund outperformed
in seven economic sectors but fell behind the index in eight.
. The Fund's technology selections trailed those of the index which, combined
with an overweighting, were a significant drag on performance.
. On the positive side, the Fund's transportation stocks were up 21% compared
to the 11% return for the index sector.
- -------------------------------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Top Ten Common Stocks
% of Total
Company Investments
- --------------------------------------------
<S> <C>
Chase Manhattan Corp. 1.6%
- --------------------------------------------
AT&T Corp. 1.6%
- --------------------------------------------
Merck & Co., Inc. 1.5%
- --------------------------------------------
Coca-Cola Co. 1.5%
- --------------------------------------------
Intel Corp. 1.4%
- --------------------------------------------
Federal National Mortgage Assn. 1.2%
- --------------------------------------------
Microsoft Corp. 1.2%
- --------------------------------------------
Exxon Corp. 1.2%
- --------------------------------------------
General Electric 1.2%
- --------------------------------------------
Citicorp 1.1%
- --------------------------------------------
Top Ten Total 13.5%
</TABLE>
Industry Classifications
as a Percent of Total Investments
<TABLE>
<S> <C>
Consumer Discretionary 15.2%
- --------------------------------------------
Consumer Staples 7.3%
- --------------------------------------------
Energy 6.3%
- --------------------------------------------
Financial & Business Services 17.9%
- --------------------------------------------
Health Care 10.5%
- --------------------------------------------
Technology 14.9%
- --------------------------------------------
Utilities 13.0%
- --------------------------------------------
Other 14.9%
- --------------------------------------------
</TABLE>
12
<PAGE>
BLAIRLOGIE EMERGING MARKETS FUND
Portfolio Manager:
Blairlogie Capital Management
Edinburgh, Scotland
Investment Objective and Primary Investments:
Seeks long-term growth of capital; invests primarily in common stocks of
companies located in emerging market countries.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Since
1 Yr. 3 Yrs. 5 Yrs. Inception
<S> <C> <C> <C> <C>
Blairlogie Emerging
Markets Fund
Inst. Class (%) 7.70 11.16 n/a 11.41
- ----------------------------------------------------------------------
Blairlogie Emerging
Markets Fund
Admin. Class (%) 7.53 n/a n/a (12.95)
- ----------------------------------------------------------------------
MSCI Emerging
Markets Free
Index (%) 8.48 14.16 n/a n/a
- ----------------------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
BLAIRLOGIE
EMERGING
MARKETS
FUND MSCI INDEX
<S> <C> <C>
6/01/93 $200,000 $200,000
6/30/93 $203,000 $205,940
6/30/94 $289,114 $282,449
6/30/95 $258,900 $282,445
6/30/96 $278,841 $306,403
</TABLE>
The line graph above assumes the investment of $200,000 on 6/1/93, the Fund's
Institutional Class inception date, compared with the Morgan Stanley Capital
International (MSCI) Emerging Markets Free Index, an unmanaged market index of
emerging markets stocks. The performance of the Administrative Class from
inception on 11/1/94 (shown at left), reflects the payment of a service fee in
an amount not to exceed 0.25% on an annualized basis. Past performance is not an
indication of future results.
. Adverse stock selection in heavily-weighted Brazil was a significant drag on
relative performance.
. In Malaysia, an underperformance of the Fund's holdings was offset by a
below-index weight throughout the period.
. A positive for relative performance was Mexico, where solid stock selection
capitalized on an overweighting throughout the period.
. Despite a substantial underweighting in South Africa, holdings there more
than tripled the index's South African returns. Issue selection and a
greater-than-benchmark exposure led to significant underperformance in India.
Portfolio Composition
<TABLE>
<CAPTION>
Top Five Countries
% of Total
Country Investments
- --------------------------------------------
<S> <C>
Brazil 14.5%
- --------------------------------------------
Malaysia 13.3%
- --------------------------------------------
Mexico 11.4%
- --------------------------------------------
India 8.9%
- --------------------------------------------
South Africa 8.8%
- --------------------------------------------
Top Five Total 56.9%
</TABLE>
Industry Classification
as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 9.0%
- --------------------------------------------
Conglomerate 6.8%
- --------------------------------------------
Consumer Discretionary 10.7%
- --------------------------------------------
Consumer Staples 7.9%
- --------------------------------------------
Financial & Business Services 21.8%
- --------------------------------------------
Materials & Processing 15.5%
- --------------------------------------------
Utilities 21.0%
- --------------------------------------------
Other 7.3%
- --------------------------------------------
</TABLE>
13
<PAGE>
BLAIRLOGIE INTERNATIONAL ACTIVE FUND
Portfolio Manager:
Blairlogie Capital Management
Edinburgh, Scotland
Investment Objective and Primary Investments:
Seeks long-term growth of capital; invests primarily in a diversified portfolio
of international equity securities.
Annualized Returns Ended 6/30/96
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Since
1 Yr. 3 Yrs. 5 Yrs. Inception
<S> <C> <C> <C> <C>
Blairlogie
International
Active Fund
Inst. Class (%) 18.48 13.17 n/a 11.67
- ----------------------------------------------------------------------
Blairlogie
International
Active Fund
Admin. Class (%) 18.13 n/a n/a 14.08
- ----------------------------------------------------------------------
EAFE Index (%) 12.85 10.32 n/a n/a
- ----------------------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
BLAIRLOGIE
INTERNATIONAL
ACTIVE FUND EAFE INDEX
<S> <C> <C>
7/01/93 $200,000 $200,000
6/30/94 $240,887 $233,861
6/30/95 $244,637 $237,848
6/30/96 $289,845 $268,943
</TABLE>
The line graph above assumes the investment of $200,000 on 7/1/93, the first
full month following the Fund's Institutional Class inception on 6/8/93,
compared with the Morgan Stanley Capital International EAFE Index (Europe,
Australasia, Far East), an unmanaged market index of over 1,000 stocks. The
performance of the Administrative Class from inception on 11/30/94 (shown at
left), reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. Past performance is not an indication of future results.
. Our weighting and stock selection in Japan, which comprised around 40% of the
Fund throughout the eight months, had a neutral impact on relative
performance during the period.
. The Fund's second heaviest weighting throughout the period, the United
Kingdom, outperformed its index counterpart, although its underweighting
relative to the index neutralized some of this advantage.
. The Fund's sizable holdings in France contributed significantly to relative
performance on the basis of excellent stock selection as well as an above-
index weight.
. In all, the Fund benefited from good stock selection in eight of its eleven
largest weightings, underperforming in only two for the period.
Portfolio Composition
<TABLE>
<CAPTION>
Top Five Countries
% of Total
Country Investments
- --------------------------------------------
<S> <C>
Japan 41.3%
- --------------------------------------------
United Kingdom 12.5%
- --------------------------------------------
France 9.3%
- --------------------------------------------
Germany 8.7%
- --------------------------------------------
Switzerland 4.9%
- --------------------------------------------
Top Five Total 76.7%
</TABLE>
Industry Classification
as a Percent of Total Investments
<TABLE>
<S> <C>
Capital Goods 9.1%
- --------------------------------------------
Consumer Discretionary 12.3%
- --------------------------------------------
Consumer Services 7.6%
- --------------------------------------------
Financial & Business Services 17.5%
- --------------------------------------------
Materials & Processing 16.0%
- --------------------------------------------
Technology 6.5%
- --------------------------------------------
Utilities 11.2%
- --------------------------------------------
Other 19.8%
- --------------------------------------------
</TABLE>
14
<PAGE>
Balanced Fund
PORTFOLIO MANAGERS:
Pacific Investment
Management Company
Newport Beach, California
Parametric Portfolio Associates*
Seattle, Washington
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS:
Seeks total return; invests in common stocks, fixed income securities and money
market instruments.
<TABLE>
<CAPTION>
Annualized Returns Ended 6/30/96
- ----------------------------------------------------------------------
Since
1 Yr. 3 Yrs. 4 Yrs. Inception
------ ------ ------ ---------
<S> <C> <C> <C> <C>
Balanced
Fund (%) 15.13 10.38 10.97 11.13
- ----------------------------------------------------------------------
S&P 500
Index (%) 26.12 17.25 n/a n/a
- ----------------------------------------------------------------------
Lehman Bros.
Aggregate Bond
Index (%) 5.02 5.27 n/a n/a
- ----------------------------------------------------------------------
</TABLE>
[Line Graph Appears Here]
<TABLE>
<CAPTION>
LEHMAN
BALANCED AGGREGATE S&P 500
FUND INDEX INDEX
<S> <C> <C> <C>
7/01/92 $200,000 $200,000 $200,000
6/30/93 $225,530 $223,575 $227,212
6/30/94 $222,936 $220,640 $230,229
6/30/95 $263,427 $248,336 $290,330
6/30/96 $303,282 $260,813 $366,159
</TABLE>
The line graph above assumes the investment of $200,000 on 7/1/92, the first
full month following the Fund's Institutional Class inception on 6/25/92,
compared with the Lehman Brothers Aggregate Bond Index and S&P 500 Index,
unmanaged bond and stock market indexes. Past performance is not an indication
of future results.
. Stock selection had the largest impact on performance of the equity portion.
The Fund outperformed in seven economic sectors but fell behind the index in
eight.
. Best-performing index sectors were capital goods (+30.5%), retail (+26.9%)
and energy (+23.1%). The Fund maintained an above-index weight in retail but
was below index weight in capital goods and energy, which hindered
performance.
. An above-index duration aided the bond portion's performance in the final two
months of 1995, but detracted from returns in the first half of 1996.
. The strong performance of the bond portion's mortgage-backed and lower-tiered
investment grade holdings contributed to outperformance.
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
Top Five Holdings
% of Total
Issuer Investments
- --------------------------------------------
<S> <C>
U.S. Treasury Notes - 5.625% 5.6%
- --------------------------------------------
Government National Mortgage
Association - 6.5% 5.2%
- --------------------------------------------
Government National Mortgage
Association - 7.25% 2.9%
- --------------------------------------------
State Street Bank - 4% 2.4%
- --------------------------------------------
Government National Mortgage
Association - 7.375% 2.3%
- --------------------------------------------
Top Five Total 18.4%
</TABLE>
Industry Classification
as a Percent of Total Investments
<TABLE>
<S> <C>
Other Common Stocks 28.1%
- --------------------------------------------
Corporate Bonds & Notes 4.9%
- --------------------------------------------
U.S. Treasury Notes 5.6%
- --------------------------------------------
Mortgage-Backed Securities 25.7%
- --------------------------------------------
Short-Term Instruments 8.8%
- --------------------------------------------
Financial & Business Services 9.7%
- --------------------------------------------
Consumer Discretionary 9.0%
- --------------------------------------------
Technology 8.2%
- --------------------------------------------
</TABLE>
*Effective August 1, 1996, NFJ Investment Group and Cadence Capital Management
replaced Parametric Portfolio Associates as managers of the common stock
segment of the Balanced Fund.
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
Amounts in thousands, except per share amounts
<TABLE>
<CAPTION>
----------- --------------- ------------- ---------------- --------
Cadence
Cadence Capital Mid Cap
NFJ Equity NFJ Diversified NFJ Small Cap Appreciation Growth
Income Fund Low P/E Fund Value Fund Fund Fund
----------- --------------- ------------- ---------------- --------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $120,863 $55,606 $33,417 $343,036 $231,855
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Cash and foreign currency 0 499 0 0 0
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Receivable for investments and
foreign currency sold 2,237 0 0 5,003 895
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Receivable for Fund shares sold 158 57 13 682 158
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Variation margin receivable 0 0 0 0 0
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Interest and dividends receivable 460 82 76 394 159
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
123,718 56,244 33,506 349,115 233,067
================================================= =========== ============== ============= ============== ========
Liabilities:
Payable for investments and foreign
currency purchased $ 0 $ 3,492 $ 25 $ 0 $ 713
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Written options outstanding 0 0 0 0 0
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Payable for Fund shares redeemed 700 0 0 21 121
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Dividends payable 130 0 8 180 25
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Accrued investment advisor's fee 48 16 15 119 80
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Accrued administrator's fee 27 9 7 66 45
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Accrued distribution fee 1 0 1 0 0
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Accrued trustees' fee 1 0 0 1 1
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Other liabilities 0 0 0 0 0
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
907 3,517 56 387 985
================================================= =========== ============== ============= ============== ========
Net Assets $122,811 $52,727 $33,450 $348,728 $232,082
================================================= =========== ============== ============= ============== ========
Net Assets Consist of:
Paid in capital $ 93,579 $48,467 $25,770 $266,949 $169,974
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Undistributed (overdistributed)
net investment income 3,782 348 837 3,922 2,129
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Accumulated undistributed net realized gain (loss) 7,778 752 2,963 27,208 28,839
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Net unrealized appreciation 17,672 3,160 3,880 50,649 31,140
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
$122,811 $52,727 $33,450 $348,728 $232,082
================================================= =========== ============== ============= ============== ========
Shares Issued and Outstanding
Institutional class 8,130 4,232 2,044 19,265 11,881
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Administrative class 425 0 312 0 55
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Net Asset Value, Offering and Redemption Price
Per Share (Net Assets Per Share Outstanding)
Institutional class $14.36 $12.46 $14.20 $18.10 $19.44
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Administrative class 14.35 - 14.20 - 19.44
- ------------------------------------------------- ----------- -------------- ------------- -------------- --------
Cost of Investments Owned 103,191 52,446 29,537 292,387 200,715
================================================= =========== ============== ============= ============== ========
Cost of Foreign Currency Held 0 0 0 0 0
================================================= =========== ============== ============= ============== ========
</TABLE>
See Notes to Financial Statements
16
<PAGE>
<TABLE>
<CAPTION>
-------------- ------------- -------------- ---------------
Columbus
Cadence Micro Cadence Small Columbus Circle Circle Investors
Cap Growth Cap Growth Investors Core Mid Cap Equity
Fund Fund Equity Fund Fund
-------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments, at value $84,865 $32,870 $44,328 $8,355
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Cash and foreign currency 0 0 1 28
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Receivable for investments and
foreign currency sold 431 410 432 179
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Receivable for Fund shares sold 313 200 0 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Variation margin receivable 0 0 0 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Interest and dividends receivable 25 24 27 1
- ------------------------------------------------- -------------- ------------- -------------- ---------------
85,634 33,504 44,788 8,563
================================================= ============== ============= ============== ===============
Liabilities:
Payable for investments and foreign
currency purchased $ 986 $ 332 $ 330 $ 179
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Written options outstanding 0 0 2 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Payable for Fund shares redeemed 0 0 385 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Dividends payable 0 0 8 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Accrued investment advisor's fee 91 40 20 4
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Accrued administrator's fee 18 10 9 2
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Accrued distribution fee 0 0 7 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Accrued trustees' fee 0 0 0 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Other liabilities 0 56 0 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
1,095 438 761 185
================================================= ============== ============= ============== ===============
Net Assets $84,539 $33,066 $44,027 $8,378
================================================= ============== ============= ============== ===============
Net Assets Consist of:
Paid in capital $53,355 $12,237 $38,342 $6,019
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Undistributed (overdistributed)
net investment income 0 3,202 1,498 280
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Accumulated undistributed net realized gain (loss) 8,934 12,658 58 173
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Net unrealized appreciation 22,250 4,969 4,129 1,906
- ------------------------------------------------- -------------- ------------- -------------- ---------------
$84,539 $33,066 $44,027 $8,378
================================================= ============== ============= ============== ===============
Shares Issued and Outstanding
Institutional class 4,546 1,582 771 571
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Administrative class 31 5 2,477 0
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Net Asset Value, Offering and Redemption Price
Per Share (Net Assets Per Share Outstanding)
Institutional class $18.47 $20.83 $13.55 $14.66
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Administrative class 18.46 20.82 13.56 -
- ------------------------------------------------- -------------- ------------- -------------- ---------------
Cost of Investments Owned 62,615 27,901 40,203 6,449
================================================= ============== ============= ============== ===============
Cost of Foreign Currency Held 0 0 0 0
================================================= ============== ============= ============== ===============
</TABLE>
<TABLE>
<CAPTION>
-------------- ----------- ------------ -------
Parametric Blairlogie Blairlogie
Enhanced Equity Emerging International Balanced
Fund Markets Fund Active Fund Fund
-------------- ----------- ------------ -------
<S> <C> <C> <C> <C>
Assets:
Investments, at value $83,354 $ 77,256 $71,062 $89,475
- ------------------------------------------------- -------------- ----------- ------------ -------
Cash and foreign currency 0 831 3,679 0
- ------------------------------------------------- -------------- ----------- ------------ -------
Receivable for investments and
foreign currency sold 0 2,706 983 3,976
- ------------------------------------------------- -------------- ----------- ------------ -------
Receivable for Fund shares sold 0 30 40 2
- ------------------------------------------------- -------------- ----------- ------------ -------
Variation margin receivable 0 0 15 90
- ------------------------------------------------- -------------- ----------- ------------ -------
Interest and dividends receivable 116 365 218 413
- ------------------------------------------------- -------------- ----------- ------------ -------
83,470 81,188 75,997 93,956
================================================= ============== =========== ============ =======
Liabilities:
Payable for investments and foreign
currency purchased $ 0 $ 97 $ 54 $11,283
- ------------------------------------------------- -------------- ----------- ------------ -------
Written options outstanding 0 0 0 2
- ------------------------------------------------- -------------- ----------- ------------ -------
Payable for Fund shares redeemed 0 94 48 0
- ------------------------------------------------- -------------- ----------- ------------ -------
Dividends payable 0 0 0 4
- ------------------------------------------------- -------------- ----------- ------------ -------
Accrued investment advisor's fee 29 53 35 28
- ------------------------------------------------- -------------- ----------- ------------ -------
Accrued administrator's fee 16 31 29 16
- ------------------------------------------------- -------------- ----------- ------------ -------
Accrued distribution fee 0 0 0 0
- ------------------------------------------------- -------------- ----------- ------------ -------
Accrued trustees' fee 0 0 0 0
- ------------------------------------------------- -------------- ----------- ------------ -------
Other liabilities 0 0 0 61
- ------------------------------------------------- -------------- ----------- ------------ -------
45 275 166 11,394
================================================= ============== =========== ============ =======
Net Assets $83,425 $ 80,913 $75,831 $82,562
================================================= ============== =========== ============ =======
Net Assets Consist of:
Paid in capital $57,946 $ 88,130 $66,518 $70,614
- ------------------------------------------------- -------------- ----------- ------------ -------
Undistributed (overdistributed)
net investment income 954 (33) 1,936 0
- ------------------------------------------------- -------------- ----------- ------------ -------
Accumulated undistributed net realized gain (loss) 10,860 (13,517) 1,214 1,338
- ------------------------------------------------- -------------- ----------- ------------ -------
Net unrealized appreciation 13,665 6,333 6,163 10,610
- ------------------------------------------------- -------------- ----------- ------------ -------
$83,425 $ 80,913 $75,831 $82,562
================================================= ============== =========== ============ =======
Shares Issued and Outstanding
Institutional class 5,243 6,361 5,600 7,096
- ------------------------------------------------- -------------- ----------- ------------ -------
Administrative class 0 29 450 0
- ------------------------------------------------- -------------- ----------- ------------ -------
Net Asset Value, Offering and Redemption Price
Per Share (Net Assets Per Share Outstanding)
Institutional class $15.91 $12.66 $12.54 $11.64
- ------------------------------------------------- -------------- ----------- ------------ -------
Administrative class - 12.63 12.51 -
- ------------------------------------------------- -------------- ----------- ------------ -------
Cost of Investments Owned 69,689 70,913 64,970 79,066
================================================= ============== =========== ============ =======
Cost of Foreign Currency Held 0 0 2,077 0
================================================= ============== =========== ============ =======
</TABLE>
17
<PAGE>
STATEMENT OF OPERATIONS
For the eight months ended June 30, 1996
<TABLE>
<CAPTION>
$ in thousands
Cadence
Cadence Capital Mid Cap
NFJ Equity NFJ Diversified NFJ Small Cap Appreciation Growth
Income Fund Low P/E Fund Value Fund Fund Fund
----------- --------------- ------------- --------------- --------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 3,622 $ 379 $ 708 $ 3,231 $ 2,042
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Interest 276 79 67 778 452
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Total income 3,898 458 775 4,009 2,494
========================================== ========== ======== ======== ========== ==========
Expenses:
Investment advisory fees 426 66 157 883 618
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Administration fees 237 37 65 491 343
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Distribution fees - Administrative Class 10 0 8 0 2
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Trustees' fees 5 0 1 11 7
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Total expenses 678 103 231 1,385 970
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net Investment Income (Loss) 3,220 355 544 2,624 1,524
========================================== ========== ======== ======== ========== ==========
Net Realized and Unrealized Gain:
Net realized gain on investments 11,596 1,115 3,943 31,135 30,980
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net realized gain (loss) on futures
contracts and written options 0 0 0 0 0
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net realized loss on foreign
currency transactions 0 0 0 0 0
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net change in unrealized appreciation
depreciation) on investments 6,902 1,082 1,415 6,136 (13,220)
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on futures contracts
and written options 0 0 0 0 0
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities denominated in
foreign currencies 0 0 0 0 0
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net Gain 18,498 2,197 5,358 37,271 17,760
- ------------------------------------------ ---------- -------- -------- ---------- ----------
Net Increase in Assets
Resulting from Operations $ 21,718 $ 2,552 $ 5,902 $ 39,895 $ 19,284
========================================== ========== ======== ======== ========== ==========
</TABLE>
See Notes to Financial Statements
18
<PAGE>
STATEMENT OF OPERATIONS
For the eight months ended June 30, 1996
<TABLE>
<CAPTION>
$ in thousands
------------- ------------- --------------- ----------------
Cadence Micro Cadence Small Columbus Circle Circle Investors
Cap Growth Cap Growth Investors Core Mid Cap Equity
Fund Fund Equity Fund Fund
------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 337 $ 345 $ 242 $ 17
- ------------------------------------------ -------- -------- -------- -------
Interest 226 103 105 15
- ------------------------------------------ -------- -------- -------- -------
Total income 563 448 347 32
========================================== ======== ======== ======== =======
Expenses:
Investment advisory fees 670 426 146 35
- ------------------------------------------ -------- -------- -------- -------
Administration fees 134 107 64 15
- ------------------------------------------ -------- -------- -------- -------
Distribution fees - Administrative Class 0 1 49 0
- ------------------------------------------ -------- -------- -------- -------
Trustees' fees 3 0 1 0
- ------------------------------------------ -------- -------- -------- -------
Total expenses 807 534 260 50
- ------------------------------------------ -------- -------- -------- -------
Net Investment Income (Loss) (244) (86) 87 (18)
========================================== ======== ======== ======== =======
Net Realized and Unrealized Gain:
Net realized gain on investments 8,951 15,949 1,591 471
- ------------------------------------------ -------- -------- -------- -------
Net realized gain (loss) on futures
contracts and written options 0 0 (7) 0
- ------------------------------------------ -------- -------- -------- -------
Net realized loss on foreign
currency transactions 0 0 0 0
- ------------------------------------------ -------- -------- -------- -------
Net change in unrealized appreciation
(depreciation) on investments 8,025 (11,349) 1,686 853
- ------------------------------------------ -------- -------- -------- -------
Net change in unrealized appreciation
(depreciation) on futures contracts
and written options 0 0 3 0
- ------------------------------------------ -------- -------- -------- -------
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities denominated in
foreign currencies 0 0 0 0
- ------------------------------------------ -------- -------- -------- -------
Net Gain 16,976 4,600 3,273 1,324
- ------------------------------------------ -------- -------- -------- -------
Net Increase in Assets
Resulting from Operations $ 16,732 $ 4,514 $ 3,360 $ 1,306
========================================== ======== ======== ======== =======
</TABLE>
See Notes to Financial Statements
STATEMENT OF OPERATIONS
For the eight months ended June 30, 1996
<TABLE>
<CAPTION>
$ in thousands
--------------- ------------ ------------- --------
Parametric Blairlogie Blairlogie
Enhanced Equity Emerging International Balanced
Fund Markets Fund Active Fund Fund
--------------- ------------ ------------- --------
<S> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 1,342 $ 1,083 $ 833 $ 680
- ------------------------------------------ ---------- ---------- -------- --------
Interest 46 55 112 1,491
- ------------------------------------------ ---------- ---------- -------- --------
Total income 1,388 1,138 945 2,171
========================================== ========== ========== ======== ========
Expenses:
Investment advisory fees 275 441 295 236
- ------------------------------------------ ---------- ---------- -------- --------
Administration fees 152 259 244 130
- ------------------------------------------ ---------- ---------- -------- --------
Distribution fees - Administrative Class 0 1 4 0
- ------------------------------------------ ---------- ---------- -------- --------
Trustees' fees 3 3 3 3
- ------------------------------------------ ---------- ---------- -------- --------
Total expenses 430 704 546 369
- ------------------------------------------ ---------- ---------- -------- --------
Net Investment Income (Loss) 958 434 399 1,802
========================================== ========== ========== ======== ========
Net Realized and Unrealized Gain:
Net realized gain on investments 11,972 1,701 2,847 1,866
- ------------------------------------------ ---------- ---------- -------- --------
Net realized gain (loss) on futures
contracts and written options 0 0 161 (88)
- ------------------------------------------ ---------- ---------- -------- --------
Net realized loss on foreign
currency transactions 0 (343) (259) 0
- ------------------------------------------ ---------- ---------- -------- --------
Net change in unrealized appreciation
depreciation) on investments (909) 7,317 4,938 3,171
- ------------------------------------------ ---------- ---------- -------- --------
Net change in unrealized appreciation
(depreciation) on futures contracts
and written options 0 0 31 (83)
- ------------------------------------------ ---------- ---------- -------- --------
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities denominated in
foreign currencies 0 (14) 144 0
- ------------------------------------------ ---------- ---------- -------- --------
Net Gain 11,063 8,661 7,862 4,866
- ------------------------------------------ ---------- ---------- -------- --------
Net Increase in Assets
Resulting from Operations $ 12,021 $ 9,095 $ 8,261 $ 6,668
========================================== ========== ========== ======== ========
</TABLE>
See Notes to Financial Statements
19
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
------------------------ ----------------------- -----------------------------
$ in thousands NFJ Equity Income Fund NFJ Diversified NFJ Small Cap Value Fund
Low P/E Fund
------------------------ ----------------------- -----------------------------
Eight Eight Eight
Months Year Months Year Months Year
Ended Ended Ended Ended Ended Ended
Increase (Decrease) in June 30, October 31, June 30, October 31, June 30, October 31,
Net Assets from: 1996 1995(a) 1996 1995(a) 1996 1995(a)
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income
(loss) $ 3,220 $ 3,800 $ 355 $ 337 $ 544 $ 763
- --------------------------- ------------------------ ----------------------- -----------------------------
Net realized gain 11,596 4,643 1,115 2,035 3,943 2,349
- --------------------------- ------------------------ ----------------------- -----------------------------
Net change in unrealized
appreciation
(depreciation) on
investments 6,902 9,476 1,082 484 1,415 3,100
- --------------------------- ------------------------ ----------------------- -----------------------------
Net increase resulting
from operations 21,718 17,919 2,552 2,856 5,902 6,212
=========================== ======================== ======================= =============================
Net equalization credits
(debits) (222) 62 42 (4) (26) (10)
=========================== ======================== ======================= =============================
Distributions to
Shareholders
From net investment income
Institutional class (3,065) (3,822) (355) (342) (483) (761)
- --------------------------- ------------------------ ----------------------- -----------------------------
Administrative class (155) (4) 0 0 (62) 0
- --------------------------- ------------------------ ----------------------- -----------------------------
In excess of net
investment income
Institutional class (7) 0 0 0 (5) 0
- --------------------------- ------------------------ ----------------------- -----------------------------
Administrative class 0 0 0 0 (1) 0
- --------------------------- ------------------------ ----------------------- -----------------------------
From net realized capital
gains
Institutional class (4,404) (2,558) (2,045) (1,375) (2,049) (2,473)
- --------------------------- ------------------------ ----------------------- -----------------------------
Administrative class (232) (4) 0 0 (293) 0
- --------------------------- ------------------------ ----------------------- -----------------------------
Total Distributions (7,863) (6,388) (2,400) (1,717) (2,893) (3,234)
=========================== ======================== ======================= =============================
Fund Share Transactions
Receipts for shares sold
Institutional class 34,285 25,992 36,330 115 2,712 4,351
- --------------------------- ------------------------ ----------------------- -----------------------------
Administrative class 6,890 120 0 0 5,755 0
- --------------------------- ------------------------ ----------------------- -----------------------------
Issued as reinvestment of
distributions
Institutional class 6,952 5,859 2,397 1,715 2,501 3,218
- --------------------------- ------------------------ ----------------------- -----------------------------
Administrative class 387 8 0 0 355 0
- --------------------------- ------------------------ ----------------------- -----------------------------
Cost of shares redeemed
Institutional class (55,588) (17,770) (637) (3,964) (13,943) (6,680)
- --------------------------- ------------------------ ----------------------- -----------------------------
Administrative class (1,903) (12) 0 0 (2,006) 0
- --------------------------- ------------------------ ----------------------- -----------------------------
Net increase (decrease)
resulting from Fund
share transactions (8,977) 14,197 38,090 (2,134) (4,626) 889
- --------------------------- ------------------------ ----------------------- -----------------------------
Total Increase (Decrease)
in Net Assets 4,656 25,790 38,284 (999) (1,643) 3,857
=========================== ======================== ======================= =============================
Net Assets
Beginning of period 118,155 92,365 14,443 15,442 35,093 31,236
- --------------------------- ------------------------ ----------------------- -----------------------------
End of period * $122,811 $118,155 $52,727 $14,443 $ 33,450 $35,093
- --------------------------- ------------------------ ----------------------- -----------------------------
*Including net
undistributed
investment income of: $ 3,782 $ 0 $ 348 $ 0 $ 837 $ 1
- --------------------------- ------------------------ ----------------------- -----------------------------
</TABLE>
(a) Audited by other independent accountants
See Notes to Financial Statements
20
<PAGE>
<TABLE>
<CAPTION>
----------------------- ------------------------
Cadence Capital Cadence Mid Cap
$ in thousands Appreciation Fund Growth Fund
----------------------- ------------------------
Eight Eight
Months Year Months Year
Ended Ended Ended Ended
June 30, October 31, June 30, October 31,
Increase (Decrease) in Net Assets from: 1996 1995(a) 1996 1995(a)
<S> <C> <C> <C>
Operations
Net investment income
(loss) $ 2,624 $ 2,383 $ 1,524 $ 615
- -------------------------------------------------- ----------------------- ------------------------
Net realized gain 31,135 16,227 30,980 6,630
- -------------------------------------------------- ----------------------- ------------------------
Net change in unrealized
appreciation (depreciation) on investments 6,136 31,810 (13,220) 31,560
- -------------------------------------------------- ----------------------- ------------------------
Net increase resulting from operations 39,895 50,420 19,284 38,805
================================================== ======================= ========================
Net equalization credits (debits) 214 65 59 46
================================================== ======================= ========================
Distributions to Shareholders
From net investment
Institutional class (2,624) (2,383) (1,518) (615)
- -------------------------------------------------- ----------------------- ------------------------
Administrative class 0 0 (6) 0
- -------------------------------------------------- ----------------------- ------------------------
In excess of net investment income
Institutional class 0 0 (2) 0
- -------------------------------------------------- ----------------------- ------------------------
Administrative class 0 0 0 0
- -------------------------------------------------- ----------------------- ------------------------
From net realized capital gains
Institutional class (15,492) 0 (4,245) 0
- -------------------------------------------------- ----------------------- ------------------------
Administrative class 0 0 (21) 0
- -------------------------------------------------- ----------------------- ------------------------
Total Distributions (18,116) (2,383) (5,792) (615)
================================================== ======================= ========================
Fund Share Transactions
Receipts for shares sold
Institutional class 93,460 47,862 65,496 56,121
- -------------------------------------------------- ----------------------- ------------------------
Administrative class 0 0 266 1,745
- -------------------------------------------------- ----------------------- ------------------------
Issued as reinvestment of distributions
Institutional class 15,598 2,167 5,548 563
- -------------------------------------------------- ----------------------- ------------------------
Administrative class 0 0 27 0
- -------------------------------------------------- ----------------------- ------------------------
Cost of shares redeemed
Institutional class (18,543) (27,352) (42,836) (27,331)
- -------------------------------------------------- ----------------------- ------------------------
Administrative class 0 0 (182) (913)
- -------------------------------------------------- ----------------------- ------------------------
Net increase (decrease) resulting from Fund
share transactions 90,515 22,677 28,319 30,185
- -------------------------------------------------- ----------------------- ------------------------
Total Increase (Decrease) in Net Assets 112,508 70,779 41,870 68,421
================================================== ======================= ========================
Net Assets
Beginning of period 236,220 165,441 190,212 121,791
- -------------------------------------------------- ----------------------- ------------------------
End of period $348,728 $236,220 $232,082 $190,212
- -------------------------------------------------- ----------------------- ------------------------
*Including net undistributed
investment income of: $ 3,922 $ 0 $ 2,129 $ 0
- -------------------------------------------------- ----------------------- ------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------- -------------------------------
Cadence Micro Cap Cadence Small Cap
$ in thousands Growth Fund Growth Fund
------------------------- -------------------------------
Eight Eight
Months Year Months Year
Ended Ended Ended Ended
June 30, October 31, June 30, October 31,
Increase (Decrease) in Net Assets from: 1996 1995(a) 1996 1995(a)
<S> <C> <C> <C> <C>
Operations
Net investment income
(loss) $ (244) $ (182) $ (86) $ (161)
- -------------------------------------------------- ------------------------- -------------------------------
Net realized gain 8,951 2,911 15,949 5,706
- -------------------------------------------------- ------------------------- -------------------------------
Net change in unrealized
appreciation (depreciation) on investments 8,025 10,798 (11,349) 4,873
- -------------------------------------------------- ------------------------- -------------------------------
Net increase resulting from operations 16,732 13,527 4,514 10,418
================================================== ========================= ===============================
Net equalization credits (debits) 0 0 0 0
================================================== ========================= ===============================
Distributions to Shareholders
From net investment
Institutional class 0 0 0 0
- -------------------------------------------------- ------------------------- -------------------------------
Administrative class 0 0 0 0
- -------------------------------------------------- ------------------------- -------------------------------
In excess of net investment income
Institutional class 0 0 0 0
- -------------------------------------------------- ------------------------- -------------------------------
Administrative class 0 0 0 0
- -------------------------------------------------- ------------------------- -------------------------------
From net realized capital gains
Institutional class (1,543) 0 (5,641) (3,708)
- -------------------------------------------------- ------------------------- -------------------------------
Administrative class 0 0 (55) 0
- -------------------------------------------------- ------------------------- -------------------------------
Total Distributions (1,543) 0 (5,696) (3,708)
================================================== ========================= ===============================
Fund Share Transactions
Receipts for shares sold
Institutional class 21,977 26,532 4,731 16,717
- -------------------------------------------------- ------------------------- -------------------------------
Administrative class 707 0 437 574
- -------------------------------------------------- ------------------------- -------------------------------
Issued as reinvestment of distributions
Institutional class 1,379 0 4,655 3,456
- -------------------------------------------------- ------------------------- -------------------------------
Administrative class 0 0 55 0
- -------------------------------------------------- ------------------------- -------------------------------
Cost of shares redeemed
Institutional class (24,322) (2,889) (49,237) (3,361)
- -------------------------------------------------- ------------------------- -------------------------------
Administrative class (166) 0 (914) 0
- -------------------------------------------------- ------------------------- -------------------------------
Net increase (decrease) resulting from Fund
share transactions (425) 23,643 (40,273) 17,386
- -------------------------------------------------- ------------------------- -------------------------------
Total Increase (Decrease) in Net Assets 14,764 37,170 (41,455) 24,096
================================================== ========================= ===============================
Net Assets
Beginning of period 69,775 32,605 74,521 50,425
- -------------------------------------------------- ------------------------- -------------------------------
End of period $ 84,539 $69,775 $ 33,066 $74,521
- -------------------------------------------------- ------------------------- -------------------------------
*Including net undistributed
investment income of: $ 0 $ 0 $ 3,202 $ 0
- -------------------------------------------------- ------------------------- -------------------------------
</TABLE>
21
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (Cont.)
<TABLE>
<CAPTION>
-------------------------- --------------------------- ------------------------
Columbus Circle Columbus Circle Parametric
Investors Investors Enhanced
$ in thousands Core Equity Fund Mid Cap Equity Fund Equity Fund
-------------------------- --------------------------- ------------------------
Eight Period From Eight Period From Eight
Months December 28, Months December 28, Months
Ended 1994 to Ended 1994 to Ended Year Ended
Increase (Decrease) June 30, October 31, June 30, October 31, June 30, October 31,
in Net Assets from: 1996 1995 (a) 1996 1995 (a) 1996 1995 (a)
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income
(loss) $ 87 $ 62 $ (18) $ 10 $ 958 $ 1,357
- -------------------------- ------------------------- --------------------------- ------------------------
Net realized gain (loss) 1,584 756 471 243 11,972 2,417
- -------------------------- ------------------------- --------------------------- ------------------------
Net change in unrealized
appreciation
(depreciation) on
investments 1,686 2,439 853 1,053 (909) 12,008
- -------------------------- ------------------------- --------------------------- ------------------------
Net change in unrealized
appreciation
(depreciation) on
futures contracts and
written options 3 1 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Net change in unrealized
appreciation
(depreciation) on
translation of assets
and liabilities denominated
in foreign currencies 0 0 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Net increase (decrease)
resulting from operations 3,360 3,258 1,306 1,306 12,021 15,782
========================== ========================= =========================== ========================
Net equalization credits
(debits) 21 80 (1) 13 10 (27)
========================== ========================= =========================== ========================
Distributions to Shareholders
From net investment income
Institutional class (29) (27) 0 (10) (958) (1,356)
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class (58) (35) 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
In excess of net
investment income
Institutional class (9) 0 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class (18) 0 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
From net realized capital
gains
Institutional class (180) 0 (243) 0 (2,327) (939)
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class (577) 0 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Total Distributions (871) (62) (243) (10) (3,285) (2,295)
========================== ========================= =========================== ========================
Fund Share Transactions
Receipts for shares sold
Institutional class 2,105 7,025 474 7,334 44,945 11,181
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class 17,158 23,345 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Issued as reinvestment of
distributions
Institutional class 73 8 82 3 3,136 2,282
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class 652 35 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Cost of shares redeemed
Institutional class (118) (293) (1,597) (289) (47,401) (18,839)
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class (10,789) (960) 0 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Net increase (decrease)
resulting from Fund
share transactions 9,081 29,160 (1,041) 7,048 680 (5,376)
- -------------------------- ------------------------- --------------------------- ------------------------
Total Increase (Decrease)
in Net Assets 11,591 32,436 21 8,357 9,426 8,084
========================== ========================= =========================== ========================
Net Assets
Beginning of period 32,436 0 8,357 0 73,999 65,915
- -------------------------- ------------------------- --------------------------- ------------------------
End of period * $ 44,027 $32,436 $ 8,378 $8,357 $ 83,425 $ 73,999
- -------------------------- ------------------------- --------------------------- ------------------------
*Including net undistributed
(overdistributed)
investment income of: $ 1,498 $ 0 $ 280 $ 0 $ 954 $ 0
========================== ========================= =========================== ========================
</TABLE>
(a) Audited by other independent accountants
See Notes to Financial Statements
22
<PAGE>
<TABLE>
<CAPTION>
------------------------- --------------------------- ------------------------
Blairlogie Emerging Blairlogie International
$ in thousands Markets Fund Active Fund Balanced Fund
------------------------- --------------------------- ------------------------
Eight Eight Eight
Months Months Months
Ended Year Ended Ended Year Ended Ended Year Ended
Increase (Decrease) June 30, October 31, June 30, October 31, June 30, October 31,
in Net Assets from: 1996 1995 (a) 1996 1995 (a) 1996 1995 (a)
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income
(loss) $ 434 $ 428 $ 399 $ 515 $ 1,802 $ 3,449
- -------------------------- ------------------------- --------------------------- ------------------------
Net realized gain (loss) 1,358 (15,110) 2,749 3,506 1,778 7,151
- -------------------------- ------------------------- --------------------------- ------------------------
Net change in unrealized
appreciation
(depreciation) on
investments 7,317 (8,263) 4,938 63 3,171 3,440
- -------------------------- ------------------------- --------------------------- ------------------------
Net change in unrealized
appreciation
(depreciation) on
futures contracts and
written options 0 0 31 (61) (83) 958
- -------------------------- ------------------------- --------------------------- ------------------------
Net change in unrealized
appreciation
(depreciation) on
translation of assets
and liabilities denominated
in foreign currencies (14) (2) 144 (73) 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Net increase (decrease)
resulting from operations 9,095 (22,947) 8,261 3,950 6,668 14,998
========================== ========================= =========================== ========================
Net equalization credits
(debits) (4) 4 62 142 0 0
========================== ========================= =========================== ========================
Distributions to Shareholders
From net investment income
Institutional class (236) (414) (382) (504) (1,802) (3,451)
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class (3) (3) (4) (5) 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
In excess of net
investment income
Institutional class 0 0 (1,896) 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class 0 0 (21) 0 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
From net realized capital
gains
Institutional class 0 (3,784) (1,127) (844) (6,227) 0
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class 0 0 (13) (2) 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Total Distributions (239) (4,201) (3,443) (1,355) (8,029) (3,451)
========================== ========================= =========================== ========================
Fund Share Transactions
Receipts for shares sold
Institutional class 32,382 64,126 14,180 45,600 9,459 20,019
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class 387 1,512 5,259 947 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Issued as reinvestment of
distributions
Institutional class 174 3,577 2,171 1,148 8,025 3,421
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class 3 4 38 7 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Cost of shares redeemed
Institutional class (34,303) (46,658) (14,496) (8,424) (6,199) (93,043)
- -------------------------- ------------------------- --------------------------- ------------------------
Administrative class (951) (668) (483) (302) 0 0
- -------------------------- ------------------------- --------------------------- ------------------------
Net increase (decrease)
resulting from Fund
share transactions (2,308) 21,893 6,669 38,976 11,285 (69,603)
- -------------------------- ------------------------- --------------------------- ------------------------
Total Increase (Decrease)
in Net Assets 6,544 (5,251) 11,549 41,713 9,924 (58,056)
========================== ========================= =========================== ========================
Net Assets
Beginning of period 74,369 79,620 64,282 22,569 72,638 130,694
- -------------------------- ------------------------- --------------------------- ------------------------
End of period * $ 80,913 $ 74,369 $ 75,831 $ 64,282 $ 82,562 $ 72,638
- -------------------------- ------------------------- --------------------------- ------------------------
*Including net undistributed
(overdistributed)
investment income of: $ (33) $ 10 $ 1,936 $ (13) $ 0 $ 0
========================== ========================= =========================== ========================
</TABLE>
23
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------ ----------- ------------- ------------ ----------- ------------- -------------
Net Realized/
Selected Per Share Data Net Asset Unrealized Total Income Dividends Distributions
for the Year or Period Ended: Value Net Gain from from Net from Net Distributions
Beginning of Investment (Loss) on Investment Investment Realized from
Period Income Investments Operations Income Capital Gains Equalization
------------ ----------- ------------- ------------ ----------- ------------- -------------
NFJ Equity Income Fund
Institutional Class
<S> <C> <C> <C> <C> <C> <C> <C>
11/01/95 - 06/30/96 $ 13.09 $ 0.78 $ 1.31 $ 2.09 $(0.34) $(0.48) $ 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/95 11.75 0.46 1.67 2.13 (0.46) (0.33) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/94 11.95 0.42 (0.16) 0.26 (0.42) (0.04) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/93 10.92 0.40 1.40 1.80 (0.40) (0.37) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/92 10.77 0.45 0.93 1.38 (0.43) (0.57) (0.23)
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
03/08/91 - 10/31/91 10.00 0.24 0.92 1.16 (0.24) (0.15) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
Administrative Class
11/01/95 - 06/30/96 13.13 0.75 1.31 2.06 (0.36) (0.48) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
11/30/94 - 10/31/95 11.12 0.39 2.35 2.74 (0.40) (0.33) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
NFJ Diversified Low P/E Fund
Institutional Class
11/01/95 - 06/30/96 $ 12.53 $ 0.25 $ 1.62 $ 1.87 $(0.17) $(1.77) $ 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/95 11.55 0.30 2.18 2.48 (0.30) (1.20) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/94 11.92 0.30 (0.28) 0.02 (0.29) (0.10) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/93 10.05 0.28 2.36 2.64 (0.28) (0.49) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
12/30/91 - 10/31/92 10.00 0.24 0.23 0.47 (0.24) (0.18) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
NFJ Small Cap Value Fund
Institutional
11/01/95 - 06/30/96 $13.10 $ 0.56 $ 1.49 $ 2.05 $(0.21) $(0.74) $ 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/95 12.07 0.28 1.92 2.20 (0.28) (0.89) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/94 12.81 0.29 (0.65) (0.36) (0.29) (0.09) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/93 10.98 0.24 2.33 2.57 (0.24) (0.50) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/92 10.09 0.22 1.17 1.39 (0.22) (0.24) (0.04)
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/01/91 - 10/31/91 10.00 0.02 0.10 0.12 (0.03) 0.00 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
Administrative Class
11/01/95 - 06/30/96 13.16 0.54 1.43 1.97 (0.19) (0.74) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
Cadence Capital Appreciation Fund
Institutional Class
11/01/95 - 06/30/96 $ 16.94 $ 0.35 $ 1.99 $ 2.34 $(0.15) $(1.03) $ 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/95 13.34 0.18 3.60 3.78 (0.18) 0.00 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/94 13.50 0.14 (0.12) 0.02 (0.14) (0.04) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/93 11.27 0.11 2.73 2.84 (0.11) (0.50) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/92 11.02 0.14 1.05 1.19 (0.14) (0.72) (0.08)
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
03/08/91 - 10/31/91 10.00 0.09 1.02 1.11 (0.09) 0.00 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
Cadence Mid Cap Growth Fund
Institutional Class
11/01/95 - 06/30/96 $ 18.16 $ 0.32 $ 1.53 $ 1.85 $(0.14) (0.43) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/95 13.97 0.07 4.19 4.26 (0.07) 0.00 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/94 13.97 0.06 0.01 0.07 (0.06) (0.01) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/93 11.29 0.07 2.70 2.77 (0.07) (0.02) 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
10/31/92 10.28 0.10 1.03 1.13 (0.10) 0.00 (0.02)
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
08/26/91 - 10/31/91 10.00 0.02 0.27 0.29 (0.01) 0.00 0.00
- ------------------------ ------------ ----------- ------------- ------------ ----------- ------------- -------------
</TABLE>
*Annualized
Periods ending prior to 06/30/96 were audited by other independent accountants.
See Notes to Financial Statements
24
<PAGE>
<TABLE>
<CAPTION>
Selected Per Share Data Ratio of Net
for the Year or Period Ended: Net Assets Ratio of Investment
Net Asset End of Expenses Income to Portfolio Average
NFJ Equity Income Fund Total Value End of Total Period to Average Average Net Turnover Commission
Institutional Class Distributions Period Return (000's) Net Assets Assets Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/01/95 - 06/30/96 $ (0.82) $14.36 16.35% $116,714 0.70%* 3.41%* 52.30% $ 0.06
10/31/95 (0.79) 13.09 19.36 118,015 0.70 3.83 46.49 0.06
10/31/94 (0.46) 11.75 2.25 92,365 0.70 3.77 35.56
10/31/93 (0.77) 11.95 16.65 67,854 0.70 3.55 38.60
10/31/92 (1.23) 10.92 12.89 30,506 0.70 3.83 46.74
03/08/91 - 10/31/91 (0.39) 10.77 11.81 15,628 0.74* 4.18* 61.51
Administrative Class
11/01/95 - 06/30/96 (0.84) 14.35 16.08 6,097 0.95* 3.19* 52.30 0.06
11/30/94 - 10/31/95 (0.73) 13.13 25.69 140 0.95* 3.43* 43.27 N/A
NFJ Diversified Low P/E
Fund Institutional Class
11/01/95 - 06/30/96 $ (1.94) $12.46 16.24% $ 52,727 0.70%* 2.40%* 28.53% $ 0.06
10/31/95 (1.50) 12.53 24.98 14,443 0.70 2.50 71.02 0.06
10/31/94 (0.39) 11.55 0.15 15,442 0.70 2.34 43.70
10/31/93 (0.77) 11.92 26.35 22,930 0.70 2.43 28.19
12/30/91 - 10/31/92 (0.42) 10.05 4.68 18,083 0.70* 2.57* 72.77
NFJ Small Cap Value Fund
Institutional Class
11/01/95 - 06/30/96 $ (0.95) $ 14.20 16.35% $ 29,017 0.85%* 2.12%* 35.21% $ 0.04
10/31/95 (1.17) 13.10 19.88 35,093 0.85 2.25 49.57 0.04
10/31/94 (0.38) 12.07 (2.89) 31,236 0.85 2.23 48.12
10/31/93 (0.74) 12.81 23.60 46,523 0.85 2.05 41.80
10/31/92 (0.50) 10.98 13.75 18,261 0.85 2.16 26.77
10/01/91 - 10/31/91 (0.03) 10.09 1.19 5,060 1.09* 3.06* 0.00
Administrative Class
11/01/95 - 06/30/96 (0.93) 14.20 15.64 4,433 1.10* 1.86* 35.21 0.04
Cadence Capital
Appreciation Fund
Institutional Class
11/01/95 - 06/30/96 $ (1.18) $18.10 14.65% $348,728 0.70%* 1.33%* 73.48% $ 0.04
10/31/95 (0.18) 16.94 28.47 236,220 0.70 1.22 82.69 0.05
10/31/94 (0.18) 13.34 0.15 165,441 0.70 1.17 76.75
10/31/93 (0.61) 13.50 25.30 84,990 0.70 0.94 81.15
10/31/92 (0.94) 11.27 10.75 36,334 0.70 1.13 134.17
03/08/91 - 10/31/91 (0.09) 11.02 11.19 18,813 0.75* 1.55* 40.54
Cadence Mid Cap Growth Fund
Institutional Class
11/01/95 - 06/30/96 $ (0.57) $ 19.44 10.37% $231,011 0.70%* 1.11%* 78.81% $ 0.04
10/31/95 (0.07) 18.16 30.54 189,320 0.70 0.43 78.29 0.04
10/31/94 (0.07) 13.97 0.58 121,791 0.70 0.45 60.85
10/31/93 (0.09) 13.97 24.57 67,625 0.70 0.56 97.87
10/31/92 (0.12) 11.29 10.91 21,213 0.70 0.87 65.92
08/26/91 - 10/31/91 (0.01) 10.28 2.98 2,748 0.82* 0.92* 13.41
</TABLE>
25
<PAGE>
FINANCIAL HIGHLIGHTS (Cont.)
Selected Per Share Data
for the Year or Period Ended:
<TABLE>
<CAPTION>
Net Realized/
Net Asset Net Unrealized Total Income Dividends Dividends in Distributions
Value Investment Gain from from Net Excess of Net from Net
Beginning of Income (Loss) on Investment Investment Investment Realized
Period (Loss) Investments Operations Income Income Capital Gains
<S> <C> <C> <C> <C> <C> <C> <C>
Cadence Mid Cap Growth
Fund Administrative Class
11/01/95 - 06/30/96 $ 18.17 $ 0.28 $ 1.53 $ 1.81 $(0.11) $ 0.00 $(0.43)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
11/30/94 - 10/31/95 13.31 0.03 4.85 4.88 (0.02) 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
Cadence Micro Cap Growth
Fund Institutional Class
11/01/95 - 06/30/96 $ 15.38 $ 0.00 $ 3.43 $ 3.43 $ 0.00 $ 0.00 $(0.34)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/95 11.87 (0.04) 3.55 3.51 0.00 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/94 11.06 (0.03) 0.84 0.81 0.00 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
06/25/93 - 10/31/93 10.00 0.00 1.07 1.07 0.00 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
Administrative Class
04/01/96 - 06/30/96 16.73 0.03 1.70 1.73 0.00 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
Cadence Small Cap Growth
Fund
Institutional Class
11/01/95 - 06/30/96 $ 21.02 $ 2.02 $(0.61) $ 1.41 $ 0.00 $ 0.00 $(1.60)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/95 19.38 (0.05) 3.12 3.07 0.00 0.00 (1.43)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/94 19.15 (0.02) 0.89 0.87 0.00 0.00 (0.64)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/93 15.80 (0.06) 6.19 6.13 0.00 0.00 (2.78)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/92 14.87 0.01 1.50 1.51 (0.01) 0.00 (0.57)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
01/07/91 - 10/31/91 10.00 0.02 5.03 5.05 (0.02) 0.00 (0.16)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
Administrative Class
11/01/95 - 06/30/96 21.01 2.02(a) (0.61)(a) 1.41 0.00 0.00 (1.60)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
09/27/95 - 10/31/95 21.90 (0.02) (0.87) (0.89) 0.00 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
Columbus Circle Investors
Core Equity Fund
Institutional Class
11/01/95 - 06/30/96 $ 12.72 $ 0.51 $ 0.65 $ 1.16 $(0.04) $(0.01) $(0.28)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
12/28/94 - 10/31/95 10.00 0.07 2.71 2.78 (0.06) 0.00 0.00
-------- ------ ------ ------ ------ ------ ------
Administrative Class
11/01/95 - 06/30/96 12.73 0.49 0.65 1.14 (0.02) (0.01) (0.28)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
05/31/95 - 10/31/95 11.45 0.02 1.28 1.30 (0.02) 0.00 0.00
-------- ------ ------ ------ ------ ------ ------
Columbus Circle Investors
Mid Cap Equity Fund
Institutional Class
11/01/95 - 06/30/96 $ 12.92 $ 0.49 $ 1.62 $ 2.11 $ 0.00 $ 0.00 $(0.37)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
12/28/94 - 10/31/95 10.00 0.02 2.92 2.94 (0.02) 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
Parametric Enhanced Equity
Fund
Institutional Class
11/01/95 - 06/30/96 $14.44 $ 0.34 $ 1.67 $ 2.01 $(0.16) $ 0.00 $(0.38)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/95 11.99 0.25 2.62 2.87 (0.25) 0.00 (0.17)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/94 12.08 0.25 (0.04) 0.21 (0.25) 0.00 (0.05)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/93 11.76 0.23 0.74 0.97 (0.23) 0.00 (0.42)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
10/31/92 10.80 0.16 1.06 1.22 (0.16) 0.00 (0.04)
- --------------------------- -------- ------ ------ ------ ------ ------ ------
02/11/91 - 10/31/91 10.00 0.16 0.80 0.96 (0.16) 0.00 0.00
- --------------------------- -------- ------ ------ ------ ------ ------ ------
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
Periods ending prior to 06/30/96 were audited by other independent accountants.
See Notes to Financial Statements
26
<PAGE>
<TABLE>
<CAPTION>
Distributions Tax Basis Net Asset
from Return of Total Value End Total
Equalization Capital Distributions of Period Return
<S> <C> <C> <C> <C> <C>
Cadence Mid Cap Growth
Fund Administrative Class
11/01/95 - 06/30/96 $ 0.00 $ 0.00 $ (0.54) $ 19.44 10.17%
- --------------------------- ------ ------- -------- ------- -----
11/30/94 - 10/31/95 0.00 0.00 (0.02) 18.17 36.64
- --------------------------- ------ ------- -------- ------- -----
Cadence Micro Cap Growth
Fund Institutional Class
11/01/95 - 06/30/96 $ 0.00 $ 0.00 $ (0.34) $ 18.47 22.64%
- --------------------------- ------ ------- -------- ------- -----
10/31/95 0.00 0.00 0.00 15.38 29.54
- --------------------------- ------ ------- -------- ------- -----
10/31/94 0.00 0.00 0.00 11.87 7.31
- --------------------------- ------ ------- -------- ------- -----
06/25/93 - 10/31/93 0.00 (0.01) (0.01) 11.06 10.81
- --------------------------- ------ ------- -------- ------- -----
Administrative Class
04/01/96 - 06/30/96 0.00 0.00 0.00 18.46 10.34
- --------------------------- ------ ------- -------- ------- -----
Cadence Small Cap Growth
Fund Institutional Class
11/01/95 - 06/30/96 $ 0.00 $ 0.00 $ (1.60) $ 20.83 7.22%
- --------------------------- ------ ------- -------- ------- -----
10/31/95 0.00 0.00 (1.43) 21.02 17.39
- --------------------------- ------ ------- -------- ------- -----
10/31/94 0.00 0.00 (0.64) 19.38 4.62
- --------------------------- ------ ------- -------- ------- -----
10/31/93 0.00 0.00 (2.78) 19.15 38.80
- --------------------------- ------ ------- -------- ------- -----
10/31/92 0.00 0.00 (0.58) 15.80 10.20
- --------------------------- ------ ------- -------- ------- -----
01/07/91 - 10/31/91 0.00 0.00 (0.18) 14.87 50.68
- --------------------------- ------ ------- -------- ------- -----
Administrative Class
11/01/95 - 06/30/96 0.00 0.00 (1.60) 20.82 7.18
- --------------------------- ------ ------- -------- ------- -----
09/27/95 - 10/31/95 0.00 0.00 0.00 21.01 (5.34)
- --------------------------- ------ ------- -------- ------- -----
Columbus Circle Investors
Core Equity Fund
Institutional Class
11/01/95 - 06/30/96 $ 0.00 $ 0.00 $ (0.33) $ 13.55 9.41%
- --------------------------- ------ ------- -------- ------- -----
12/28/94 - 10/31/95 0.00 0.00 (0.06) 12.72 27.86
- --------------------------- ------ ------- -------- ------- -----
Administrative Class
11/01/95 - 06/30/96 0.00 0.00 (0.31) 13.56 9.23
- --------------------------- ------ ------- -------- ------- -----
05/31/95 - 10/31/95 0.00 0.00 (0.02) 12.73 11.34
- --------------------------- ------ ------- -------- ------- -----
Columbus Circle Investors
Mid Cap Equity Fund
Institutional Class
11/01/95 - 06/30/96 $ 0.00 $ 0.00 $ (0.37) $ 14.66 16.72%
- --------------------------- ------ ------- -------- ------- -----
12/28/94 - 10/31/95 0.00 0.00 (0.02) 12.92 29.34
- --------------------------- ------ ------- -------- ------- -----
Parametric Enhanced Equity
Fund
Institutional Class
11/01/95 - 06/30/96 $ 0.00 $ 0.00 $ (0.54) $ 15.91 14.21%
- --------------------------- ------ ------- -------- ------- -----
10/31/95 0.00 0.00 (0.42) 14.44 24.46
- --------------------------- ------ ------- -------- ------- -----
10/31/94 0.00 0.00 (0.30) 11.99 1.83
- --------------------------- ------ ------- -------- ------- -----
10/31/93 0.00 0.00 (0.65) 12.08 8.20
- --------------------------- ------ ------- -------- ------- -----
10/31/92 (0.06) 0.00 (0.26) 11.76 11.46
- --------------------------- ------ ------- -------- ------- -----
02/11/91 - 10/31/91 0.00 0.00 (0.16) 10.80 9.59
- --------------------------- ------ ------- -------- ------- -----
<CAPTION>
Ratio of Net
Ratio of Investment
Net Assets Expenses to Income to Portfolio Average
End of Period Average Net Average Net Turnover Commission
(000's) Assets Assets Rate Rate
<S> <C> <C> <C> <C> <C>
Cadence Mid Cap Growth
Fund Administrative Class
11/01/95 - 06/30/96 $ 1,071 0.95%* 0.89%* 78.81% $ 0.04
- --------------------------- --------- ---------- ---------- ---------- -------
11/30/94 - 10/31/95 892 0.94* 0.23* 71.73 N/A
- --------------------------- --------- ---------- ---------- ---------- -------
Cadence Micro Cap Growth
Fund Institutional Class
11/01/95 - 06/30/96 $83,973 1.50%* (0.45%)* 53.96% $ 0.02
- --------------------------- --------- ---------- ---------- ---------- -------
10/31/95 69,775 1.50 (0.37) 86.68 0.03
- --------------------------- --------- ---------- ---------- ---------- -------
10/31/94 32,605 1.50 (0.25) 58.81
- --------------------------- --------- ---------- ---------- ----------
06/25/93 - 10/31/93 10,827 1.50* (0.02)* 15.98
- --------------------------- --------- ---------- ---------- ----------
Administrative Class
04/01/96 - 06/30/96 566 1.73* (0.74)* 53.96 0.02
- --------------------------- --------- ---------- ---------- ---------- -------
Cadence Small Cap Growth
Fund Institutional Class
11/01/95 - 06/30/96 $32,954 1.25%* (0.20%)* 59.00% $ 0.02
- --------------------------- --------- ---------- ---------- ---------- -------
10/31/95 73,977 1.25 (0.27) 85.61 0.02
- --------------------------- --------- ---------- ---------- ---------- -------
10/31/94 50,425 1.25 (0.33) 65.53
- --------------------------- --------- ---------- ---------- ----------
10/31/93 43,308 1.25 (0.35) 62.15
- --------------------------- --------- ---------- ---------- ----------
10/31/92 33,734 1.25 0.09 66.05
- --------------------------- --------- ---------- ---------- ----------
01/07/91 - 10/31/91 33,168 1.29* 0.11* 47.84
- --------------------------- --------- ---------- ---------- ----------
Administrative Class
11/01/95 - 06/30/96 112 1.50* (0.41)* 59.00 0.02
- --------------------------- --------- ---------- ---------- ---------- -------
09/27/95 - 10/31/95 544 1.60* (0.82)* 8.80 N/A
- --------------------------- --------- ---------- ---------- ---------- -------
Columbus Circle Investors
Core Equity Fund
Institutional Class
11/01/95 - 06/30/96 $10,452 0.82%* 0.53%* 73.16% $ 0.04
- --------------------------- --------- ---------- ---------- ---------- -------
12/28/94 - 10/31/95 7,791 0.82* 0. 79* 122.88 0.03
- --------------------------- --------- ---------- ---------- ---------- -------
Administrative Class
11/01/95 - 06/30/96 33,575 1.07* 0.28* 73.16 0.04
- --------------------------- --------- ---------- ---------- ---------- -------
05/31/95 - 10/31/95 24,645 1.06* 0.34* 57.96 N/A
- --------------------------- --------- ---------- ---------- ---------- -------
Columbus Circle Investors
Mid Cap Equity Fund
Institutional Class
11/01/95 - 06/30/96 $ 8,378 0.88%* (0.32%)* 96.62% $ 0.03
- --------------------------- --------- ---------- ---------- ---------- -------
12/28/94 - 10/31/95 8,357 0.88* 0.24* 131.58 0.04
- --------------------------- --------- ---------- ---------- ---------- -------
Parametric Enhanced Equity
Fund
Institutional Class
11/01/95 - 06/30/96 $ 83,425 0.70%* 1.58%* 52.83% $0.05
- --------------------------- --------- ---------- ---------- ---------- -------
10/31/95 73,999 0.70 1.91 20.59 0.05
- --------------------------- --------- ---------- ---------- ---------- -------
10/31/94 65,915 0.70 2.20 43.58
- --------------------------- --------- ---------- ---------- ----------
10/31/93 46,724 0.70 1.89 15.02
- --------------------------- --------- ---------- ---------- ----------
10/31/92 36,515 0.70 1.81 16.85
- --------------------------- --------- ---------- ---------- ----------
02/11/91 - 10/31/91 4,451 0.73* 2.14* 0.15
- --------------------------- --------- ---------- ---------- ----------
</TABLE>
27
<PAGE>
FINANCIAL HIGHLIGHTS (Cont.)
<TABLE>
<CAPTION>
------------
Selected Per Share Data ------------ ---------- Net Realized/ ------------
for the Year or Period Ended: Net Asset Net Unrealized Total Income
Value Investment Gain from
Beginning of Income (Loss) on Investment
Period (Loss) Investments Operations
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
Blairlogie Emerging Markets Fund
Institutional Class
11/01/95 - 06/30/96 $11.27 $ 0.03 $ 1.40 $ 1.43
- -------------------------------- ------ ------ ------ ------
10/31/95 16.53 0.07 (4.55) (4.48)
- -------------------------------- ------ ------ ------ ------
10/31/94 12.27 (0.01) 4.45 4.44
- -------------------------------- ------ ------ ------ ------
06/01/93 - 10/31/93 10.00 0.03 2.52 2.55
- -------------------------------- ------ ------ ------ ------
Administrative Class
11/01/95 - 06/30/96 11.24 0.02 (a) 1.40 (a) 1.42
- -------------------------------- ------ ------ ------ ------
10/31/95 16.95 0.00 (4.95) (4.95)
- -------------------------------- ------ ------ ------ ------
Blairlogie International Active
Fund Institutional Class
11/01/95 - 06/30/96 $11.74 $ 0.72 $ 0.72 $ 1.44
- -------------------------------- ------ ------ ------ ------
10/31/95 11.86 0.10 0.30 0.40
- -------------------------------- ------ ------ ------ ------
10/31/94 10.69 0.09 1.15 1.24
- -------------------------------- ------ ------ ------ ------
06/08/93 - 10/31/93 10.00 0.05 0.69 0.74
- -------------------------------- ------ ------ ------ ------
Administrative Class
11/01/95 - 06/30/96 11.73 0.69 (a) 0.72 (a) 1.41
- -------------------------------- ------ ------ ------ ------
11/30/94 - 10/31/95 11.21 0.02 1.01 1.03
- -------------------------------- ------ ------ ------ ------
Balanced Fund
Institutional Class
11/01/95 - 06/30/96 $ 11.89 $ 0.27 $ 0.76 $ 1.03
- -------------------------------- ------ ------ ------ ------
10/31/95 10.35 0.44 1.54 1.98
- -------------------------------- ------ ------ ------ ------
10/31/94 10.84 0.34 (0.34) 0.00
- -------------------------------- ------ ------ ------ ------
10/31/93 10.42 0.35 0.68 1.03
- -------------------------------- ------ ------ ------ ------
06/25/92 - 10/31/92 10.00 0.12 0.52 0.64
- -------------------------------- ------ ------ ------ ------
</TABLE>
FINANCIAL HIGHLIGHTS (Cont.)
<TABLE>
<CAPTION>
---------- ------------- -------------
Selected Per Share Data Dividends Dividends in Distributions
for the Year or Period Ended: from Net Excess of Net from Net
Investment Investment Realized
Income Income Capital Gains
---------- ------------- -------------
<S> <C> <C> <C>
Blairlogie Emerging Markets Fund
Institutional Class
11/01/95 - 06/30/96 $(0.04) $ 0.00 $ 0.00
- -------------------------------- ------ ------ ------
10/31/95 (0.06) 0.00 (0.72)
- -------------------------------- ------ ------ ------
10/31/94 0.00 0.00 (0.18)
- -------------------------------- ------ ------ ------
06/01/93 - 10/31/93 (0.02) 0.00 (0.26)
- -------------------------------- ------ ------ ------
Administrative Class
11/01/95 - 06/30/96 (0.03) 0.00 0.00
- -------------------------------- ------ ------ ------
10/31/95 (0.05) 0.00 (0.71)
- -------------------------------- ------ ------ ------
Blairlogie International Active
Fund Institutional Class
11/01/95 - 06/30/96 $(0.07) $(0.36) $(0.21)
- -------------------------------- ------ ------ ------
10/31/95 (0.09) 0.00 (0.43)
- -------------------------------- ------ ------ ------
10/31/94 (0.03) 0.00 (0.04)
- -------------------------------- ------ ------ ------
06/08/93 - 10/31/93 (0.04) 0.00 (0.01)
- -------------------------------- ------ ------ ------
Administrative Class
11/01/95 - 06/30/96 (0.07) (0.35) (0.21)
- -------------------------------- ------ ------ ------
11/30/94 - 10/31/95 (0.08) 0.00 (0.43)
- -------------------------------- ------ ------ ------
Balanced Fund
Institutional Class
11/01/95 - 06/30/96 $(0.27) $ 0.00 $(1.01)
- -------------------------------- ------ ------ ------
10/31/95 (0.44) 0.00 0.00
- -------------------------------- ------ ------ ------
10/31/94 (0.34) 0.00 (0.15)
- -------------------------------- ------ ------ ------
10/31/93 (0.35) 0.00 (0.26)
- -------------------------------- ------ ------ ------
06/25/92 - 10/31/92 (0.12) 0.00 (0.10)
- -------------------------------- ------ ------ ------
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
Periods ending prior to 06/30/96 were audited by other independent accountants.
See Notes to Financial Statements
28
<PAGE>
FINANCIAL HIGHLIGHTS (Cont.)
<TABLE>
<CAPTION>
------------- ------------ ------------ -------------
Selected Per Share Data Net Asset Net Assets
for the Year or Period Ended: Total Value End of End of Period
Distributions Period Total Return (000's)
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Blairlogie Emerging Markets Fund
Institutional Class
11/01/95 - 06/30/96 $(0.04) $ 12.66 12.70% $80,545
- -------------------------------- ------ ------- ------ -------
10/31/95 (0.78) 11.27 (27.70) 73,539
- -------------------------------- ------ ------- ------ -------
10/31/94 (0.18) 16.53 36.31 79,620
- -------------------------------- ------ ------- ------ -------
06/01/93 - 10/31/93 (0.28) 12.27 25.55 14,625
- -------------------------------- ------ ------- ------ -------
Administrative Class
11/01/95 - 06/30/96 (0.03) 12.63 12.70 368
- -------------------------------- ------ ------- ------ -------
10/31/95 (0.76) 11.24 (27.96) 830
- -------------------------------- ------ ------- ------ -------
Blairlogie International Active
Fund Institutional Class
11/01/95 - 06/30/96 $(0.64) $ 12.54 12.54% $70,207
- -------------------------------- ------ ------- ------ -------
10/31/95 (0.52) 11.74 3.83 63,607
- -------------------------------- ------ ------- ------ -------
10/31/94 (0.07) 11.86 11.68 22,569
- -------------------------------- ------ ------- ------ -------
06/08/93 - 10/31/93 (0.05) 10.69 7.39 8,299
- -------------------------------- ------ ------- ------ -------
Administrative Class
11/01/95 - 06/30/96 (0.63) 12.51 12.33 5,624
- -------------------------------- ------ ------- ------ -------
11/30/94 - 10/31/95 (0.51) 11.73 9.61 675
- -------------------------------- ------ ------- ------ -------
Balanced Fund
Institutional Class
11/01/95 - 06/30/96 $(1.28) $11.64 9.07% $ 82,562
- -------------------------------- ------ ------- ------ -------
10/31/95 (0.44) 11.89 19.47 72,638
- -------------------------------- ------ ------- ------ -------
10/31/94 (0.49) 10.35 0.08 130,694
- -------------------------------- ------ ------- ------ -------
10/31/93 (0.61) 10.84 10.06 126,410
- -------------------------------- ------ ------- ------ -------
06/25/92 - 10/31/92 (0.22) 10.42 6.40 99,198
- -------------------------------- ------ ------- ------ -------
</TABLE>
FINANCIAL HIGHLIGHTS (Cont.)
<TABLE>
<CAPTION>
----------- ------------ --------- ----------
Ratio of Net
Selected Per Share Data Ratio of Investment
for the Year or Period Ended: Expenses to Income to Portfolio Average
Average Net Average Net Turnover Commission
Assets Assets Rate Rate
----------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Blairlogie Emerging Markets Fund
Institutional Class
11/01/95 - 06/30/96 1.35%* 0.84%* 74.04% $0.01
- -------------------------------- ----- ----- ------ -----
10/31/95 1.35 0.57 118.18 0.03
- -------------------------------- ----- ----- ------ -----
10/31/94 1.35 (0.06) 79.04
- -------------------------------- ----- ----- ------
06/01/93 - 10/31/93 1.34* 0.64* 36.51
- -------------------------------- ----- ----- ------
Administrative Class
11/01/95 - 06/30/96 1.61* 0.18* 74.04 0.01
- -------------------------------- ----- ----- ------ -----
10/31/95 1.62 0.02 118.18 N/A
- -------------------------------- ----- ----- ------ -----
Blairlogie International Active
Fund Institutional Class
11/01/95 - 06/30/96 1.10%* 0.81%* 59.56% $0.02
- -------------------------------- ----- ----- ------ -----
10/31/95 1.10 1.10 63.12 0.03
- -------------------------------- ----- ----- ------ -----
10/31/94 1.10 1.12 88.55
- -------------------------------- ----- ----- ------
06/08/93 - 10/31/93 1.10* 0.91* 19.61
- -------------------------------- ----- ----- ------
Administrative Class
11/01/95 - 06/30/96 1.35* 1.04* 59.56 0.02
- -------------------------------- ----- ----- ------ -----
11/30/94 - 10/31/95 1.34* 0.50* 58.07 N/A
- -------------------------------- ----- ----- ------ -----
Balanced Fund
Institutional Class
11/01/95 - 06/30/96 0.70%* 3.46%* 139.59% $ 0.05
- -------------------------------- ----- ----- ------ -----
10/31/95 0.70 3.73 43.10 0.04
- -------------------------------- ----- ----- ------ -----
10/31/94 0.70 3.25 46.72
- -------------------------------- ----- ----- ------
10/31/93 0.70 3.10 19.32
- -------------------------------- ----- ----- ------
06/25/92 - 10/31/92 0.70* 3.36* 38.51
- -------------------------------- ----- ----- ------
</TABLE>
29
<PAGE>
SCHEDULE OF INVESTMENTS
NFJ Equity Income Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- --------------------------------------------------------------------------------
Common Stocks - 98.4%
- --------------------------------------------------------------------------------
<S> <C> <C>
Capital Goods - 2.0%
GATX Corp. 50,000 $ 2,413
Consumer Discretionary - 16.0%
Brunswick Corp. 118,500 2,370
Chrysler Corp. 38,180 2,367
Ford Motor Co. 73,900 2,393
Harland (John H.) Co. 100,100 2,465
J.C. Penney Co., Inc. 47,400 2,489
Maytag Corp. 117,300 2,449
Springs Industries, Inc. 51,800 2,616
Xerox Corp. 46,000 2,461
--------
19,610
Consumer Staples - 7.8%
Anheuser Busch 32,100 2,408
Philip Morris Co., Inc. 23,100 2,402
RJR Nabisco Holdings Corp. 74,600 2,313
Supervalu, Inc. 76,100 2,397
--------
9,520
Energy - 9.6%
Amoco Corp. 33,400 2,417
Atlantic Richfield Co. 20,300 2,406
Repsol 68,600 2,384
Ultramar Corp. 159,800 4,634
--------
11,841
Financial & Business Services - 19.6%
Aetna Life & Casualty Co. 33,600 2,402
Bankers Trust N.Y. Corp. 33,200 2,453
Bear Stearns Cos. 195,187 4,611
Chase Manhattan Corp. 34,656 2,448
Meditrust 73,600 2,456
Mellon Bank Corp. 42,600 2,428
PHH Corp. 43,500 2,480
PNC Bank Corp. 78,300 2,329
Provident Cos. Inc. 66,200 2,449
--------
24,056
Health Care - 8.0%
American Home Products 41,000 2,465
Baxter International, Inc. 50,800 2,400
Bristol Myers Squibb 26,900 2,421
Pharmacia & Upjohn, Inc. 56,795 2,520
--------
9,806
Materials & Processing - 9.5%
Dow Chemical 30,200 2,295
Phelps Dodge Corp. 73,500 4,585
Potlatch Corp. 62,500 2,445
PPG Industries, Inc. 49,000 2,389
--------
11,714
Technology - 5.9%
Harris Corp. 40,400 2,464
Northrop Grumman Corp. 70,600 4,810
--------
7,274
Utilities - 20.0%
DTE Energy Co. 79,400 2,451
NICOR, Inc. 87,700 2,488
P.P. & L. Resources, Inc. 103,200 2,438
Pacific Gas & Electric 108,200 2,516
Pacific Telesis 73,000 2,464
Peoples Energy Corp. 72,500 2,429
Southern New England
Telecommunications Corp. 58,100 2,440
Sprint Corp. 58,200 2,444
U.S. West Communications Group 77,500 2,470
Washington Water Power 131,900 2,457
--------
24,597
--------
Total Common Stocks 120,831
(Cost $103,159) --------
- --------------------------------------------------------------------------------
Short-Term Instruments - 0.0%
- --------------------------------------------------------------------------------
Principal
Amount
(000's)
Repurchase Agreement - 0.0%
State Street Bank $ 32 32
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 9.250% due
02/15/16 valued at $32,030.
Repurchase proceeds are $32,011.)
--------
Total Short-Term Instruments 32
(Cost $32) ========
Total Investments (a) - 98.4% $120,863
(Cost $103,191)
Other Assets and Liabilities (Net) - 1.6% 1,948
--------
Net Assets - 100.0% $122,811
========
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of
value over tax cost. $ 18,989
Aggregate gross unrealized depreciation for all
investments in which there was an excess of
tax cost over value. (1,338)
--------
Unrealized appreciation-net $ 17,651
========
</TABLE>
See Notes to Financial Statements
30
<PAGE>
SCHEDULE OF INVESTMENTS
NFJ Diversified Low P/E Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- --------------------------------------------------------------------------------
Common Stocks - 93.0%
- --------------------------------------------------------------------------------
<S> <C> <C>
Capital Goods - 1.8%
Deere & Co. 23,600 $ 944
Consumer Discretionary - 15.7%
Brunswick Corp. 23,200 464
Chrysler Corp. 22,105 1,371
Dillard Department Stores 26,500 967
Goodyear Tire & Rubber 17,900 864
Maytag Corp. 67,900 1,417
Reebok International Limited 14,600 491
Tandy Corp. 10,200 483
Tupperware Corp. (b) 11,000 465
Washington Post Co. 2,700 875
Xerox Corp. 16,500 883
-------
8,280
Consumer Staples - 10.5%
Anheuser Busch 18,900 1,418
IBP, Inc. 30,100 832
Philip Morris Co., Inc. 13,400 1,394
Supervalu, Inc. 29,800 939
Unilever NV 6,600 958
-------
5,541
Energy - 10.9%
Amoco Corp. 20,000 1,448
Atlantic Richfield Co. 8,100 960
Repsol SA ADR 41,400 1,439
Ultramar Corp. 48,000 1,392
Union Texas Petroleum Holdings, Inc. 24,600 480
-------
5,719
Financial & Business Services - 14.6%
Bear Stearns Cos. 38,850 918
Chase Manhattan Corp. 19,984 1,411
Loews Corp. 10,400 820
Mellon Bank Corp. 22,400 1,277
PHH Corp. 25,900 1,476
Provident Cos., Inc. 24,300 899
Standard Federal Bancorp. 23,200 893
-------
7,694
Health Care - 9.0%
American Home Products 23,700 1,425
Beckman Instruments 26,200 996
Pharmacia & Upjohn, Inc. 33,010 1,465
Tenet Healthcare Corp. (b) 40,400 863
-------
4,749
Materials & Processing - 7.9%
Lennar Corp. 37,250 931
Phelps Dodge Corp. 22,100 1,378
Union Carbide Corp. 24,400 970
Wellman, Inc. 20,300 475
Willamette Industries 7,200 427
-------
4,181
Technology - 8.1%
Harris Corp. 7,500 458
Mentor Graphics Corp. (b) 29,200 475
Northrop Grumman Corp. 13,800 940
Raytheon Co. 18,400 950
Seagate Technology (b) 22,000 990
Teradyne, Inc. (b) 28,100 484
-------
4,297
Transportation - 4.1%
AMR Corp. (b) 10,600 $ 965
Conrail, Inc. 17,900 1,187
-------
2,152
Utilities - 10.4%
DTE Energy Co. 39,000 1,204
NICOR, Inc. 32,800 931
Pacific Gas & Electric 40,200 935
Pacific Telesis 26,900 908
Sprint Corp. 35,200 1,477
-------
5,455
-------
Total Common Stocks 49,012
(Cost $45,852) =======
- --------------------------------------------------------------------------------
Short-Term Instruments - 12.5%
- --------------------------------------------------------------------------------
Principal
Amount
(000's)
Repurchase Agreement - 12.5%
State Street Bank $ 6,594 6,594
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 9.250% due 02/15/16
valued at $6,726,300. Repurchase
proceeds are $6,596,198.)
-------
Total Short-Term Instruments 6,594
(Cost $6,594) =======
Total Investments (a) - 105.5% $55,606
(Cost $52,446)
Other Assets and Liabilities (Net) - (5.5%) (2,879)
-------
Net Assets - 100.0% $52,727
=======
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 3,358
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (213)
-------
Unrealized appreciation-net $ 3,145
=======
</TABLE>
(b) Non-income producing security.
See Notes to Financial Statements
31
<PAGE>
SCHEDULE OF INVESTMENTS
NFJ Small Cap Value Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- ----------------------------------------------------------
Common Stocks - 94.1%
- ----------------------------------------------------------
Capital Goods - 10.5%
<S> <C> <C>
Barnes Group, Inc. 6,400 $ 327
Blount International, Inc. 'A' 9,800 309
Brenco, Inc. 20,900 337
Kysor Industrial Corp. 12,700 308
Oshkosh Truck Corp. 'B' 22,900 323
Regal Beloit 16,100 318
Scotsman Industries, Inc. 15,800 318
Smith (A.O.) Corp. 12,500 313
Tecumseh Products Co. 'A' 6,000 323
Varlen Corp. 13,750 289
Webb Corp. 18,100 362
-------
3,527
Consumer Discretionary - 10.4%
Blair Corp. 13,000 307
Borg Warner Automotive 8,200 324
Ennis Business Forms, Inc. 28,500 324
Fedders USA, Inc. 48,000 342
Garan, Inc. 18,900 321
Guilford Mills, Inc. 13,000 325
Harman International 6,600 325
Outboard Marine Corp. 16,600 301
Shopko Stores, Inc. 20,900 337
Stanhome, Inc. 11,000 292
Toro Co. 9,000 298
-------
3,496
Consumer Services - 1.9%
Bowne & Co., Inc. 14,700 303
Merrill Corp. 13,500 338
-------
641
Consumer Staples - 7.6%
Bindley Western Industries, Inc. 19,400 325
Dimon, Inc. 18,100 335
Fay's, Inc. 40,900 322
International Multifoods 17,400 318
Marsh Supermarkets, Inc. 'B' 28,400 334
Morningstar Group, Inc. (b) 28,900 322
Nash Finch Co. 17,800 285
Super Foods Services, Inc. 32,000 304
-------
2,545
Energy - 4.8%
Diamond Shamrock 10,700 309
KCS Energy, Inc. 10,900 313
Offshore Logistics, Inc. (b) 24,400 339
Swift Energy Co. (b) 18,000 324
World Fuel Services Corp. 17,000 308
-------
1,593
Financial & Business Services - 22.1%
Alex Brown, Inc. 6,400 362
American Bankers Insurance Group 7,000 305
American Health Properties 14,400 319
Capstead Mortgage Corp. 11,400 318
Collective BanCorp., Inc. 13,700 324
Commercial Federal Corp. 8,600 329
Cullen/Frost Bankers, Inc. 11,400 316
Eaton Vance Corp. 9,000 326
First Commerce Corp. 8,600 304
First Financial Corp. Wisconsin 15,300 344
Firstbank Puerto Rico 14,900 343
Fremont General 13,600 313
Glimcher Realty Trust 18,000 304
Hibernia Corp. 'A' 17,600 191
Inter-Regional Financial Group 13,050 339
Investors Financial Services Corp. 'A' 575 13
McGrath Rentcorp. 15,800 356
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (000's)
==========================================================
<S> <C> <C>
Morgan Keegan, Inc. 24,450 $ 324
Orion Capital Corp. 6,800 347
Pioneer Financial Services, Inc. 20,000 333
Raymond James Financial Corp. 14,400 326
South West Property Trust 23,000 308
Sovereign Bancorp, Inc. 32,750 328
U.S. Facilities 18,900 328
-------
7,400
Health Care - 3.0%
Allied Healthcare Products 24,100 223
Bergen Brunswig 'A' 11,315 314
Health Images, Inc. 15,900 185
ICN Pharmaceuticals, Inc. 12,124 282
-------
1,004
Materials & Processing - 16.2%
Amcast Industrial Corp. 17,400 352
Butler Manufacturing Co. 9,150 309
Caraustar Industries, Inc. 12,500 331
Castle (A.M.) & Co. 12,725 301
Cleveland Cliffs, Inc. 8,500 333
Commercial Metals 10,200 339
Continental Homes 14,500 312
First Mississippi 13,500 300
Gencorp 22,100 334
Kaman Corp. 26,800 271
Mosinee Paper Corp. 11,800 316
Nacco Industries, Inc. 5,600 310
Quanex Corp. 13,800 326
Standard Motor Products 17,500 313
Texas Industries, Inc. 4,800 329
Wellman, Inc. 13,700 320
Zeigler Coal Holding Co. 19,900 318
-------
5,414
Technology - 6.0%
Computer Data Systems, Inc. 600 13
Dallas Semiconductor Corp. 17,000 308
Innovex, Inc. 14,800 261
MacNeal-Schwendler Corp. 24,700 185
MTS Systems Corp. 16,500 347
Pioneer Standard Electronics 22,200 294
Thiokol Corp. 8,300 328
Wyle Electronics 8,000 264
-------
2,000
Transportation - 3.8%
APL Ltd. 12,000 314
Coachman Industries 8,500 298
Sea Containers Limited 'A' 17,200 327
Winnebago Industries 39,200 322
-------
1,261
Utilities - 7.8%
Central Hudson Gas & Electric 10,400 325
Commonwealth Energy System 13,800 355
Eastern Utilities Associates 16,700 328
Energen Corp. 13,800 305
Lincoln Telecommunications 19,400 318
Rochester Gas & Electric 15,600 335
Southern California Water Co. 14,600 321
United Illuminating 8,600 320
-------
2,607
-------
Total Common Stocks 31,488
=======
(Cost $27,608)
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000's) (000's)
- -----------------------------------------------------------
Short-Term Instruments - 5.8%
- -----------------------------------------------------------
<S> <C> <C>
Repurchase Agreement - 5.8%
State Street Bank $1,929 $ 1,929
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $1,969,225. Repurchase
proceeds are $1,929,643.)
--------
Total Short-Term Instruments 1,929
========
(Cost $1,929)
Total Investments (a) - 99.9% $33,417
(Cost $29,537)
Other Assets and Liabilities (Net) - 0.1% 33
--------
Net Assets - 100.0% $33,450
========
</TABLE>
Notes to Schedule of Investments ($ in thousands):
<TABLE>
<S> <C> <C>
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 4,914
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (1,163)
--------
Unrealized appreciation-net $ 3,751
========
(b) Non-income producing security.
</TABLE>
See Notes to Financial Statements
33
<PAGE>
SCHEDULE OF INVESTMENTS
Cadence Capital Appreciation Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- --------------------------------------------------------------
Common Stocks - 87.8%
- --------------------------------------------------------------
Capital Goods - 7.3%
<S> <C> <C>
Allied Signal, Inc. 93,500 $ 5,341
Johnson Controls, Inc. 65,500 4,552
Rockwell International Corp. 91,200 5,221
Sundstrand Corp. 124,600 4,563
United Technologies 48,700 5,601
--------
25,278
Consumer Discretionary - 12.6%
Black & Decker Corp. 103,500 3,998
Chrysler Corp. 80,400 4,985
Dayton Hudson Corp. 41,100 4,238
Gap, Inc. 136,700 4,391
Harley Davidson, Inc. 102,700 4,224
Mattel, Inc. 205,945 5,895
Nike, Inc. 59,500 6,114
Omnicom Group 101,600 4,724
TJX Cos., Inc. 156,300 5,275
--------
43,844
Consumer Services - 2.7%
La Quinta Inns, Inc. 159,500 5,343
Mirage Resorts (b) 78,100 4,217
--------
9,560
Consumer Staples - 4.0%
Albertson's, Inc. 107,400 4,444
Kroger Co. (b) 123,400 4,874
Safeway, Inc. (b) 144,000 4,752
--------
14,070
Energy - 3.9%
British Petroleum - ADR 40,400 4,318
Ensco International (b) 140,200 4,557
Vastar Resources, Inc. 123,200 4,605
--------
13,480
Financial & Business Services - 24.2%
Advanta Corp. 'B' 78,000 3,530
American Express 85,400 3,811
Bank of Boston Corp. 73,800 3,653
Bankamerica Corp. 53,100 4,022
Bear Stearns Cos. 176,885 4,179
Chase Manhattan Corp. 58,300 4,117
Citicorp 41,900 3,462
Equitable Cos., Inc. 158,900 3,953
Federal Home Loan Mortgage 50,400 4,309
First Chicago Corp. 84,702 3,314
First Tennessee National Corp. 42,600 1,306
First Union Corp. 67,900 4,133
Fleet Financial Group, Inc. 95,300 4,146
National City Corp. 112,300 3,945
NationsBank Corp. 51,400 4,247
Norwest Corp. 109,900 3,833
PNC Bank Corp. 130,595 3,885
Southtrust Corp. 145,700 4,098
TIG Holdings, Inc. 134,200 3,892
Transamerica Corp. 53,900 4,366
Travelers Group, Inc. 98,800 4,508
Wells Fargo & Co. 16,033 3,830
--------
84,539
Health Care - 12.0%
American Home Products 106,600 6,409
Boston Scientific Corp. (b) 103,000 4,635
Eli Lilly & Co. 73,500 4,778
HBO & Co. 85,300 5,779
Medtronic, Inc. 79,400 4,446
Pharmacia & Upjohn, Inc. 110,400 4,899
Rhone-Poulenc Rorer, Inc. 71,900 4,826
Schering-Plough 98,600 6,187
--------
41,959
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (000's)
- --------------------------------------------------------------
<S> <C> <C>
Materials & Processing - 3.7%
IMC Global, Inc. 110,200 $ 4,146
Millipore Corp. 97,000 4,062
Textron, Inc. 59,700 4,769
--------
12,977
Technology - 8.9%
Adaptec, Inc. (b) 104,100 4,932
Andrew Corp. (b) 116,950 6,286
Computer Associates International, Inc. 70,900 5,052
Gateway 2000, Inc. (b) 124,100 4,219
Tyco Labs 118,000 4,809
U.S. Robotics Corp. 65,900 5,634
--------
30,932
Transportation - 1.4%
Continental Airlines 'B' (b) 78,700 4,860
Utilities - 7.1%
Ameritech 70,100 4,162
American Electric Power, Inc. 101,800 4,339
Bell South 104,900 4,445
General Public Utilities 120,400 4,244
Nynex Corp. 76,100 3,614
Texas Utilities Co. 94,100 4,022
--------
24,826
--------
Total Common Stocks 306,325
========
(Cost $255,676)
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Short-Term Instruments - 10.6%
- --------------------------------------------------------------
Principal
Amount
(000's)
Repurchase Agreement - 10.6%
<S> <C> <C>
State Street Bank $ 36,711 36,711
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $37,449,325. Repurchase
proceeds are $36,723,237.)
--------
Total-Short Term Instruments 36,711
========
(Cost $36,711)
Total Investments (a) - 98.4% $343,036
(Cost $292,387)
Other Assets and Liabilities (Net) - 1.6% 5,692
--------
Net Assets - 100.0% $348,728
========
</TABLE>
Notes to Schedule of Investments ($ in thousands):
<TABLE>
<CAPTION>
<S> <C>
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 52,003
Aggregated gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (1,354)
--------
Unrealized appreciation-net $ 50,649
========
</TABLE>
(b) Non-income producing security.
See Notes to Financial Statements
34
<PAGE>
SCHEDULE OF INVESTMENTS
Cadence Mid Cap Growth Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- -------------------------------------------------------------------------------
Common Stock's - 94.8%
- -------------------------------------------------------------------------------
<S> <C> <C>
Capital Goods - 11.9%
Belden, Inc. 112,000 $ 3,360
EG&G, Inc. 126,400 2,702
Harnischfeger Industries, Inc. 79,700 2,650
Mark IV Industries, Inc. 110,711 2,505
McDonnell Douglas 76,300 3,701
Raychem Corp. 54,600 3,924
Stolt-Nielsen SA - ADR 100 2
Stolt-Nielsen SA 140,900 2,554
United Dominion Industries 116,500 2,680
York International Corp. 65,800 3,405
-------
27,483
Consumer Discretionary - 11.0%
Callaway Golf Co. 129,400 4,303
Consolidated Stores Corp. (b) 65,300 2,400
Dollar General Corp. 78,900 2,308
First Brands Corp. 145,100 3,918
Liz Claiborne, Inc. 78,400 2,715
Mattel, Inc. 131,589 3,767
Omnicom Group 62,100 2,888
Tiffany & Co. 45,700 3,336
-------
25,635
Consumer Services - 4.8%
Lennar Corp. 113,600 2,840
Oakwood Homes 129,300 2,667
Promus Hotel Corp. (b) 97,800 2,897
Redman Industries, Inc. (b) 135,900 2,820
-------
11,224
Consumer Staples - 2.8%
Kroger Co. (b) 86,300 3,409
Richfood Holdings, Inc. 96,800 3,146
-------
6,555
Energy - 2.6%
Reading & Bates Corp. (b) 131,800 2,916
Tosco Corp. 63,000 3,166
-------
6,082
Financial & Business Services - 30.8%
Advanta Corp. 'A' 47,650 2,430
Allmerica Financial Corp. 109,100 3,246
American Re Corp. 64,400 2,890
Bank of Boston Corp. 40,100 1,985
Baybanks, Inc. 19,200 2,069
Citizens Corp. 141,900 2,661
Comdisco, Inc. 120,650 3,212
Countrywide Credit Industries, Inc. 111,600 2,762
Crestar Financial Corp. 49,800 2,658
Cullen/Frost Bankers, Inc. 98,300 2,728
Equifax 112,800 2,961
Finova Group, Inc. 52,000 2,535
First American Corp. 54,100 2,279
First Commerce Corp. 63,700 2,253
First USA, Inc. 40,500 2,228
Green Tree Financial Corp. 88,400 2,763
Mark Twain Bancshares, Inc. 62,000 2,294
Mid Ocean Limited 70,300 2,882
Mutual Risk Management Limited 92,699 2,897
NAC Re Corp. 77,900 2,610
Penncorp Financial Group, Inc. 71,100 2,257
Protective Life Corp. 75,800 2,662
Southern National Corp. 100,600 3,194
Summit Bancorp. 76,060 2,672
SunAmerica, Inc. 59,450 3,359
The Money Store 103,200 2,283
Trustmark Corp. 17,000 357
Union Planters Corp. 80,100 2,433
-------
71,560
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (000's)
- -------------------------------------------------------------
<S> <C> <C>
Health Care - 11.1%
Beckman Instruments 75,900 $ 2,884
Boston Scientific Corp. (b) 61,100 2,750
Genzyme Corp. (b) 50,700 2,548
Guidant Corp. 50,500 2,487
HBO & Co. 55,400 3,753
Health Management Associates 'A' (b) 177,975 3,604
Ornda Healthcorp (b) 105,300 2,527
Sybron Corp. (b) 109,800 2,745
Watson Pharmaceutical, Inc. (b) 61,900 2,344
-------
25,642
Materials & Processing - 5.7%
Bemis, Inc. 86,800 3,038
Cytec Industries, Inc. (b) 43,500 3,719
Praxair, Inc. 89,000 3,760
Texas Industries, Inc. 40,000 2,745
-------
13,262
Technology - 10.0%
Analog Devices (b) 108,400 2,764
Ascend Communications, Inc. (b) 46,900 2,638
Cadence Designs Systems, Inc. (b) 82,400 2,780
Ceridian Corp. (b) 71,200 3,596
Credence Systems Co. (b) 8,160 110
McAfee Associates, Inc. (b) 71,700 3,513
MEMC Electronic Materials, Inc. (b) 57,200 2,217
Parametric Technology Corp. (b) 87,200 3,782
Structural Dynamics Research (b) 81,000 1,781
-------
23,181
Transportation - 1.7%
America West Airlines (b) 173,600 3,818
Utilities - 2.4%
Allegheny Power System 93,100 2,874
Portland General Corp. 84,300 2,602
-------
5,476
-------
Total Common Stocks 219,918
=======
(Cost $188,778)
</TABLE>
- ------------------------------------------------------------
Short-Term Instruments - 5.1%
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000's)
<S> <C> <C>
Repurchase Agreement - 5.1%
State Street Bank $ 11,937 11,937
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $12,178,550. Repurchase
proceeds are $11,940,979.)
-------
Total Short-Term Instruments 11,937
=======
(Cost $11,937)
Total Investments (a) - 99.9% $231,855
(Cost $200,715)
Other Assets and Liabilities (Net) - 0.1% 227
-------
Net Assets - 100.0% $232,082
=======
</TABLE>
35
<PAGE>
SCHEDULE OF INVESTMENTS (Cont.)
Cadence Mid Cap Growth Fund
June 30, 1996
- -------------------------------------------------------------------------------
Notes to Schedule of Investments ($ in thousands):
<TABLE>
<CAPTION>
<S> <C>
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 34,851
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (3,925)
----------
Unrealized appreciation-net $ 30,926
==========
</TABLE>
(b) Non-income producing security.
See Notes to Financial Statements
36
<PAGE>
SCHEDULE OF INVESTMENTS
Cadence Micro Cap Growth Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- ------------------------------------------------------------
Common Stocks - 95.9%
- ------------------------------------------------------------
<S> <C> <C>
Capital Goods - 9.1%
Gardner Denver Machinery, Inc. (b) 57,400 $ 1,514
Hughes Supply, Inc. 33,900 1,178
LSI Industries, Inc. 75,000 1,294
NCI Building Systems, Inc. (b) 39,150 1,321
Shaw Group, Inc. (b) 27,500 519
Watsco, Inc. 'A' 90,000 1,890
---------
7,716
Consumer Discretionary - 8.1%
Culp, Inc. 123,350 1,665
Custom Chrome, Inc. (b) 60,900 1,637
Day Runner, Inc. (b) 40,100 1,038
Duckwall-ALCO Stores, Inc. (b) 80,900 1,193
Orchard Supply Hardware Store (b) 42,300 1,274
---------
6,807
Consumer Services - 19.6%
All American
Communications, Inc. 'B'(b) 163,600 1,391
Ameristar Casinos, Inc. (b) 80,000 1,040
Aaron Rents, Inc. 'B' 108,200 1,366
Anchor Gaming (b) 27,000 1,627
Carmike Cinemas, Inc. (b) 34,700 937
Fresh America Corp. (b) 50,500 688
Ha-Lo Industries, Inc. (b) 53,700 1,396
M/I Schottenstein Homes, Inc. (b) 50,000 463
Penn National Gaming, Inc. (b) 75,700 1,684
Saga Communications, Inc. (b) 68,775 1,487
Sodak Gaming, Inc. (b) 44,800 1,366
United Video Satellite (b) 97,400 2,044
Youth Services International, Inc. (b) 59,750 1,061
---------
16,550
Consumer Staples - 5.3%
Foodbrands America, Inc. (b) 27,500 354
Morningstar Group, Inc. (b) 125,000 1,391
Sylvan, Inc. (b) 84,200 1,126
Riser Foods, Inc. 68,500 1,644
---------
4,515
Energy - 2.9%
Giant Industries 91,100 1,321
ICO, Inc. 208,000 1,170
---------
2,491
Financial & Business Services - 14.9%
Aames Financial Corp. 29,550 1,060
Chittenden Corp. 51,055 1,149
Community First Bankshares 45,400 1,067
Dime Financial Corp. 71,000 1,083
Graphic Industries 95,500 907
Peoples Heritage Financial Group 46,400 945
Pioneer Financial Services, Inc. 60,700 1,009
Provident Bankshares Corp. 31,174 1,029
Right Management Consultants (b) 31,200 1,139
Titan Holdings, Inc. 60,830 852
Vermont Financial Services Corp. 31,100 980
Warren Bancorp., Inc. 109,700 1,371
---------
12,591
Health Care - 11.3%
Conmed Corp. (b) 60,000 1,598
Health Images, Inc. 144,200 1,676
International Remote
Imaging Systems (b) 170,000 1,562
Rexall Sundown, Inc. (b) 73,650 1,989
Rotech Medical Corp. (b) 56,000 1,092
Vitalink Pharmacy Service (b) 70,100 1,630
---------
9,547
Materials & Processing - 3.8%
Castle (A.M.) & Co. 80,000 $ 1,890
Roanoke Electric Steel Corp. 96,550 1,339
---------
3,229
Technology - 19.3%
Barra, Inc. (b) 58,900 1,517
Bel Fuse, Inc. (b) 90,800 1,532
Ciber, Inc. (b) 75,000 1,650
Compucom Systems, Inc. (b) 151,100 1,643
Computer Data Systems, Inc. 60,500 1,346
Gelman Sciences, Inc. (b) 70,000 1,584
Ikos Systems, Inc. (b) 74,900 1,582
Quickturn Design Systems, Inc. (b) 104,300 1,512
STB Systems, Inc. 115,800 1,983
TCSI Corp. (b) 80,000 1,930
---------
16,279
Transportation - 1.6%
Atlantic Coast Airlines, Inc. (b) 105,400 1,377
---------
Total Common Stocks 81,102
---------
(Cost $58,852)
<CAPTION>
- ------------------------------------------------------------
Short -Term Instruments - 4.5%
- ------------------------------------------------------------
Principal
Amount
(000's)
<S> <C> <C>
Repurchase Agreement - 4.5%
State Street Bank $ 3,763 3,763
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $3,841,975. Repurchase
proceeds are $3,764,254.)
---------
Total Short-Term Instruments 3,763
---------
(Cost $3,763)
Total Investments (a) - 100.4% $ 84,865
(Cost $62,615)
Other Assets and Liabilities (Net) - (0.4%) (326)
---------
Net Assets - 100.0% $ 84,539
---------
</TABLE>
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 22,919
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (681)
---------
Unrealized appreciation-net $ 22,238
=========
(b) Non-income producing security.
See Notes to Financial Statements
37
<PAGE>
SCHEDULE OF INVESTMENTS
Cadence Small Cap Growth Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- ------------------------------------------------------------
Common Stocks - 96.2%
- ------------------------------------------------------------
<S> <C> <C>
Capital Goods - 15.7%
Blount International, Inc. 'A' 16,900 $ 532
Duriron Co., Inc. 15,400 370
Greenfield Industries, Inc. 11,400 376
Hughes Supply, Inc. 8,800 306
IDEX Corp. 14,600 555
Manitowoc Co., Inc. 7,200 258
Methode Electronics 'A' 36,450 620
NCI Building Systems, Inc. (b) 11,500 388
Roper Industries, Inc. 12,700 619
United Waste Systems, Inc. (b) 22,100 713
Watsco, Inc. 'A' 20,750 436
-------
5,173
Consumer Discretionary - 4.4%
Central Garden & Pet Co. (b) 9,100 164
K2, Inc. 22,200 602
Sturm, Ruger & Co., Inc. 7,100 330
Toro Co. 11,000 364
-------
1,460
Consumer Services - 6.8%
Continental Homes Holding Corp. 16,900 363
Gilat Satellite Networks Limited (b) 19,000 418
Ross Stores, Inc. 12,800 445
U.S. Home Corp. (b) 16,700 411
Wackenhut Corrections Corp. (b) 14,100 471
Westwood One, Inc. (b) 9,800 149
-------
2,257
Energy - 2.2%
Camco International, Inc. 10,900 369
Swift Energy Co. (b) 19,200 346
-------
715
Financial & Business Services - 30.3%
Allied Group, Inc. 12,800 557
American Travellers Co. (b) 23,650 544
Associated Banc-Corp. 12,187 472
Capital Re Corp. 11,600 426
Centura Banks, Inc. 11,200 412
City National Corp. 25,200 397
Colonial Bancgroup, Inc. 9,700 325
Executive Risk, Inc. 14,000 536
First Midwest Bancorp., Inc. 14,300 400
Green Tree Financial Corp. 12,700 397
HCC Insurance Holdings, Inc. 18,900 425
MMI Cos., Inc. 15,200 469
National Re Corp. 13,000 491
Penncorp Financial Group, Inc. 13,800 438
Peoples Heritage Financial Group 18,200 371
Protective Life Corp. 12,600 443
Reinsurance Group of America 11,600 438
Selective Insurance Group 12,200 397
The Money Store 15,400 341
Trenwick Group, Inc. 7,500 375
UST Corp. 30,200 449
Vesta Insurance Group, Inc. 15,050 502
Westamerica Bancorp. 8,200 412
-------
10,017
Health Care - 13.1%
Conmed Corp. (b) 15,000 399
ICN Pharmaceuticals, Inc. 13,900 323
Kinetic Concepts, Inc. 28,600 443
Magellan Health Services, Inc. (b) 4,100 88
Orthodontic Centers of America, Inc. (b) 17,400 461
Physician Reliance Network (b) 15,000 334
Physio-Control International Corp. (b) 22,700 400
Rotech Medical Corp. (b) 20,000 390
Universal Health Services, Inc. (b) 25,300 661
Vital Signs, Inc. 20,700 424
Watson Pharmaceutical, Inc. (b) 11,100 420
-------
4,343
Materials & Processing - 12.7%
Castle (A.M.) & Co. 15,525 367
Intertape Polymer Group, Inc. 22,100 448
Lone Star Industries, Inc. 11,800 397
Medusa Corp. 15,700 487
Mississippi Chemical Corp. 16,600 332
Mueller Industries, Inc. (b) 17,800 739
NN Ball & Roller, Inc. 16,950 352
Robbins & Myers, Inc. 10,200 454
Titan Wheel International, Inc. 24,525 392
Zeigler Coal Holding Co. 15,300 245
-------
4,213
Technology - 10.1%
Altron, Inc. (b) 22,700 460
Atmel Corp. (b) 17,400 524
Brightpoint, Inc. (b) 17,200 370
Datastream Systems, Inc. (b) 12,800 451
NU Horizons Electronics, Inc. (b) 10,700 118
Rational Software Corp. (b) 11,400 613
Sanmina Corp. (b) 18,400 497
Wyle Electronics 9,700 321
-------
3,354
Utilities - 0.9%
Vanguard Cellular Systems (b) 13,100 284
-------
Total Common Stocks 31,816
-------
(Cost $26,847)
- ------------------------------------------------------------
Short-Term Instruments - 3.2%
- ------------------------------------------------------------
Principal
Amount
(000's)
Repurchase Agreement - 3.2%
State Street Bank $ 1,054 1,054
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $1,078,250. Repurchase
proceeds are $1,054,351.)
-------
Total Short-Term Instruments 1,054
-------
(Cost $1,054)
Total Investments (a) - 99.4% $ 32,870
(Cost $27,901)
Other Assets and Liabilities (Net) - 0.6% 196
-------
Net Assets - 100.0% $ 33,066
=======
</TABLE>
38
<PAGE>
- ------------------------------------------------------------------
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 5,487
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (593)
----------
Unrealized appreciation-net $ 4,894
==========
(b) Non-income producing security.
See Notes to Financial Statements
39
<PAGE>
SCHEDULE OF INVESTMENTS
Columbus Circle Investors Core Equity Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- -----------------------------------------------------------------
Common Stocks - 98.8%
- -----------------------------------------------------------------
<S> <C> <C>
Capital Goods - 2.5%
Armstrong World Industries, Inc. 11,700 $ 674
Lockheed Martin Corp. 4,900 412
-------
1,086
Consumer Discretionary - 13.1%
Autozone, Inc. (b) 13,100 455
Black & Decker Corp. 23,600 912
Federated Department Stores, Inc. (b) 19,900 679
General Motors 'H' 11,300 679
Home Depot, Inc. 10,600 572
Liberty Media Group 'A' (b) 17,900 474
Nike, Inc. 7,100 730
TJX Cos., Inc. 23,700 800
Viacom, Inc. 'B' (b) 12,000 467
-------
5,768
Consumer Services - 3.6%
Circus Circus Enterprises, Inc. (b) 11,700 480
Dayton Hudson Corp. 6,000 619
Hilton Hotels Corp. 4,400 495
-------
1,594
Consumer Staples - 6.0%
Campbell Soup Co. 6,100 430
Kimberly Clark Corp. 9,400 726
Pepsico 42,500 1,503
-------
2,659
Energy - 4.7%
Amerada Hess Corp. 13,200 708
Schlumberger Limited 16,200 1,365
-------
2,073
Financial & Business Services - 8.7%
Aetna Life & Casualty Co. 10,700 765
Allstate Corp. 21,000 958
Chase Manhattan Corp. 16,800 1,187
Fleet Financial Group, Inc. 10,300 448
Merrill Lynch Co. 7,100 462
-------
3,820
Health Care - 11.5%
American Home Products 19,500 1,172
Bausch & Lomb, Inc. 10,600 451
Columbia HCA Healthcare Corp. 25,380 1,355
Johnson & Johnson 33,700 1,668
Oxford Health Plans (b) 9,600 395
-------
5,041
Materials & Processing - 1.5%
Georgia-Pacific Corp. (b) 9,400 667
Technology - 38.4%
Adaptec, Inc. (b) 11,500 545
Associates First Capital 17,900 673
Atmel Corp. (b) 15,800 476
Boeing 17,100 1,490
Cisco Systems (b) 24,100 1,365
Computer Associates International, Inc. (c) 14,650 1,044
Computer Sciences (b) 10,200 762
Ericsson (L.M.) - ADR 45,700 983
First Data Corp. 12,100 963
Hewlett Packard Co. 9,500 946
Honeywell, Inc. 12,100 659
Intel Corp. 18,300 1,344
Lucent Technologies 21,100 799
Microsoft Corp. (b) 14,900 1,790
Motorola, Inc. 14,000 880
Qualcomm, Inc. (b) 10,400 553
Service Corp. International 16,100 926
U.S. Robotics Corp. (b) 8,300 710
-------
16,908
Transportation - 4.2%
Delta Air Lines 12,400 1,029
Southwest Airlines 28,800 839
-------
1,868
Utilities - 4.6%
MCI Communications Corp. 44,300 1,135
Worldcom, Inc. (b) 16,100 891
-------
2,026
-------
Total Common Stocks 43,510
=======
(Cost $39,385)
</TABLE>
- -----------------------------------------------------------------
Short-Term Instruments - 1.9%
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000's)
Repurchase Agreement - 1.9%
<S> <C> <C>
State Street Bank $ 818 818
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 7.125% due 02/15/23
valued at $835,701. Repurchase
proceeds are $818,273.)
-------
Total Short-Term Instruments 818
=======
(Cost $818)
Total Investments (a) - 100.7% $44,328
(Cost $40,203)
Written Options (c) - 0.0% (2)
(Premium $6)
Other Assets and Liabilities (Net) - (0.7%) (299)
-------
Net Assets - 100.0% $44,027
=======
</TABLE>
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 4,611
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (486)
-------
Unrealized appreciation-net $ 4,125
=======
(b) Non-income producing security.
(c) Premium received on Written Covered Call Options:
<TABLE>
<CAPTION>
Premium Market
Type Contracts Received Value
- -------------------------------------------------------
<S> <C> <C> <C>
Computer Associates
International, Inc. 16 $ 6 $ 2
Strike @ 75.00 Exp. 7/96
</TABLE>
See Notes to Financial Statements
40
<PAGE>
SCHEDULE OF INVESTMENTS
Columbus Circle Investors Mid Cap Equity Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- ----------------------------------------------------------
Common Stocks - 97.7%
- ----------------------------------------------------------
<S> <C> <C>
Capital Goods - 4.9%
Raychem Corp. 3,000 $ 216
U.S.A. Waste Services, Inc. (b) 6,600 196
------
412
Consumer Discretionary - 24.7%
Bed Bath & Beyond, Inc. (b) 4,600 123
Boston Chicken, Inc. (b) 2,900 94
Callaway Golf Co. 5,500 183
Diebold, Inc. 4,950 239
Global DirectMail Corp. (b) 2,700 107
Gucci, Inc. (b) 4,300 277
Gymboree Corp. (b) 3,900 119
Harley Davidson, Inc. 4,400 181
International Game Technology 8,000 135
Jones Apparel Group, Inc. (b) 2,400 118
Liz Claiborne, Inc. 4,100 142
Meredith Corp. 1,200 50
Oakley, Inc. (b) 2,800 127
Omnicom Group, Inc. 1,900 88
Saks Holdings, Inc. (b) 2,600 89
------
2,072
Consumer Services - 22.4%
APAC Teleservices, Inc. (b) 6,600 238
Clear Channel Communications (b) 2,400 198
Diamond Offshore Drilling (b) 2,800 160
DST Systems, Inc. (b) 4,200 134
Gartner Group, Inc. (b) 3,900 143
HFS, Inc. (b) 5,500 385
Manpower, Inc. 2,900 114
MGM Grand, Inc. (b) 4,100 163
Peoplesoft, Inc. (b) 1,400 100
Quintiles Transnational Corp. (b) 1,600 105
Starbucks Corp. (b) 4,700 133
------
1,873
Energy - 5.4%
Ensco International (b) 5,600 182
Tosco Corp. 2,000 101
UCAR International, Inc. (b) 4,100 171
------
454
Financial & Business Services - 2.6%
Everest Reinsurance Holdings 8,300 215
Health Care - 7.6%
Guidant Corp. 5,600 276
Healthsouth Corp. (b) 7,200 259
Tenet Healthcare Corp. 4,700 100
------
635
Technology - 22.2%
Adaptec, Inc. (b) 2,600 123
American Management Systems (b) 7,100 208
Baan Co. (b) 3,800 129
Dassault Systemes SA - ADR (b) 3,200 99
Fore Systems (b) 5,000 181
Millicom International Cellular (b) 2,500 119
Netscape Communications Corp. (b) 1,700 106
Newbridge Networks Corp. (b) 3,600 236
Qualcomm, Inc. (b) 3,800 202
Sterling Commerce, Inc. (b) 3,800 141
Storage Technology Corp. (b) 3,500 134
Thermotrex Corp. (b) 2,100 103
Xylan Corp. (b) 1,800 83
------
1,864
Transportation - 5.4%
Atlas Air, Inc. (b) 1,900 $ 109
Comair, Inc. 4,650 126
Tidewater, Inc. 5,000 218
------
453
Utilities - 2.5%
MFS Communications Co., Inc. (b) 5,500 207
------
Total Common Stocks 8,185
======
(Cost $6,279)
</TABLE>
- ---------------------------------------------------------
Short-Term Instruments - 2.0%
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000's)
Repurchase Agreement - 2.0%
<S> <C> <C>
State Street Bank $ 170 170
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 7.125% due 02/15/23
valued at $174,318. Repurchase
proceeds are $170,057.)
-------
Total Short-Term Instruments 170
-------
(Cost $170)
Total Investments (a) - 99.7% $ 8,355
(Cost $6,449)
Other Assets and Liabilities (Net) - 0.3% 23
-------
Net Assets - 100.0% $ 8,378
=======
</TABLE>
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized
appreciation (depreciation) of investments
based on cost for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 1,992
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (86)
-------
Unrealized appreciation-net $ 1,906
=======
(b) Non-income producing security.
See Notes to Financial Statements
41
<PAGE>
SCHEDULE OF INVESTMENTS
Parametric Enhanced Equity Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
- -------------------------------------------------------
Common Stocks - 99.8%
- -------------------------------------------------------
<S> <C> <C>
Capital Goods - 5.0%
Allied Signal, Inc. 13,992 $ 799
Caterpillar, Inc. 3,400 230
Cummins Engine, Inc. 10,100 408
Emerson Electric Co. 4,900 443
General Electric 11,200 969
Grainger (W.W.), Inc. 4,900 380
Illinois Tool Works 1,900 128
Ingersoll Rand Co. 8,500 372
Northrop Grumman Corp. 7,100 484
Paccar, Inc. 730 36
-------
4,249
Consumer Discretionary - 15.2%
Albertson's, Inc. 4,337 179
American Brands, Inc. 5,300 240
American Stores Co. 6,800 281
Briggs & Stratton Co. 7,300 300
Cooper Tire & Rubber Corp. 10,600 236
Crown Cork & Seal 7,600 342
Dana Corp. 14,300 443
Dial Corp. 1,600 46
Dillard Department Stores 6,300 230
Disney (Walt) Productions Co. 11,000 692
Echlin, Inc. 5,000 189
Federated Department Stores, Inc. (b) 8,900 304
Fleming Cos., Inc. 2,493 36
FMC Corp. (b) 600 39
Genuine Parts Co. 8,300 380
Giant Foods, Inc. 3,000 108
Gillette Co. 7,500 468
Home Depot, Inc. 11,500 621
International Flavors & Fragrances 1,800 86
Kroger Co. (b) 10,700 423
Limited, Inc. 11,200 241
Liz Claiborne, Inc. 4,300 149
Lowes Co. 18,400 665
McDonalds Corp. 9,500 444
Minnesota Mining & Manufacturing Co. 7,000 483
Nike, Inc. 2,500 257
Premark International, Inc. 10,700 198
Procter & Gamble Co. 7,948 720
Reebok International Limited 10,700 360
Seagrams Limited 8,600 289
SPX Corp. 3,100 76
Toys R Us (b) 6,500 185
Tupperware Corp. (b) 10,700 452
Unilever NV 2,500 363
UST, Inc. 3,300 113
VF Corp. 4,100 244
Viacom, Inc. 'B' (b) 11,200 435
Wal-Mart Stores, Inc. 19,900 505
Walgreen Co. 9,623 322
Wendy's International, Inc. 11,200 209
Winn Dixie Stores 8,500 301
-------
12,654
Consumer Services - 2.9%
CUC International, Inc. (b) 11,050 392
Federal Express Corp. (b) 3,800 312
Harrah's Entertainment, Inc. (b) 15,100 427
King World Productions (b) 600 22
Mattel, Inc. 20,875 598
Sears Roebuck 13,400 652
-------
2,403
Consumer Staples - 7.2%
Anheuser Busch 4,400 330
Archer-Daniel Midland 8,834 169
Campbell Soup Co. 4,300 303
Coca-Cola Co. 25,000 1,222
Colgate Palmolive 1,000 85
Conagra 13,075 593
CPC International, Inc. 2,400 173
General Mills, Inc. 1,000 55
Heinz (H.J.) Co. 2,050 62
Kellogg Co. 1,754 128
Kimberly Clark Corp. 6,000 464
Pepsico 26,400 934
Philip Morris Co., Inc. 8,300 863
Sara Lee Corp. 8,800 285
Sysco Corp. 8,400 288
Wrigley, William Jr. Co. 1,900 96
-------
6,050
Energy - 6.3%
Amoco Corp. 6,600 478
Atlantic Richfield Co. 1,700 201
Chevron Corp. 7,800 460
Exxon Corp. 11,200 973
Mobil Corp. 5,161 579
Phillips Petroleum Co. 10,200 427
Royal Dutch Petroleum Co. 5,500 846
Schlumberger Limited 4,300 362
Texaco, Inc. 5,968 501
Unocal Corp. 12,129 409
-------
5,236
Financial & Business Services - 17.9%
American Express 14,200 634
American International Group, Inc. 5,637 556
Banc One Corp. 12,128 412
Bank of Boston Corp. 13,600 673
Bankamerica Corp. 9,900 750
Bankers Trust N.Y. Corp. 2,584 191
Barnett Banks 12,600 769
Chase Manhattan Corp. 19,179 1,355
Chubb Corp. 6,800 339
Cigna Corp. 3,100 365
Citicorp 11,383 941
Dean Witter Discover & Co. 3,000 172
Federal National Mortgage Assn. 30,000 1,005
First Chicago Corp. 5,350 209
First Union Corp. 13,315 811
Fleet Financial Group., Inc. 18,800 818
General Re Corp. 1,700 259
Golden West Financial Corp. 7,200 403
Jefferson Pilot Corp. 6,200 320
Merrill Lynch Co. 8,600 560
Morgan J.P. and Co., Inc. 3,058 259
NationsBank Corp. 6,166 509
Norwest Corp. 14,870 519
Safeco Corp. 6,100 216
St. Paul Cos., Inc. 4,800 257
Suntrust Banks, Inc. 15,200 561
Travelers Group, Inc. (b) 7,500 342
Wachovia Corp. 3,800 166
Wells Fargo & Co. 2,261 540
-------
14,911
Health Care - 10.5%
Abbott Laboratories 13,200 574
American Home Products 9,300 559
Amgen, Inc. (b) 4,500 243
Becton Dickinson 6,400 514
Beverly Enterprises (b) 9,200 110
Bristol Myers Squibb 8,400 756
Johnson & Johnson 18,200 901
Lilly Eli & Co. 5,300 345
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Value
Shares (000's)
- ------------------------------------------------------------
<S> <C> <C>
Manor Care, Inc. 9,400 $ 370
Medtronic, Inc. 3,900 218
Merck & Co., Inc. 19,900 1,286
Pfizer, Inc. 10,700 764
Pharmacia & Upjohn, Inc. 12,100 537
Schering-Plough 6,100 383
St. Jude Medical Enterprises, Inc. (b) 9,750 327
U.S. Health Care Systems, Inc. 2,500 138
United Healthcare Corp. 8,900 449
Warner Lambert Co. 4,700 258
-------
8,732
Materials & Processing - 5.7%
Barrick Gold Corp. 18,900 513
du Pont (E.I.) de Nemours 5,800 459
Engelhard Corp. 2,350 54
First Mississippi 1,500 33
Fluor Corp. 4,577 299
Great Lakes Chemical 4,100 255
Hercules, Inc. 9,500 525
International Paper 9,846 363
Louisiana Pacific Corp. 17,400 385
Morton International 10,200 380
NUCOR Corp. 5,900 299
Pall Corp. 14,755 356
Pioneer Hi-Bred International 8,300 438
Union Carbide Corp. 2,400 95
Worthington Industries, Inc. 15,000 313
-------
4,767
Technology - 14.9%
Advanced Micro Devices (b) 17,600 240
Andrew Corp. (b) 13,375 719
Applied Materials (b) 3,000 92
Autodesk, Inc. 8,200 245
Automatic Data Processing 10,700 413
Bay Networks, Inc. (b) 3,400 88
Boeing 5,300 462
Cabletron Systems, Inc. (b) 4,300 295
Compaq Computer Corp. (b) 10,600 522
Computer Associates International, Inc. 3,850 274
DSC Communications (b) 13,500 407
General Dynamics Corp. 1,100 68
Hewlett Packard Co. 6,300 628
Honeywell, Inc. 6,600 360
IBM Corp. 5,300 525
Intel Corp. 15,900 1,168
McDonnell Douglas 16,000 776
Micron Technology, Inc. 3,500 91
Microsoft Corp. (b) 8,200 985
Motorola, Inc. 6,380 401
National Semiconductor (b) 7,400 115
Northern Telecommunications Limited 8,200 446
Novell, Inc. (b) 12,900 179
Oracle Systems Corp. (b) 18,525 731
Raytheon Co. 9,000 465
Service Corp. International 8,900 512
Sun Microsystem, Inc. (b) 9,700 571
Tektronix 4,700 210
Texas Instruments, Inc. 5,000 249
WMX Technologies 4,723 154
-------
12,391
Transportation - 1.2%
Consolidated Freightways, Inc. 11,200 237
Norfolk Southern 4,000 339
Southwest Airlines 14,800 430
-------
1,006
Utilities - 13.0%
360 Communications Co. (b) 2,727 $ 64
Airtouch Communications, Inc. (b) 4,900 138
Alltel Corp. 5,800 178
American Electric Power, Inc. 3,061 130
Ameritech 9,333 554
AT&T Corp. 21,400 1,327
Baltimore Gas & Electric 6,384 181
Bell Atlantic Corp. 6,741 430
Bell South 15,470 656
Carolina Power and Light Co. 7,464 284
Central & South West Corp. 4,900 142
Coastal Corp. 10,100 422
Consolidated Edison Co. 3,400 99
Consolidated Natural Gas 3,071 160
Dominion Resources, Inc. 3,950 158
DTE Energy Co. 2,100 65
Duke Power Co. 2,651 136
Enron Corp. 12,200 499
Entergy Corp. 5,400 153
FPL Group, Inc. 3,132 144
GTE Corp. 15,977 715
Houston Industry, Inc. 4,394 108
MCI Communications Corp. 10,300 264
NICOR, Inc. 6,481 184
Nynex Corp. 9,606 456
Ohio Edison Co. 2,731 60
Pacific Gas & Electric 6,600 153
Pacific Telesis 7,062 238
Peco Energy Co. 8,891 231
Public Service Enterprise 4,135 113
SBC Communications 12,021 592
Sonat, Inc. 15,200 684
Southern Co. 11,060 272
Sprint Corp. 8,282 348
U.S. West Communications Group 5,671 181
U.S. West Media Group (b) 5,332 97
Unicom Corp. 5,200 145
Union Electric Co. 1,600 64
-------
10,825
-------
Total Common Stocks 83,224
=======
(Cost $69,559)
</TABLE>
- -------------------------------------------------------------
Short-Term Instruments - 0.1%
- -------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000's)
<S> <C> <C>
Repurchase Agreement - 0.1%
State Street Bank $ 130 130
4.000% due 07/01/96
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $136,200. Repurchase
proceeds are $130,043.)
-------
Total Short-Term Instruments 130
-------
(Cost $130)
Total Investments (a) - 99.9% $83,354
(Cost $69,689)
Other Assets and Liabilities (Net) - 0.1% 71
-------
Net Assets - 100.0% $83,425
=======
</TABLE>
43
<PAGE>
SCHEDULE OF INVESTMENTS (Cont.)
Parametric Enhanced Equity Fund
June 30, 1996
- --------------------------------------------------------------------------------
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 15,346
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (1,848)
-----------
Unrealized appreciation-net $ 13,498
===========
(b) Non-income producing security.
See Notes to Financial Statements
44
<PAGE>
SCHEDULE OF INVESTMENTS
Blairlogie Emerging Markets Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's) Country
- ------------------------------------------------------------------
Common Stocks - 95.5%
- ------------------------------------------------------------------
<S> <C> <C> <C>
Capital Goods - 8.5%
Adana Cimento 3,864,760 $ 234 (TK)
Apasco SA 137,500 759 (MX)
Cementos Diamante - ADR (b) 11,500 181 (CO)
Cementos Paz Del Rio - ADR 31,300 415 (CO)
Cimpor Cimentos 12,140 252 (PL)
Dewan Salman Rights (b) 10,263 0 (PK)
DG Kahn Cement (b) 187,010 74 (PK)
DG Kahn Cement Rights (b) 792 0 (PK)
Duratex SA (b) 8,400 363 (BR)
Empresas Ica Sociedad (b) 25,020 351 (MX)
Fauji Fertilizer Co. 67,900 175 (PK)
P.T. Semen Gresik 117,500 342 (ID)
Road Builder (M) Holdings Berhad 276,400 1,230 (MY)
Sungei Way Holdings Berhad 163,000 765 (MY)
Tata Engineering &
Locomotive Co. - GDR 37,424 664 (IN)
United Engineers 139,000 964 (MY)
United Tractors 92,000 145 (ID)
------
6,914
Conglomerate - 6.5%
Ayala Corp. (b) 279,400 528 (PH)
Barlow Limited 42,480 444 (SF)
Cadenalco - ADR 24,600 335 (CO)
Century Textiles - GDR (b) 2,250 359 (IN)
Controladora Commercial 291,000 272 (MX)
Desc Sociedad de Fomento 'B' 63,000 340 (MX)
Desc Sociedad de Fomento 'C' 1,312 7 (MX)
Indian Rayon & Industries - GDR 30,550 451 (IN)
Koor Industries 1,600 135 (IL)
Larsen & Tourbro Limited - GDS 26,280 496 (IN)
Madeco SA - ADR 29,900 841 (CH)
Murray and Roberts Holdings 92,830 371 (SF)
Smith C.G. Limited 47,730 248 (SF)
Tadiran Limited 27,000 116 (IL)
Turkey Sise Ve Cam Fabrika (b) 3,837,216 303 (TK)
------
5,246
Consumer Discretionary - 10.2%
Akaltekstil 4,147,500 257 (TK)
Bajaj Auto - GDR 12,070 459 (IN)
Bimantara Citra 217,000 275 (ID)
Brasmotor SA 2,114 661 (BR)
Cifra SA 448,080 646 (MX)
Coteminas Cia Tecidos (b) 1,270 501 (BR)
Grupo Televisa - GDS 14,610 449 (MX)
H.M. Sampoerna (b) 35,000 399 (ID)
Jeronimo Martins 4,220 380 (PL)
Lojas Americanas SA 20,934 413 (BR)
Migros 497,800 435 (TK)
Nasionale Pers Limited 49,700 551 (SF)
Perusahaan Otomobil Nasi 271,000 1,478 (MY)
Raymond Limited (b) 19,700 401 (IN)
South Indian Viscose Warrants (b) 11,260 1 (IN)
UMW Holdings Berhad 263,866 942 (MY)
------
8,248
Consumer Services - 2.0%
East India Hotels - GDR 20,460 555 (IN)
Indian Hotels Co. - GDR 15,100 428 (IN)
Inversiones y Representaciones - GDR 5,084 172 (AR)
SM Prime Holdings 1,902,000 494 (PH)
------
1,649
Consumer Staples - 7.5%
Backus and Johnston (b) 118,687 148 (PR)
Ceval Alimentos SA (b) 26,500 276 (BR)
Compania Cervecerias Unidas - ADS 20,000 470 (CH)
Elite Industries 27,000 100 (IL)
Fomento Economico Mexica 85,000 244 (MX)
Grupo Modelo SA de Cv 93,000 435 (MX)
Kimberly Clark de Mexico 32,800 597 (MX)
Mavesa SA - ADR 11,700 46 (VZ)
Metro Cash and Carry (b) 107,900 417 (SF)
Molinos Rio de la Plata 15,250 160 (AR)
Osem Investment 24,136 142 (IL)
Rembrandt Group 72,840 685 (SF)
San Miguel Corp. 182,970 632 (PH)
South African Breweries 22,500 660 (SF)
Souza Cruz (CIA) SA 47,800 417 (BR)
Super Sol 7,560 161 (IL)
Vina Concha Y Toro - ADR 27,000 500 (CH)
-----
6,090
Energy - 3.6%
Compania Naviera Perez Co. - ADR 52,005 690 (AR)
Hub Power Co. - GDR (b) 7,000 174 (PK)
Korea Kumho Petrochemical 37,600 328 (SK)
Pakistan State Oil 15,810 187 (PK)
Petrol Brasileiros 5,602 689 (BR)
YPF Sociedad Anonima - ADR 38,400 864 (AR)
-----
2,932
Financial & Business Services - 20.9%
Banco Bradesco SA (b) 138,945 1,135 (BR)
Banco Frances del Rio 22,365 213 (AR)
Banco Itau SA 1,250 508 (BR)
Banco Osorno y La Union - ADS 32,400 437 (CH)
Banco Wiese - ADR 18,400 131 (PR)
Bangkok Bank 126,900 1,719 (TH)
Bank Hapoalim 80,800 119 (IL)
Bank International Indonesia 100,500 497 (ID)
Bank Rozwoju Eksportu 15,910 415 (PD)
Bank Slaski 1,730 146 (PD)
Cho Hung Bank 41,316 504 (SK)
CMIC Finance and Securities 113,500 358 (TH)
Credicorp Limited 7,244 144 (PR)
Daewoo Securities Co. 8,700 203 (SK)
DCB Holdings Berhad 144,000 494 (MY)
Demirbank (b) 7,899,000 268 (TK)
Faysal Bank 40,400 38 (PK)
Grupo Financiero Banamex (b) 586,007 1,113 (MX)
Investec Consulting (b) 4,500 149 (PL)
Krung Thai Bank Limited 184,600 865 (TH)
Liberty Life Association of Africa 18,200 583 (SF)
Malayan Banking Berhad 146,000 1,405 (MY)
Metro Bank and Trust Co. 25,800 724 (PH)
Nedcor - GDR 61,100 917 (SF)
Nedcor Warrants 4,400 17 (SF)
Norwich Holdings (b) 213,400 379 (SF)
Phatra Thanakit Co. 48,000 335 (TH)
Public Bank Berhad 401,000 1,109 (MY)
Sonae Investmentos 12,100 314 (PL)
Telefonica del Peru 422,338 849 (PR)
Thai Farmers Bank 70,400 771 (TH)
------
16,859
Health Care - 0.2%
Teva Pharmaceutical - ADR 3,900 148 (IL)
Materials & Processing - 14.8%
Aracruz Celulose SA (b) 186,122 347 (BR)
Bagfas Bandirma Gubre (b) 836,000 226 (TK)
Brisa Bridgestone Sabanc 660,000 264 (TK)
Cia Vale Rio Doce 25,162 487 (BR)
De Beers Consolidated 25,740 886 (SF)
Debica (b) 11,780 286 (PD)
</TABLE>
45
<PAGE>
SCHEDULE OF INVESTMENTS (Cont.)
Blairlogie Emerging Markets Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's) Country
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Engro Chemical 18,400 $ 85 (PK)
Eregli Demir Celik 2,306,000 255 (TK)
Fertilizantes Fosfatados 70,000 298 (BR)
Gencor 174,810 646 (SF)
Grasim Industries - GDS 36,000 671 (IN)
Grupo Mexico SA (b) 138,260 414 (MX)
Gujarat Narmada Va - GDR 2,360 13 (IN)
Gujarat Narmada Va - GDR 19,000 126 (IN)
Hanwha Chemical Corp. 20,200 218 (SK)
Hindalco Industries - GDR 17,420 660 (IN)
ICL Israel Chemical 168,000 141 (IL)
Indian Aluminium - GDR (b) 63,400 460 (IN)
Industrias Penoles SA 124,600 572 (MX)
Jaya Tiasa Holdings 166,000 972 (MY)
Maderas Sinteticos Sociedad - ADR 5,600 99 (CH)
Minas Buenaventura 'A' 18,496 166 (PR)
Minas Buenaventura 'B' 4,624 45 (PR)
Minsur SA (b) 14,100 125 (PR)
Paranapanema SA Mineraca 19,456 155 (BR)
Petron Corp. 784,875 360 (PH)
Pohang Iron & Steel Co. - ADR 4,900 119 (SK)
Polifarb Cieszyn 44,240 224 (PD)
Reliance Industries - GDS 43,420 564 (IN)
Samsung Heavy Industries 29,500 458 (SK)
Sider Nacional 17,100 436 (BR)
Sider Venezolana - ADR (b) 26,900 86 (VZ)
Siderca SA (b) 108,167 148 (AR)
Southern Peru Copper 28,600 107 (PR)
Steel Authority of India - GDR (b) 19,800 292 (IN)
Tubos de Acero de Mexico (b) 59,200 567 (MX)
------
11,978
Technology - 1.2%
Arcelik 3,430,500 316 (TK)
Efacec-Empresa Fabril (b) 27,321 256 (PL)
Oryx (India) Fund Limited (b) 5,030 194 (IN)
Oryx (India) Shares Fund (b) 10,800 81 (IN)
Samsung Co. - GDR 1,172 6 (SK)
Samsung Co. - GDS 15,850 85 (SK)
---
938
Transportation - 0.0%
Transport Maritima - ADR 750 6 (MX)
Utilities - 20.1%
Buenos Aires Embotelladora - ADR 3,450 46 (AR)
Centrais Eletrobras 4,454 1,273 (BR)
Chilgener SA - ADS 23,400 562 (CH)
Cia Energetica Minas 16,530 440 (BR)
Cia Paulista de Forca 6,255 573 (BR)
Compania de Telefonos de Chile - ADR 9,314 914 (CH)
Electricidad de Caracas (b) 390,000 323 (VZ)
Elektrim 62,231 510 (PD)
Empresa Nacional de Electric - ADS 15,500 333 (CH)
Enersis SA - ADR 24,400 756 (CH)
Korea Electric Power 22,600 902 (SK)
Pakistan Telecommunications - GDS (b) 400 47 (PK)
Philippine Long
Distance Telephone - ADR 13,000 756 (PH)
Portugal Telecommunications 20,010 523 (PL)
Sociedad Quimica y
Minera de Chile - ADR 9,060 492 (CH)
Tadiran Telecommunications 6,280 100 (IL)
Technology Resources Industries (b) 269,000 938 (MY)
Telecomunicacoes Brasileiras - ADR 17,450 1,215 (BR)
Telecomunicacoes Brasileiras 17,000 999 (BR)
Telecomunicacoes Brasileiras Rights (b) 17,000 0 (BR)
Telefonica de Argentina - ADR 23,000 681 (AR)
Telefonos de Mexico - ADR 61,550 2,062 (MX)
Telekomunikasi Indonesia - ADR 20,000 $ 595 (ID)
Total Access Communications 142,000 1,208 (TH)
------
16,248
------
Total Common Stocks 77,256
======
(Cost $70,913)
Total Investments (a) - 95.5% $77,256
(Cost $70,913)
Other Assets and Liabilities (Net) - 4.5% 3,657
-------
Net Assets - 100.0% $80,913
=======
</TABLE>
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 9,930
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (3,969)
-------
Unrealized appreciation-net $ 5,961
=======
(b) Non-income producing security.
<TABLE>
<CAPTION>
Country Composition
<S> <C> <C> <C>
Argentina (AR) 3.9% Peru (PR) 2.2%
Brazil (BR) 14.5% Philippines (PH) 4.5%
Chile (CH) 7.0% Poland (PD) 2.1%
Colombia (CO) 1.2% Portugal (PL) 2.4%
India (IN) 8.9% South Africa (SF) 8.8%
Indonesia (ID) 2.9% South Korea (SK) 3.7%
Israel (IL) 1.5% Thailand (TH) 6.8%
Malaysia (MY) 13.3% Turkey (TK) 3.3%
Mexico (MX) 11.4% Venezuela (VZ) 0.6%
Pakistan (PK) 1.0% ------
Total 100.0%
======
</TABLE>
See Notes to Financial Statements
46
<PAGE>
SCHEDULE OF INVESTMENTS
Blairlogie International Active Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's) Country
- --------------------------------------------------------------------------------
Common Stocks - 93.7%
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Goods - 8.5%
Boral Limited 15,600 $ 41 (AS)
CRH PLC 15,300 151 (IR)
Holderbank Financiere 450 359 (SZ)
Keppel Corp. 22,000 184 (SN)
MetaCorp Berhad (b) 99,000 286 (MY)
Mitsui Engineering & Shipbuilding 560,000 1,706 (JA)
Obayashi Corp. 158,000 1,428 (JA)
Pirelli SPA 105,000 176 (IT)
Road Builder (M) Holdings Berhad 80,412 358 (MY)
Schneider SA 9,240 484 (FR)
Sungei Way Holdings Berhad 68,000 320 (MY)
Unichem SPA (b) 22,000 161 (IT)
United Engineers Berhad 36,000 250 (MY)
Wolseley PLC 79,800 563 (UK)
-----
6,467
Conglomerate - 1.4%
Citic Pacific Limited 30,000 121 (HK)
Hutchison Whampoa 54,000 340 (HK)
Straits Steamship 62,000 207 (SN)
Swire Pacific 'A' 42,400 363 (HK)
-----
1,031
Consumer Discretionary - 11.5%
Ahold Koninklijke 2,261 122 (NL)
Benetton Group SPA 7,000 90 (IT)
Boots Co. PLC 60,800 546 (UK)
Carrefour 745 417 (FR)
Carrefour Rights 745 206 (FR)
Clarins 3,450 530 (FR)
Cycle & Carriage 16,000 171 (SN)
Daimler Benz AG 570 305 (GC)
Daimler Benz AG Rights (b) 570 0 (GC)
David Jones Limited (b) 26,500 37 (AS)
Edaran Otomobil Nasional 33,000 316 (MY)
Elsevier NV 13,351 202 (NL)
Karstadt AG 1,164 463 (GC)
Marubeni Corp. 270,000 1,478 (JA)
News Corp. (b) 15,200 86 (AS)
Peugeot 2,650 354 (FR)
Pilkington PLC 141,550 398 (UK)
Saloman SA 730 666 (FR)
Societe BIC SA 3,500 496 (FR)
Television Broadcasts 29,000 109 (HK)
Tesco PLC 133,700 611 (UK)
Vendex International NV (b) 3,600 125 (NL)
Ver Ned Uitgevers 10,800 167 (NL)
Volkswagen AG 1,840 684 (GC)
Werner Soderstrom Osakey 10,000 185 (FI)
-----
8,764
Consumer Services - 7.1%
Aumar Autop del Mare Nos 25,200 325 (SP)
British Airport Authority PLC 68,640 498 (UK)
Cheung Kong Holdings 32,000 230 (HK)
Club Mediterranee 4,754 425 (FR)
Compagnie de Saint-Gobain 3,560 476 (FR)
DBS Land 58,000 199 (SN)
Granada Group PLC (b) 45,500 609 (UK)
Mitsui Fudosan Co. 116,000 1,566 (JA)
Parmalat Finanziaria 194,000 260 (IT)
Resorts World Berhad 35,971 206 (MY)
Sun Hung Kai Properties 58,816 595 (HK)
-----
5,389
Consumer Staples - 2.5%
Hartwall Oy AB 750 18 (FI)
Kerry Group 11,300 116 (IR)
Nestle SA 370 $ 422 (SZ)
RJ Reynolds Berhad (b) 68,000 200 (MY)
Scottish & Newcastle PLC 56,000 573 (UK)
SouthCorp Holdings Limited 14,700 36 (AS)
Unilever NV (b) 1,260 182 (NL)
Unilever PLC (b) 17,000 338 (UK)
-----
1,885
Energy - 6.1%
Broken Hill Proprietary Co. 11,522 159 (AS)
Burmah Castrol (b) 28,300 447 (UK)
Elf Aquitaine 8,650 635 (FR)
Eni SPA 83,500 416 (IT)
Nippon Oil Co. 258,000 1,749 (JA)
Royal Dutch Petroleum 3,170 489 (NL)
Shell Transport & Trading Co. 51,500 753 (UK)
-----
4,648
Financial & Business Services - 16.5%
Abbey National PLC 59,400 499 (UK)
ABN-AMRO Holdings NV 5,690 305 (NL)
Allianz AG Holdings 233 404 (GC)
Allied Irish Banks 11,200 58 (IR)
Banca Fideuram 155,000 335 (IT)
Banco Popular Espanol 2,776 494 (SP)
Bank of Ireland 5,300 36 (IR)
Cie de Suez 8,050 294 (FR)
Commercial Union PLC 50,000 450 (UK)
Compagnie Bancaire SA 6,550 737 (FR)
Credito Italiano 249,000 291 (IT)
CS Holdings 6,015 571 (SZ)
Daiwa Securities Co. Limited 100,000 1,286 (JA)
DCB Holdings Berhad 58,000 199 (MY)
Deutsche Bank 9,550 452 (GC)
Fortis Amev NV 5,405 155 (NL)
Hang Seng Bank 11,400 115 (HK)
Hong Leong Finance 42,000 147 (SN)
Lloyd's TSB Group PLC 94,204 460 (UK)
Malayan Banking Berhad 29,000 279 (MY)
Muenchener Rueckvers AG 76 155 (GC)
Muenchener Rueckvers AG Warrants (b) 3 0 (GC)
Overseas Chinese Bank 31,000 362 (SN)
Overseas Chinese Bank Rights 3,100 25 (SN)
Overseas Union Bank 57,000 392 (SN)
R.A.S. SPA 22,200 230 (IT)
Sumitomo Bank 94,000 1,818 (JA)
Sumitomo Trust & Banking 119,000 1,628 (JA)
Westpac Banking Corp. 24,900 110 (AS)
Winterthur Schweiz 295 175 (SZ)
------
12,462
Health Care - 4.5%
Fujisawa Pharmaceutical Co. 145,000 1,521 (JA)
Roche Holdings AG 70 533 (SZ)
Roussel-Uclaf 2,020 485 (FR)
Smithkline Beecham (b) 79,298 847 (UK)
------
3,386
Materials & Processing - 14.9%
Akzo Noble NV (b) 1,410 169 (NL)
Allusuisse-Lonza Holdings 340 280 (SZ)
Amcor Limited 'A' 11,200 76 (AS)
Bayer AG 26,770 941 (GC)
Bobst AG 135 195 (SZ)
Ciba Geigy AG 295 359 (SZ)
Clariant AG 760 278 (SZ)
Comalco Limited 13,200 77 (AS)
Degussa AG 1,380 468 (GC)
Kesko (b) 4,500 66 (FI)
Mannesmann AG 2,153 740 (GC)
</TABLE>
47
<PAGE>
SCHEDULE OF INVESTMENTS (Cont.)
Blairlogie International Active Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's) Country
<S> <C> <C> <C>
- ------------------------------------------------------------------
Mitsubishi Chemical Corp. 305,000 $1,408 (JA)
NKK Corp. 546,000 1,654 (JA)
Sasib RNC 101,000 201 (IT)
Smurfit (Jefferson) 22,900 61 (IR)
Sumitomo Metal Mining 185,000 1,602 (JA)
Tokyo Steel Manufacturing 74,000 1,451 (JA)
UPM-Kymmene Corp.(b) 4,480 93 (FI)
Valmet Corp. 7,100 120 (FI)
WMC Limited 18,500 132 (AS)
Zeneca Group PLC 40,960 904 (UK)
------
11,275
Technology - 6.1%
ABB AG 255 315 (SZ)
Alcatel Alsthom 4,800 419 (FR)
Matsushita Electric Works 139,000 1,509 (JA)
NEC Corp. 163,000 1,769 (JA)
Siemens AG 11,800 632 (GC)
-----
4,644
Transportation - 4.1%
Comfort Group (b) 200,000 199 (SN)
Finnair Oy 4,100 28 (FI)
Mitsui O.S.K. Lines Limited (b) 383,000 1,321 (JA)
Tokyu Corp. 208,000 1,584 (JA)
-----
3,132
Utilities - 10.5%
Edison International 49,000 295 (IT)
Endesa 7,684 478 (SP)
Hong Kong Telecommunications 57,600 103 (HK)
Iberdrola SA 64,452 661 (SP)
Kon Ptt Nederland 4,580 173 (NL)
Nippon Telegraph & Telephone (b) 221 1,637 (JA)
Nokia Corp. 2,770 101 (FI)
Repsol SA ADR 7,956 276 (SP)
Scottish Power (b) 90,000 425 (UK)
Stet Societa Finanziaria Telefonica SPA 111,000 375 (IT)
Technology Resources Industries (b) 101,000 352 (MY)
Telecom Italia SPA 142,000 305 (IT)
Telefonica de Espana 34,510 635 (SP)
Telekom Malaysia 551 5 (MY)
Tokyo Electric Power 48,400 1,227 (JA)
Veba AG 17,530 931 (GC)
-----
7,979
------
Total Common Stocks 71,062
(Cost $64,970) ======
Total Investments (a) - 93.7% $71,062
(Cost $64,970)
Other Assets and Liabilities (Net) - 6.3% 4,769
-------
Net Assets - 100.0% $75,831
=======
</TABLE>
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 7,345
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (1,287)
-------
Unrealized appreciation-net $ 6,058
=======
(b) Non-income producing security.
<TABLE>
<CAPTION>
Country Composition
<S> <C> <C> <C>
Australia (AS) 1.1% Japan (JA) 41.3%
Finland (FI) 0.9% Malaysia (MY) 3.9%
France (FR) 9.3% The Netherlands(NL) 2.9%
Germany (GC) 8.7% Singapore (SN) 2.7%
Hong Kong (HK) 2.8% Spain (SP) 4.0%
Ireland (IR) 0.6% Switzerland (SZ) 4.9%
Italy (IT) 4.4% United Kingdom (UK) 12.5%
-----
Total 100.0%
=====
</TABLE>
See Notes to Financial Statements
48
<PAGE>
SCHEDULE OF INVESTMENTS
Balanced Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
<S> <C> <C>
- --------------------------------------------------------------------------------
Common Stocks - 59.6%
- --------------------------------------------------------------------------------
Capital Goods - 2.9%
Allied Signal, Inc. 8,068 $ 461
Caterpillar, Inc. 2,000 136
Cummins Engine, Inc. 5,500 222
Emerson Electric Co. 2,700 244
General Electric 6,700 580
Grainger (W.W.), Inc. 2,900 225
Illinois Tool Works 1,200 81
Ingersoll Rand Co. 4,800 210
Northrop Grumman Corp. 4,100 279
--------
2,438
Consumer Discretionary - 9.7%
Albertson's, Inc. 2,554 106
Briggs & Stratton Co. 4,300 177
Cooper Tire & Rubber Corp. 6,300 140
Crown Cork & Seal 4,500 203
Dana Corp. 8,200 254
Dial Corp. 1,800 52
Dillard Department Stores 3,600 131
Disney (Walt) Productions Co. 6,500 409
Earthgrain Co. (b) 204 7
Echlin, Inc. 8,700 330
Federated Department Stores, Inc. (b) 4,500 154
Fleming Cos., Inc. 1,823 26
FMC Corp. (b) 700 46
Genuine Parts Co. 4,600 210
Giant Foods, Inc. 1,800 65
Gillette Co. 4,500 281
Harland (John H.) Co. 21 1
Home Depot, Inc. 6,833 369
International Flavors & Fragrances 1,100 52
King World Productions (b) 1,200 44
Kroger Co. (b) 6,400 253
Limited, Inc. 6,700 144
Liz Claiborne, Inc. 2,500 87
Lowes Co. 10,100 365
McDonalds Corp. 5,400 252
Minnesota Mining & Manufacturing Co. 4,100 283
Nike, Inc. 5,900 606
Premark International, Inc. 5,900 109
Procter & Gamble Co. 4,700 426
Reebok International Limited 6,100 205
Schweitzer-Mauduit 390 11
Seagrams Limited 5,000 168
Sears Roebuck 7,500 365
SPX Corp. 1,900 47
Toys R Us (b) 3,900 111
Tupperware Corp. (b) 2,900 123
Unilever NV 1,500 218
UST, Inc. 1,900 65
VFCorp. 2,300 137
Viacom, Inc. 'B' (b) 6,500 253
Wal-Mart Stores, Inc. 11,900 302
Walgreen Co. 5,491 184
Wendy's International, Inc. 6,100 114
Winn Dixie Stores 5,100 179
--------
8,064
Consumer Services - 1.2%
CUC International, Inc. (b) 6,050 215
Federal Express Corp. (b) 2,200 180
Harrah's Entertainment, Inc. (b) 8,500 240
Mattel, Inc. 12,527 358
--------
993
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (000's)
<S> <C> <C>
================================================================================
Consumer Staples - 4.7%
American Brands, Inc. 2,700 123
American Stores Co. 3,900 161
Anheuser Busch 2,600 195
Archer-Daniel Midland 4,954 95
Campbell Soup Co. 2,500 176
Coca-Cola Co. 14,900 728
Colgate Palmolive 400 34
Conagra 7,700 349
CPC International, Inc. 1,500 108
General Mills, Inc. 500 27
Heinz (H.J.) Co. 1,550 47
Kellogg Co. 1,039 76
Kimberly Clark Corp. 3,600 278
Pepsico 15,800 559
Philip Morris Co., Inc. 5,000 520
Sara Lee Corp. 5,300 172
Sysco Corp. 4,600 158
Wrigley, William Jr. Co. 1,200 60
--------
3,866
Energy - 3.7%
Amoco Corp. 3,900 282
Atlantic Richfield Co. 1,100 130
Chevron Corp. 4,600 271
Exxon Corp. 6,600 573
Mobil Corp. 3,144 353
Phillips Petroleum Co. 6,000 251
Royal Dutch Petroleum Co. 3,300 507
Schlumberger Limited (b) 2,400 202
Texaco, Inc. 3,546 297
Unocal Corp. 6,332 213
--------
3,079
Financial & Business Services - 10.5%
American Express (b) 7,300 326
American International Group, Inc. 3,275 323
Banc One Corp. 7,199 245
Bank of Boston Corp. 7,400 366
Bankamerica Corp. 5,900 447
Bankers Trust N.Y. Corp. 1,588 117
Barnett Banks 7,100 433
Chase Manhattan Corp. 11,032 779
Chubb Corp. 4,100 204
Cigna Corp. 1,600 189
Citicorp 6,810 563
Dean Witter Discover & Co. 1,600 92
Federal National Mortgage Association 17,900 600
First Chicago Corp. 3,200 125
First Union Corp. 7,920 482
Fleet Financial Group, Inc. 10,800 470
General Re Corp. 1,100 167
Golden West Financial Corp. 4,300 241
Jefferson Pilot Corp. 3,650 188
Merrill Lynch Co. 4,800 313
Morgan, J.P. and Co., Inc. 1,894 160
NationsBank Corp. 3,670 303
Norwest Corp. 8,887 310
Safeco Corp. 3,600 127
St. Paul Cos., Inc. 2,800 150
Suntrust Banks, Inc. 9,000 333
Travelers Group, Inc. (b) 3,800 173
Wachovia Corp. 2,300 101
Wells Fargo & Co. 1,453 346
--------
8,673
Health Care - 6.2%
Abbott Laboratories 7,900 344
American Home Products 5,400 325
</TABLE>
49
<PAGE>
SCHEDULE OF INVESTMENTS (Cont.)
Balanced Fund
June 30, 1996
<TABLE>
<CAPTION>
Value
Shares (000's)
================================================================================
<S> <C> <C>
Amgen, Inc. (b) 2,700 $ 146
Becton Dickinson 3,600 289
Beverly Enterprises (b) 4,300 52
Bristol Myers Squibb 4,800 432
Johnson & Johnson 10,800 535
Lilly Eli & Co. 3,100 202
Manor Care, Inc. 5,300 209
Medtronic, Inc. 2,300 129
Merck & Co., Inc. 11,600 750
Pfizer, Inc. 6,400 457
Pharmacia & Upjohn, Inc. 6,900 306
Schering-Plough 3,600 226
Shared Medical Systems Corp. 700 45
St. Jude Medical Enterprises, Inc. (b) 5,900 198
U.S. Health Care Systems, Inc. 1,500 83
United Healthcare Corp. 5,200 263
Warner Lambert Co. 2,700 148
--------
5,139
Materials & Processing - 3.3%
Barrick Gold Corp. 10,100 274
du Pont (E.I.) de Nemours 3,500 277
Engelhard Corp. 2,050 47
First Mississippi 1,000 22
Fluor Corp. 2,777 182
Getchell Gold Corp. (b) 708 23
Great Lakes Chemical 2,300 143
Hercules, Inc. 5,200 287
International Paper 5,675 209
Louisiana Pacific Corp. 9,600 212
Morton International 5,800 216
NUCOR Corp. 3,200 162
Pall Corp. 8,020 193
Pioneer Hi-Bred International 4,300 227
Union Carbide Corp. 1,400 56
Worthington Industries, Inc. 8,650 180
--------
2,710
Technology - 9.0%
Advanced Micro Devices 10,000 136
Andrew Corp. (b) 7,875 423
Applied Materials (b) 1,800 55
Autodesk, Inc. 4,600 137
Automatic Data Processing 6,400 247
Bay Networks, Inc. (b) 2,000 52
Boeing 3,000 261
Cabletron Systems, Inc. (b) 2,300 158
Compaq Computer Corp. (b) 6,300 310
Computer Associates International, Inc. 2,250 160
DSC Communications (b) 7,700 232
General Dynamics Corp. 800 50
Hewlett Packard Co. 5,500 548
Honeywell, Inc. 3,500 191
IBM Corp. 3,000 297
Intel Corp. 9,500 698
McDonnell Douglas 9,500 461
Micron Technology, Inc. 2,100 54
Microsoft Corp. (b) 4,900 589
Motorola, Inc. 3,866 243
National Semiconductor (b) 4,200 65
Northern Telecommunications Limited 4,500 245
Novell, Inc. 7,700 107
Oracle Systems Corp. (b) 10,800 426
Raytheon Co. 5,400 279
Service Corp. International 4,800 276
Sun Microsystem, Inc. (b) 5,500 324
Tektronix 2,600 116
Texas Instruments, Inc. 2,800 140
WMX Technologies 2,323 75
--------
7,355
Transportation - 0.7%
Consolidated Freightways, Inc. 6,400 135
Norfolk Southern 2,300 195
Southwest Airlines 8,500 247
--------
577
Utilities - 7.7%
360 Communications Co. (b) 1,917 46
Airtouch Communications, Inc. 2,900 82
Alltel Corp. 3,300 101
American Electric Power, Inc. 1,849 79
Ameritech 5,517 328
AT&T Corp. 12,500 775
Baltimore Gas & Electric 3,790 108
Bell Atlantic Corp. 3,726 238
Bell South 8,754 371
Carolina Power and Light Co. 4,492 171
Central & South West Corp. 2,900 84
Coastal Corp. 5,700 238
Consolidated Edison Co. 2,000 59
Consolidated Natural Gas 1,795 94
Dominion Resources, Inc. 2,400 96
Duke Power Co. 1,633 84
Enron Corp. 7,300 298
Entergy Corp. 3,300 94
FPL Group, Inc. 1,897 87
GTE Corp. 9,185 411
Houston Industry, Inc. 2,618 64
MCI Communications Corp. 6,100 156
NICOR, Inc. 3,645 103
Nynex Corp. 5,671 269
Ohio Edison Co. 2,367 52
Pacific Gas & Electric 3,900 91
Pacific Telesis 4,295 145
Peco Energy Co. 5,294 138
Public Service Enterprises 2,408 66
SBC Communications 7,150 352
Sonat, Inc. 8,200 369
Southern Co. 6,630 163
Sprint Corp. 4,952 208
U.S. West Communications Group 3,391 108
U.S. West Media Group (b) 3,106 56
Unicom Corp. 2,900 81
Union Electric Co. 1,300 52
--------
6,317
--------
Total Common Stocks 49,211
========
(Cost $38,795)
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000's) (000's)
<S> <C> <C>
- --------------------------------------------------------------------------------
Corporate Bonds and Notes - 5.3%
- --------------------------------------------------------------------------------
AMR Corp.
10.000% due 02/01/01 $ 400 $ 444
9.430% due 05/10/01 1,000 1,095
Cleveland Electric
9.375% due 03/01/17 1,000 912
Long Island Lighting Co.
9.000% due 11/01/22 2,000 1,845
Ohio Power
8.300% due 04/01/97 87 88
---------
Total Corporate Bonds and Notes 4,384
(Cost $4,538)
- --------------------------------------------------------------------------------
U.S Treasury Notes - 6.0%
- --------------------------------------------------------------------------------
5.625% due 06/30/97 5,000 4,992
---------
Total U.S. Treasury Notes 4,992
=========
(Cost $4,988)
- --------------------------------------------------------------------------------
Mortgage-Backed Securities - 27.9%
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation - 4.6%
6.500% due 08/12/26 2,000 1,871
7.000% due 09/12/26 1,000 960
8.500% due 03/01/23 862 892
10.150% due 04/15/06 81 82
---------
3,805
Federal Housing Administration - 0.7%
6.930% due 07/01/14 605 583
Federal National Mortgage Association - 3.7%
7.488% due 12/01/23 (d) 881 909
8.500% due 07/01/02-01/01/08 (e) 1,400 1,443
9.500% due 06/25/18 658 695
---------
3,047
Government National Mortgage Association - 12.6%
6.500% due 08/19/26 5,000 4,647
7.250% due 08/20/24-09/20/24 (d) (e) 2,596 2,639
7.375% due 04/20/23 (d) 2,045 2,068
7.500% due 05/15/17 19 19
8.000% due 09/15/06 87 89
9.500% due 09/15/09-10/15/09 (e) 166 179
10.750% due 09/15/00-10/15/00 (e) 186 196
14.000% due 08/15/12 32 37
16.000% due 10/15/11-04/15/12 (e) 430 508
---------
10,382
Collateralized Mortgage Obligations - 6.3%
Bear Stearns Cos.
9.000% due 01/25/21 13 13
Capstead
8.900% due 12/25/21 340 349
Countrywide
7.757% due 11/25/24 (d) 1,222 1,251
Home Savings
5.969% due 05/25/27 (d) 1,183 1,144
Independent National Mortgage Corp.
7.920% due 11/25/24 (d) 1,222 1,252
PNC Mortgage Securities Corp.
7.500% due 06/25/10 1,147 1,148
---------
5,157
---------
Total Mortgage-Backed Securities 22,974
(Cost $22,831) =========
- --------------------------------------------------------------------------------
Short-Term Instruments - 9.6%
- --------------------------------------------------------------------------------
Discount Notes - 6.8%
du Pont (E.I.) de Nemours
5.340% due 07/24/96 500 $ 498
Eli Lilly & Co.
5.300% due 07/12/96 900 899
Emerson Electric Co.
5.320% due 07/08/96 600 599
Ford Motor Credit Corp.
5.370% due 07/11/96 1,500 1,498
G. E. Capital Corp.
5.290% due 09/16/96 1,100 1,087
Pitney Bowes Credit, Inc.
5.320% due 07/10/96 500 499
Procter & Gamble
5.250% due 08/22/96 200 198
Southwestern Public Service
5.420% due 07/22/96 300 300
---------
5,578
Repurchase Agreement - 2.5%
State Street Bank
4.000% due 07/01/96 2,103 2,103
(Dated 06/28/96. Collateralized by
U.S. Treasury Bond 8.750% due 11/15/08
valued at $2,156,500. Repurchase
proceeds are $2,103,701.)
U.S. Treasury Bill - 0.3%
4.890% due 8/22/96-11/14/96 (c) (e) 235 233
---------
Total Short-Term Instruments 7,914
(Cost $7,914) =========
Total Investments (a) - 108.4% $ 89,475
(Cost $79,066)
Written Options (f) - 0.0% (2)
(Premium $3)
Other Assets and Liabilities (Net) - (8.4%) (6,911)
---------
Net Assets - 100.0% $ 82,562
=========
</TABLE>
51
<PAGE>
SCHEDULE OF INVESTMENTS (Cont.)
Balanced Fund
June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Notes to Schedule of Investments ($ in thousands):
(a) At June 30, 1996, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 11,539
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (1,248)
-----------
Unrealized appreciation-net $ 10,291
===========
(b) Non-income producing security.
(c) Securities with an aggregate market value of
$233 have been segregated with the custodian
to cover margin requirements for the following
open future contracts at June 30, 1996:
<CAPTION>
Unrealized
Type Contracts Appreciation
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S Treasury 10 Year Note (9/96) 109 $ 174
U.S Treasury 30 Year Note (9/96) 10 27
-----------
$ 201
===========
(d) Variable rate security. The rate listed is as of June 30, 1996.
(e) Securities are grouped by coupon rate and represent a range of maturities.
(f) Premium received on Written Put Options:
<CAPTION>
Premium Market
Type Contracts Received Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CME Eurodollar March Futures
Strike @ 93.00 Exp. 3/97 8 $ 3 $ 2
</TABLE>
See Notes to Financial Statements
52
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1. Significant Accounting Policies
PIMCO Funds: Equity Advisors Series (the "Trust") was established as a
Massachusetts business trust on August 24, 1990. The Trust is registered under
the Investment Company Act of 1940, as amended, as a no-load, open-end
investment management company. The Trust currently consists of thirteen
separate investment funds (the "Funds"): the NFJ Equity Income Fund; the NFJ
Diversified Low P/E Fund; the NFJ Small Cap Value Fund; the Cadence Capital
Appreciation Fund; the Cadence Mid Cap Growth Fund; the Cadence Micro Cap Growth
Fund; the Cadence Small Cap Growth Fund; the Columbus Circle Investors Core
Equity Fund; the Columbus Circle Investors Mid Cap Equity Fund; the Parametric
Enhanced Equity Fund; the Blairlogie Emerging Markets Fund; the Blairlogie
International Active Fund; and the Balanced Fund. The following is a summary of
significant accounting policies consistently followed by the Trust in
preparation of its financial statements. These policies are in conformity with
generally accepted accounting principles.
Security Valuation. Portfolio securities and other financial instruments for
which market quotations are readily available are stated at market value. Market
value is determined on the basis of last reported sales prices, or if no sales
are reported, as is the case for most securities traded over-the-counter, the
mean between representative bid and asked quotations obtained from a quotation
reporting system or from established market makers. Foreign currency amounts are
converted to U.S. dollars using foreign exchange quotations received from
independent dealers. Short-term investments having a maturity of 60 days or
less are valued at amortized cost, which approximates market value. Certain
fixed income securities for which daily market quotations are not readily
available may be valued, pursuant to guidelines established by the Board of
Trustees, with reference to fixed income securities whose prices are more
readily obtainable.
Securities Transactions and Investment Income. Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or more after the trade date.
Realized gains and losses from securities sold are recorded on the identified
cost basis. Dividend income is recorded on the ex-dividend date. Interest
income is recorded on the accrual basis and includes the accretion of discounts
and amortization of premiums.
Dividends and Distributions to Shareholders. Dividends from net investment
income are declared and paid quarterly to shareholders of record by the NFJ
Equity Income, NFJ Diversified Low P/E, NFJ Small Cap Value, Cadence Capital
Appreciation, Cadence Mid Cap Growth, Cadence Micro Cap Growth, Cadence Small
Cap Growth, Parametric Enhanced Equity, and Balanced Funds. Dividends from net
investment income are declared and paid semi-annually to shareholders of record
by the Columbus Circle Investors Core Equity Fund. The Columbus Circle
Investors Mid Cap Equity, Blairlogie Emerging Markets, and Blairlogie
International Active Funds distribute all of their net investment income at
least annually. Effective July 1, 1996, dividends from net investment income
will be declared and paid annually to shareholders of record by the NFJ Small
Cap Value, Cadence Capital Appreciation, Cadence Mid Cap Growth, Cadence Micro
Cap Growth, Cadence Small Cap Growth, Columbus Circle Investors Core Equity,
Columbus Circle Investors Mid Cap Equity, Parametric Enhanced Equity, Blairlogie
Emerging Markets, and Blairlogie International Active Funds. Dividends from net
investment income will continue to be paid quarterly to the NFJ Equity Income,
NFJ Diversified Low P/E, and Balanced Funds. Net long-term capital gains earned
by a Fund, if any, will be distributed no less frequently than once each year.
Foreign exchange gains or losses on investments and the income generated from
such investments, arising from fluctuations of exchange rates of the non-dollar
denominated investments relative to the U.S. dollar, are reported to
shareholders as income in accordance with the provisions of the Internal Revenue
Code.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for such items as
wash sales, foreign currency transactions, net operating losses and capital loss
carryforwards. Certain amounts have been reclassified between undistributed net
investment income and accumulated undistributed net realized gains in order to
more appropriately conform financial accounting and tax characterizations of
dividend distributions.
During the period ended June 30, 1996, the Cadence Small Cap Growth Fund
incurred two redemptions in kind, resulting in realized gains of $11,036,613. A
redemption in kind occurs when a Fund pays a shareholder with portfolio
securities in lieu of cash.
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Cont.)
June 30, 1996
Multi-class Operations. The Trust is authorized to offer investors a choice of
two classes of shares, the Institutional Class and the Administrative Class.
Each class has equal rights as to assets and voting privileges, while each has
exclusive voting rights with respect to its distribution plan. The NFJ Equity
Income, NFJ Small Cap Value, Cadence Mid Cap Growth, Cadence Micro Cap Growth,
Cadence Small Cap Growth, Columbus Circle Investors Core Equity, Blairlogie
Emerging Markets and Blairlogie International Active Funds had commenced multi-
class operations as of June 30, 1996.
Income and non-class specific expenses are allocated daily to each class of
shares based on the relative value of settled shares as of the beginning of each
day, adjusted for purchase orders received in Federal Funds prior to 12:00 p.m.,
Eastern time. Realized and unrealized capital gains and losses are allocated to
each class of shares based on relative net assets as of the beginning of each
day adjusted for the prior day's capital share activity.
Federal Income Taxes. Each Fund intends to qualify as a regulated investment
company and distribute all of its taxable income and net realized gains, if
applicable, to shareholders. Accordingly, no provision for Federal income taxes
has been made.
Foreign Taxes on Dividends. Dividend income in the statement of operations is
shown net of foreign taxes withheld on dividends from foreign securities.
Foreign taxes withheld were as follows: NFJ Diversified Low P/E Fund - $1,103;
Cadence Capital Appreciation Fund - $11,001; Cadence Mid Cap Growth Fund -
$1,460; Columbus Circle Investors Core Equity Fund - $2,410; Parametric Enhanced
Equity Fund - $5,298; Blairlogie Emerging Markets Fund - $105,838; Blairlogie
International Active Fund - $113,535; and Balanced Fund - $3,106.
Equalization. Prior to July 1, 1996, all of the Funds, except the Balanced Fund,
followed the accounting practice known as equalization, by which a portion of
the proceeds from sales and costs of repurchases of Fund shares, equivalent on a
per share basis to the amount of distributable investment income on the date of
the transaction, was credited or charged to undistributed income. As a result,
undistributed investment income per share was unaffected by sales or redemptions
of Fund shares. As of July 1, 1996, the Funds discontinued using equalization.
This change has no effect on the Funds' net assets, net asset values per share,
or their net increases (decreases) in net assets resulting from operations.
Futures and Options. Certain Funds are authorized to enter into futures
contracts and options. The primary risks associated with the use of futures
contracts and options are imperfect correlation between the change in market
value of the securities held by a Fund and the prices of futures contracts and
options, the possibility of an illiquid market, and the inability of the
counterparty to meet the terms of the contract. Futures contracts and purchased
options are valued based upon their quoted daily settlement prices. The premium
received for a written option is recorded as an asset with an equal liability
which is marked-to-market based on the option's quoted daily settlement price.
Fluctuations in the value of such instruments are recorded as unrealized
appreciation (depreciation) until terminated, at which time realized gains and
losses are recognized.
Currencies with an aggregate market value of $74,819 have been segregated with
the custodian to cover margin requirements for the following open stock index
futures contracts at June 30, 1996 ($ in thousands):
Blairlogie International Active Fund
<TABLE>
<CAPTION>
Unrealized
Appreciation
Type Contracts (Depreciation)
----------------------------------------------
<S> <C> <C>
DTB DAX (9/96) 3 $ 4
LIFFE FT-SE 100 (9/96) 11 (25)
------------
$ (21)
============
</TABLE>
Forward Currency Contracts. Certain Funds are authorized to enter into forward
foreign exchange contracts for the purpose of hedging against foreign exchange
risk arising from the Fund's investment or anticipated investment in securities
denominated in foreign currencies. The aggregate principal amounts of the
contracts for which delivery is anticipated are recorded in the Fund's account,
while such amounts are not recorded if the Fund intends to settle the contracts
prior to delivery. All commitments are marked-to-market daily at the applicable
translation rates and any resulting unrealized gains or losses are recorded in
the Fund's financial statements. The Fund records realized gains or losses at
the time the forward contract is extinguished by entry into a closing
transaction or by delivery of the currency. Risks may arise upon entering these
contracts from the potential inability of counterparties to meet the terms of
their contracts
54
<PAGE>
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The following foreign forward currency contracts were
outstanding at June 30, 1996 (amounts in thousands):
Blairlogie International Active Fund
<TABLE>
<CAPTION>
Principal
Amount Unrealized
Covered Expiration Appreciation
Type by Contract Month (Depreciation)
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Sell Japanese Yen 889,779 7/96 $ 128
Buy Japanese Yen 850,000 7/96 (54)
------------
$ 74
============
</TABLE>
Estimates. The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
2. Fees, Expenses, and Related Party Transactions
Investment Advisory Fee. PIMCO Advisors L.P. ("PIMCO Advisors") serves as
investment advisor to the Trust, pursuant to an Investment Advisory Agreement.
PIMCO Advisors receives from the Trust a fee based on an annual percentage of
the average daily net assets of each Fund as follows: for the NFJ Equity Income,
NFJ Diversified Low P/E, Cadence Capital Appreciation, Cadence Mid Cap Growth,
Parametric Enhanced Equity, and Balanced Funds - .45%; for the Columbus Circle
Investors Core Equity Fund - .57%; for the NFJ Small Cap Value and Blairlogie
International Active Funds - .60%; for the Columbus Circle Investors Mid Cap
Equity Fund - .63%; for the Blairlogie Emerging Markets Fund - .85%; for the
Cadence Small Cap Growth Fund - 1.00%; and for the Cadence Micro Cap Growth
Fund - 1.25%. Pursuant to the Portfolio Management Agreements, which became
effective November 15, 1994, PIMCO Advisors employs six of its sub-partnerships
as portfolio managers for the Funds. The advisory fees received by PIMCO
Advisors are paid to each of the portfolio managers, except for the Balanced
Fund. For the fixed income segment of the Balanced Fund, PIMCO Advisors pays
.25% of the average daily net assets to Pacific Investment Management Company
("PIMCO"). For the common stock segment of the Balanced Fund, PIMCO Advisors
pays .45% of the average daily net assets to Parametric Portfolio Associates.
Administration Fee. PIMCO provides administrative services to the Trust for
which it receives from the Trust an administrative fee at the annual rate of
.25% of the average daily net assets of each of the Funds other than the
Blairlogie Emerging Markets and Blairlogie International Active Funds, for which
the fee is at the annual rate of .50% of the average daily net assets of the
Fund.
Expenses. The Trust is responsible for the following expenses: (i) salaries
and other compensation of any of the Trust's executive officers and employees
who are not officers, directors, stockholders or employees of PIMCO Advisors,
PIMCO, or its subsidiaries or affiliates; (ii) taxes and governmental fees;
(iii) brokerage fees and commissions and other portfolio transaction expenses;
(iv) the cost of borrowing money, including interest expenses; (v) fees and
expenses of the Trustees who are not "interested persons" of the Advisor, PIMCO,
Portfolio Managers, or the Trust, and any counsel retained exclusively for their
benefit; (vi) extraordinary expenses, including costs of litigation and
indemnification expenses; (vii) expenses such as organizational expenses, which
are capitalized in accordance with generally accepted accounting principles; and
(viii) any expenses allocated or allocable to a specific class of shares, which
include service fees payable with respect to the Administrative Class shares and
may include certain other expenses as permitted by the Trust's Multiple Class
Plan adopted pursuant to Rule 18f-3 under the Investment Company Act of 1940 and
subject to review and approval by the Trustees.
Expense Limitation. PIMCO Advisors has undertaken to reimburse the Trust for
its operating expenses, exclusive of class specific service fees, brokerage fees
or other transactional expenses, taxes paid by a fund, interest on borrowing and
extraordinary expenses, in excess of the sum of advisory and administration fees
as a percentage of daily net assets of each Fund (consolidating both classes of
shares), through June 30, 1997. Reimbursements of $401, $3,147, $42, $195, $16,
and $74 were due to the NFJ Equity Income, Cadence Small Cap Growth, Columbus
Circle Investors Mid Cap Equity, Parametric Enhanced Equity, Blairlogie
International Active, and Balanced Funds, respectively, as of June 30, 1996. No
other reimbursements were due as of June 30, 1996.
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Cont.)
June 30, 1996
Related Party Transactions. PIMCO Advisors Distribution Company ("PADCO"), an
indirect wholly-owned subsidiary of PIMCO Advisors, serves as the distributor of
the Trust's shares. Pursuant to a Distribution Agreement, all expenses relating
to the distribution of Trust shares will be paid by PIMCO Advisors, PIMCO or
PADCO out of past profits and resources which may include fees received by PIMCO
Advisors or the administrator.
Certain officers of PIMCO Advisors are also officers of the Trust.
3. Purchases and Sales of Securities
Purchases and sales of securities (excluding short-term investments) for the
eight months ended June 30, 1996 were as follows ($ in thousands):
<TABLE>
<CAPTION>
U.S. Government/Agency All Other
-------------------------------------------------------------
Purchases Sales Purchases Sales
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NFJ Equity Income Fund $ 67,776 $ 67,713
NFJ Diversified Low P/E Fund 39,988 6,400
NFJ Small Cap Value Fund 12,819 20,350
Cadence Capital Appreciation Fund 257,262 198,947
Cadence Mid Cap Growth Fund 176,667 150,688
Cadence Micro Cap Growth Fund 39,118 39,591
Cadence Small Cap Growth Fund 35,245 39,678
Columbus Circle Investors Core Equity Fund 39,056 25,809
Columbus Circle Investors Mid Cap Equity Fund 7,655 8,372
Parametric Enhanced Equity Fund 47,311 49,043
Blairlogie Emerging Markets Fund 55,755 58,859
Blairlogie International Active Fund 45,709 41,040
Balanced Fund $99,997 $97,007 13,728 10,142
</TABLE>
4. Transactions in Written Call and Put Options
Transactions in written call and put options were as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Columbus Circle Investors
Core Equity Fund Balanced Fund
--------------------------------------------------------------
Premium Contracts Premium Contracts
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at 10/31/95 $ 2 8 $ 0 0
Sales 144 600 3 8
Closing Buys (116) (503) 0 0
Expirations (6) (54) 0 0
Exercised (18) (35) 0 0
- -------------------------------------------------------------------------------------------
Balance at 06/30/96 $ 6 16 $3 8
===========================================================================================
</TABLE>
56
<PAGE>
5. Shares of Beneficial Interest
The Trust may issue an unlimited number of shares of beneficial interest with a
$.0001 par value. Changes in shares of beneficial interest were as follows
(shares in thousands):
<TABLE>
<CAPTION>
NFJ NFJ NFJ
NFJ Equity Diversified NFJ Small Cap Cadence
Period Ended Equity Income Low Small Cap Value Capital
June 30, 1996 Income Admin. P/E Value Admin. (a) Appreciation
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,560 524 2,925 201 437 5,442
Issued as reinvestment
of dividends 514 29 207 192 27 947
Shares redeemed (3,957) (139) (53) (1,028) (152) (1,070)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) (883) 414 3,079 (635) 312 5,319
==============================================================================================================
Cadence Cadence Cadence
Cadence Mid Cap Cadence Micro Cap Cadence Small Cap
Period Ended Mid Cap Growth Micro Cap Growth Small Cap Growth
June 30, 1996 Growth Admin. Growth Admin. (b) Growth Admin.
- --------------------------------------------------------------------------------------------------------------
Shares sold 3,438 14 1,333 40 238 22
Issued as reinvestment
of dividends 301 2 88 0 239 2
Shares redeemed (2,281) (10) (1,411) (9) (2,414) (45)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,458 6 10 31 (1,937) (21)
==============================================================================================================
Columbus Columbus Columbus
Circle Circle Circle Blairlogie
Investors Investors Investors Parametric Blairlogie Emerging
Period Ended Core Core Equity Mid Cap Enhanced Emerging Markets
June 30, 1996 Equity Admin. Equity Equity Markets Admin.
- --------------------------------------------------------------------------------------------------------------
Shares sold 162 1,313 36 2,985 2,675 33
Issued as reinvestment
of dividends 5 52 6 210 14 0
Shares redeemed (9) (825) (118) (3,078) (2,853) (78)
- --------------------------------------------------------------------------------------------------------------
Net increase 158 540 (76) 117 (164) (45)
==============================================================================================================
Blairlogie
Blairlogie International
Period Ended International Active
June 30, 1996 Active Admin. Balanced
- ---------------------------------------------------------------------------
Shares sold 1,178 428 821
Issued as reinvestment
of dividends 182 3 704
Shares redeemed (1,178) (39) (538)
- ---------------------------------------------------------------------------
Net increase 182 392 987
===========================================================================
</TABLE>
(a) From commencement of operations, November 1, 1995.
(b) From commencement of operations, April 1, 1996.
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Cont.)
JUNE 30, 1996
<TABLE>
<CAPTION>
NFJ
Year or NFJ Equity NFJ NFJ Cadence Cadence
Period Ended Equity Income Diversified Small Cap Capital Mid Cap
October 31, 1995 Income Admin.(a) Low P/E Value Appreciation Growth
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 2,186 11 10 367 3,256 3,440
Issued as reinvestment
of dividends 513 1 171 283 143 35
Shares redeemed (1,547) (1) (365) (559) (1,858) (1,769)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,152 11 (184) 91 1,541 1,706
=======================================================================================================================
Columbus Columbus
Cadence Cadence Circle Circle
Year or Mid Cap Cadence Cadence Small Cap Investors Investors
Period Ended Growth Micro Cap Small Cap Growth Core Core Equity
October 31, 1995 Admin.(a) Growth Growth Admin.(b) Equity (c) Admin.(d)
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 99 1,996 887 26 636 2,012
Issued as reinvestment
of dividends 0 0 199 0 1 3
Shares redeemed (50) (206) (168) 0 (25) (78)
- -----------------------------------------------------------------------------------------------------------------------
Net increase 49 1,790 918 26 612 1,937
=======================================================================================================================
Columbus
Circle Blairlogie Blairlogie
Year or Investors Parametric Blairlogie Emerging Blairlogie International
Period Ended Mid Cap Enhanced Emerging Markets International Active
October 31, 1995 Equity (c) Equity Markets Admin. Active Admin.(a)
- -----------------------------------------------------------------------------------------------------------------------
Shares Sold 671 872 5,234 130 4,157 83
Issued as reinvestment
of dividends 0 185 248 0 104 1
Shares redeemed (24) (1,427) (3,774) (57) (747) (26)
- -----------------------------------------------------------------------------------------------------------------------
Net Increase (decrease) 647 (370) 1,708 73 3,514 58
=======================================================================================================================
</TABLE>
Year Ended
October 31, 1995 Balanced
- ----------------------------------------
Shares sold 1,847
Issued as reinvestment
of dividends 311
Shares redeemed (8,679)
- ----------------------------------------
Net decrease (6,521)
========================================
(a) From commencement of operations, November 30, 1994.
(b) From commencement of operations, September 27, 1995.
(c) From commencement of operations, December 28, 1994.
(d) From commencement of operations, May 31, 1995.
6. Change in Portfolio Manager for the Balanced Fund
Effective August 1, 1996, NFJ Investment Group and Cadence Capital Management
replaced Parametric Portfolio Associates as managers of the common stock segment
of the Balanced Fund. There was no change to the advisory fee. PIMCO continues
to manage the fixed income segment of the balanced fund.
7. Federal Income Tax Matters
As of June 30, 1996, the Blairlogie Emerging Markets fund has a capital loss
carryforward that was realized in the prior year of $11,876,066. This capital
loss is available to offset future realized capital gains through June 30, 2003.
The Fund will resume capital gain distributions in the future to the extent
gains are realized in excess of the available carryforwards.
The Cadence Micro Cap Growth Fund had a tax operating loss of $244,153 during
the period ended June 30, 1996 which resulted in a permanent difference between
book income and tax-basis income. This difference was reclassified from
undistributed net investment income (loss) to paid in capital on the statement
of assets and liabilities.
58
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the PIMCO Funds: Equity
Advisors Series
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
the NFJ Equity Income Fund, NFJ Diversified Low P/E Fund, NFJ Small
Cap Value Fund, Cadence Capital Appreciation Fund, Cadence Mid Cap
Growth Fund, Cadence Micro Cap Growth Fund, Cadence Small Cap Growth
Fund, Columbus Circle Investors Core Equity Fund, Columbus Circle
Investors Mid Cap Equity Fund, Parametric Enhanced Equity Fund,
Blairlogie Emerging Markets Fund, Blairlogie International Active
Fund, and Balanced Fund (series of the PIMCO Funds: Equity Advisors
Series) at June 30, 1996, the results of each of their operations, the
changes in each of their net assets and the financial highlights for
the period from November 1, 1995 through June 30, 1996, in conformity
with generally accepted accounting principles. These financial
statements and the financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial 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, which
included confirmation of portfolio positions at June 30, 1996 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed
above. The financial statements of the PIMCO Funds: Equity Advisors
Series for periods prior to November 1, 1995 were audited by other
independent accountants whose report dated December 15, 1995 expressed
an unqualified opinion on those statements.
PRICE WATERHOUSE LLP
Kansas City, Missouri
August 12, 1996
59
<PAGE>
FEDERAL INCOME TAX INFORMATION
As required by the Internal Revenue Code regulations shareholders must
be notified within 60 days of the Trust's fiscal year end (June 30,
1996) as to the tax status of the dividend received deduction for
corporations.
Dividend Received Deduction. Corporate shareholders are generally
entitled to take the dividend received deduction on the portion of the
Fund's dividend distribution that qualifies under tax law. The
percentage of each Fund's fiscal 1996 ordinary income dividends that
qualify for the corporate dividend received deduction are as follows:
NFJ Equity Income Fund - 58.44%; NFJ Diversified Low P/E Fund -
59.74%; NFJ Small Cap Value Fund - 47.46%; Cadence Capital
Appreciation Fund - 42.80%; Cadence Mid Cap Growth Fund - 53.74%;
Columbus Circle Investors Core Equity Fund - 14.19%; Columbus Circle
Investors Mid Cap Equity Fund - 7.25%; Parametric Enhanced Equity
Fund - 79.55%; Balanced Fund - 37.32%.
Shareholders are advised to consult their own tax advisor with respect
to the tax consequences of their investment in the Trust. However,
income received by tax-exempt recipients need not be reported as
taxable income. In January 1997, you will be advised on IRS form 1099-
DIV as to the federal tax status of the dividends and distributions
received by you in calendar year 1996.
60
<PAGE>
Trustees and Officers
William D. Cvengros, Chairman, President & Trustee
Richard L. Nelson, Trustee
Lyman W. Porter, Trustee
Alan Richards, Trustee
Garlin G. Flynn, Secretary
R. Mark Brandenberger, Treasurer
Investment Advisor
PIMCO Advisors L.P.
840 Newport Center Drive, Suite 360
Newport Beach, California 92660
Administrator
Pacific Investment Management Company
840 Newport Center Drive, Suite 360
Newport Beach, California 92660
Transfer Agent and Custodian
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Counsel
Dechert Price & Rhoads
1500 K. Street N.W.
Washington, D.C. 20005
Independent Accountants
Price Waterhouse LLP
1055 Broadway, Suite 1000
Kansas City Missouri 64105
<PAGE>
-----------------------------------------
- ----------------------------------------------------------------
--------------------------------------------------------
PIMCO FUNDS:
EQUITY ADVISORS SERIES
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
800-927-4648
--------------------------------------------------------
This report is submitted for the general information of the shareholders
of the PIMCO Funds: Equity Advisors Series. It is not authorized
for distributions to prospective investors unless accompanied or
preceded by an effective Prospectus for the PIMCO Funds: Equity
Advisors Series, which contains information covering its investment
policies as well as other pertinent information.
- -------------------------------------------------------------------------
-----------------------------------------
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
(1) Part A
Financial Highlights
(2) Part B
Financial statements dated as of June 30, 1996 are
incorporated by reference in the Statement of Additional
Information from the Funds' Annual Report dated as of
June 30, 1996 and include the following:
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Schedule of Investments
Notes to Financial Statements
Report of Independent Accountants
(b) Exhibits (the number of each exhibit relates to the exhibit
designation in Form N-1A):
(1)(a) Agreement and Declaration of Trust(1)
(b) Amendment to Agreement and Declaration of Trust dated
October 24, 1990(2)
(c) Amendment to Agreement and Declaration of Trust dated
November 16, 1990(3)
(d) Amendment to Agreement and Declaration of Trust dated
November 29, 1990(4)
(e) Amendment to Agreement and Declaration of Trust dated
December 14, 1990(4)
(f) Form of Amendment to Agreement and Declaration of Trust
dated February 1, 1991(4)
(g) Amendment to Agreement and Declaration of Trust dated May 9,
1991(5)
II-1
<PAGE>
(h) Amendment to Agreement and Declaration Trust dated August 6,
1992(6)
(i) Amendment to Agreement and Declaration of Trust dated
February 26, 1993(7)
(j) Amended and Restated Agreement and Declaration of Trust
dated May 7, 1993(8)
(k) Amendment to Amended and Restated Agreement and Declaration
of Trust dated July 15, 1993(9)
(l) Amendment to Amended and Restated Agreement and Declaration
of Trust dated October 29, 1993(10)
(m) Amendment to Amended and Restated Agreement and Declaration
of Trust dated March 4, 1994(11)
(n) Amendment to Amended and Restated Agreement and Declaration
of Trust dated August 12, 1994(12)
(o) Amendment to Amended and Restated Agreement and Declaration
of Trust dated November 7, 1994(13)
(p) Form of Amended and Restated Agreement and Declaration of
Trust as of November 28, 1995(16)
(q) Form of Amended and Restated Agreement and Declaration of
Trust as of February 2, 1996(17)
(r) Form of Amended and Restated Agreement and Declaration of
Trust as of August 20, 1996(18)
(2)(a) By-Laws(1)
(3) Not Applicable
(4)(a) Specimen of Security(4)
(b) Form of Specimen of Security for Mid Cap Growth Portfolio(5)
(c) Form of Specimen of Security for Emerging Markets
Portfolio(6)
(d) Form of Specimen of Security for International Diversified
Portfolio(7)
(e) Form of Specimen of Security for Micro Cap Growth
Portfolio(7)
II-2
<PAGE>
(f) Forms of Specimen of Security for Variable Portfolios(9)
(g) Form of Specimen of Security for Utility Stock Portfolio(10)
(h) Forms of Specimen of Security for Core Equity, Mid Cap
Equity, and Small Cap Equity Funds (collectively, "Columbus
Circle Funds")(12)
(i) Form of Specimen of Security for Parametric Structured
Emerging Markets Fund(18)
(5)(a) Form of Investment Advisory Agreement
(b) (i) Form of Portfolio Management Agreement with
Pacific Mutual Life Insurance Company(12)
(ii) Form of Portfolio Management Agreement with
Pacific Investment Management Company(12)
(iii) Form of Portfolio Management Agreement with NFJ
Investment Group(18)
(iv) Form of Portfolio Management Agreement with
Cadence Capital Management(18)
(v) Form of Portfolio Management Agreement with
Parametric Portfolio Associates(18)
(vi) Form of Portfolio Management Agreement with
Blairlogie Capital Management(12)
(vii) Form of Portfolio Management Agreement with
Columbus Circle Investors(12)
(c) (i) Form of Administration Agreement(18)
(ii) Form of Sub-Administration Agreement(15)
(6) Form of Distribution Agreement(18)
(7) Not Applicable
II-3
<PAGE>
(8) (i) Form of Custody Agreement and Addenda(18)
(9) (a) (i) Form of Agency Agreement and Addenda(18)
II-4
<PAGE>
(b) Form of Service Plan for Institutional Services Shares(11)
(10) Opinion and Consent of Counsel(2)
(11) Consents of Independent Accountants
(12) Not applicable
(13) Initial Capital Agreement(2)
(14) Not Applicable
(15) Not Applicable
(16) Schedule of Computation of Performance(13)
(17) Financial Data Schedule (filed as Exhibit 27)
(18) Form of Multiple Class Plan Pursuant to Rule 18f-3(18)
(19) Powers of Attorney and Certificate of Secretary(18)
__________________
1 Included in the Registrant's initial Registration Statement on Form N-1A
(File No. 33-36528), as filed on August 24, 1990.
2 Included in Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on November 2, 1990.
3 Included in Pre-Effective Amendment No. 2 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on November 30, 1990.
II-5
<PAGE>
4 Included in Post-Effective Amendment No. 1 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on February 5, 1991.
5 Included in Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on June 18, 1991.
6 Included in Post-Effective Amendment No. 4 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on October 30, 1992.
7 Included in Post-Effective Amendment No. 6 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on April 2, 1993.
8 Included in Post-Effective Amendment No. 8 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on July 9, 1993.
9 Included in Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on August 11, 1993.
10 Included in Post-Effective Amendment No. 10 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on November 4, 1993.
11 Included in Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on April 12, 1994.
12 Included in Post-Effective Amendment No. 15 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on October 14, 1994.
13 Included in Post-Effective Amendment No. 16 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on December 28, 1994.
14 Included in Post-Effective Amendment No. 17 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on June 28, 1995.
15 Included in Post-Effective Amendment No. 19 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on October 31, 1995.
16 Included in Post-Effective Amendment No. 20 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on December 29, 1995.
17 Included in Post-Effective Amendment No. 21 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on February 29, 1996.
18 Included in Post-Effective Amendment No. 22 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on July 1, 1996.
II-6
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
As of August 21, 1996, Pacific Mutual Life Insurance Company owned 76%
of the outstanding shares of the Columbus Circle Investors Mid Cap Equity Fund,
50% of the NFJ Diversified Low P/E Fund, and 28% of the Parametric Enhanced
Equity Fund; The Jewish Federation of Metropolitan Chicago owned 27% of the
Cadence Small Cap Growth Fund; First Interstate Bank of California as Custodian
for the San Francisco Bay Area Rapid Transit District owned 34% of the
Parametric Enhanced Equity Fund; Charles Schwab & Company owned 40% of the
outstanding shares of the Blairlogie Emerging Markets Fund; and The Bank of New
York as Trustee for Melville Corporation owned 64% of the outstanding shares of
the Columbus Circle Investors Core Equity Fund.
Item 26. Number of Holders of Securities.
As of August 21, 1996, the number of shareholders of each operational
Fund was as follows:
<TABLE>
<CAPTION>
Institutional Class Administrative Class
Number of Number of
Fund Record Holders Record Holders
<S> <C> <C>
NFJ Equity Income Fund 131 4
NFJ Diversified Low P/E Fund 137 0
NFJ Small Cap Value Fund 184 1
Cadence Capital Appreciation Fund 248 0
Cadence Mid Cap Growth Fund 241 5
Cadence Micro Cap Growth Fund 75 1
Cadence Small Cap Growth Fund 44 1
Columbus Circle Investors Core Equity Fund 126 6
Columbus Circle Investors Mid Cap Equity Fund 125 0
Parametric Enhanced Equity Fund 147 0
Blairlogie Emerging Markets Fund 206 1
Blairlogie International Active Fund 158 4
Balanced Fund 23 0
</TABLE>
II-7
<PAGE>
Item 27. Indemnification.
Reference is made to Article 5, Section 5.4 of the Registrant's
Agreement and Declaration of Trust, which is incorporated by reference herein.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant by the Registrant pursuant to the Fund's Articles of
Incorporation, its By-Laws or otherwise, the Registrant is aware that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by directors,
officers or controlling persons or the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such
directors, officers or controlling persons in connection with shares being
registered, the Registrant 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 Act and will be governed by the final adjudication of
such issues.
Item 28. Business and Other Connections of Current Investment Adviser.
Unless otherwise stated, the principal business address of each
organization listed is 800 Newport Center Drive, Newport Beach, CA 92660.
PIMCO Advisors L.P. ("PALP")
<TABLE>
<CAPTION>
Position
Name with Adviser Other Affiliations
<S> <C> <C>
Walter E. Auch, Sr. Member of Equity Management
Board Consultant;
Director, Fort Dearborn Fund,
Shearson VIP Fund, Shearson
Advisors Fund, Shearson TRAK
Fund, Banyan Land Trust, Banyan
Land Fund II, Banyan Mortgage
Fund, Allied Healthcare Products,
Inc., First Western Inc., DHR
Group and Geotech Industries.
David B. Breed Member of Director, Managing
Operating Board Director and Chief
Executive Officer,
Cadence Capital
Management, Inc.;
Managing Director
and Chief
Executive
</TABLE>
II-8
<PAGE>
<TABLE>
<S> <C> <C>
Officer, Cadence
Capital Management.
Donald A. Chiboucas Member of Director and
Operating Board President, Columbus
Circle Investors
Management, Inc.;
Managing Director
and President,
Columbus Circle
Investors.
William D. Cvengros Chief Executive Trustee and Chairman of the Trust;
Officer and Trustee, PIMCO Advisors Funds and
President, Member Cash Accumulation Trust; Director,
of Operating PIMCO Advisors Distribution
Board, Operating Company.
Committee, and
Equity Board
Walter B. Gerken Chairman of Equity Director, Mullin
Board Consulting Inc.;
Director,
Executive Services
Corps. of Southern
California.
William H. Gross Member of Director and
Operating Board Managing Director,
and Equity Board PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
Senior Vice
President, PIMCO
Funds; Director
and Vice President,
StocksPLUS
Management, Inc.
Brent R. Harris Member of Director and
Operating Board Managing Director,
PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
Director and Vice President
StocksPLUS Management, Inc.;
Chairman of the
Board and Trustee,
PIMCO Funds and PIMCO
Commercial Mortgage Securities
Trust, Inc.
Amy M. Hogan Member of Managing Director, Columbus
Operating Board Circle Investors; Director,
Columbus Circle Investors
Management, Inc.
Donald R. Kurtz Member of Equity Formerly, Vice President
Board of Internal Asset
Management, General
Motors Investment
Management Corp.
and Director,
Thomson Advisory
Group L.P.
James F. McIntosh Member of Equity
Board
Dean S. Meiling Member of Director and
Operating Board Managing Director,
PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
Director, StocksPLUS
Management, Inc.;
</TABLE>
II-10
<PAGE>
<TABLE>
<S> <C> <C>
Vice President,
PIMCO Funds and PIMCO Commercial
Mortgage Securities Trust, Inc.
Donald K. Miller Member of Equity Chairman, Greylock Financial Inc.;
Board Director, Huffy Corporation, RPM,
Inc., and Christensen Boyles
Corporation; Director, President
and Chief Executive Officer, TAG
Inc. Formerly, Director and
Vice Chairman, Thomson Advisory
Group L.P.
James F. Muzzy Member of Director and
Operating Board Managing Director,
PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
Vice President,
PIMCO Funds;
Director and Vice
President,
StocksPLUS
Management, Inc.
</TABLE>
II-11
<PAGE>
<TABLE>
<S> <C> <C>
Daniel S. Pickett Member of Managing Director,
Operating Board Columbus Circle
Investors; Director,
Columbus Circle
Investors
Management, Inc.
William F. Podlich, Member of Director and
III Operating Board Managing Director,
and Equity Board PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
Vice President, PIMCO
Commercial Mortgage
Securities Trust, Inc.
William C. Powers Member of Director and
Operating Board Managing Director,
PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
Senior Vice President,
PIMCO Commercial Mortgage
Securities Trust, Inc.
Glenn S. Schafer Member of Equity President and
Board Director, Pacific
Mutual Life
Insurance Company;
Chairman and Director, Mutual
Service Corporation, United
Planners Group, Inc., Pacific
Equities Network and Pacific
Financial Holding Company.
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
Name Position with Adviser Other Affiliations
- ---- --------------------- ------------------
<S> <C> <C>
Irwin F. Smith Member of Chairman, Managing Director,
Operating Board, Chief Executive Officer and
Operating Chief Investment Officer,
Committee, and Columbus Circle Investors;
Equity Board Director and Chairman, Columbus
Circle Investors Management, Inc.;
Director, Columbus Circle Trust
Company.
Thomas C. Sutton Member of Equity Chairman, Chief
Board Executive Officer
and Director,
Pacific Mutual Life
Insurance Company; Chairman,
Trustee and President, Pacific
Select Fund; Director, United
Planners Group, Inc.,
Pacific Equities Network,
Mutual Services
Corporation and Pacific
Financial Holding Company.
William S. Chairman and Member Director, Managing Director and
Thompson, Jr. of Operating Board, Chief Executive Officer, PIMCO
Member of Operating Management, Inc.; Chief Executive
Committee, and Officer and Managing Director,
Equity Board Pacific Investment Management
Company; Director and President,
StocksPLUS Management,Inc.;
Vice President, PIMCO Funds
and PIMCO Commercial Mortgage
Securities Trust, Inc.
Sharon A. Cheever Vice President-
Legal, and Assistant
Secretary
Robert M. Fitzgerald Senior Vice President- Chief Financial Officer,
Finance, Chief Financial Senior Vice President-
Officer and Controller Finance, and Controller,
PIMCO Advisors Distribution
Company.
John O. Leasure Senior Vice President Director, President and Chief
Executive Officer,
PIMCO Advisors Distribution Company.
Michele Mitchell Vice President Senior Vice President, PIMCO
Advisors Institutional
Services and of the Trust.
Kenneth M. Poovey General Counsel and Partner, Latham & Watkins.
Board Secretary
Robert A. Prindiville Vice President None
Ernest L. Schmider Vice President-Legal, Senior Vice President, Pacific
and Assistant Secretary Investment Management Company
and PIMCO Management, Inc.; Secretary,
Chief Administrative and Legal Officer,
Pacific Investment Management Company.
Newton B. Schott, Jr. Senior Vice President- Vice President and Clerk, PIMCO
Legal, and Secretary Advisors Funds and Cash Accumulation
Trust; Senior Vice President, Director
and Secretary, PIMCO Advisors
Distribution Company.
Stephen J. Treadway Executive Vice President Director and Chairman, PIMCO Advisors
Distribution Company.
James Ward Vice President
Richard M. Weil Senior Vice President, Formerly, Vice President-Global
Legal Counsel Asset Management Group,
Bankers Trust Company.
</TABLE>
Cadence Capital Management
Exchange Place, 53 State Street,
Boston, Massachusetts 02109
<TABLE>
<CAPTION>
Position
Name with Adviser Other Affiliations
<S> <C> <C>
William B. Bannick Managing Director Director and
and Executive Managing Director,
Vice President Cadence Capital
Management, Inc.
David B. Breed Managing Director Member of Operating Board,
and Chief PALP; Director, Managing
Executive Officer Director and Chief
Executive Officer,
Cadence Capital
Management, Inc.
Katherine A. Burdon Managing Director None
Eric M. Wetlaufer Managing Director None
</TABLE>
II-13
<PAGE>
NFJ Investment Group
2121 San Jacinto, Suite 1850,
Dallas, Texas 75201
<TABLE>
<CAPTION>
Position
Name with Adviser Other Affiliations
<S> <C> <C>
Benno J. Fischer Managing Director Director and
and Chief Financial Managing Director,
Officer NFJ Management, Inc.
John L. Johnson Managing Director Director and
Managing Director,
NFJ Management, Inc.
Jack C. Najork Managing Director Director, Managing
Director and
Chairman, NFJ
Management, Inc.
Parametric Portfolio Associates
7310 Columbia Center, 701 Fifth Avenue,
Seattle, Washington 98104-7090
<CAPTION>
Position
Name with Adviser Other Affiliations
<S> <C> <C>
William E. Managing Director Director and
Cornelius, Jr. Managing Director,
Parametric
Management, Inc.
Mark W. England- Managing Director Director, Managing
Markun Director and Chief
Executive Officer,
Parametric
Management, Inc.
David M. Stein Managing Director Director and Managing
and Chief Director, Parametric
Financial Officer Management, Inc.
</TABLE>
II-14
<PAGE>
Pacific Investment Management Company ("PIMCO")
840 Newport Center Drive,
Newport Beach, California 92660
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH ADVISER OTHER AFFILIATIONS
George C. Allan Vice President Vice President, PIMCO
Management, Inc.
Tamara J. Arnold Vice President Vice President, PIMCO
Management, Inc.
Leslie A. Barbi Vice President Vice President, PIMCO
Management, Inc.
William R. Benz Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
John B. Brynjolfsson Vice President Vice President, PIMCO
Management, Inc.
R. Wesley Burns Executive Vice Executive Vice
President President, PIMCO
Management, Inc.;
President, PIMCO Funds
and PIMCO Commercial
Mortgage Securities
Trust, Inc.; Vice
President of the Trust,
PIMCO Advisors Funds
and Cash Accumulation
Trust.
Wendy W. Cupps Vice President Vice President, PIMCO
Management, Inc.
Charles M. Daniels, III Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Anita Dunn Vice President Vice President, PIMCO
Management, Inc.
David H. Edington Managing Director Director and Managing
Director, PIMCO
Management, Inc.
A. Benjamin Ehlert Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Robert A. Ettl Vice President Vice President, PIMCO
Management, Inc.
Robert M. Fitzgerald Treasurer Chief Financial
Officer, Senior Vice
President-Finance and
Controller, PALP and
PIMCO Advisors
Distribution Company.
William H. Gross Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Director and Vice
President, StocksPLUS
Management, Inc.;
Senior Vice President,
PIMCO Funds; Member of
Equity and Operating
Boards, PALP.
John L. Hague Managing Director Director and Managing
Director, PIMCO
Management, Inc.
Gordon C. Hally Executive Vice Executive Vice
President President, PIMCO
Management , Inc.
</TABLE>
II-15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH ADVISER OTHER AFFILIATIONS
Pasi M. Hamalainen Vice President Vice President, PIMCO
Management, Inc.
John P. Hardaway Vice President Vice President, PIMCO
Management, Inc. and
the Trust; Treasurer,
PIMCO Funds, PIMCO
Commercial Mortgage
Securities Trust, Inc.,
PIMCO Advisors Funds
and Cash Accumulation
Trust.
Brent R. Harris Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Director and Vice
President, StocksPLUS
Management, Inc.;
Trustee and Chairman,
PIMCO Funds and PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of Operating
Board, PALP.
Douglas M. Hodge Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Brent L. Holden Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Dwight F. Holloway, Jr. Vice President Vice President, PIMCO
Management, Inc.
Jane T. Howe Vice President Vice President, PIMCO
Management, Inc.
Margaret E. Isberg Executive Vice Executive Vice
President President, PIMCO
Management, Inc.;
Senior Vice President,
PIMCO Funds.
John S. Loftus Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Dean S. Meiling Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Director, StocksPLUS
Management, Inc.; Vice
President, PIMCO Funds
and PIMCO Commercial
Mortgage Securities
Trust, Inc.; Member of
Operating Board, PALP.
James F. Muzzy Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Director and Vice
President, StocksPLUS
Management, Inc.; Vice
President, PIMCO Funds;
Member of Operating
Board, PALP.
Thomas J. Otterbein Vice President Vice President, PIMCO
Management, Inc.
William F. Podlich, III Managing Director Director and Managing
Director, PIMCO
Management, Inc.; Vice
President, PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of Equity and
Operating Boards, PALP.
William C. Powers Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Senior Vice President
PIMCO Commercial
Mortgage Securities
Trust, Inc.; Member of
Operating Board, PALP
</TABLE>
II-16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH ADVISER OTHER AFFILIATIONS
Frank B. Rabinovitch Managing Director Director and Managing
Director, PIMCO
Management, Inc.
Edward P. Rennie Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Scott L. Roney Vice President Vice President, PIMCO
Management, Inc.
Michael J. Rosborough Vice President Vice President, PIMCO
Management, Inc.
Jeffrey M. Sargent Vice President Vice President of the
Trust, PIMCO
Management, Inc., PIMCO
Funds, PIMCO Commercial
Mortgage Securities
Trust, Inc.
Jeffrey M. Saye Vice President Vice President, PIMCO
Management, Inc.
Ernest L. Schmider Senior Vice Senior Vice President,
President, Secretary, PIMCO Management, Inc.;
Chief Administrative Vice President-Legal
and Legal Officer and Assistant
Secretary, PALP.
Leland T. Scholey Senior Vice President Senior Vice President,
PIMCO Management, Inc.
and PIMCO Funds.
Denise C. Seliga Vice President Vice President, PIMCO
Management, Inc.
Rita J. Seymour Vice President Vice President, PIMCO
Management, Inc.
Lee R. Thomas Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
William S. Thompson, Jr. Chief Executive Director, Managing
Officer and Managing Director and Chief
Director Executive Officer,
PIMCO Management, Inc.;
Director and President,
StocksPLUS Management,
Inc.; Vice President,
PIMCO Funds and PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of Equity Board
and Operating
Committee, and Chairman
and Member of Operating
Board, PALP.
Benjamin L. Trosky Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Senior Vice President,
PIMCO Commercial
Mortgage Securities
Trust, Inc.
Robert S. Venable Vice President Vice President, PIMCO
Management, Inc.
Teresa A. Wagner Vice President Vice President of the
Trust, PIMCO
Management, Inc., PIMCO
Funds, PIMCO Commercial
Mortgage Securities
Trust, Inc.; Vice
President and Assistant
Clerk, PIMCO Advisors
Funds and Cash
Accumulation Trust.
Andrew C. Ward Vice President Vice President, PIMCO
Management, Inc.;
Senior Vice President,
PIMCO Funds.
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NAME POSITION WITH ADVISER OTHER AFFILIATIONS
Ram Willner Vice President Vice President, PIMCO
Management Inc.
Kristen M. Wilsey Vice President Vice President, PIMCO
Management, Inc. and
PIMCO Funds.
George H. Wood Vice President Vice President, PIMCO
Management Inc.
Michael A. Yetter Vice President Vice President, PIMCO
Management Inc.
</TABLE>
II-18
<PAGE>
Columbus Circle Investors
Metro Center
One Station Place, 8th Floor
Stamford, Connecticut 06902
<TABLE>
<CAPTION>
Position
Name with Adviser Other Affiliations
<S> <C> <C>
Irwin F. Smith Chairman, Managing Member of Equity and Operating
Director, Chief Boards and Operating Committee,
Executive Officer PALP; Director and Chairman,
and Chief Invest- Columbus Circle Investors
ment Officer Management, Inc.; Director
Columbus Circle Trust Company.
Donald A. Chiboucas President and Member of Operating Board, PALP;
Managing Director Director and President, Columbus
Circle Investors Management, Inc.
Louis P. Celentano Managing Director Director and Vice President,
Columbus Circle Investors
Management, Inc.; Director and
Chairman, Columbus Circle Trust
Company.
Robert W. Fehrmann Managing Director Director, Columbus
Circle Investors
Management, Inc.
Marc Felman Managing Director None
Amy M. Hogan Managing Director Member of Operating Board, PALP;
Director, Columbus Circle
Investors Management, Inc.
Daniel S. Pickett Managing Director Member of Operating Board, PALP;
Director, Columbus Circle
Investors Management, Inc.
Anthony Rizza Managing Director None
Paul C. Tyborowski Managing Director None
Winthrop S. Headley Vice President None
Clifford G. Fox Vice President None
Harold R. Snedcof Vice President None
Sharon S. Weslow Vice President None
Michele Montano Vice President None
Cecelia Pastore Vice President None
Paul A. Pantalena Vice President None
Paul Meeks Vice President None
Anne Malone Vice President None
Norman Seltzer Vice President None
Nathaniel J. Belknap Vice President None
</TABLE>
Blairlogie Capital Management
4th Floor, 125 Princes Street
Edinburgh EH2 4AD, Scotland
<TABLE>
<CAPTION>
<S> <C> <C>
Position
Name with Adviser Other Affiliations
Gavin R. Dobson Chief Executive Director and Chief Investment Officer,
Officer and Blairlogie Holdings Limited
Managing Director (U.K.)
James G.S. Smith Chief Investment Director and Chief Executive Officer,
Officer and Blairlogie Holdings Limited
Managing Director (U.K.)
</TABLE>
II-19
<PAGE>
<TABLE>
<S> <C> <C>
John R.W. Stevens Chief Financial Director and Chief Financial
Officer and Officer, Blairlogie Holdings Limited
Managing Director (U.K.)
</TABLE>
Item 29. Principal Underwriters.
(a) PIMCO Advisors Distribution Company. PIMCO Advisors Distribution
Company (the "Distributor") serves as Distributor of shares of the
Fund. The Distributor is a wholly-owned subsidiary of PIMCO Advisors
L.P., the Investment Adviser and Administrator of the Registrant.
(b)
<TABLE>
<CAPTION>
Positions and Positions
Name and Principal Offices with and Offices
Business Address* Underwriter with Registrant
<S> <C> <C>
William D. Badgley Vice President None
Jeffrey L. Booth Vice President None
James D. Bosch Vice President None
William D. Cvengros Director Trustee and Chairman
Robert M. Fitzgerald Senior Vice President None
of Finance, Chief
Financial Officer and
Controller
Michael J. Gallagher Vice President None
Ronald H. Gray Vice President None
Edward W. Janeczek Vice President None
Johnathan C. Jones Vice President None
Jaishree B. Kemraj Assistant Vice None
President and
Assistant
Controller
John O. Leasure Director, President None
and Chief Executive
Officer
William E. Lynch Regional Vice President None
Jacqueline A. McCarthy Vice President None
Richard J. McLaughlin Vice President None
Andrew J. Meyers Executive Vice None
President
Paul R. Moody Regional Vice President None
Fioja Moyer Vice President None
Goffrey H. Pearlman Vice President None
</TABLE>
II-20
<PAGE>
<TABLE>
<S> <C> <C>
Glynne Pisapia Vice President None
Matthew M. Russell Vice President None
Newton B. Schott, Jr. Director, Senior Vice None
President and Secretary
David P. Stone Vice President None
William H. Thomas, Jr. Regional Vice President None
Stephen J. Treadway Director and Chairman None
Paul H. Troyer Regional Vice President None
Brian F. Trumbore Senior Vice None
President
</TABLE>
____________________
* Principal business address for all individuals listed is One Station Place,
Stamford, Connecticut 06902.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
The account books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of the Fund's Transfer
Agent and Custodian, Investors Fiduciary Trust Company, 21 West 10th Street,
Kansas City, Missouri 64105.
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant, if requested to do so by the holders of at least 10% of
the Registrant's outstanding shares, will
II-21
<PAGE>
call a meeting of shareholders for the purpose of voting upon the
question of removal of a trustee or trustees, and will assist
communications among shareholders as set forth within Section 16(c) of
the 1940 Act; and
(d) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest report to
shareholders, upon request and without charge.
(e) Registrant undertakes to file a post-effective amendment using
financial statements of the Parametric Structured Emerging Markets
Fund, which need not be certified, within four to six months from
the latter of the effective date of Post-Effective Amendment No. 23
or the date on which shares of the Fund are first sold (other than
shares sold for seed money).
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 23 to the Registration Statement of PIMCO Funds: Equity
Advisors Series to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Newport Beach in the State of California on the 10th
day of September, 1996.
PIMCO Funds: Equity Advisors Series
By: /s/ William D. Cvengros
-------------------------------------------
William D. Cvengros, Chairman of the Board,
President, and Trustee
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 23 to the Registration Statement of PIMCO Funds:
Equity Advisors Series has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
________________________ 9/10/96
Robert M. Brandenberger* Treasurer (Principal
Financial and
Accounting Officer
________________________ 9/10/96
Richard L. Nelson* Trustee
________________________ 9/10/96
Lyman W. Porter* Trustee
________________________ 9/10/96
Alan Richards* Trustee
</TABLE>
*By: /s/ William D. Cvengros
_____________________________________________
William D. Cvengros
Chairman of the Board, President, and Trustee
as Attorney-in-Fact
Powers of Attorney for Messrs. Brandenberger, Nelson, Porter, Richards and
Cvengros, and a certificate included pursuant to Rule 483(b) under the
Securities Act of 1933, were filed as Exhibit 19 to Post-Effective Amendment
No. 22 filed on July 1, 1996.
II-24
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
Exhibit No. Exhibit Name Edgar Exhibit No.
<S> <C> <C>
11 Consents of Independent 99.B11
Accountants
17 Financial Data Schedule 27
</TABLE>
II-25
<PAGE>
EX-99.B11
PIMCO FUNDS: EQUITY ADVISORS SERIES
CONSENTS OF INDEPENDENT ACCOUNTANTS
<PAGE>
EX-99.B11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the references to us under the heading "Financial
Highlights" in the Prospectus and under the headings "Independent Accountants"
and "Financial Statements" in the Statement of Additional Information
constituting parts of this Post-Effective Amendment No. 23 to the Registration
Statement on Form N-1A of the PIMCO Funds: Equity Advisors Series.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Kansas City, Missouri
September 10, 1996
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
PIMCO Funds: Equity Advisors Series:
We hereby consent to the use in this Post-Effective Amendment No. 23 under the
Securities Act of 1933 and Amendment No. 25 under the Investment Company Act of
1940 to Registration Statement No. 33-36528 on Form N-1A of our report dated
December 15, 1995, related to PIMCO Funds: Equity Advisors Series appearing in
the financial statements which are incorporated by reference for the respective
portfolios listed below:
PIMCO Funds: Equity Advisors Series - NFJ Equity Income Fund
PIMCO Funds: Equity Advisors Series - NFJ Diversified Low P/E Fund
PIMCO Funds: Equity Advisors Series - NFJ Small Cap Value Fund
PIMCO Funds: Equity Advisors Series - Cadence Capital Appreciation Fund
PIMCO Funds: Equity Advisors Series - Cadence Mid Cap Growth Fund
PIMCO Funds: Equity Advisors Series - Cadence Micro Cap Growth Fund
PIMCO Funds: Equity Advisors Series - Cadence Small Cap Growth Fund
PIMCO Funds: Equity Advisors Series - Columbus Circle Investors Core Equity
Fund
PIMCO Funds: Equity Advisors Series - Columbus Circle Investors Mid Cap
Equity Fund
PIMCO Funds: Equity Advisors Series - Parametric Enhanced Equity Fund
PIMCO Funds: Equity Advisors Series - Blairlogie Emerging Markets Fund
PIMCO Funds: Equity Advisors Series - Blairlogie International Active Fund
PIMCO Funds: Equity Advisors Series - Balanced Fund
Deloitte & Touche LLP
Costa Mesa, California
September 10, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT DATED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER> 031
<NAME> NFJ EQUITY INCOME FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 103,191
<INVESTMENTS-AT-VALUE> 120,863
<RECEIVABLES> 2,855
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 907
<TOTAL-LIABILITIES> 907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,579
<SHARES-COMMON-STOCK> 8,130
<SHARES-COMMON-PRIOR> 9,013
<ACCUMULATED-NII-CURRENT> 3,782
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,778
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,672
<NET-ASSETS> 122,811
<DIVIDEND-INCOME> 3,622
<INTEREST-INCOME> 276
<OTHER-INCOME> 0
<EXPENSES-NET> 678
<NET-INVESTMENT-INCOME> 3,220
<REALIZED-GAINS-CURRENT> 11,596
<APPREC-INCREASE-CURRENT> 6,902
<NET-CHANGE-FROM-OPS> 21,718
<EQUALIZATION> (222)
<DISTRIBUTIONS-OF-INCOME> 3,072
<DISTRIBUTIONS-OF-GAINS> 4,404
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,560
<NUMBER-OF-SHARES-REDEEMED> 3,957
<SHARES-REINVESTED> 514
<NET-CHANGE-IN-ASSETS> 4,656
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,607
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 678
<AVERAGE-NET-ASSETS> 136,173
<PER-SHARE-NAV-BEGIN> 13.09
<PER-SHARE-NII> 0.78
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 0.48
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.36
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>032
<NAME>NFJ EQUITY INCOME FUND - ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 103,191
<INVESTMENTS-AT-VALUE> 120,863
<RECEIVABLES> 2,855
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 907
<TOTAL-LIABILITIES> 907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,579
<SHARES-COMMON-STOCK> 425
<SHARES-COMMON-PRIOR> 11
<ACCUMULATED-NII-CURRENT> 3,782
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,778
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,672
<NET-ASSETS> 122,811
<DIVIDEND-INCOME> 3,622
<INTEREST-INCOME> 276
<OTHER-INCOME> 0
<EXPENSES-NET> 678
<NET-INVESTMENT-INCOME> 3,220
<REALIZED-GAINS-CURRENT> 11,596
<APPREC-INCREASE-CURRENT> 6,902
<NET-CHANGE-FROM-OPS> 21,718
<EQUALIZATION> (222)
<DISTRIBUTIONS-OF-INCOME> 155
<DISTRIBUTIONS-OF-GAINS> 232
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 524
<NUMBER-OF-SHARES-REDEEMED> 139
<SHARES-REINVESTED> 29
<NET-CHANGE-IN-ASSETS> 4,656
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,607
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 678
<AVERAGE-NET-ASSETS> 6,341
<PER-SHARE-NAV-BEGIN> 13.13
<PER-SHARE-NII> 0.75
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0.36
<PER-SHARE-DISTRIBUTIONS> 0.48
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.35
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>041
<NAME>NFJ DIVERSIFIED LOW P/E FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 52,446
<INVESTMENTS-AT-VALUE> 55,606
<RECEIVABLES> 139
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 499
<TOTAL-ASSETS> 56,244
<PAYABLE-FOR-SECURITIES> 3,492
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25
<TOTAL-LIABILITIES> 3,517
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,467
<SHARES-COMMON-STOCK> 4,232
<SHARES-COMMON-PRIOR> 1,153
<ACCUMULATED-NII-CURRENT> 348
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 752
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,160
<NET-ASSETS> 52,727
<DIVIDEND-INCOME> 379
<INTEREST-INCOME> 79
<OTHER-INCOME> 0
<EXPENSES-NET> 103
<NET-INVESTMENT-INCOME> 355
<REALIZED-GAINS-CURRENT> 1,115
<APPREC-INCREASE-CURRENT> 1,082
<NET-CHANGE-FROM-OPS> 2,552
<EQUALIZATION> 42
<DISTRIBUTIONS-OF-INCOME> 355
<DISTRIBUTIONS-OF-GAINS> 2,045
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,925
<NUMBER-OF-SHARES-REDEEMED> 53
<SHARES-REINVESTED> 207
<NET-CHANGE-IN-ASSETS> 38,284
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,030
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 66
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103
<AVERAGE-NET-ASSETS> 22,311
<PER-SHARE-NAV-BEGIN> 12.53
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> 1.62
<PER-SHARE-DIVIDEND> 0.17
<PER-SHARE-DISTRIBUTIONS> 1.77
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.46
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>051
<NAME>PARAMETRIC ENHANCED EQUITY FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 69,689
<INVESTMENTS-AT-VALUE> 83,354
<RECEIVABLES> 116
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83,470
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45
<TOTAL-LIABILITIES> 45
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,946
<SHARES-COMMON-STOCK> 5,243
<SHARES-COMMON-PRIOR> 5,126
<ACCUMULATED-NII-CURRENT> 954
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,860
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,665
<NET-ASSETS> 83,425
<DIVIDEND-INCOME> 1,342
<INTEREST-INCOME> 46
<OTHER-INCOME> 0
<EXPENSES-NET> 430
<NET-INVESTMENT-INCOME> 958
<REALIZED-GAINS-CURRENT> 11,972
<APPREC-INCREASE-CURRENT> (909)
<NET-CHANGE-FROM-OPS> 12,021
<EQUALIZATION> 10
<DISTRIBUTIONS-OF-INCOME> 958
<DISTRIBUTIONS-OF-GAINS> 2,327
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,985
<NUMBER-OF-SHARES-REDEEMED> 3,078
<SHARES-REINVESTED> 210
<NET-CHANGE-IN-ASSETS> 9,426
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,169
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 275
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 430
<AVERAGE-NET-ASSETS> 91,516
<PER-SHARE-NAV-BEGIN> 14.44
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.38
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.91
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>061
<NAME>CADENCE CAPITAL APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 292,387
<INVESTMENTS-AT-VALUE> 343,036
<RECEIVABLES> 6,079
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 349,115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387
<TOTAL-LIABILITIES> 387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,949
<SHARES-COMMON-STOCK> 19,265
<SHARES-COMMON-PRIOR> 13,946
<ACCUMULATED-NII-CURRENT> 3,922
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27,208
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 50,649
<NET-ASSETS> 348,728
<DIVIDEND-INCOME> 3,231
<INTEREST-INCOME> 778
<OTHER-INCOME> 0
<EXPENSES-NET> 1,385
<NET-INVESTMENT-INCOME> 2,624
<REALIZED-GAINS-CURRENT> 31,135
<APPREC-INCREASE-CURRENT> 6,136
<NET-CHANGE-FROM-OPS> 39,895
<EQUALIZATION> 214
<DISTRIBUTIONS-OF-INCOME> 2,624
<DISTRIBUTIONS-OF-GAINS> 15,492
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,442
<NUMBER-OF-SHARES-REDEEMED> 1,070
<SHARES-REINVESTED> 947
<NET-CHANGE-IN-ASSETS> 112,508
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 15,487
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 883
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,385
<AVERAGE-NET-ASSETS> 296,348
<PER-SHARE-NAV-BEGIN> 16.94
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 1.99
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 1.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.10
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in is entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>071
<NAME>NFJ SMALL CAP VALUE FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 29,537
<INVESTMENTS-AT-VALUE> 33,417
<RECEIVABLES> 89
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,506
<PAYABLE-FOR-SECURITIES> 25
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 56
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,770
<SHARES-COMMON-STOCK> 2,044
<SHARES-COMMON-PRIOR> 2,679
<ACCUMULATED-NII-CURRENT> 837
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,963
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,880
<NET-ASSETS> 33,450
<DIVIDEND-INCOME> 708
<INTEREST-INCOME> 67
<OTHER-INCOME> 0
<EXPENSES-NET> 231
<NET-INVESTMENT-INCOME> 544
<REALIZED-GAINS-CURRENT> 3,943
<APPREC-INCREASE-CURRENT> 1,415
<NET-CHANGE-FROM-OPS> 5,902
<EQUALIZATION> (26)
<DISTRIBUTIONS-OF-INCOME> 488
<DISTRIBUTIONS-OF-GAINS> 2,049
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 201
<NUMBER-OF-SHARES-REDEEMED> 1,028
<SHARES-REINVESTED> 192
<NET-CHANGE-IN-ASSETS> (1,643)
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> 2,205
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 231
<AVERAGE-NET-ASSETS> 34,470
<PER-SHARE-NAV-BEGIN> 13.10
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 1.49
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.74
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>072
<NAME>NFJ SMALL CAP VALUE FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 29,537
<INVESTMENTS-AT-VALUE> 33,417
<RECEIVABLES> 89
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,506
<PAYABLE-FOR-SECURITIES> 25
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 56
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,770
<SHARES-COMMON-STOCK> 312
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 837
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,963
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,880
<NET-ASSETS> 33,450
<DIVIDEND-INCOME> 708
<INTEREST-INCOME> 67
<OTHER-INCOME> 0
<EXPENSES-NET> 231
<NET-INVESTMENT-INCOME> 544
<REALIZED-GAINS-CURRENT> 3,943
<APPREC-INCREASE-CURRENT> 1,415
<NET-CHANGE-FROM-OPS> 5,902
<EQUALIZATION> (26)
<DISTRIBUTIONS-OF-INCOME> 63
<DISTRIBUTIONS-OF-GAINS> 293
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 437
<NUMBER-OF-SHARES-REDEEMED> 152
<SHARES-REINVESTED> 27
<NET-CHANGE-IN-ASSETS> (1,643)
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> 2,205
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 231
<AVERAGE-NET-ASSETS> 4,823
<PER-SHARE-NAV-BEGIN> 13.16
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 1.43
<PER-SHARE-DIVIDEND> 0.19
<PER-SHARE-DISTRIBUTIONS> 0.74
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>081
<NAME>CADENCE SMALL CAP GROWTH FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 27,901
<INVESTMENTS-AT-VALUE> 32,870
<RECEIVABLES> 634
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,504
<PAYABLE-FOR-SECURITIES> 332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106
<TOTAL-LIABILITIES> 438
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,237
<SHARES-COMMON-STOCK> 1,582
<SHARES-COMMON-PRIOR> 3,519
<ACCUMULATED-NII-CURRENT> 3,202
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,658
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,969
<NET-ASSETS> 33,066
<DIVIDEND-INCOME> 345
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> 534
<NET-INVESTMENT-INCOME> (86)
<REALIZED-GAINS-CURRENT> 15,949
<APPREC-INCREASE-CURRENT> (11,349)
<NET-CHANGE-FROM-OPS> 4,514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 5,641
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 238
<NUMBER-OF-SHARES-REDEEMED> 2,414
<SHARES-REINVESTED> 239
<NET-CHANGE-IN-ASSETS> (41,455)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,693
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 534
<AVERAGE-NET-ASSETS> 63,443
<PER-SHARE-NAV-BEGIN> 21.02
<PER-SHARE-NII> 2.02
<PER-SHARE-GAIN-APPREC> (0.61)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.60
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.83
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>082
<NAME>CADENCE SMALL CAP GROWTH FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 27,901
<INVESTMENTS-AT-VALUE> 32,870
<RECEIVABLES> 634
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,504
<PAYABLE-FOR-SECURITIES> 332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106
<TOTAL-LIABILITIES> 438
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,237
<SHARES-COMMON-STOCK> 5
<SHARES-COMMON-PRIOR> 26
<ACCUMULATED-NII-CURRENT> 3,202
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,658
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,969
<NET-ASSETS> 33,066
<DIVIDEND-INCOME> 345
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> 534
<NET-INVESTMENT-INCOME> (86)
<REALIZED-GAINS-CURRENT> 15,949
<APPREC-INCREASE-CURRENT> (11,349)
<NET-CHANGE-FROM-OPS> 4,514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 55
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22
<NUMBER-OF-SHARES-REDEEMED> 45
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> (41,455)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,693
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 534
<AVERAGE-NET-ASSETS> 506
<PER-SHARE-NAV-BEGIN> 21.01
<PER-SHARE-NII> 2.02
<PER-SHARE-GAIN-APPREC> (0.61)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.60
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.82
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>101
<NAME>BALANCED FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 79,066
<INVESTMENTS-AT-VALUE> 89,475
<RECEIVABLES> 4,481
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 93,956
<PAYABLE-FOR-SECURITIES> 11,283
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111
<TOTAL-LIABILITIES> 11,394
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,614
<SHARES-COMMON-STOCK> 7,096
<SHARES-COMMON-PRIOR> 6,109
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,338
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,610
<NET-ASSETS> 82,562
<DIVIDEND-INCOME> 680
<INTEREST-INCOME> 1,491
<OTHER-INCOME> 0
<EXPENSES-NET> 369
<NET-INVESTMENT-INCOME> 1,802
<REALIZED-GAINS-CURRENT> 1,778
<APPREC-INCREASE-CURRENT> 3,088
<NET-CHANGE-FROM-OPS> 6,668
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,802
<DISTRIBUTIONS-OF-GAINS> 6,227
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 821
<NUMBER-OF-SHARES-REDEEMED> 538
<SHARES-REINVESTED> 704
<NET-CHANGE-IN-ASSETS> 9,924
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,787
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 236
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 369
<AVERAGE-NET-ASSETS> 78,368
<PER-SHARE-NAV-BEGIN> 11.89
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 0.76
<PER-SHARE-DIVIDEND> 0.27
<PER-SHARE-DISTRIBUTIONS> 1.01
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.64
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>111
<NAME>CADENCE MID CAP GROWTH FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 200,715
<INVESTMENTS-AT-VALUE> 231,855
<RECEIVABLES> 1,212
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 233,067
<PAYABLE-FOR-SECURITIES> 713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 272
<TOTAL-LIABILITIES> 985
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 169,974
<SHARES-COMMON-STOCK> 11,881
<SHARES-COMMON-PRIOR> 10,423
<ACCUMULATED-NII-CURRENT> 2,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,839
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,140
<NET-ASSETS> 232,082
<DIVIDEND-INCOME> 2,042
<INTEREST-INCOME> 452
<OTHER-INCOME> 0
<EXPENSES-NET> 970
<NET-INVESTMENT-INCOME> 1,524
<REALIZED-GAINS-CURRENT> 30,980
<APPREC-INCREASE-CURRENT> (13,220)
<NET-CHANGE-FROM-OPS> 19,284
<EQUALIZATION> 59
<DISTRIBUTIONS-OF-INCOME> 1,520
<DISTRIBUTIONS-OF-GAINS> 4,245
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,438
<NUMBER-OF-SHARES-REDEEMED> 2,281
<SHARES-REINVESTED> 301
<NET-CHANGE-IN-ASSETS> 41,870
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,256
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 970
<AVERAGE-NET-ASSETS> 205,838
<PER-SHARE-NAV-BEGIN> 18.16
<PER-SHARE-NII> 0.32
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.14
<PER-SHARE-DISTRIBUTIONS> 0.43
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.44
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>112
<NAME>CADENCE MID CAP GROWTH FUND - ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 200,715
<INVESTMENTS-AT-VALUE> 231,855
<RECEIVABLES> 1,212
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 233,067
<PAYABLE-FOR-SECURITIES> 713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 272
<TOTAL-LIABILITIES> 985
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 169,974
<SHARES-COMMON-STOCK> 55
<SHARES-COMMON-PRIOR> 49
<ACCUMULATED-NII-CURRENT> 2,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,839
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,140
<NET-ASSETS> 232,082
<DIVIDEND-INCOME> 2,042
<INTEREST-INCOME> 452
<OTHER-INCOME> 0
<EXPENSES-NET> 970
<NET-INVESTMENT-INCOME> 1,524
<REALIZED-GAINS-CURRENT> 30,980
<APPREC-INCREASE-CURRENT> (13,220)
<NET-CHANGE-FROM-OPS> 19,284
<EQUALIZATION> 59
<DISTRIBUTIONS-OF-INCOME> 6
<DISTRIBUTIONS-OF-GAINS> 21
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14
<NUMBER-OF-SHARES-REDEEMED> 10
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 41,870
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,256
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 970
<AVERAGE-NET-ASSETS> 991
<PER-SHARE-NAV-BEGIN> 18.17
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.11
<PER-SHARE-DISTRIBUTIONS> 0.43
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.44
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>121
<NAME>BLAIRLOGIE EMERGING MARKETS FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 70,913
<INVESTMENTS-AT-VALUE> 77,256
<RECEIVABLES> 3,101
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 831
<TOTAL-ASSETS> 81,188
<PAYABLE-FOR-SECURITIES> 97
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 275
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,130
<SHARES-COMMON-STOCK> 6,361
<SHARES-COMMON-PRIOR> 6,525
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 33
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 13,517
<ACCUM-APPREC-OR-DEPREC> 6,333
<NET-ASSETS> 80,913
<DIVIDEND-INCOME> 1,083
<INTEREST-INCOME> 55
<OTHER-INCOME> 0
<EXPENSES-NET> 704
<NET-INVESTMENT-INCOME> 434
<REALIZED-GAINS-CURRENT> 1,358
<APPREC-INCREASE-CURRENT> 7,303
<NET-CHANGE-FROM-OPS> 9,095
<EQUALIZATION> (4)
<DISTRIBUTIONS-OF-INCOME> 236
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,675
<NUMBER-OF-SHARES-REDEEMED> 2,853
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 6,544
<ACCUMULATED-NII-PRIOR> 10
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 15,113
<GROSS-ADVISORY-FEES> 441
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 704
<AVERAGE-NET-ASSETS> 77,404
<PER-SHARE-NAV-BEGIN> 11.27
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.40
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.66
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>122
<NAME>BLAIRLOGIE EMERGING MARKETS FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 70,913
<INVESTMENTS-AT-VALUE> 77,256
<RECEIVABLES> 3,101
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 831
<TOTAL-ASSETS> 81,188
<PAYABLE-FOR-SECURITIES> 97
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 275
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,130
<SHARES-COMMON-STOCK> 29
<SHARES-COMMON-PRIOR> 74
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 33
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 13,517
<ACCUM-APPREC-OR-DEPREC> 6,333
<NET-ASSETS> 80,913
<DIVIDEND-INCOME> 1,083
<INTEREST-INCOME> 55
<OTHER-INCOME> 0
<EXPENSES-NET> 704
<NET-INVESTMENT-INCOME> 434
<REALIZED-GAINS-CURRENT> 1,358
<APPREC-INCREASE-CURRENT> 7,303
<NET-CHANGE-FROM-OPS> 9,095
<EQUALIZATION> (4)
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33
<NUMBER-OF-SHARES-REDEEMED> 78
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,544
<ACCUMULATED-NII-PRIOR> 10
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 15,113
<GROSS-ADVISORY-FEES> 441
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 704
<AVERAGE-NET-ASSETS> 756
<PER-SHARE-NAV-BEGIN> 11.24
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.40
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.63
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>131
<NAME>BLAIRLOGIE INTERNATIONAL ACTIVE FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 64,970
<INVESTMENTS-AT-VALUE> 71,062
<RECEIVABLES> 1,256
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,679
<TOTAL-ASSETS> 75,997
<PAYABLE-FOR-SECURITIES> 54
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112
<TOTAL-LIABILITIES> 166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,518
<SHARES-COMMON-STOCK> 5,600
<SHARES-COMMON-PRIOR> 5,418
<ACCUMULATED-NII-CURRENT> 1,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,214
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,163
<NET-ASSETS> 75,831
<DIVIDEND-INCOME> 833
<INTEREST-INCOME> 112
<OTHER-INCOME> 0
<EXPENSES-NET> 546
<NET-INVESTMENT-INCOME> 399
<REALIZED-GAINS-CURRENT> 2,749
<APPREC-INCREASE-CURRENT> 5,113
<NET-CHANGE-FROM-OPS> 8,261
<EQUALIZATION> 62
<DISTRIBUTIONS-OF-INCOME> 2,278
<DISTRIBUTIONS-OF-GAINS> 1,127
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,178
<NUMBER-OF-SHARES-REDEEMED> 1,178
<SHARES-REINVESTED> 182
<NET-CHANGE-IN-ASSETS> 11,549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,510
<OVERDISTRIB-NII-PRIOR> 13
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546
<AVERAGE-NET-ASSETS> 71,131
<PER-SHARE-NAV-BEGIN> 11.74
<PER-SHARE-NII> 0.72
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> 0.43
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.54
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>132
<NAME>BLAIRLOGIE INTERNATIONAL ACTIVE FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 64,970
<INVESTMENTS-AT-VALUE> 71,062
<RECEIVABLES> 1,256
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,679
<TOTAL-ASSETS> 75,997
<PAYABLE-FOR-SECURITIES> 54
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112
<TOTAL-LIABILITIES> 166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,518
<SHARES-COMMON-STOCK> 450
<SHARES-COMMON-PRIOR> 58
<ACCUMULATED-NII-CURRENT> 1,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,214
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,163
<NET-ASSETS> 75,831
<DIVIDEND-INCOME> 833
<INTEREST-INCOME> 112
<OTHER-INCOME> 0
<EXPENSES-NET> 546
<NET-INVESTMENT-INCOME> 399
<REALIZED-GAINS-CURRENT> 2,749
<APPREC-INCREASE-CURRENT> 5,113
<NET-CHANGE-FROM-OPS> 8,261
<EQUALIZATION> 62
<DISTRIBUTIONS-OF-INCOME> 25
<DISTRIBUTIONS-OF-GAINS> 13
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 428
<NUMBER-OF-SHARES-REDEEMED> 39
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 11,549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,510
<OVERDISTRIB-NII-PRIOR> 13
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546
<AVERAGE-NET-ASSETS> 2,529
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.69
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> 0.42
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.51
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>141
<NAME>CADENCE MICRO CAP GROWTH FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 62,615
<INVESTMENTS-AT-VALUE> 84,865
<RECEIVABLES> 769
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,634
<PAYABLE-FOR-SECURITIES> 986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109
<TOTAL-LIABILITIES> 1,095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,355
<SHARES-COMMON-STOCK> 4,546
<SHARES-COMMON-PRIOR> 4,536
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,250
<NET-ASSETS> 84,539
<DIVIDEND-INCOME> 337
<INTEREST-INCOME> 226
<OTHER-INCOME> 0
<EXPENSES-NET> 807
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 8,951
<APPREC-INCREASE-CURRENT> 8,025
<NET-CHANGE-FROM-OPS> 16,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,543
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,333
<NUMBER-OF-SHARES-REDEEMED> 1,411
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> 14,764
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 670
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 807
<AVERAGE-NET-ASSETS> 80,637
<PER-SHARE-NAV-BEGIN> 15.38
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 3.43
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.34
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.47
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>142
<NAME>CADENCE MICRO CAP GROWTH FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 62,615
<INVESTMENTS-AT-VALUE> 84,865
<RECEIVABLES> 769
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,634
<PAYABLE-FOR-SECURITIES> 986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109
<TOTAL-LIABILITIES> 1,095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,355
<SHARES-COMMON-STOCK> 31
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,250
<NET-ASSETS> 84,539
<DIVIDEND-INCOME> 337
<INTEREST-INCOME> 226
<OTHER-INCOME> 0
<EXPENSES-NET> 807
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 8,951
<APPREC-INCREASE-CURRENT> 8,025
<NET-CHANGE-FROM-OPS> 16,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40
<NUMBER-OF-SHARES-REDEEMED> 9
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,764
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 670
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 807
<AVERAGE-NET-ASSETS> 432
<PER-SHARE-NAV-BEGIN> 16.73
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 1.70
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.46
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>161
<NAME>COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 40,203
<INVESTMENTS-AT-VALUE> 44,328
<RECEIVABLES> 459
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 44,788
<PAYABLE-FOR-SECURITIES> 330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 431
<TOTAL-LIABILITIES> 761
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,342
<SHARES-COMMON-STOCK> 771
<SHARES-COMMON-PRIOR> 613
<ACCUMULATED-NII-CURRENT> 1,498
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 58
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,129
<NET-ASSETS> 44,027
<DIVIDEND-INCOME> 242
<INTEREST-INCOME> 105
<OTHER-INCOME> 0
<EXPENSES-NET> 260
<NET-INVESTMENT-INCOME> 87
<REALIZED-GAINS-CURRENT> 1,584
<APPREC-INCREASE-CURRENT> 1,689
<NET-CHANGE-FROM-OPS> 3,360
<EQUALIZATION> 21
<DISTRIBUTIONS-OF-INCOME> 38
<DISTRIBUTIONS-OF-GAINS> 180
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 162
<NUMBER-OF-SHARES-REDEEMED> 9
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 11,591
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 756
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260
<AVERAGE-NET-ASSETS> 9,028
<PER-SHARE-NAV-BEGIN> 12.72
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> .65
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.28
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.55
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>162
<NAME>COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 40,203
<INVESTMENTS-AT-VALUE> 44,328
<RECEIVABLES> 459
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 44,788
<PAYABLE-FOR-SECURITIES> 330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 431
<TOTAL-LIABILITIES> 761
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,342
<SHARES-COMMON-STOCK> 2,477
<SHARES-COMMON-PRIOR> 1,937
<ACCUMULATED-NII-CURRENT> 1,498
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 58
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,129
<NET-ASSETS> 44,027
<DIVIDEND-INCOME> 242
<INTEREST-INCOME> 105
<OTHER-INCOME> 0
<EXPENSES-NET> 260
<NET-INVESTMENT-INCOME> 87
<REALIZED-GAINS-CURRENT> 1,584
<APPREC-INCREASE-CURRENT> 1,689
<NET-CHANGE-FROM-OPS> 3,360
<EQUALIZATION> 21
<DISTRIBUTIONS-OF-INCOME> 76
<DISTRIBUTIONS-OF-GAINS> 577
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,313
<NUMBER-OF-SHARES-REDEEMED> 825
<SHARES-REINVESTED> 52
<NET-CHANGE-IN-ASSETS> 11,591
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 756
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260
<AVERAGE-NET-ASSETS> 29,565
<PER-SHARE-NAV-BEGIN> 12.73
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> .65
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.28
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.56
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>171
<NAME>COLUMBUS CIRCLE INVESTORS MID CAP EQUITY FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 6,449
<INVESTMENTS-AT-VALUE> 8,355
<RECEIVABLES> 180
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 28
<TOTAL-ASSETS> 8,563
<PAYABLE-FOR-SECURITIES> 179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6
<TOTAL-LIABILITIES> 185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,019
<SHARES-COMMON-STOCK> 571
<SHARES-COMMON-PRIOR> 647
<ACCUMULATED-NII-CURRENT> 280
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 173
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,906
<NET-ASSETS> 8,378
<DIVIDEND-INCOME> 17
<INTEREST-INCOME> 15
<OTHER-INCOME> 0
<EXPENSES-NET> 50
<NET-INVESTMENT-INCOME> (18)
<REALIZED-GAINS-CURRENT> 471
<APPREC-INCREASE-CURRENT> 853
<NET-CHANGE-FROM-OPS> 1,306
<EQUALIZATION> (1)
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 243
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36
<NUMBER-OF-SHARES-REDEEMED> 118
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> 21
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 243
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50
<AVERAGE-NET-ASSETS> 8,441
<PER-SHARE-NAV-BEGIN> 12.92
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 1.62
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.37
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.66
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
