<PAGE>
As filed with the Securities and Exchange Commission on July 1, 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. 22 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24 [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 (a)(2) 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
October 31, 1995 on November 15, 1995 and amended such Notice on December 7,
1995. The Registrant intends to file its Notice pursuant to Rule 24f-2 for the
fiscal year ended June 30, 1996 on or before August 29, 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>
[LOGO of PIMCO]
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
<PAGE>
(This page left blank intentionally)
<PAGE>
PIMCO FUNDS
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.
<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>
PIMCO FUNDS
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>
3
<PAGE>
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. 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."
4
<PAGE>
PIMCO FUNDS
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 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."
5
<PAGE>
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...................................... -- 0.50 --
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*
----------------------------------- -------- -------------- ------- ---------
<S> <C> <C> <C> <C>
NFJ Equity Income Fund............. 0.45% 0.25% 0.25% 0.95%
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
Markets Fund...................... -- 0.50 0.25 --
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>
*PIMCO, the Funds' Administrator, has undertaken until at least June 30, 1997
to limit the operating expenses that are borne by each Fund so that the Fund's
total expenses, exclusive of interest or gains, brokerage fees or other
transactional expenses, taxes paid by the Fund, interest on borrowing, and
extraordinary expenses, do not exceed on an annual basis the total expenses
shown.
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."
6
<PAGE>
PIMCO FUNDS
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. $-- $-- $-- $ --
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. $-- $-- $-- $ --
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.
7
<PAGE>
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 $ $ $ $ $ $ $
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
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 $ $ $ $ $ $ $
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 $ $ $ $ $ $ $
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)
CADENCE CAPITAL APPRECIATION FUND
Institutional Class
6/30/96 $ $ $ $ $ $ $
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 $ $ $ $ $ $ $
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
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 $ $ $ $ $ $ $
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)
</TABLE>
- --------
(a) From commencement of operations, March 8, 1991.
(e) From commencement of operations,
November 1, 1995.
(b) From commencement of operations, November 30, 1994.
(f) From commencement of operations,
August 26, 1991.
(c) From commencement of operations, December 30, 1991.
(d) From commencement of operations, October 1, 1991.
(g) From commencement of operations,
June 25, 1993.
(h) From commencement of operations,
April 1, 1996.
* Annualized.
8
<PAGE>
PIMCO FUNDS
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 (0.79) 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 (0.73) 13.13 25.69 140 0.95* 3.43* 43.27 N/A
$ $ $ % $ % % % $
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 (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 (0.18) 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 (0.07) 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 (0.02) 18.17 36.64 892 0.94* 0.23* 71.73 N/A
$ $ $ % $ % % % $
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
</TABLE>
9
<PAGE>
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 $ $ $ $ $ $ $
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
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 $ $ $ $ $ $ $
10/31/95(k) 10.00 0.07 2.71 2.78 (0.06) 0.00 0.00
Administrative Class
6/30/96
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 $ $ $ $ $ $ $
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 $ $ $ $ $ $ $
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 $ $ $ $ $ $ $
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
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 $ $ $ $ $ $ $
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
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 $ $ $ $ $ $ $
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.
(j) From commencement of operations, September 27, 1995.
(k) From commencement of operations, December 28, 1994.
(l) From commencement of operations, May 31, 1995.
(m) From commencement of operations, February 11, 1991.
(n) From commencement of operations, June 1, 1993.
(o) From commencement of operations, June 8, 1993.
(p) From commencement of operations, June 25, 1992.
* Annualized.
** 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.
10
<PAGE>
PIMCO FUNDS
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 (1.43) 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 0.00 21.01 (5.34) 544 1.60* (0.82)* 8.80 N/A
$ $ $ % $ % % % $
0.00 (0.06) 12.72 27.86 7,791 0.82* 0.79* 122.88 0.03
0.00 (0.02) 12.73 11.34 24,645 1.06* 0.34* 57.96 N/A
$ $ $ % $ % % % $
0.00 (0.02) 12.92 29.34 8,357 0.88 0.24 131.58 0.04
$ $ $ % $ % % % $
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 (0.78) 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 (0.76) 11.24 (27.96) 830 1.62 0.02 118.18 N/A
$ $ $ % $ % % % $
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 (0.51) 11.73 9.61 675 1.34* 0.50* 58.07 N/A
$ $ $ % $ % % % $
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>
11
<PAGE>
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
12
<PAGE>
PIMCO FUNDS
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.
13
<PAGE>
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.
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PIMCO FUNDS
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, such as those listed on the Morgan Stanley Capital
International Emerging Markets Free Index ("MSCI Free Index") or the Baring
Emerging Markets Index (the "Baring Index"), although the Portfolio Manager
has complete discretion in identifying countries that qualify as emerging
markets. 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, 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 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.
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<PAGE>
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
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<PAGE>
PIMCO FUNDS
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
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<PAGE>
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
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PIMCO FUNDS
(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;
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<PAGE>
(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
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PIMCO FUNDS
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.
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<PAGE>
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
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PIMCO FUNDS
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.
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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.
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PIMCO FUNDS
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 Fund, 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.
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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
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<PAGE>
PIMCO FUNDS
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.
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<PAGE>
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
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PIMCO FUNDS
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.
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."
29
<PAGE>
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
$ 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 $ 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 $ 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.
30
<PAGE>
PIMCO FUNDS
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 1989. She previously served as portfolio manager at GW Capital, and as
senior investment analyst at Composite Research & Management. 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 $ 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 $ 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 and William B. Bannick 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 or its predecessor 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 had 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's predecessor in
1992. He graduated from the University of Massachusetts and received his MBA
from Boston University. Mr. Bannick is a Chartered Financial Analyst.
31
<PAGE>
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 $
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 a Scottish
investment management firm, organized as a United Kingdom limited partnership
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 Ltd. 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 $ 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, 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
32
<PAGE>
PIMCO FUNDS
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.
PIMCO has undertaken until at least June 30, 1997 to limit the operating
expenses that are borne by each Fund so that the Fund's total expenses,
exclusive of items (ii), (iii), (iv) and (vi) above, do not exceed on an
annual basis the advisory, administrative and service fees charged to each
Fund. For more information, see "Expense Information."
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, 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%
Parametric Structured Emerging Markets Fund......................... --%
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
. % for the Parametric Structured Emerging Markets Fund; NFJ--.45% for the
NFJ Equity Income Fund, .45% for the NFJ Diversified Low P/E
33
<PAGE>
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
reimburse, 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
34
<PAGE>
PIMCO FUNDS
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;
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 (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.
35
<PAGE>
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.
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
36
<PAGE>
PIMCO FUNDS
so. 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.
37
<PAGE>
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 (currently 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
38
<PAGE>
PIMCO FUNDS
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.
39
<PAGE>
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 , 1996, The Northern Trust
Company as Trustee for Great Lakes Chemical Master Retirement Trust (Chicago,
Illinois) owned a controlling interest (as that term is defined in the 1940
Act) of the NFJ Diversified Low P/E Fund; Pacific Mutual Life Insurance
Company (Newport Beach, California) owned a controlling interest of the
Columbus Circle Investors Mid Cap 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; Charles Schwab & Company, Inc.
(San Francisco, California) owned a controlling interest of the Blairlogie
Emerging Markets Fund; and Pacific Financial Asset Management Corporation
(Newport Beach, California) owned a controlling interest of the Blairlogie
International Active 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).
40
<PAGE>
PIMCO FUNDS
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).
41
<PAGE>
PIMCO FUNDS
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<PAGE>
[LOGO of PIMCO]
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
- --------------------------------------------------------------------------------
September 15, 1996
<PAGE>
[LOGO of PIMCO]
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>
PIMCO FUNDS
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.
<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>
PIMCO FUNDS
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
- ------------------------------------------------------------------------------
<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."
3
<PAGE>
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."
4
<PAGE>
EXPENSE INFORMATION
PIMCO FUNDS
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>
*Pacific Investment Management Company ("PIMCO"), the Funds' Administrator,
has undertaken until at least June 30, 1997 to limit the operating expenses
that are borne by each Fund so that the Fund's total expenses, exclusive of
interest or gains, brokerage fees or other transactional expenses, taxes paid
by the Fund, interest on borrowing, and extraordinary expenses, do not exceed
on an annual basis the total expenses shown.
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.
5
<PAGE>
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 $ $ $ $ $ $ $
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 $ $ $ $ $ $ $
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
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 $ $ $ $ $ $ $
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)
CADENCE SMALL CAP
GROWTH FUND
Institutional Class
6/30/96 $ $ $ $ $ $ $
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
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.
* Annualized.
6
<PAGE>
PIMCO FUNDS
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 (0.18) 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 (0.07) 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 (0.02) 18.17 36.64 892 0.94* 0.23* 71.73 N/A
$ $ $ % $ % % % $
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 (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 0.00 21.01 (5.34) 544 1.60* (0.82)* 8.80 N/A
</TABLE>
7
<PAGE>
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:
8
<PAGE>
PIMCO FUNDS
(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;
9
<PAGE>
(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;
10
<PAGE>
PIMCO FUNDS
(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.
11
<PAGE>
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.
12
<PAGE>
PIMCO FUNDS
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.
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."
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<PAGE>
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
$ 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 $ 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 and William B. Bannick 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 or its predecessor 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 had 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's predecessor in
1992. He graduated from the University of Massachusetts and received his MBA
from Boston University. Mr. Bannick is a Chartered Financial Analyst.
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.
14
<PAGE>
PIMCO FUNDS
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.
PIMCO has undertaken until at least June 30, 1997 to limit the operating
expenses that are borne by each Fund so that the Fund's total expenses,
exclusive of items (ii), (iii), (iv) and (vi) above, do not exceed on an
annual basis the advisory, administrative, and service fees charged to each
Fund. For more information, see "Expense Information."
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.
15
<PAGE>
SERVICE FEES
Under the terms of the Multiple Class Plan, PIMCO is permitted to
reimburse, 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;
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
16
<PAGE>
PIMCO FUNDS
prior to the close of business (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.
17
<PAGE>
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. 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
18
<PAGE>
PIMCO FUNDS
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.
19
<PAGE>
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 (currently 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.
20
<PAGE>
PIMCO FUNDS
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
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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 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)
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PIMCO FUNDS
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).
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PIMCO FUNDS
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<PAGE>
[LOGO of PIMCO]
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
- --------------------------------------------------------------------------------
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..................................... 33
PORTFOLIO TRANSACTIONS AND BROKERAGE............................... 33
Investment Decisions.......................................... 33
Brokerage and Research Services............................... 34
Portfolio Turnover............................................ 36
NET ASSET VALUE.................................................... 36
TAXATION........................................................... 37
Distributions................................................. 38
Sales of Shares............................................... 38
Backup Withholding............................................ 38
Options, Futures and Forward Contracts, and Swap Agreements... 38
Passive Foreign Investment Companies.......................... 39
Foreign Currency Transactions................................. 40
Foreign Taxation.............................................. 40
Original Issue Discount....................................... 41
Other Taxation................................................ 42
</TABLE>
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<TABLE>
<S> <C>
OTHER INFORMATION............................................ 42
Capitalization............................................ 42
Performance Information................................... 43
Voting Rights............................................. 45
Code of Ethics............................................ 53
Custodian, Transfer Agent and Dividend Disbursing Agent... 53
Independent Accountants................................... 53
Counsel................................................... 54
Registration Statement.................................... 54
Financial Statements...................................... 54
</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
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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.
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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.
4
<PAGE>
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
5
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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.
14
<PAGE>
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
15
<PAGE>
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.
16
<PAGE>
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,
17
<PAGE>
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).
18
<PAGE>
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);
19
<PAGE>
(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 65
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 65 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 50 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 40 Formerly, Assistant Vice
President and Associate
Counsel, Pacific Mutual.
R. Mark Brandenberger Treasurer Project Lead, PIMCO.
Age 29 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 49 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 38 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 33 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. William H. Gross, a Managing Director of PIMCO, holds approximately
41.9% of the ownership interests in PIMCO Partners (representing an indirect
economic interest in approximately 15.6% of the partnership units of PIMCO
Advisors owned by PIMCO Partners, G.P., or approximately 12.5% of the
outstanding partnership units of PIMCO Advisors). PIMCO Advisors had
approximately $ 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; and by
the sole shareholder of the Parametric Structured Emerging Markets Fund at a
meeting on , 1996.
------
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, 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%
Parametric Structured Emerging Markets Fund.................................. __%
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 $ $ 445,739 $ 368,971
NFJ Diversified Low P/E Fund 60,686 85,078
NFJ Small Cap Value Fund 203,158 214,936
Cadence Capital Appreciation Fund 881,358 595,724
Cadence Mid Cap Growth Fund 650,017 453,846
Cadence Micro Cap Growth Fund 609,540 251,431
Cadence Small Cap Growth Fund 594,905 456,981
Columbus Circle Investors Core Equity 73,930 N/A
Fund*
Columbus Circle Investors Mid Cap Equity
Fund* 26,276 N/A
Parametric Enhanced Equity Fund 319,036 267,252
Blairlogie Emerging Markets Fund 638,097 319,725
Blairlogie International Active Fund 282,055 84,712
Balanced Fund 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 $ 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 . % for 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 $
----
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 $ 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 $ 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 $ 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 a Scottish investment management firm, organized as a
limited partnership. Blairlogie is the successor investment adviser to
Blairlogie Capital Management Ltd., an indirect subsidiary of PFAMCo. Blairlogie
is organized as a United Kingdom limited partnership 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 PFAMCo, and the limited partners of which are the
principal executive officers of Blairlogie Capital Management Ltd. 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 $ 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 $ $ 445,739 $ 368,971
NFJ Diversified Low P/E Fund 60,686 85,078
NFJ Small Cap Value Fund 203,158 214,936
Cadence Capital Appreciation Fund 881,358 595,724
Cadence Mid Cap Growth Fund 650,017 453,846
Cadence Micro Cap Growth Fund 609,540 251,431
Cadence Small Cap Growth Fund 594,905 456,981
Columbus Circle Investors Core Equity 62,906 N/A
Fund*
Columbus Circle Investors Mid Cap Equity
Fund* 13,832 N/A
Parametric Enhanced Equity Fund 319,036 267,252
Blairlogie Emerging Markets Fund 550,590 195,258
Blairlogie International Active Fund 241,135 34,947
Balanced Fund 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.
PIMCO has undertaken, until at least June 30, 1997, to limit the
operating expenses that are borne by each Fund so that the Fund's expenses,
exclusive of interest or gains, brokerage fees or other transactional expenses,
taxes paid by the Fund, interest on borrowing, and extraordinary expenses, do
not exceed on an annual basis the following amounts (expressed as a percentage
of average daily net assets):
<TABLE>
<CAPTION>
INSTITUTIONAL ADMINISTRATIVE
FUND CLASS SHARES CLASS SHARES
- ---- ------------- --------------
<S> <C> <C>
NFJ Equity Income Fund....................... 0.70% 0.95%
NFJ Diversified Low P/E Fund................. 0.70% 0.95%
NFJ Small Cap Value Fund..................... 0.85% 1.10%
Cadence Capital Appreciation Fund............ 0.70% 0.95%
Cadence Mid Cap Growth Fund.................. 0.70% 0.95%
Cadence Micro Cap Growth Fund................ 1.50% 1.75%
Cadence Small Cap Growth Fund................ 1.25% 1.50%
Columbus Circle Investors Core Equity
Fund*....................................... 0.82% 1.07%
Columbus Circle Investors Mid Cap Equity
Fund*....................................... 0.88% 1.13%
Parametric Enhanced Equity Fund.............. 0.70% 0.95%
Parametric Structured Emerging Markets Fund.. ____% ____%
Blairlogie Emerging Markets Fund............. 1.35% 1.60%
Blairlogie International Active Fund......... 1.10% 1.35%
Balanced Fund................................ 0.70% 0.95%
</TABLE>
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 reimburse, 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.
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<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.
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<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 $ $ 170,712 $ 172,646
NFJ Diversified Low P/E Fund 39,801 39,671
NFJ Small Cap Value Fund 74,739 115,477
Cadence Capital Appreciation Fund 411,595 368,018
Cadence Mid Cap Growth Fund 332,045 258,765
Cadence Micro Cap Growth Fund 202,678 118,750
Cadence Small Cap Growth Fund 111,918 87,362
Columbus Circle Investors Core Equity 40,203 N/A
Fund*
Columbus Circle Investors Mid Cap 20,084 N/A
Equity Fund*
Parametric Enhanced Equity Fund 47,226 106,389
Blairlogie Emerging Markets Fund 1,061,823 618,574
Blairlogie International Active Fund 302,313 150,878
Balanced Fund 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.
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<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.
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<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, and
Parametric Enhanced Equity Funds, and 150% for the Parametric Structured
Emerging Markets, 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 03/08/91
NFJ Equity Income Fund (Administrative) 11/30/94
NFJ Diversified Low P/E Fund 12/30/91
NFJ Small Cap Value Fund 10/01/91
Cadence Capital Appreciation Fund 03/08/91
Cadence Mid Cap Growth Fund 08/26/91
Cadence Mid Cap Growth Fund (Administrative) 11/30/94
Cadence Micro Cap Growth Fund 06/25/93
Cadence Small Cap Growth Fund 01/07/91
Cadence Small Cap Growth Fund (Administrative) 09/27/95
Columbus Circle Investors Core Equity Fund 12/28/94
Columbus Circle Investors Core Equity Fund (Administrative) 05/31/95
Columbus Circle Investors Mid Cap Equity Fund 12/28/94
Parametric Enhanced Equity Fund 02/11/91
Blairlogie Emerging Markets Fund 06/01/93
Blairlogie Emerging Markets Fund (Administrative) 10/20/94
Blairlogie International Active Fund 06/08/93
Blairlogie International Active Fund (Administrative) 11/30/94
Balanced Fund 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 ____, 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
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -------------
<S> <C> <C>
Santa Barbara Foundation
15 East Carrillo Street
Santa Barbara, California 93101-2780
NBD Bank NA as Trustee for
AM Castle & Company Employee Pension
P.O. Box 77975
Detroit, Michigan 48277-0975
UC San Diego Foundation
9500 Gilman Drive
Mail Code 0940
La Jolla, California 92093-5003
NFJ DIVERSIFIED LOW P/E FUND
The Northern Trust Company as
Trustee for Great Lakes Chemical
Master Retirement Trust
P.O. Box 2200
West Lafayette, Indiana 47906
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
NFJ SMALL CAP VALUE FUND
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
First Union National Bank
401 South Tyron Street, FRB-3
Mail Code: CMG-2-1151
Charlotte, North Carolina 28202-1911
Sheet Metal Workers' Local Unions
and Councils Pension Fund
601 N. Fairfax Street, Suite 500
Alexandria, Virginia 22314-2054
Victoria Bank and Trust Company,
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
Bank of New York as Trustee for
Coopers & Lybrand Retirement Trust
One Wall Street
New York, New York 10286-0001
Donaldson Lufkin & Jenrette**
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Mac & Co
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
CADENCE MID CAP GROWTH FUND
First Trust NA as Trustee for
Dayton Hudson Corporation
Supplemental Retirement Savings and
Employee Stock Ownership Plan
P.O. Box 64010
St. Paul, Minnesota 55164-0100
First Bank National Association,
Custodian for St. Paul Foundation
P.O. Box 64482
St. Paul, Minnesota 55164-0482
Berklee College of Music, Inc.
1140 Boylston Street
Boston, Massachusetts 02215-3693
Nadoit & Company
c/o Bessemer Trust Company
100 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Staff Retirement Plan of the
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.**
101 Montgomery Street
San Francisco, California 94104-4122
Bost & Co
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, Pennsylvania 15230
University of Southern California
Treasurer's Office
University Park, BKS 402
Los Angeles, California 90089-2541
Collins Group Trust
770 Broadway, Tenth Floor
New York, New York 10003-9522
The Northern Trust Company as Trustee for
Toyota Directed Retirement Trust
P.O. Box 92956
Chicago, Illinois 60690
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660-6397
Collins Group Trust IX
770 Broadway, Tenth Floor
New York, New York 10003-9598
CADENCE SMALL CAP GROWTH FUND
Bost & Co
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, Pennsylvania 15230
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
The Trustee of the KN Energy Inc.,
Retirement Plan and Trust Agreement
for Non Bargain Employees
P.O. Box 281304
Lakewood, Colorado 80228-8304
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -------------
<S> <C> <C>
The Trustee of the KN Energy Inc.,
Retirement Plan and Trust Agreement
for Bargain Employees
P.O. Box 281304
Lakewood, Colorado 80228-8304
The Jewish Federation of
Metropolitan Chicago
One South Franklin Street
Room 625
Chicago, Illinois 60606-4609
COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND
The Bank of New York as
Trustee for Melville Corporation
One Theall Road
Rye, New York 10580-1404
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
The Bank of New York as Trustee for
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
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Charitable Foundation
700 Newport Center Drive
Newport Beach, California 92660
John W. Barnum
5175 Tilden Street, N.W.
Washington, D.C. 20016-1961
Union Bank as Trustee for
Pacific Corinthian Life Insurance
Company Pension Plan
P.O. Box 109
San Diego, California 92112-4103
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -------------
<S> <C> <C>
PARAMETRIC ENHANCED EQUITY FUND
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
First Interstate Bank of CA,
Custodian S.F. Bay Area
Rapid Transit District Deferred
Compensation Plan
P.O. Box 9800
Calabasas, California 91372-0800
FTC & Co**
P.O. Box 173736
Denver, Colorado 80217-3736
First Interstate Bank of CA as Trustee for
S.F. Bay Area Rapid
Transit Pension
P.O. Box 9800
Calabasas, California 91372-0800
Glass, Molders, Pottery, Plastics
& Allied Workers Int'l Union
608 East Baltimore Pike
P.O. Box 607
Media, Pennsylvania 19063
First Trust NA as Trustee for
Robinson Companies Inc.
Profit Sharing Plan & Trust
P.O. Box 64010
St. Paul, Minnesota 55164-0010
Pacific Mutual Life Insurance Company
FBO Hoag Memorial Hospital Presbyterian
700 Newport Center Drive
Newport Beach, California 92660
BLAIRLOGIE EMERGING MARKETS FUND
Charles Schwab & Co., Inc.***
101 Montgomery Street
San Francisco, California 94104-4122
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED SHARES
------------ -------------
<S> <C> <C>
Donaldson Lufkin & Jenrette**
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Hatado-Limited Partnership
1616 Travis Circle South
Irving, Texas 75038-6247
BLAIRLOGIE INTERNATIONAL ACTIVE FUND
Pacific Financial Asset
Management Corporation
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Charles Schwab & Co., Inc.**
101 Montgomery Street
San Francisco, California 94104-4122
First Interstate Bank as Trustee for
Cadence Design System Inc.
P.O. Box 9800
Calabasas, California 91372-0800
BALANCED FUND
Pacific Mutual Life Insurance Company
FBO Hoag Memorial Hospital Presbyterian
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company
FBO California Race Track Association
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Key Trust Company
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
Hospital Retirement Plan
350 Terracina Blvd.
Redlands, California 92373-4850
Pacific Mutual Life Insurance Company
FBO Telephone Employees' Credit Union
700 Newport Center Drive
Newport Beach, California 92660
Pacific Mutual Life Insurance Company
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 ____, 1996, the Trustees and Officers of the Trust, as a group,
owned .063%, .12%, .30%, .20%, .055%, .011%, .011%, .044%, and .018% of the
outstanding shares of the NFJ Equity Income, NFJ Diversified Low P/E, Blairlogie
International Active, Blairlogie Emerging Markets, Cadence Micro Cap Growth,
Cadence Mid Cap Growth, Cadence Capital Appreciation, NFJ Small Cap Value, and
Columbus Circle Investors Mid Cap Equity Funds, respectively.
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 ___________, 1996, are incorporated by reference from the Trust's
1996 Annual Report.
54
<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
(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 _________________, 1996
(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
(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
(iv) Form of Portfolio Management Agreement with
Cadence Capital Management
(v) Form of Portfolio Management Agreement with
Parametric Portfolio Associates
(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
(ii) Form of Sub-Administration Agreement(15)
(6) Form of Distribution Agreement
(7) Not Applicable
II-3
<PAGE>
(8) (i) Form of Custody Agreement and Addenda
(9) (a) (i) Form of Agency Agreement and Addenda
II-4
<PAGE>
(b) Form of Service Plan for Institutional Services Shares(11)
(10) Opinion and Consent of Counsel(2)
(11) Consent 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(18)
(18) Form of Multiple Class Plan Pursuant to Rule 18f-3
(19) Powers of Attorney and Certificate of Secretary
__________________
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 To be filed on or before September 15, 1996 pursuant to paragraph (b) of
Rule 485.
II-6
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
As of June 6, 1996, Pacific Mutual Life Insurance Company owned 68%
of the outstanding shares of the Columbus Circle Investors Mid Cap Equity Fund
and 25% of the NFJ Small Cap Value Fund; The Northern Trust Company as Trustee
for Great Lakes Chemical Master Retirement Trust owned 65% of the outstanding
shares of the NFJ Diversified Low P/E Fund; Pacific Financial Asset Management
Corporation owned 28% of the outstanding shares of the Blairlogie International
Active Fund; Charles Schwab & Company owned 30% of the outstanding shares of the
Blairlogie Emerging Markets Fund; and The Bank of New York as Trustee for
Melville Corporation owned 66% of the outstanding shares of the Columbus Circle
Investors Core Equity Fund.
Item 26. Number of Holders of Securities.
As of June 6, 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 229 4
NFJ Diversified Low P/E Fund 39 0
NFJ Small Cap Value Fund 176 1
Cadence Capital Appreciation Fund 232 0
Cadence Mid Cap Growth Fund 233 5
Cadence Micro Cap Growth Fund 66 1
Cadence Small Cap Growth Fund 46 1
Columbus Circle Investors Core Equity Fund 117 0
Columbus Circle Investors Mid Cap Equity Fund 117 4
Parametric Enhanced Equity Fund 136 0
Blairlogie Emerging Markets Fund 201 1
Blairlogie International Active Fund 148 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
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
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.
</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.
</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.
Sherri A. Frazier Assistant Secretary Senior Paralegal, PALP.
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.
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.
</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 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 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
Robert A. Prindiville Director and None
Chairman
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. Vice President None
Paul H. Troyer 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. 22
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 has duly caused this Post-
Effective Amendment No. 22 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 1st
day of July, 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. 22 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
________________________ 7/1/96
Robert M. Brandenberger* Treasurer (Principal
Financial and
Accounting Officer
________________________ 7/1/96
Richard L. Nelson* Trustee
________________________ 7/1/96
Lyman W. Porter* Trustee
________________________ 7/1/96
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, are filed as Exhibit 19 to this Post-Effective Amendment
No. 22.
II-24
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
Exhibit No. Exhibit Name Edgar Exhibit No.
<S> <C> <C>
1(r) Form of Amended and 99.B1(r)
Restated Agreement and
Declaration of Trust as
of June 24, 1996
4(i) Form of Specimen of 99.B4(i)
Security for Parametric
Structured Emerging
Markets Fund
5(a) Form of Investment 99.B5(a)
Advisory Agreement
5(b)(iii) Form of Portfolio Management 99.B5(b)(iii)
Agreement with NFJ
Investment Group
5(b)(iv) Form of Portfolio Management 99.B5(b)(iv)
Agreement with Cadence
Capital Management
5(b)(v) Form of Portfolio Management 99.B5(b)(v)
Agreement with Parametric
Portfolio Associates
5(c)(i) Form of Administration 99.B5(c)(i)
Agreement
6 Form of Distribution 99.B6
Agreement
8(i) Form of Custody Agreement 99.B8(i)
and Addenda
9(a)(i) Form of Agency Agreement 99.B9(a)(i)
And Addenda
11 Consent of Independent 99.B11
Accountants
18 Form of Multiple Class Plan 99.B18
Pursuant to Rule 18f-3
19 Powers of Attorney and
Certificate of Secretary 99.B19
</TABLE>
II-25
<PAGE>
EX-99.B1(r)
PIMCO FUNDS: EQUITY ADVISORS SERIES
AMENDED AND RESTATED
AGREEMENT AND
DECLARATION OF TRUST
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
The Trust.................................... 5
Section 1.1 Name......................................... 5
Section 1.2 Definitions.................................. 6
ARTICLE II
Trustees..................................... 7
Section 2.1 Management of the Trust...................... 7
Section 2.2 Election of Trustees......................... 7
Section 2.3 Term of Office of Trustees................... 8
Section 2.4 Termination of Service and Appointment of
Trustees..................................... 8
Section 2.5 Temporary Absence of Trustee................. 9
Section 2.6 Number of Trustees........................... 9
Section 2.7 Effect of Death, Resignation, etc. of a
Trustee...................................... 9
Section 2.8 No Accounting................................ 9
Section 2.9 Ownership of the Trust....................... 9
ARTICLE III
Powers of Trustees........................... 9
Section 3.1 General...................................... 9
Section 3.2 Investments.................................. 10
Section 3.3 Legal Title.................................. 11
Section 3.4 Issuance and Repurchase of Securities........ 11
Section 3.5 Borrow Money................................. 11
Section 3.6 Officers; Delegation; Committees............. 11
Section 3.7 Collection and Payment...................... 12
Section 3.8 Expenses.................................... 12
Section 3.9 Manner of Acting; By-laws................... 12
Section 3.10 Voting Trusts.............................. 12
Section 3.11 Miscellaneous Powers....................... 13
Section 3.12 Further Powers............................. 13
ARTICLE IV
Advisory, Administrative, Management
and Distribution Arrangements............... 14
Section 4.1 Advisory and Management Arrangements........ 14
Section 4.2 Distribution Arrangements................... 14
Section 4.3 Parties to Contract......................... 15
Section 4.4 Provisions and Amendments................... 15
</TABLE>
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ARTICLE V
<TABLE>
<S> <C>
Limitations of Liability of Shareholders,
Trustees and Others......................... 15
Section 5.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice................... 15
Section 5.2 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety................... 16
Section 5.3 Indemnification of Shareholders............. 16
Section 5.4 Indemnification of Trustees, Officers,
etc......................................... 17
Section 5.5 Compromise Payment.......................... 18
Section 5.6 Indemnification Not Exclusive, etc.......... 18
Section 5.7 Liability of Third Persons Dealing with
Trustees.................................... 19
ARTICLE VI
Shares of Beneficial Interest............... 19
Section 6.1 Beneficial Interest......................... 19
Section 6.2 Series Designation.......................... 19
Section 6.2.1 Class Designation......................... 22
Section 6.3 Rights of Shareholders...................... 23
Section 6.4 Trust Only.................................. 23
Section 6.5 Issuance of Shares.......................... 23
Section 6.6 Register of Shares.......................... 24
Section 6.7 Transfer Agent and Registrar................ 24
Section 6.8 Transfer of Shares.......................... 24
Section 6.9 Notice...................................... 25
ARTICLE VII
Redemption.................................. 25
Section 7.2 Redemptions of Accounts of Less than a
Minimum Dollar Amount....................... 26
ARTICLE VIII
Determination of Net Asset Value, Net Income
and Distributions........................... 26
Section 8.1 Net Asset Value............................. 26
Section 8.2 Distributions to Shareholders............... 27
Section 8.3 Power to Modify Foregoing Procedures........ 27
ARTICLE IX
Shareholders................................ 27
Section 9.1 Voting Powers............................... 27
Section 9.2 Meetings.................................... 28
Section 9.3 Quorum and Required Vote.................... 28
Section 9.4 Record Date for Meetings.................... 28
Section 9.5 Proxies..................................... 29
Section 9.6 Additional Provisions....................... 29
Section 9.7 Reports..................................... 29
</TABLE>
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<TABLE>
<S> <C>
Section 9.8 Shareholder Action by Written Consent....... 29
ARTICLE X
Duration; Termination of Trust; Amendment; Mergers; Etc.. 30
Section 10.1 Duration................................... 30
Section 10.2 Termination................................ 30
Section 10.3 Reorganization............................. 31
Section 10.4 Amendment Procedure........................ 32
Section 10.5 Incorporation.............................. 32
ARTICLE XI
Miscellaneous.............................. 33
Section 11.1 Filing..................................... 33
Section 11.2 Resident Agent............................. 33
Section 11.3 Governing Law.............................. 33
Section 11.4 Counterparts............................... 34
Section 11.5 Reliance by Third Parties.................. 34
Section 11.6 Provisions in Conflict with Law or
Regulations................................ 34
</TABLE>
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AMENDED AND RESTATED
AGREEMENT AND
DECLARATION OF TRUST
OF
PIMCO FUNDS: EQUITY ADVISORS SERIES
THE AGREEMENT AND DECLARATION OF TRUST of PFAMCo Funds made the 24th day of
August, 1990 by the then trustees (and all other persons who since that time
have been duly elected or appointed as trustees in accordance with the
provisions of this Agreement and Declaration of Trust and are then in office,
being hereinafter called the "Trustees") and by the holders of shares of
beneficial interest issued and to be issued hereunder hereinafter provided, and
amended on October 24, 1990, November 16, 1990, November 29, 1990, December 14,
1990, February 1, 1991, May 9, 1991, August 6, 1992, and February 26, 1993, is
hereby amended and restated on May 7, 1993 by the Trustees, as authorized by the
majority of shares of beneficial interest issued hereunder and entitled to vote.
W I T N E S S E T H
WHEREAS, the Trustees desire to form a trust fund under the laws of the
Commonwealth of Massachusetts for the investment and reinvestment of funds
contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the trust assets be
divided into transferable shares of beneficial interest, which may, at the
discretion of the Trustees, be divided into separate series and classes as
hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust
all money and property contributed to the trust fund to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
ARTICLE I
The Trust
Section 1.1 Name. The name of the trust created hereby (the "Trust"),
which term shall be deemed to include any series of the Trust when the context
requires, shall be "PIMCO Funds: Equity Advisors Series", and so far as may be
practicable the Trustees shall conduct the activities of the Trust, execute all
documents and sue or be sued under that name, which name (and the word "Trust"
wherever hereinafter used) shall refer to the Trustees as Trustees, and not
individually, and shall not refer to the officers, agents, employees or
shareholders of the Trust or any Series thereof. Each Series of the Trust which
shall be established and designated by the Trustees pursuant to Section 6.2
shall conduct its activities under such name as the Trustees
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shall determine and set forth in the instrument establishing such Series.
Should the Trustees determine that the use of the name of the Trust or any
Series is not advisable, they may select such other name for the Trust or such
Series as they deem proper and the Trust or such Series may conduct its
activities under such other name. Any name change shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth the
new name. Any such instrument shall have the status of an amendment to this
Agreement and Declaration of Trust.
Section 1.2 Definitions. As used in this Agreement and Declaration of
Trust, the following terms shall have the following meanings:
The "1940 Act" refers to the Investment Company Act of 1940 and the
regulations promulgated thereunder, as amended from time to time.
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Majority Shareholder Vote" (the 67% or 50% requirement of the third
sentence of Section 2(a)(42) of the 1940 Act, whichever may be applicable) and
"Principal Underwriter" shall have the meanings given them in the 1940 Act.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Class" shall mean any class of Shares that may be established and
designated pursuant to Section 6.21.
"Declaration" or "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended from time to time. References in this
Declaration to "Declaration", "hereof", "herein" and "hereunder" shall be deemed
to refer to the Declaration rather than the article or section in which such
words appear.
"Fundamental Policies" shall mean the investment objective for each
Series and the investment restrictions set forth in the registration statement
for the Trust on Form N-1A and designated as fundamental policies therein.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
"Prospectus" shall mean the currently effective prospectus of any
Series of the Trust under the Securities Act of 1933, as amended.
"Series" shall mean any separate Series that may be established and
designated pursuant to Section 6.2.
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"Shareholders" shall mean as of any particular time all holders of
record of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units of
interest into which the beneficial interest in any Series of the Trust shall be
divided from time to time and includes fractions of Shares as well as whole
Shares. All references to Shares shall be deemed to be Shares of any or all
Series as the context may require.
"Statement of Additional Information" shall mean the currently
effective Statement of Additional Information of any Series of the Trust under
the Trust's registration statement filed pursuant to the Securities Act of 1933,
as amended.
"Trustees" shall mean the signatories to this Declaration, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who at the time in question have been duly elected or appointed and have
qualified as Trustees in accordance with the provisions hereof and are then in
office, and each such person is herein referred to as the "Trustee", and
reference in this Declaration to a Trustee or Trustees shall refer to such
person or persons in their capacity as Trustees hereunder.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust, any Series thereof or the Trustees.
ARTICLE II
Trustees
Section 2.1 Management of the Trust. The business and affairs of the
Trust shall be managed by the Trustees, and they shall have all powers necessary
and desirable to carry out that responsibility. The Trustees named herein (or
their successors appointed hereunder) shall serve until the election of Trustees
at the first meeting of Shareholders of the Trust.
Section 2.2 Election of Trustees. Except for the Trustees named herein
and those Trustees designated by such Trustees prior to the issuance of Shares,
or appointed to fill vacancies pursuant to Section 2.4 hereof, the Shareholders
of the Trust shall elect Trustees at Shareholder meetings called for that
purpose. The Trustees need not be elected annually or at regular intervals.
Except as provided in Section 9.2, the Trustees shall not be required to call a
meeting of Shareholders for the purpose of electing Trustees, provided, however,
that in the event that at any time, other than the time preceding the first
meeting of Shareholders for the purpose of electing Trustees, less than a
majority of the Trustees holding office at that time were elected by the
Shareholders, a meeting of the Shareholders for the
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purpose of electing Trustees shall be held promptly and in any event within 60
days (unless the Commission shall by order extend such period). No election of
a Trustee shall become effective, however, until the person elected shall have
accepted such election and agreed in writing to be bound by the terms of this
Declaration. If re-elected, a Trustee may succeed himself. Trustees need not
own shares.
Section 2.3 Term of Office of Trustees. A Trustee duly appointed or
elected hereunder shall hold office until the occurrence of any of the
following: (a) the Trustee may resign his trust by written instrument signed by
him and delivered to the other Trustees, which shall take effect upon such
delivery or upon such later date as is specified therein; (b) the Trustee may be
removed at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) the Trustee who requests in writing to be retired or
who has become mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) the Trustee may be removed at any meeting of
Shareholders of the Trust by a vote of two-thirds of the outstanding Shares or
by a written declaration executed, without a meeting, by the holders of not less
than two-thirds of the outstanding Shares. A meeting for the purpose of
considering the removal of a person serving as Trustee shall be called by the
Trustees if requested in writing to do so by the holders (which for purposes of
this provision and only this provision shall be the persons having a voting
interest in the shares of the Trust) of not less than 10% of the outstanding
shares of the Trust.
Section 2.4 Termination of Service and Appointment of Trustees. In case
of the death, resignation, retirement, removal or mental or physical incapacity
of any of the Trustees, or in case a vacancy shall, by reason of an increase in
number, or for any other reason, exist, the remaining Trustees may (but need not
unless required by the 1940 Act, so long as there are at least two remaining
Trustees) fill such vacancy by appointing for the remaining term of the
predecessor Trustee such other person as they in their discretion shall see fit.
Such appointment shall be effective upon the signing of a written instrument by
a majority of the Trustees in office and the written acceptance of this
Declaration by the appointee. An appointment of a Trustee may be made by the
Trustees then in office in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of Trustees
and the written acceptance of this Declaration by the appointee. As soon as any
Trustee so appointed shall have accepted this Trust, the trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a
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Trustee hereunder. Any appointment authorized by this Section 2.4 is subject to
the provisions of Section 16(a) of the 1940 Act.
Section 2.5 Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two of the Trustees personally exercise the power hereunder except as herein
otherwise expressly provided.
Section 2.6 Number of Trustees. The number of Trustees serving hereunder
at any time shall be determined by the Trustees themselves, but once Shares have
been issued shall not be less than two (2) or more than fifteen (15).
Section 2.7 Effect of Death, Resignation, etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical incapacity of the
Trustees, or any one of them, shall not operate to annul or terminate the Trust
or any Series hereunder or to revoke or terminate any existing agency or
contract created pursuant to the terms of this Declaration, and until such
vacancy is filled, the Trustees in office, regardless of their number, shall
have all of the powers granted to the Trustees and shall discharge all the
duties imposed upon them by this Declaration.
Section 2.8 No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for cause, no person
ceasing to be a Trustee as a result of his death, resignation, retirement,
removal or incapacity (nor the estate of any such person) shall be required to
make an accounting to the shareholders or remaining Trustees upon such
cessation.
Section 2.9 Ownership of the Trust. The assets of the Trust shall be held
separate and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or by any successor Trustees. All of
the assets of the Trust shall at all times be considered as vested in the
Trustees. No Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or any right of partition or possession thereof,
but each Shareholder shall have a proportionate undivided beneficial interest in
the Trust.
ARTICLE III
Powers of Trustees
Section 3.1 General. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or
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appropriate in connection with the management of the Trust. The Trustees shall
not be bound or limited by present or future laws or customs with regard to
investment by trustees or fiduciaries, but shall have full authority and
absolute power and control over the Trust Property and business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, including such authority, power and control to
do all acts and things as they, in their uncontrolled discretion, shall deem
proper to accomplish the purposes of this Trust. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid powers.
Section 3.2 Investments. The Trustees shall have power, subject to the
Fundamental Policies, to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, lend, exchange,
mortgage, hypothecate, lease, distribute or otherwise deal in or
dispose of common stocks, preferred stocks, bonds, debentures,
warrants and rights to purchase securities, mortgage related
securities such as mortgage-backed securities and collateralized
mortgage obligations, options on securities, futures contracts
and options on futures contracts, covered spread options, gold
bullion and coins and other precious metals (silver and platinum)
bullion and future contracts with respect to such commodities,
certificates of beneficial interest, negotiable or non-negotiable
instruments, bank obligations, evidences of indebtedness,
privately placed debt securities, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, reverse
repurchase agreements, firm commitment agreements and "when-
issued" securities and other securities, including, without
limitation, those issued, guaranteed, or sponsored by any state,
territory or possession of the United States and the District of
Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government or its
agencies or instrumentalities, or international
instrumentalities, or by any bank, savings institution,
corporation or other business entity organized under the laws of
the United States and, to the extent provided in the Prospectus
and not prohibited by the Fundamental Policies of the Trust,
foreign securities of issuers or governments organized under
foreign laws, foreign currency transactions and options on
foreign currency transactions, and
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other assets; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all
such investments of every kind and description, with power to
designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any of said instruments; and the
Trustees shall be deemed to have the foregoing powers with
respect to any additional securities or other assets in which any
Series of the Trust may invest should the investment policies set
forth in the Prospectus or the Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series.
Section 3.3 Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust or any Series thereof,
or in the name of any other Person as nominee, on such terms as the Trustees may
determine, provided that the interest of the Trust or any Series thereof is
appropriately protected.
Section 3.4 Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in, Shares,
including shares in fractional denominations, and, subject to the more detailed
provisions set forth in Articles VII and VIII, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the applicable Series of the Trust whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
Section 3.5 Borrow Money. Subject to the Fundamental Policies, the
Trustees shall have power to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as security the
assets of the Trust or any Series thereof, including the lending of portfolio
securities, and to endorse, guarantee or undertake the performance of any
obligation, contract or engagement of any other person, form, association or
corporation.
Section 3.6 Officers; Delegation; Committees. The Trustees may, as they
consider appropriate, elect and remove officers and appoint and terminate agents
and consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee and may provide for the compensation of all
of the foregoing. The Trustees shall have power, consistent with their
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continuing exclusive authority over the management of the Trust and the Trust
Property, to delegate from time to time to such of their number or to officers,
employees or agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient. The Trustees may appoint from
their number and terminate any one or more committees consisting of two or more
Trustees, including without implied limitation an Executive Committee which may,
when the Trustees are not in session and subject to the 1940 Act, exercise some
or all of the powers and authority of the Trustees as the Trustees may
determine.
Section 3.7 Collection and Payment. The Trustees shall have power to
collect all property due to the Trust or any Series thereof; to pay all claims,
including taxes, against the Trust Property; to prosecute, defend, compromise,
arbitrate or abandon any claims relating to the Trust Property; to foreclose any
security interest securing any obligations, by virtue of which any property is
owed to the Trust or any Series thereof; and to enter into releases, agreements
and other instruments.
Section 3.8 Expenses. The Trustees shall have power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of the Trust or any Series or Class, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
The Trustees may pay themselves such compensation for special services,
including legal, underwriting, syndicating and brokerage services, as they in
good faith may deem reasonable and reimbursement for expenses reasonably
incurred by themselves on behalf of the Trust.
Section 3.9 Manner of Acting; By-laws. Except as otherwise provided
herein or in the By-laws or required by the 1940 Act, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
the Trustees (a quorum being present), including any meeting held by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, or by written consents
of a majority of Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law). The Trustees may
adopt and from time to time amend or repeal the By-laws for the conduct of the
business of the Trust.
Section 3.10 Voting Trusts. The Trustees shall have power and authority
for and on behalf of the Trust to join with other holders of any securities or
debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depositary or trustee, and to delegate to them such power and
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authority with relation to any security or debt instrument (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to agree to
pay, and to pay, such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem proper.
Section 3.11 Miscellaneous Powers. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust or any Series or Class thereof; (b)
enter into joint ventures, partnership and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance as they
deem necessary or appropriate for the conduct of the business, including without
limitation, policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Trust or any Series or Class thereof against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (d) establish pension, profit-sharing, share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (e) make donations, irrespective of
benefit to the Trust, for charitable, religious, educational, scientific, civic
or similar purposes; (f) to the extent permitted by law, indemnify any Person
with whom the Trust or any Series or Class thereof has dealings, including any
adviser, administrator, manager, distributor and selected dealers with respect
to any Series, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust and the method in which its accounts shall be kept; and
(i) adopt a seal for the Trust, provided that the absence of such seal shall not
impair the validity of any instrument executed on behalf of the Trust.
Section 3.12 Further Powers. The Trustees shall have power to conduct the
business of the Trust or any Series or Class thereof, carry on its operations
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust or any Series or Class thereof although such things are
not herein specifically mentioned. Any determination as to what is in the
interests of the Trust or any Series or Class thereof made by the Trustees in
good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees will not be required to obtain any court
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order to deal with the Trust Property. No Trustee shall be required to give any
bond or other security for the performance of any of his duties hereunder.
ARTICLE IV
Advisory, Administrative, Management
and Distribution Arrangements
Section 4.1 Advisory and Management Arrangements. Subject to a Majority
Shareholder Vote, if required by law, of the applicable Series, the Trustees may
in their discretion from time to time enter into advisory, administrative or
management contracts whereby the other party to such contract shall undertake to
furnish to the Trustees such advisory, administrative and management services,
with respect to a Series as the Trustees shall from time to time consider
desirable and all upon such terms and conditions as the Trustees may in their
discretion determine. Subject to a Majority Shareholder Vote if required by
law, the investment adviser may engage one or more firms to serve as Portfolio
Manager to a Series pursuant to a sub-investment advisory contract in which the
Portfolio Manager makes all determinations with respect to the purchase and sale
of portfolio securities and places, in the names of the Series all orders for
execution of the Series' portfolio transactions upon such terms and conditions
and for such compensation as the Trustees may in their discretion approve. A
Portfolio Manager may, in turn, engage its own sub-adviser in managing a
particular Series. Notwithstanding any provisions of this Declaration, the
Trustees may authorize any adviser, portfolio manager, administrator or manager
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or exchanges of portfolio
securities of any Series of the Trust on behalf of the Trustees or may authorize
any officer, employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of any such adviser, portfolio manager,
administrator or manager (and all without further action by the Trustees). Any
such purchases, sales, loans or exchanges shall be deemed to have been
authorized by all of the Trustees.
Section 4.2 Distribution Arrangements. The Trustees may in their
discretion from time to time enter into a contract, providing for the sale of
the Shares of the Trust or any Series or Class of the Trust, whereby the Trust
may either agree to sell the Shares to the other party to the contract or
appoint such other party as its sales agent for such Shares. In either case,
the contract shall be on such terms and conditions as the Trustees may in their
discretion determine to be not inconsistent with the provisions of this Article
IV or the By-laws; and such contract may also provide for the repurchase or sale
of Shares by such other party as principal or as agent of the Trust and may
provide that such other party may enter into selected dealer agreements with
registered securities dealers to further the
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purpose of the distribution or repurchase of the Shares. The Trustees may adopt
a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act and may authorize the
Trust to make payments from its assets pursuant to such Plan.
Section 4.3 Parties to Contract. Any contract of the character described
in Sections 4.1 and 4.2 of this Article IV hereof may be entered into with any
corporation, firm, trust or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, Trustee, shareholder or
member of such other party to the contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article IV
or the By-laws. The same person (including a firm, corporation, trust or
association) may be the other party to contracts entered into pursuant to
Sections 4.1 and 4.2 above, and any individual may be financially interested or
otherwise affiliated with persons who are parties to any or all of the contracts
mentioned in this Section 4.3.
Section 4.4 Provisions and Amendments. Any contract under which the other
party agrees to serve as investment adviser or principal underwriter for the
Fund or any Series or Class thereof, which is entered into pursuant to Sections
4.1 and 4.2 of this Article IV shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract entered into
pursuant to Section 4.1 shall be effective unless consented to by a Majority
Shareholder Vote of the applicable Series if required by law.
ARTICLE V
Limitations of Liability of Shareholders, Trustees and Others
Section 5.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Series with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Series nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Series shall
be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Series or Class, or the Trustees or any
of them in connection with the Trust shall be conclusively deemed to have been
executed or done only by or for the Trust (or the
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Series or Class) or the Trustees and not personally. Nothing in this
Declaration shall protect any Trustee or officer against any liability to the
Trust or the Shareholders to which such Trustee or officer would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee or of such officer.
Every note, bond, contract, instrument, certificate, share or undertaking
made or issued by the Trustees or by any officers or officer shall give notice
that this Declaration is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually, and that the obligations of such bond, contract,
instrument, certificate, share or undertaking are not binding upon any of them
or the Shareholders individually but are binding only upon the assets and
property of the Trust, or the particular Series in question, as the case may be,
but the omission thereof shall not operate to bind any Trustees or Trustee or
officers or officer or Shareholders or Shareholder individually.
Section 5.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration and their duties as
Trustees, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice; and (c) in discharging
their duties, the Trustees, when acting in good faith, shall be entitled to rely
upon the books of account of the Trust and upon written reports made to the
Trustees by any officer appointed by them, any independent public accountant,
and (with respect to the subject matter of the contract involved) any officer,
partner or responsible employee of any adviser, administrator, manager,
distributor, selected dealer, appraiser or other expert, consultant or agent.
The Trustees as such shall not be required to give any bond or surety or any
other security for the performance of their duties.
Section 5.3 Indemnification of Shareholders. In case any Shareholder (or
former Shareholder) of any Series of the Trust
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shall be charged or held to be personally liable for any obligation or liability
of the Trust solely by reason of being or having been a Shareholder and not
because of such Shareholder's acts or omissions or for some other reason, said
Series (upon proper and timely request by the Shareholder) shall assume the
defense against such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or his heirs, executors, administrators or
other legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of
said Series' estate to be held harmless from and indemnified against all loss
and expense arising from such liability.
Section 5.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Trust or Series in question) each of its
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) [hereinafter referred to
as a "Covered Person"] against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of the Trust or (ii)
had acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(either and both of the conduct described in (i) and (ii) being referred to
hereafter as "Disabling Conduct"). A determination that the Covered Person is
entitled to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the person to
be indemnified was not liable by reason of Disabling Conduct, (ii) dismissal of
a court action or an administrative proceeding against a Covered Person for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as defined in section
2(a)(19) of the 1940 Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Expenses, including accountants' and
counsel fees so incurred by any such Covered Person (but excluding amounts paid
in satisfaction of judgments, in compromise or as fines or penalties), may be
paid from time to time by
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the Series in question in advance of the final disposition of any such action,
suit or proceeding, provided that the Covered Person shall have undertaken to
repay the amounts so paid to the Series in question if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article V and (i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum of the disinterested
Trustees who are not a party to the proceeding, or an independent legal counsel
in a written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately will be found entitled to
indemnification.
Section 5.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 5.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a)
or by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust or to have been liable to the
Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office.
Section 5.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article V shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article V, "Covered Person" shall include such person's heirs, executors
and administrators; "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened, and a
"disinterested" person is a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing contained in
this Article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
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Section 5.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VI
Shares of Beneficial Interest
Section 6.1 Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest which
may be divided into one or more separate and distinct series, or classes
thereof, as the Trustees from time to time create and establish. Each share
shall have a par value of $.001. The number of such shares of beneficial
interest authorized hereunder is unlimited. All Shares issued hereunder
including, without limitation, Shares issued in connection with a dividend in
Shares or a split of Shares, shall be fully paid and nonassessable.
Section 6.2 Series Designation. The Trustees, in their discretion from
time to time, may authorize the division of Shares into additional Series, each
additional Series relating to a separate portfolio of investments. The
following Series are hereby established and designated:
Utility Stock Fund
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
Columbus Circle Investors Small Cap Equity Fund
Parametric Enhanced Equity Fund
Parametric International Equity Fund
Blairlogie Emerging Markets Fund
Blairlogie International Active Fund
Balanced Fund
Money Market Variable Fund
Managed Bond and Income Variable Fund
Equity Income Variable Fund
Diversified Low P/E Variable Fund
Capital Appreciation Variable Fund
Small Cap Value Variable Fund
Mid Cap Growth Variable Fund
Enhanced Equity Variable Fund
International Equity Variable Fund
Emerging Markets Variable Fund
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International Active Variable Fund
These Series shall be the only Series until additional Series are established
and designated by the Trustees. Different Series may be established and
designated and variations in the relative rights and preferences as between the
different Series shall be fixed and determined by the Trustees; provided that
all Shares shall be identical except that there may be variations between
different Series as to investment policies, securities portfolios, purchase
price, determination of net asset value, the price, terms and manner of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several Series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be shares of any or all Series as the context may require.
The following provisions shall be applicable to all Series:
(a) The number of Shares of each Series that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued
Shares or any Shares previously issued and required of any Series
into one or more Series that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of
the same or some other Series), reissue for such consideration
and on such terms as they may determine, or cancel any Shares of
any Series reacquired by the Trust at their discretion from time
to time.
(b) The power of the Trustees to invest and reinvest the Trust
Property of each Series that has been or that may be established
shall be governed by Section 3.2 of this Declaration.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which
such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably
belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of
account of the Trust. In the event that there are any assets,
income, earnings, profits and proceeds thereof, funds or payments
which are not readily identifiable as belonging to any particular
Series, the Trustees shall allocate them among any one or more of
the Series established and designated from time to
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time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of
all Series for all purposes.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and
all expenses, costs, charges and reserves attributable to that
Series, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged
by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and
on such basis as the Trustees in their sole discretion deem fair
and equitable. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and
binding upon the holders of all Series for all purposes. The
Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon
the Shareholders.
(e) The power of the Trustees to pay dividends and make distributions
with respect to any one or more Series shall be governed by
Section 9.2 of this Trust. Dividends and distributions on Shares
of a particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise, pursuant
to a standing resolution or resolutions adopted only once or with
such frequency as the Trustees may determine, to the holders of
Shares of that Series, from such of the income and capital gains,
accrued liabilities belonging to that Series. All dividends and
distributions on Shares of a particular Series shall be
distributed pro rata to the holders of that Series in proportion
to the number of Shares of that Series held by such holders at
the date and time of record established for the payment of such
dividends or distributions.
The establishment and designation of any additional Series of Shares shall
be effective upon the execution by a majority of the then Trustees of any
instrument setting forth the establishment and designation of such Series. Such
instrument shall also set forth any rights and preferences of such Series which
are in addition to the rights and preferences of Shares set forth in this
Declaration. The Trustees may by an instrument executed by
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a majority of their number abolish a Series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.
Section 6.2.1 Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust or the Shares of any Series,
into two or more Classes, and the different Classes shall be established and
designated, and the variations in the relative rights and preferences as between
the different Classes shall be fixed and determined, by the Trustees; provided,
that all Shares of the Trust or of any Series shall be identical to all other
Shares of the Trust or the same Series, as the case may be, except that there
may be variations between different Classes as to allocation of expenses, right
of redemption, special and relative rights as to dividends, and on liquidation,
conversion rights, and conditions under which the several Classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all Classes as the context may require.
If the Trustees shall divide the Shares of the Trust or any Series into two
or more Classes, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust, or any Series of the
Trust, shall apply equally to each Class of Shares of the Trust
or of any Series of the Trust, except as the context requires
otherwise.
(b) The number of Shares of each Class that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued
Shares of the Trust or any Series or any Shares previously issued
and reacquired of any Class of the Trust or of any Series into
one or more Classes that may be established and designated from
time to time. The Trustees may hold as treasury Shares (of the
same or some other Class), reissue for such consideration and on
such terms as they may determine, or cancel any Shares of any
Class reacquired by the Trust at their discretion from time to
time.
(c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should
properly be allocated to, the Shares of a particular Class may be
charged to and borne solely by such Class, and the bearing of
expenses solely by a Class of Shares may be appropriately
reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the
dividend, redemption and liquidation rights of, the
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Shares of different Classes. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all classes for
all purposes.
The establishment and designation of any Class of Shares shall be effective
upon the execution of a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and preferences
of such Class, or as otherwise provided in such instrument. The Trustees may,
by an instrument executed by a majority of their number, abolish any Class and
the establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration.
Section 6.3 Rights of Shareholders. The ownership of the Trust Property
of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares with respect to a particular Series or Class, and they shall have no
right to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to share or assume any losses
of the Trust, or suffer an assessment of any kind by virtue of their ownership
of Shares. The Shares shall be personal property giving only the rights in this
Declaration specifically set forth. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights (except for
rights to exchange Shares of one Series for Shares of another Series or Class or
rights to convert shares of one Class for shares of another Class as set forth
in the Prospectus).
Section 6.4 Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 6.5 Issuance of Shares. The Trustees, in their discretion, may
from time to time without a vote of the Shareholders issue Shares with respect
to any Series that may have been established pursuant to Section 6.2.1 or any
Class that may have been established pursuant to Section 6.2.1, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount not less than the then current net asset
value of said Shares and type of consideration, including cash or property, at
such time or times and on such terms as the Trustee may deem best, and may in
such
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manner acquire other assets (including the acquisition of assets subject to, and
in connection with the assumption of, liabilities) and businesses. In
connection with any issuance of Shares, the Trustees may issue fractional
Shares. The Trustees may from time to time divide or combine the Shares of any
Series or Class into a greater or lesser number without thereby changing the
proportionate beneficial interests in such Series or Class of the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed as,
whole Shares and/or 1/1,000ths of a Share or multiples thereof.
Section 6.6 Register of Shares. A register shall be kept at the Trust or
the offices of any transfer agent duly appointed by the Trustees under the
direction of the Trustees which shall contain the names and addresses of the
Shareholders and the number of Shares (with respect to each Series and Class
that may have been established) held by them respectively and a record of all
transfers thereof. Separate registers shall be established and maintained for
each Series and Class of the Trust. Each such register shall be conclusive as
to who are the holders of the Shares of the applicable Series and Class and who
shall be entitled to receive dividends or distributions or otherwise to exercise
or enjoy the rights of Shareholders. No Shareholder shall be entitled to
receive payment of any dividend or distribution, nor to have notice given to him
as herein provided, until he has given his address to a transfer agent or such
other officer or agent of the Trustees as shall keep the register for entry
thereon. The Trust shall not be required to issue certificates for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
Section 6.7 Transfer Agent and Registrar. The Trustees, or an agent of
the Trust selected by the Trustees, shall have power to employ a transfer agent
or transfer agents, and a registrar or registrars, with respect to the Shares of
the various Series and Classes. The transfer agent may keep the applicable
register and record therein the original issues and transfers, if any, of the
said Shares of the applicable Series and Classes. Any such transfer agent and
registrar shall perform the duties usually performed by transfer agents and
registrars of certificates of stock in a corporation, except as modified by the
Trustees.
Section 6.8 Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereto duly authorized in writing, upon
delivery to the Trustees or a transfer agent of the Trust of a duly executed
instrument of transfer, together with such evidence of the genuineness of each
such execution and authorization and of other matters as may reasonably be
required. Upon such delivery, the transfer shall be recorded on the applicable
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes
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hereof and neither the Trustees nor any transfer agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice of the
proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy or incompetence of any Shareholder, or otherwise by operation of law,
shall be recorded on the applicable register of Shares as the holder of such
Shares upon production of the proper evidence thereof to the Trustees or a
transfer agent of the Trust, but until such record is made, the Shareholder of
record shall be deemed to be the holder of such Shares for all purposes hereof
and neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
Section 6.9 Notice. Any and all notices to which any Shareholder
hereunder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the applicable register of the
Trust.
ARTICLE VII
Redemption
Section 7.1 Redemptions. All outstanding Shares of any Series and Class
of the Trust may be redeemed at the option of the holders thereof, upon and
subject to the terms and conditions provided in this Article VII. The Trust
shall, upon application of any Shareholder or pursuant to authorization from any
Shareholder of a particular Series or Class, redeem or repurchase from such
Shareholder outstanding Shares of such Series or Class for the following amount:
with respect to the Shares of any Series, the then current net asset value of
such Shares.
For purposes of paragraph (b): (A) if a redemption request identifies
Shares to be redeemed by indicating the manner and date of their acquisition,
then the Trust shall redeem the Shares so identified; (B) if a redemption
request does not contain such identification of the Shares to be redeemed, then
to the extent of the number of Shares which are the subject thereof, such
redemption request shall be deemed to request the redemption of Shares held by
the Shareholder in the following order: first, Shares purchased at least one
year before receipt of such redemption request; second, Shares acquired upon
reinvestment of dividends or distributions; and third, Shares purchased less
than one year before receipt of such redemption request; and (C) the Trustees
may implement such procedures, including procedures related to the transfer of
Shares, and take such actions as are necessary for the Trust to effect
redemptions in a manner consistent with this paragraph (b).
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Notwithstanding the provisions of Section 10.4 of this Declaration, the
Trustees may amend this Declaration to modify or delete the provisions contained
in paragraph (b) of this Section 7.1 by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to the
vote of a majority of such Trustees) without obtaining shareholder approval.
If so authorized by the Trustees, the Trust may, at any time and from time
to time, charge fees or deferred sales charges for effecting such redemption, at
such rates as the Trustees may establish, as and to the extent permitted under
the 1940 Act, and may, at any time and from time to time, pursuant to such Act,
suspend such right of redemption. The procedures for effecting redemption shall
be as set forth in the Prospectus with respect to the applicable Series or Class
from time to time.
The Trust may repurchase Shares directly, through the Distributor or
another agent designated for the purpose by agreement with the owner thereof at
a price not exceeding the net asset value per share as determined as of the time
when the contract purchase is made or the net asset value as of any time which
may be later determined pursuant to Section 8.1 hereof, provided payment is not
made for the Shares prior to the time as of which such net asset value is
determined.
Section 7.2 Redemptions of Accounts of Less than a Minimum Dollar Amount.
The Trustees shall have the power to redeem shares at a redemption price
determined in accordance with Section 7.1 if at any time the total investment in
such account does not have a minimum dollar value determined from time to time
by the Trustees in their sole discretion; provided, however, that the Trustees
may exercise such power with respect to Shares of any Series or Class only to
the extent the Prospectus or Statement of Additional Information describes such
power with respect to such Series or Class. In the event the Trustees determine
to exercise their power to redeem Shares provided in this Section 7.2,
Shareholders shall be notified that the value of their account is less than the
then effective minimum dollar amount and allowed at least 30 days to make an
additional investment before redemption is processed.
ARTICLE VIII
Determination of Net Asset Value, Net Income and Distributions
Section 8.1 Net Asset Value. The net asset value of each outstanding
Share of each Series and Class of the Trust shall be determined with respect to
each Series and Class at such time or times on such days as the Trustees may
determine, in accordance with the 1940 Act. The method of determination of net
asset value shall be determined by the Trustees and shall be as set forth in the
Prospectus or Statement of Additional Information with respect to the applicable
Series or Class. The power and
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duty to make the daily calculations for any Series or Class may be delegated by
the Trustees, or an agent of the Trust selected by the Trustees, to the adviser,
administrator, manager, custodian, transfer agent or such other person as the
Trustees or an agent of the Trust selected by the Trustees may determine. The
Trustees may suspend the daily determination of net asset value to the extent
permitted by the 1940 Act.
Section 8.2 Distributions to Shareholders. Except at such times when the
Trustees deem proper, the Trustees will not distribute to Shareholders net
investment income and realized capital gains, but will retain and reinvest such
net profits. The Trustees may make distributions to Shareholders to the extent
the distribution and the circumstances in which it may be made are determined by
the Trustees to be in the best interests of the Series or Class. The Trustees
may retain and not reinvest from the net profits such amount as they may deem
necessary to pay the debts or expenses of the Trust or to meet obligations of
the Trust, or as they may deem desirable to use in the conduct of its affairs or
to retain for future requirements or extensions of the business.
Section 8.3 Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
share net asset value of the Trust's Shares or net income, or the declaration
and payment of dividends and distributions as they may deem necessary or
desirable to enable the Trust to comply with any provision of the 1940 Act, or
any securities association registered under the Securities Exchange Act of 1934,
or any order of exemption issued by said Commission, all as in effect now or
hereafter amended or modified.
ARTICLE IX
Shareholders
Section 9.1 Voting Powers. The Shareholders shall have the power to vote
(i) for the election of Trustees as provided in Article II, Section 2.2; (ii)
for the removal of Trustees as provided in Article II, Section 2.3(d); (iii)
with respect to any investment adviser as provided in Article IV, Section 4.1;
(iv) with respect to the merger, consolidation and sale of assets of the Trust
as provided in Article X, Section 10.3; (v) with respect to the amendment of
this Declaration as provided in Article X, Section 10.4; (vi) to the same extent
as the Shareholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders (provided,
however, that a shareholder of a particular Series or Class shall not be
entitled to a derivative or class action on behalf of any other Series or Class
(or shareholders of any other Series or Class) of the Trust); and
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(vii) with respect to such additional matters relating to the Trust as may be
required by law, by this Declaration, or the By-laws of the Trust or any
regulation of the Trust, by the Commission or any State, or as the Trustees may
consider desirable. Any matter affecting a particular Series or Class,
including without limitation, matters affecting the investment advisory
arrangements or investment policies or restrictions of a Series or Class, if
required by law, shall not be deemed to have been effectively acted upon unless
approved by the required vote of the Shareholders of such Series or Class if
required by law. Unless otherwise required by law, each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action to be taken by Shareholders which is required or permitted by law, this
Declaration or any By-laws of the Trust.
Section 9.2 Meetings. Shareholder meetings shall be held as specified in
the By-laws and in Section 2.2 hereof at the principal office of the Trust or at
such other place as the Trustees may designate. No annual or regular meetings
of shareholders are required. Meetings of the Shareholders may be called by the
Trustees and shall be held at such times, on such day and at such hour as the
Trustees may from time to time determine, for the purposes specified in Section
2.2 and for such other purposes as may be specified by the Trustees.
Section 9.3 Quorum and Required Vote. Except as otherwise provided by
law, the holders of thirty percent of the outstanding Shares of each Series
present in person or by proxy shall constitute a quorum for the transaction of
any business at any meeting of Shareholders. If a quorum, as above defined,
shall not be present for the purpose of any vote that may properly come before
the meeting, the Shareholders present in person or by proxy and entitled to vote
at such meeting on such matter holding a majority of the Shares present entitled
to vote on such matter may by vote adjourn the meeting from time to time to be
held at the same place without further notice than by announcement to be given
at the meeting until a quorum, as above defined, entitled to vote on such matter
shall be present, whereupon any such matter may be voted upon at the meeting as
though held when originally convened. Subject to any applicable requirement of
law, this Declaration or the By-laws, a plurality of the votes cast shall elect
a Trustee and all other matters shall be decided by a majority of the votes cast
entitled to vote thereon.
Section 9.4 Record Date for Meetings. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding 30 days, as the Trustees may determine; or without closing the
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transfer books the Trustees may fix a date not more than 180 days prior to the
date of any meeting of Shareholders or declaration of dividends or other action
as a record date for the determination of the persons to be treated as
Shareholders of record for such purposes, except for dividend payments which
shall be governed by Section 8.2 hereof.
Section 9.5 Proxies. Any vote by a Shareholder of the Trust may be made
in person or by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Trustees or their designee
prior to the time the vote is taken. Pursuant to a resolution of a majority of
the Trustees, proxies may be solicited in the name of one or more Trustees or
one or more officers of the Trust. Only Shareholders of record shall be
entitled to vote. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. A proxy with
respect to shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them.
Section 9.6 Additional Provisions. The By-laws may include further
provisions for Shareholders' votes, meetings and related matters.
Section 9.7 Reports. The Trustees shall cause to be prepared with respect
to each Series at least annually a report of operations containing a balance
sheet and statement of income and undistributed income of the applicable Series
of the Trust prepared in conformity with generally accepted accounting
principles and an opinion of an independent public accountant on such financial
statements. It is contemplated that separate reports may be prepared for the
various Series or Classes. Copies of such reports shall be mailed to all
Shareholders of record of the applicable Series within the time required by the
1940 Act. The Trustees shall, in addition, furnish to the Shareholders at least
semi-annually, interim reports containing an unaudited balance sheet of the
Series as of the end of such period and an unaudited statement of income and
surplus for the period from the beginning of the current fiscal year to the end
of such period.
Section 9.8 Shareholder Action by Written Consent. Any action which may
be taken by Shareholders may be taken without a meeting if a majority of
Shareholders of each Series or Class entitled to vote on the matter (or such
larger proportion thereof as shall be required by any express provision of this
Declaration) consent to the action in writing and the written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
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ARTICLE X
Duration; Termination of Trust; Amendment; Mergers; Etc.
Section 10.1 Duration. Subject to the provisions of Sections 11.2
and 11.3 hereof, this Trust shall continue without limitation of time.
Section 10.2 Termination.
(a) The Trust, or any Series thereof, may be terminated by the
affirmative vote of a majority of the Trustees, or by the
affirmative vote of a majority of the Shares of the Trust or
Series outstanding and entitled to vote, at any meeting of
shareholders. Upon the termination of the Trust or any Series:
(i) the Trust or such Series shall carry on no business except
for the purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust or such Series and all of the powers of the Trustees
under this Declaration shall continue until the affairs of
the Trust or such Series shall have been wound up, including
the power to fulfill or discharge the contracts of the Trust
or such Series, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part
of the remaining Trust Property to one or more persons at
public or private sale for consideration which may consist
in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities, and do all other
acts appropriate to liquidate its business; provided that
any sale, conveyance, assignment, exchange, transfer or
other disposition of all or substantially all the Trust
Property shall require approval of the principal terms of
the transaction and the nature and amount of the
consideration by vote or consent of the holders of a
majority of the Shares entitled to vote; and
(iii) after payment or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities
and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Trust
Property of any Series, in cash or in kind or partly each,
among the
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Shareholders of such Series according to their respective
rights.
(b) After termination of the Trust or any Series and distribution to
the Shareholders as herein provided, a majority of the Trustees
shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination.
Upon termination of the Trust, the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and
the rights and interests of all Shareholders shall thereupon
cease. Upon termination of any Series, the Trustees thereunder
shall be discharged from any further liabilities and duties with
respect to such Series, and the rights and interests of all
Shareholders of such Series shall thereupon cease.
Section 10.3 Reorganization. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Series, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Series of the Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another Series of the
Trust, Shares of such other Series) with such transfer either (1) being made
subject to, or with the assumption by the transferee of, the liabilities
belonging to each Series the assets of which are so transferred, or (2) not
being made subject to, or not with the assumption of, such liabilities;
provided, however, that no assets belonging to any particular Series shall be so
transferred unless the terms of such transfer shall have first been approved at
a meeting called for the purpose by a Majority Shareholder Vote of that Series.
Following such transfer, the Trustees shall distribute such cash, shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series the assets
belonging to which have been so transferred; and if all of the assets of the
Trust have been so transferred, the Trust shall be terminated.
The Trust, or any one or more Series, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
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corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as
are specified in an agreement and plan of reorganization entered into by the
Trust, or one or more Series as the case may be, in connection therewith. The
terms "merge" or "merger" as used herein shall also include the purchase or
acquisition of any assets of any other trust, partnership, association or
corporation which is an investment company organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States. Any such
consolidation or merger shall require the approval of a Majority Shareholder
Vote of each Series affected thereby.
Shareholders shall have no right to demand payment for their shares or to
any other rights of dissenting shareholders in the event the Trust or any Series
participates in any transaction which would give rise to appraisal or
dissenters' rights by a shareholder of a corporation organized under Chapter
156B of the General Laws of the Commonwealth of Massachusetts.
Section 10.4 Amendment Procedure. All rights granted to the Shareholders
under this Declaration are granted subject to the reservation of the right to
amend this Declaration as herein provided, except that no amendment shall repeal
the limitations on personal liability of any Shareholder or Trustee or repeal
the prohibition of assessment upon the Shareholders without the express consent
of each Shareholder or Trustee involved. Subject to the foregoing, the
provisions of this Declaration (whether or not related to the rights of
Shareholders) may be amended at any time, so long as such amendment does not
adversely affect the rights of any Shareholder with respect to which such
amendment is or purports to be applicable and so long as such amendment is not
in contravention of applicable law, including the 1940 Act, by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees). Any amendment to this
Declaration that adversely affects the rights of Shareholders may be adopted at
any time by an instrument in writing signed by a majority of the then Trustees
(or by an officer of the Trust pursuant to a vote of a majority of such
Trustees) when authorized to do so by the vote of a majority of the Shares
entitled to vote. Subject to the foregoing, any such amendment shall be
effective as provided in the instrument containing the terms of such amendment
or, if there is no provision therein with respect to effectiveness, upon the
execution of such instrument and of a certificate (which may be a part of such
instrument) executed by a Trustee or officer of the Trust to the effect that
such amendment has been duly adopted.
Section 10.5 Incorporation. With the approval of the holders of a
majority of the Shares, the Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction or
any other trust, partnership, association or other organization to take over all
of the
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Trust Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
Property to any such corporation, trust, association or organization in exchange
for the shares or securities thereof or otherwise, and to lend money to,
subscribe for the Shares or securities of, and enter into any contracts with any
such corporation, trust, partnership, association or organization, or any
corporation, trust, partnership,
association or organization in which the Trust holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organizations or
entities.
ARTICLE XI
Miscellaneous
Section 11.1 Filing. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other places as may be required under the laws of Massachusetts and also
may be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee or officer stating that such action was duly taken in
a manner provided herein, and unless such amendment or such certificate sets
forth some later time for the effectiveness of such amendment, such amendment
shall be effective upon its filing. A restated Declaration, containing the
original Declaration and all amendments theretofore made, may be executed from
time to time by a majority of the Trustees and shall, upon filing with the
Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.
Section 11.2 Resident Agent. The Trust shall maintain a resident agent in
the Commonwealth of Massachusetts, which agent shall initially be CT Corporation
System, 2 Oliver Street, Boston, Massachusetts 02109. The Trustees may
designate a successor resident agent, provided, however, that such appointment
shall not become effective until written notice thereof is delivered to the
office of the Secretary of the Commonwealth of Massachusetts.
Section 11.3 Governing Law. This Declaration is executed by the Trustees
and delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of
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all parties and the validity and construction of every provision hereof shall be
subject to and construed according to the laws of said Commonwealth.
Section 11.4 Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 11.5 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Declaration may be recorded, appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Shareholders; (b) the
name of the Trust or any Series thereof; (c) the due authorization of the
execution of any instrument or writing; (d) the form of any vote passed at a
meeting of Trustees or Shareholders; (e) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration; (f) the form of any By-laws
adopted by or the identity of any officers elected by the Trustees; (g) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust or any Series or Class; or (h) the establishment of any Series or Class,
shall be conclusive evidence as to the matters so certified in favor of any
person dealing with the Trustees and their successors.
Section 11.6 Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or
with other applicable laws and regulations, the conflicting
provision shall be deemed never to have constituted a part of
this Declaration; provided, however, that such determination
shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in
any other jurisdiction or any other provision of this Declaration
in any jurisdiction.
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Section 11.7 Principal Place of Business.
As of the date of this Declaration, the principal place of business of
the Trust is 700 Newport Center Drive, Newport Beach, California 92660. The
principal place of business may be changed by resolution of a majority of the
Trustees.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the ____day of _________, 1993.
________________________________
Thomas C. Sutton
Trustee
________________________________
William D. Cvengros
Trustee
________________________________
Richard L. Nelson
Trustee
________________________________
Lyman W. Porter
Trustee
________________________________
Alan Richards
Trustee
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<PAGE>
PRESIDENT'S CERTIFICATE
The undersigned, being the duly appointed, qualified and active President
of PIMCO Advisors Institutional Funds (the "Trust"), formerly PFAMCo Fund,
hereby certifies that the Funds' Agreement and Declaration of Trust dated August
24, 1990 and subsequently amended on October 24, 1990, November, 16, 1990,
November 29, 1990, December 14, 1990, February 1, 1991, May 9, 1991, August 6,
1992, and February 26, 1993 (the "Declaration of Trust") has been duly amended
and restated in accordance with the provisions of Section 10.4 of the
Declaration of Trust.
Date: _________________, 1993
_________________________
Thomas C. Sutton
President
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<PAGE>
WRITTEN INSTRUMENT AMENDING THE
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF PIMCO FUNDS: EQUITY ADVISORS SERIES
The undersigned, being a majority of the Trustees of PIMCO Advisors
Institutional Funds, a Massachusetts business trust, (the "Trust") acting
pursuant to Section 6.2.1 of the Amended and Restated Agreement and Declaration
of Trust, dated May 7, 1993, and subsequently amended on July 15, 1993 and
October 29, 1993, (the "Declaration of Trust"), hereby amend the Declaration of
Trust by dividing the Shares of each Series into three Classes designated as
"Institutional Class," "Benefit Plan Class," and "Administrative Class," by
designating all previously issued and outstanding Shares as Institutional Class
Shares, and by assigning the following relative rights and preferences to each
Class:
Each Class of a Series shall be identical to each other Class of that
Series except as follows:
(a) Each Class shall bear the expenses, costs, charges, and liabilities
relating to any agreements or arrangements entered into by or on
behalf of the Trust pursuant to which an organization or other person
agrees to provide services with respect to that Class but not with
respect to any other Class or Classes of the Trust, as well as any
other expenses, costs, charges, and liabilities directly attributable
to a Class which the Trustees determine should be borne solely by that
Class; and
(b) A Class shall not bear the expenses, costs, charges, and liabilities
relating to any agreements or arrangements entered into by or on
behalf of the Trust pursuant to which an organization or other person
agrees to provide services with respect to any other Class or Classes
of the Trust, nor any other expenses, costs, charges, or liabilities
directly attributable to shares of any other Class or Classes of the
Trust which the Trustees determine should be borne exclusively by such
other Class or Classes; and
(c) The dividends and distributions with respect to each Class of a Series
shall be in such amount as may be declared from time to time by or
under the direction of the Trustees, and such dividends and
distributions may vary from dividends and distributions with respect
to other Classes of that Series to reflect differing allocations of
the expenses, costs, charges, or liabilities of the Trust among the
holders of the Classes of Shares of that Series and to equalize the
net asset value per Share of its Classes, to such extent and for such
purposes as the Trustees may deem appropriate.
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(d) The Shareholders of each Class of each Series shall have (i) exclusive
voting rights with respect to matters on which the Shareholders of the Class
shall be entitled to exclusive voting rights under applicable federal or state
law and on any matters affecting only that Class and (ii) no voting rights with
respect to matters on which the Shareholders of another Class of that Series or
another Series shall be entitled to exclusive voting rights under applicable
federal or state law or on any matters affecting only another Class or Classes.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the __ day of March, 1994.
____________________________
Thomas C. Sutton
Trustee
____________________________
William D. Cvengros
Trustee
____________________________
Richard L. Nelson
Trustee
____________________________
Lyman W. Porter
Trustee
____________________________
Alan Richards
Trustee
38
<PAGE>
PRESIDENT'S CERTIFICATE
The undersigned, being the duly appointed, qualified and active
President of PIMCO Advisors Institutional Funds (the "Trust"), hereby certifies
that Section 6.2.1 of the Trust's Amended and Restated Agreement and Declaration
of Trust dated May 7, 1993 and subsequently amended on July 15, 1993 and October
29, 1993 (the "Declaration of Trust") has been duly amended in accordance with
the provisions of Section 10.4 of the Declaration of Trust.
Date: March __, 1994
_____________________________
Thomas C. Sutton
President
39
<PAGE>
EX-99.B1(r)
PIMCO FUNDS: EQUITY ADVISORS SERIES
AMENDED AND RESTATED
AGREEMENT AND
DECLARATION OF TRUST
WRITTEN INSTRUMENT AMENDING THE
AGREEMENT AND DECLARATION OF TRUST OF
PIMCO FUNDS: EQUITY ADVISORS SERIES
RESOLVED, that the undersigned, being a majority of the Trustees of PIMCO
Funds: Equity Advisors Series, a Massachusetts business trust, (the "Trust")
acting pursuant to Section 6.2 of the Amended and Restated Agreement and
Declaration of Trust, dated May, 1993 and amended July 15, 1993, October 29,
1993, March 4, 1994, August 12, 1994, November 7, 1994, January 17, 1995,
November 1, 1995, and February 2, 1996, ("Declaration of Trust"), and having
heretofore divided the Shares of beneficial interest of the Trust in thirteen
separate Series (the "Series"), hereby amend the Declaration of Trust by
designating and establishing one additional Series to be known as the
"Parametric Structured Emerging Markets Fund", such new Series to have the
relative rights and preferences set forth in Subsections (a) through (e) of
Section 6.2 of the Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the _____ day of __________, 1996.
______________________________ _______________________________
William D. Cvengros Lyman W. Porter
Trustee Trustee
______________________________ _______________________________
Richard L. Nelson Alan Richards
Trustee Trustee
40
<PAGE>
PRESIDENT'S CERTIFICATE
The undersigned, being the duly appointed, qualified and active President
of PIMCO Funds: Equity Advisors Series (the "Trust"), hereby certifies that
Section 6.2 of the Trust's Amended and Restated Agreement and Declaration of
Trust dated May 7, 1993 and subsequently amended on July 15, 1993, October 29,
1993, March 4, 1994, August 12, 1994, November 17, 1994, January 17, 1995,
November 1, 1995, and February 2, 1996, (the "Declaration of Trust") has been
duly amended in accordance with the provisions of sections 10.4 of the
Declaration of Trust.
Date: _____________________ ____________________________________
William D. Cvengros
President
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<PAGE>
EX-99.B4(i)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] SPECIMEN OF SECURITY
FOR PARAMETRIC STRUCTURED EMERGING MARKETS FUND
<PAGE>
PIMCO FUNDS: EQUITY ADVISORS SERIES
A MASSACHUSETTS BUSINESS TRUST
PARAMETRIC STRUCTURED EMERGING MARKETS FUND
NUMBER SHARES
CUSIP
THIS IS TO CERTIFY THAT_________________________________________________________
IS THE OWNER OF_________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST AS SHOWN ON THE
BOOKS OF RECORD OF THE TRANSFER AGENT AT THE PAR VALUE OF $.001 EACH OF
PIMCO FUNDS: EQUITY ADVISORS SERIES
(HEREIN CALLED THE "TRUST") TRANSFERABLE ON THE BOOKS OF THE TRUST BY THE
HOLDER THEREOF IN PERSON OR BY ATTORNEY DULY AUTHORIZED IN WRITING UPON
SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED., THIS CERTIFICATE IS NOT
VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT.
THE HOLDER HEREOF BY ACCEPTING THIS CERTIFICATE EXPRESSLY ASSENTS TO AND IS
BOUND BY THE DECLARATION OF TRUST AND BY-LAWS OF THE TRUST, COPIES OF WHICH
ARE AVAILABLE FOR INSPECTION AT THE OFFICE OF THE TRUST. THE RIGHTS,
RESTRICTIONS AND QUALIFICATIONS OF THE SHARES OF BENEFICIAL INTEREST
REPRESENTED BY THIS CERTIFICATE AND OF ANY OTHER FUND SHARES AT ANY TIME
OUTSTANDING ARE FIXED IN THE AGREEMENT AND DECLARATION OF TRUST. THE
AGREEMENT AND DECLARATION OF TRUST ESTABLISHING PIMCO FUNDS: EQUITY
ADVISORS SERIES (THE "DECLARATION"), EXECUTED ON AUGUST 24, 1990, IS ON
FILE IN THE OFFICE OF THE SECRETARY OF THE COMMONWEALTH OF MASSACHUSETTS,
AND PROVIDES THAT THE DECLARATION WAS EXECUTED OR MADE BY OR ON BEHALF OF
THE TRUST OR BY THEM AS TRUSTEES OR TRUSTEE OR AS OFFICERS OR OFFICER AND
NOT INDIVIDUALLY AND THAT THE OBLIGATIONS OF SUCH INSTRUMENT ARE NOT
BINDING UPON ANY OF THEM OR THE SHAREHOLDERS INDIVIDUALLY, BUT ARE BINDING
ONLY UPON THE ASSETS AND PROPERTY OF THE TRUST, OR THE PARTICULAR FUND IN
QUESTION, AS THE CASE MAY BE.
WITNESS, THE FACSIMILE SIGNATURE OF THE DULY AUTHORIZED OFFICER OF THE
TRUST.
DATED:
__________________________________ ____________________________________
President Treasurer
Countersigned: Investors Fiduciary Trust Company (Kansas City, Missouri)
Transfer Agent
BY:_______________________________________________
Authorized Signature
<PAGE>
REQUIREMENTS: The signatures(s) on this assignment must correspond exactly
with the name(s) as written upon the face of the certificate in every
particular.
Signatures must be guaranteed by a national bank or other bank which is
insured by the Federal Deposit Insurance Corporation, or by a savings and
loan association which is insured by the Federal Savings and Loan Insurance
Corporation; or by a member firm of the National Association of Securities
Dealers, Inc. The fund reserves the right, in extraordinary cases, to
specify that signatures be guaranteed by a national bank or other bank
which is insured by the Federal Deposit Insurance Corporation or by a
member firm in good standing of a United States Stock Exchange.
For value received, the undersigned hereby sell, assign, and transfer
___________shares of beneficial interest represented by this certificate
to:
___________________________________________________________________________
(Please print or type write name and address of assignee)
___________________________________________________________________________
___________________________________________________________________________
and do hereby irrevocably constitute and appoint___________________________
___________________________________________________________________________
___________________________________________________________________________
_________________________________________________attorney to transfer the
said shares on the books of the trust with full power of substitution.
Date: __________________________________________
____________________________________________________________________
Owner
____________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT: BEFORE SIGNING, PLEASE READ AND COMPLY WITH REQUIREMENTS
PRINTED ABOVE.
Signature(s) guaranteed by:
<PAGE>
EX-99.B5(a)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] INVESTMENT ADVISORY AGREEMENT
<PAGE>
EXHIBIT 99.B5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this 15th day of November, 1994 between PIMCO Advisors
Institutional Funds ("Trust"), formerly PFAMCo Funds, a Massachusetts business
trust, and PIMCO Advisors L.P. ("Adviser"), a limited partnership.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust has established multiple series, including operational
series or series that are expected to be operational that are designated as the
Money Market Fund, the PIMCO Managed Bond and Income Fund, the Utility Stock
Fund, 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
<PAGE>
Fund, the Columbus Circle Investors Core Equity Fund, the Columbus Circle
Investors Mid Cap Equity Fund, the Columbus Circle Investors Small Cap Equity
Fund, the Parametric Enhanced Equity Fund, the Parametric International Equity
Fund, the Blairlogie Emerging Markets Fund, the Blairlogie International Active
Fund, and the Balanced Fund, such series together with any other series
subsequently established by the Trust, with respect to which the Trust desires
to retain the Adviser to render investment advisory services hereunder, and with
respect to which the Adviser is willing to do so, being herein collectively
referred to also as the "Funds"; and
WHEREAS, the Adviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940; and
WHEREAS, the Adviser is the parent company or an affiliate of other
companies that render investment advisory services and are registered as
investment advisers under the Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Adviser so that it and its
subsidiaries and affiliates will render
2
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investment advisory services to the Funds in the manner and on the terms
hereinafter set forth; and
WHEREAS, the Adviser is willing to render such services and engage its
subsidiaries and affiliates to render such services to the Trust,
NOW, THEREFORE, in consideration of the premises, the promises, and mutual
covenants herein contained, it is agreed between the parties as follows:
1. APPOINTMENT. The Trust hereby appoints the Adviser to provide
-----------
investment advisor services to the Trust with respect to the Funds for the
period and on the terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
In the event the Trust establishes and designates additional series with
respect to which it desires to retain the Adviser to render investment advisory
services hereunder, it shall notify the Adviser in writing. If the Adviser is
willing to render such services is shall notify the Trust in writing, whereupon
such additional series shall become a Fund hereunder.
3
<PAGE>
2. DUTIES. Subject to the general supervision of the Board of Trustees,
------
the Adviser shall provide general, overall advice and guidance with respect to
the Funds and provide advice and guidance to the Trust's Trustees. In
discharging these duties the Adviser shall, either directly or indirectly
through others ("Portfolio Managers") engaged by it pursuant to Section 3 of
this Agreement, provide a continuous investment program for each Fund and
determine the composition of the assets of each Fund, including determination of
the purchase, retention, or sale of the securities, cash, and other investments
for the Fund. The Adviser (or Portfolio Manager) will provide investment
research and analysis, which may consist of a computerized investment
methodology, and will conduct a continuous program of evaluation, investment,
sales, and reinvestment of the Fund assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Fund, when these transactions should be executed, and what
portion of the assets of the Fund should be held in the various securities and
other investments in which it may invest, and the Adviser (or Portfolio Manager)
is hereby authorized to execute and perform such services on behalf of the Fund.
To the extent permitted by the investment policies of the Fund, the Adviser (or
Portfolio Manager) shall make decisions for the
4
<PAGE>
Fund as to foreign currency matters and make determinations as to the retention
or disposition of foreign currencies or securities or other instruments
denominated in foreign currencies or derivative instruments based upon foreign
currencies, including forward foreign currency contracts and options and futures
on foreign currencies, and shall execute and perform the same. The Adviser (or
Portfolio Manager) will provide the services under this Agreement for each Fund
in accordance with the Fund's investment objective or objectives, investment
policies, and investment restrictions as stated in the Trust's Registration
Statement filed on Form N-1A with the SEC as supplemented or amended from time
to time.
In performing these duties, the Adviser, either directly or indirectly
through others selected by the Adviser:
(a) Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Trust's
Board of Trustees, and with the provisions of the Trust's Registration
Statement filed on Form N-1A as supplemented or amended from time to
time.
5
<PAGE>
(b) Shall use reasonable efforts to manage each Fund so that it qualifies
as a regulated investment company under Subchapter M of the Internal
Revenue Code.
(c) Is responsible, in connection with its responsibilities under Section
2, for decisions to buy and sell securities and other investments for
the Funds, for broker-dealer and futures commission merchants ("FCM")
selection, and for negotiation of commission rates. The Adviser's (or
Portfolio Manager's) primary consideration in effecting a security or
other transaction will be to obtain the best execution for the Fund,
taking into account the factors specified in the Prospectus and
Statement of Additional Information for the Trust, as they may be
amended or supplemented from time to time. Subject to such policies
as the Board of Trustees may determine and consistent with Section
28(e) of the Securities Exchange Act of 1934, the Adviser (or
Portfolio Manager) shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Fund to pay a
6
<PAGE>
broker or dealer, acting as agent, for effecting a portfolio
transaction at a price in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if
the Adviser (or Portfolio Manager) determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Adviser's
(or Portfolio Manager's) overall responsibilities with respect to the
Fund and to their other clients as to which they exercise investment
discretion. To the extent consistent with these standards, and in
accordance with Section 11(a) of the Securities Exchange Act of 1934
and Rule 11a2-(T) thereunder, and subject to any other applicable laws
and regulations, the Adviser (or Portfolio Manager) is further
authorized to allocate the orders placed by it on behalf of the Fund
to the Adviser (or Portfolio Manager) if it is registered as a broker
or dealer with the SEC, to its affiliate that is registered as a
broker or dealer with the SEC, or to such brokers and dealers that
also provide research or statistical research and material, or
7
<PAGE>
other services to the Fund or the Adviser (or Portfolio Manager). Such
allocation shall be in such amounts and proportions as the Adviser
shall determine consistent with the above standards, and, upon
request, the Adviser will report on said allocation regularly to the
Board of Trustees of the Trust indicating the broker-dealers to which
such allocations have been made and the basis therefor.
(d) May, on occasions when the purchase or sale of a security is deemed to
be in the best interest of a Fund as well as any other investment
advisory clients, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities
to be so sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in the
Registration Statement. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Adviser (or Portfolio Manager) in a
manner that is fair and equitable in the judgment of the Adviser (or
Portfolio Manager) in the exercise of its
8
<PAGE>
fiduciary obligations to the Trust and to such other clients.
(e) Will, in connection with the purchase and sale of securities for each
Fund, arrange for the transmission to the custodian for the Trust on a
daily basis, such confirmation, trade tickets, and other documents and
information, including but not limited to, Cusip, Sedol, or other
numbers that identify securities to be purchased or sold on behalf of
the Fund, as may be reasonably necessary to enable the custodian to
perform its administrative and recordkeeping responsibilities with
respect to the Fund, and, with respect to portfolio securities to be
purchased or sold through the Depository Trust Company, will arrange
for the automatic transmission of the confirmation of such trades to
the Trust's custodian.
(f) Will make available to the Trust, promptly upon request, any of the
Funds' investment records and ledgers as are necessary to assist the
Trust to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940, as well as other applicable laws, and will
furnish to regulatory
9
<PAGE>
authorities having the requisite authority any information or reports
in connection with such services which may be requested in order to
ascertain whether the operations of the Trust are being conducted in a
manner consistent with applicable laws and regulations.
(g) Will regularly report to the Trust's Board of Trustees on the
investment program for each Fund and the issuers and securities
represented in each Fund's, and will furnish the Trust's Board of
Trustees with respect to the Funds such periodic and special reports
as the Trustees may reasonably request.
3. APPOINTMENT OF PORTFOLIO MANAGERS. The Adviser may, at its expense and
---------------------------------
subject to its supervision, engage one or more persons, including, but not
limited to, subsidiaries and affiliated persons of the Adviser, to render any or
all of the investment advisory services that the Adviser is obligated to render
under this Agreement including, for one or more of the Funds and, to the extent
required by applicable law, subject to the approval of the Trust's Board of
Trustees and/or the shareholders of one or more of the Funds, a person to render
investment advisory
10
<PAGE>
services including the provision of a continuous investment program and the
determination of the composition of the securities and other assets of such Fund
or Funds.
4. DOCUMENTATION. The Trust has delivered copies of each of the following
-------------
documents to the Adviser and will deliver to it all future amendments and
supplements thereto, if any:
(a) the Trust's Registration Statement as filed with the SEC and any
amendments thereto; and
(b) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the
Registration Statement described above.
The Adviser has delivered to the Trust copies of the Adviser's and the
Portfolio Managers' Uniform Application for Investment Adviser Registration on
Form ADV, as filed with the SEC. The Adviser agrees to provide the Trust with
current copies of the Adviser's and the Portfolio Managers' Form ADV, and any
supplements or amendments thereto, as filed with the SEC.
11
<PAGE>
5. RECORDS. The Adviser agrees to maintain and to preserve for the
-------
periods prescribed under the 1940 Act any such records as are required to be
maintained by the Adviser with respect to the Funds by the 1940 Act. The
Adviser further agrees that all records which it maintains for the Funds are the
property of the Trust and it will promptly surrender any of such records upon
request.
6. EXPENSES. During the term of this Agreement, the Adviser will pay all
--------
expenses incurred by it in connection with its obligations under this Agreement,
except such expenses as are assumed by the Funds under this Agreement and any
expenses that are paid by a party other than the Trust under the terms of any
other agreement to which the Trust is a party. The Adviser further agrees to
pay or cause its subsidiaries or affiliates to pay all salaries, fees, and
expenses of any officer or Trustee of the Trust who is an officer, director, or
employee of the Adviser or a subsidiary or affiliate of the Adviser. The
Adviser assumes and shall pay for maintaining its staff and personnel and shall,
at its own expense provide the equipment, office space, and facilities necessary
to perform its obligations under this Agreement. The Adviser shall not, under
the terms of this Agreement, bear the following expenses
12
<PAGE>
(although the Adviser may bear certain of these expenses under one or more other
agreements):
(a) Expenses of all audits by Trust's independent public accountants;
(b) Expenses of the Trust's transfer agent, registrar, dividend
disbursing agent, and shareholder recordkeeping services;
(c) Expenses of the Trust's custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of each
Fund's net assets;
(e) Expenses of obtaining Portfolio Activity Reports for each Fund;
(f) Expenses of maintaining the Trust's tax records;
13
<PAGE>
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Adviser or its subsidiaries or
affiliates;
(h) Taxes, if any, levied against the Trust or any of its Funds;
(i) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for any of the Funds;
(j) Costs, including the interest expenses, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses and
reports of the Trust to its shareholders, the filing of reports
with regulatory bodies, the maintenance of the Trust's existence
and qualification to do business, and the registration of shares
with federal and state securities authorities;
14
<PAGE>
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for
sale;
(m) Costs or printing certificates representing shares of the Trust;
(n) Trustees' fees and expenses to trustee who are not officers,
employees, or stockholders of the Adviser or its subsidiaries or
affiliates;
(o) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, other claims and the
legal obligations of the Trust to indemnify its trustees,
officers, employees, shareholders, distributors, and agents with
respect thereto; and
15
<PAGE>
(r) Organizational and offering expenses and, if applicable,
reimbursement (with interest) of underwriting discounts and
commissions.
7. LIABILITY. The Adviser shall give the Trust the benefit of the
---------
Adviser's best judgment and efforts in rendering services under this Agreement.
The Adviser may rely on information reasonably believed by it to be accurate and
reliable. As an inducement for the Adviser's undertaking to render services
unless this Agreement, the Trust agrees that neither the Adviser nor its
stockholders, officers, directors, employees, or agents shall be subject to any
liability for, or any damages, expenses or losses incurred in connection with,
any act or omission or mistake in judgment connected with or arising out of any
services rendered under this Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in performance of the Adviser's duties, or by
reason of reckless disregard of the Adviser's investment advisory obligations
and duties under this Agreement.
8. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein be
----------------------
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or
16
<PAGE>
authorized by the Board of Trustees of the Trust from time to time, have no
authority to act for or represent the Trust in any way or otherwise be deemed
its agent.
9. COMPENSATION. As compensation for the services rendered under this
------------
Agreement, the Trust shall pay to the Adviser a fee based on the average daily
net assets of each of the Funds as follows: for the Money Market Fund, a fee at
an annual rate of .15% of the Fund's average daily nets assets; for the PIMCO
Managed Bond and Income Fund, a fee at an annual rate of .25% of the Fund's
average daily net assets; for the Utility Stock, NFJ Equity Income, NFJ
Diversified Low P/E, Cadence Capital Appreciation, Cadence Mid Cap Growth,
Parametric Enhanced Equity, Parametric International Equity, and Balanced Funds,
a fee at an annual rate of .45% of the Fund's average daily net assets; for the
Columbus Circle Investors Core Equity Fund, a fee at an annual rate of .57% of
the Fund's average daily net assets; for the NFJ Small Cap Value and Blairlogie
International Active Funds, a fee at an annual rate of .60% of the Fund's
average daily net assets; for the Columbus Circle Investors Mid Cap Equity Fund,
a fee at an annual rate of .63% of the Fund's average daily net assets; for the
Columbus Circle Investors Small Cap Equity and Blairlogie Emerging Markets
Funds, a fee at an annual rate of .85% of the Fund's average
17
<PAGE>
daily net assets; for the Cadence Small Cap Growth Fund, a fee at an annual rate
of 1.00% of the Fund's average daily net assets; and for the Cadence Micro Cap
Growth Fund, a fee at an annual rate of 1.25% of the Fund's average daily net
assets. The fees payable to the Adviser for all of the Funds shall be computed
and accrued daily and paid monthly. If the Adviser shall serve for less than any
whole month, the foregoing compensation shall be prorated.
10. NON-EXCLUSIVITY. It is understood that the services of the Adviser
---------------
hereunder are not exclusive, and the Adviser shall be free to render similar
services to other investment companies and other clients whether or not their
investment objectives are similar to those of any of the Funds.
11. TERM AND CONTINUATION. This Agreement shall take effect as of the
---------------------
"Closing Date" as that term is defined in the Agreement and Plan of
Consolidation for PIMCO Advisors L.P. dated July 12, 1994, and shall remain in
effect, unless sooner terminated as provided herein, for two years from such
date, and shall continue thereafter on an annual basis with respect to each Fund
provided that such continuance is specially approved at least annually (a) by
the vote of a majority of the Board of Trustees of the Trust, or (b)
18
<PAGE>
by vote of a majority of the outstanding voting shares of the Fund, and provided
continuance is also approved by the vote of a majority of the Board of Trustees
of the Trust who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of the Trust, or the Adviser, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement may
not be materially amended without a majority vote of the outstanding voting
shares (as defined in the 1940 Act) of the pertinent Fund or Funds.
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of a particular Fund shall be
effective to continue this Agreement with respect to such Fund notwithstanding
(a) that this Agreement has not been approved by the holders of a majority of
the outstanding shares of any other Fund or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding shares of the Trust,
unless such approval shall be required by any other applicable law or otherwise.
This Agreement will terminate automatically with respect to the services
provided by the Adviser in event of its assignment, as that term is defined in
the 1940 Act, by the Adviser.
This Agreement may be terminated:
19
<PAGE>
(a) by the Trust at any time with respect to the services provided by the
Adviser, with the payment of any penalty, by vote of a majority of the
entire Board of Trustees of the Trust or by a vote of a majority of
the outstanding voting shares of the Trust or, with respect to a
particular Fund, by vote of a majority of the outstanding voting
shares of such Fund, on 60 days' written notice to the Adviser;
(b) by the Adviser at any time, without the payment of any penalty, upon
60 days' written notice to the Trust.
12. USE OF NAME. It is understood that the name "PIMCO Advisors L.P." or
-----------
"PIMCO" or any derivative thereof or logo associated with those names are the
valuable property of the Adviser and its affiliates, and that the Trust and/or
the Funds have the right to use such names (or derivatives or logos) only so
long as this Agreement shall continue with respect to such Trust and/or Funds.
Upon termination of this Agreement, the Trust (or Fund) shall forthwith cease to
use such names (or derivatives or logos)
20
<PAGE>
and, in the case of the Trust, shall promptly amend its Declaration of Trust to
change its name.
13. NOTICES. Notices of any kind to be given to the Adviser by the Trust
-------
shall be in writing and shall be duly given if mailed or delivered to the
Adviser at 700 Newport Center Drive, Newport Beach, California 92660, or to
such other address or to such individual as shall be specified by the Adviser.
Notices of any kind to be given to the Trust by the Adviser shall be in writing
and shall be duly given if mailed or delivered to 700 Newport Center Drive,
Newport Beach, California 92660, or to such other address or to such individual
as shall be specified by the Trust.
14. FUND OBLIGATION. A copy of the Trust's Agreement and Declaration of
---------------
Trust is on file with the Secretary of the Commonwealth of Massachusetts and
notice is hereby given that the Agreement has been executed on behalf of the
Trust by a trustee of the Trust in his or her capacity as trustee and not
individually. The obligations of this Agreement shall only be binding upon the
assets and property of the Trust and shall not be binding upon any trustee,
officer, or shareholder of the Trust individually.
21
<PAGE>
15. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original.
16. MISCELLANEOUS.
-------------
(a) This Agreement shall be governed by the laws of California,
provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of
1940, or any rule or order of the SEC thereunder.
(b) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent,
the provisions of this Agreement shall be deemed to be severable.
To the extent that any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise
with regard to any party hereunder, such
22
<PAGE>
provisions with respect to other parties hereto shall not be
affected thereby.
(c) The captions in this Agreement are included for convenience only
and in no way define any of the provisions hereof or otherwise
affect their construction or effect.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designed below on the day and year first above
written.
PIMCO ADVISORS INSTITUTIONAL FUNDS
______________________ By: __________________________
Attest: Title:
Title:
______________________ By: __________________________
Attest: Title:
Title:
PIMCO ADVISORS L.P.
______________________ By: __________________________
Attest: Title:
Title:
_______________________ By: __________________________
Attest: Title:
Title:
24
<PAGE>
SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
February 5, 1996
Mr. William D. Cvengros
PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
Dear Mr. Cvengros:
In connection with the services provided by PIMCO Advisors L.P.
("PIMCO Advisors") to PIMCO Advisors Institutional Funds (the "Trust") pursuant
to an Investment Advisory Agreement dated November 15, 1994 (the "Agreement")
between PIMCO Advisors and the Trust, whereby PIMCO Advisors serves as
Investment Adviser to the Trust with respect to the Funds (as defined in the
Agreement) of the Trust, the Trust wishes to inform PIMCO Advisors of certain
matters set forth below:
1. Effective November 1, 1995, the Trust comprises the following Funds to
which the Agreement applies: 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; and
2. Effective February 2, 1996, the name of the Trust is "PIMCO Funds:
Equity Advisors Series."
PIMCO Funds: Equity Advisors Series
________________________________
By: William D. Cvengros
Title: Chairman of the Board,
President and Trustee
ACCEPTED:
PIMCO Advisors L.P.
_________________________
By: William D. Cvengros
Title: Chief Executive Officer
25
<PAGE>
EX-99.B5(a)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] INVESTMENT ADVISORY AGREEMENT
ADDENDUM TO INVESTMENT ADVISORY AGREEMENT
-----------------------------------------
The Investment Advisory Agreement, made the 15th day of November, 1994,
between the PIMCO Funds: Equity Advisors Series, formerly PIMCO Advisors
Institutional Funds, formerly PFAMCo Funds, formerly PFAMCo Fund (the "Trust"),
a Massachusetts business trust, and PIMCO Advisors L.P. (the "Adviser"), a
corporation organized under the laws of California, (the "Agreement") is hereby
amended by the addition of the provisions set forth in this addendum to the
Agreement, which is made this _____ day of __________, 1996.
WITNESSETH:
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets: and
WHEREAS, the Trust currently consists of thirteen series designated as 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
(each a "Fund"); and
WHEREAS, the Trust intends to establish one additional series to be
designated as the Parametric Structured Emerging Markets Fund; and
26
<PAGE>
WHEREAS, the Trust desires to appoint the Adviser as investment adviser to
the Parametric Structured Emerging Markets Fund under provisions set forth in
the Agreement and in this Addendum to the Agreement; and
WHEREAS, the Adviser is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In Addition to its responsibilities as specified in the Agreement, the
Trust hereby appoints the Adviser to provide investment advisory services to the
Parametric Structured Emerging Markets Fund which, in addition to all other
Funds previously established, shall each be deemed one of the Funds under the
Agreement, subject to the terms and conditions as specified in the Agreement,
including paragraph nine (9), "Compensation," as amended by this Addendum.
--------------
2. Paragraph nine (9) ("Compensation") of the agreement is amended by
replacing its present text with the following text:
"9. Compensation. As compensation for the services rendered under
-------------
this Agreement, the Trust shall pay to the Adviser a fee based on the
average daily net assets of each of the Funds as follows: NFJ Equity
Income, NFJ Diversified Low P/E, Cadence Capital Appreciation, Cadence Mid
Cap Growth, Parametric Enhanced Equity, and Balanced Funds, a fee at an
annual rate of .45% of the Fund's average daily net assets; for the
Columbus Circle Investors Core Equity Fund, a fee at an annual rate of .57%
of the Fund's average daily net assets; for the NFJ Small Cap Value and
Blairlogie International Active Funds, a fee at an annual rate of .60% of
the Fund's average daily net assets; for the Columbus Circle Investors Mid
Cap Equity Fund, a fee at an annual rate of .63% of the Fund's average
daily net assets; for the Parametric Structured Emerging Markets Fund, a
27
<PAGE>
fee at an annual rate of .00% of the Fund's average daily net assets; for
---
the Blairlogie Emerging Markets Funds, a fee at an annual rate of .85% of
the Fund's average daily net assets; for the Cadence Small Cap Growth Fund,
a fee at an annual rate of 1.00% of the Fund's average daily net assets;
and for the Cadence Micro Cap Growth Fund, a fee at an annual rate of 1.25%
of the Fund's average daily net assets. The fees payable to the Adviser
for all of the Funds shall be computed and accrued daily and paid monthly.
If the Adviser shall serve for less than any whole month, the foregoing
compensation shall be prorated."
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO FUNDS: EQUITY ADVISORS SERIES
By: ____________________________________
Title:
PIMCO ADVISORS L.P.
By: ____________________________________
Title:
28
<PAGE>
EX-99.B5(b)(iii)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] PORTFOLIO MANAGEMENT AGREEMENT
WITH NFJ INVESTMENT GROUP
<PAGE>
EXHIBIT 99.B5(b)(iii)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of November, 1994 between PIMCO Advisors L.P.
("Adviser"), a limited partnership, and NFJ Investment Group ("Portfolio
Manager"), a general partnership.
WHEREAS, PIMCO Advisors Institutional Funds (the "Trust") is registered
with the Securities and Exchange Commission ("SEC") as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in a
separate portfolio; and
WHEREAS, the Trust has established a multiple series, including operational
series or series that are expected to be operational that are designated as the
Money Market Fund, the PIMCO Managed Bond and Income Fund, the Utility Stock
Fund, 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
<PAGE>
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 Columbus Circle Investors Small Cap Equity Fund, the Parametric
Enhanced Equity Fund, the Parametric International Equity Fund, the Blairlogie
Emerging Markets Fund, the Blairlogie International Active Fund, and the
Balanced Fund, such series together with any other series subsequently
established by the Trust, with respect to which the Trust desires to retain the
Portfolio Manager to render investment advisory services hereunder, and with
respect to which the Portfolio Manager is willing to do so, being herein
collectively referred to also as the "Funds"; and
WHEREAS, the Portfolio Manager is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Trust has retained the Adviser to render management services
to the Funds pursuant to an Investment Advisory Agreement dated as of 11/15/94,
and such Agreement authorizes the Adviser to engage Portfolio Managers to
discharge the Adviser's responsibilities with respect to the management of the
Funds; and
2
<PAGE>
WHEREAS, the Adviser desires to retain the Portfolio Manager to furnish
investment advisory services to one or more of the Funds of the Trust, and the
Portfolio Manager is willing to furnish such services to such Funds and the
Adviser in the manner and on the terms hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Adviser and the Portfolio
Manager as follows:
1. Appointment. The Adviser hereby appoints Cadence Capital Management to
-----------
act as Portfolio Manager to NFJ Diversified Low P/E Fund, the NFJ Equity Income
Fund, and the NFJ Small Cap Value Fund (the "Funds")for the periods and on the
terms set forth in this Agreement. The Portfolio Manager accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Adviser wishes to retain the Portfolio Manager to render
investment advisory services to one or more series other than the Funds, the
Adviser shall notify the Portfolio Manager in writing. If the Portfolio Manager
is willing to render such services, it shall notify the
3
<PAGE>
Adviser in writing, whereupon such series shall become a Fund hereunder, and be
subject to this Agreement.
2. Portfolio Management Duties. Subject to the supervision of the Trust's
---------------------------
Board of Trustees and the Adviser, the Portfolio Manager will provide a
continuous investment program for the Funds and determine the composition of the
assets of the Funds, including determination of the purchase, retention, or sale
of the securities, cash, and other investments for the Funds. The Portfolio
Manager will provide investment research and analysis, which may consist of
computerized investment methodology, and will conduct a continuous program of
evaluation, investment, sales, and reinvestment of the Funds' assets by
determining the securities and other investments that shall be purchased,
entered into, sold, closed, or exchanged for the Funds, when these transactions
should be executed, and what portion of the assets of the Funds should be held
in the various securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform such services on
behalf of each Fund. To the extent permitted by the investment policies of the
Funds, the Portfolio Manager shall make decisions for the Fund as to foreign
currency matters and make determinations as to the retention or
4
<PAGE>
disposition of foreign currencies or securities or other instruments denominated
in foreign currencies, or derivative instruments based upon foreign currencies,
including forward foreign currency contracts and options and futures on foreign
currencies and shall execute and perform the same on behalf of each Fund. The
Portfolio Manager will provide the services under this Agreement in accordance
with the Funds' investment objective or objectives, investment policies, and
investment restrictions as stated in the Trust's Registration Statement filed on
form N-1A with the SEC, as supplemented or amended from time to time, copies of
which shall be sent to the Portfolio Manager by the Adviser. In performing these
duties, the Portfolio Manager:
(a) Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and regulations,
with any applicable procedures adopted by the Trust's Board of Trustees,
and with the provisions of the Trust's Registration Statement filed on form
N-1A, as supplemented or amended from time to time.
(b) Shall use reasonable efforts to manage the Funds so that they qualify
as regulated investment company under Subchapter M of the Internal Revenue
code.
5
<PAGE>
(c) Is responsible, in connection with its responsibilities under this
Section 2, for decisions to buy and sell securities and other investments
for the Funds, for broker-dealer and futures commission merchant ("FCM")
selection, and for negotiation of commission rates. The Portfolio
Manager's primary consideration in effecting a security or other
transaction will be to obtain the best execution for the Funds, taking into
account the factors specified in the Prospectus and Statement of Additional
Information for the Trust, as they may be amended or supplemented from time
to time. Subject to such policies as the Board of Trustees may determine
and consistent with Section 28(e) of the Securities Exchange Act of 1934,
the Portfolio Manager shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer, acting as
agent, for effecting a portfolio transaction at a price in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction, if the Portfolio Manager determines in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage
6
<PAGE>
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Portfolio Manager's overall
responsibilities with respect to the Funds and to its other clients as to
which it exercises investment discretion. To the extent consistent with
these standards, and in accordance with Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-(T) thereunder, and subject to any other
applicable laws and regulations, the Portfolio Manager is further
authorized to allocate the orders placed by it on behalf of the Funds to
the Portfolio Manager if it is registered as a broker or dealer with the
SEC, to its affiliate that is registered as a broker or dealer with the
SEC, or to such brokers and dealers that also provide research or
statistical research and material, or other services to the Funds or the
Portfolio Manager. Such allocation shall be in such amounts and proportions
as the Portfolio Manager shall determine consistent with the above
standards, and, upon request, the Portfolio Manager will report on said
allocation to the Adviser and Board of Trustees of the Trust, indicating
the brokers or dealers to which such allocations have been made and the
basis therefor.
7
<PAGE>
(d) May, on occasions when the purchase or sale of a security is deemed to
be in the best interest of a Fund as well as any other investment
advisory clients, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to
be sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in the
Registration Statement. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Portfolio Manager in a manner that is fair and
equitable in the judgment of the Portfolio Manager in the exercise of
its fiduciary obligations to the Trust and to such other clients.
(e) Will, in connection with the purchase or sale of securities for each
Fund, arrange for the transmission to the custodian for the Trust on a
daily basis, such confirmation, trade tickets, and other documents and
information, including, but not limited to, Cusip, Sedol, or other
numbers that identify securities to be purchased or sold on behalf of
the Fund, as may be reasonably necessary
8
<PAGE>
to enable the custodian to perform its administrative and recordkeeping
responsibilities with respect to the Fund, and, with respect to
portfolio securities to be purchased or sold through the Depository
Trust Company, will arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian.
(f) The Portfolio Manager will assist the custodian and recordkeeping agent
for the Trust in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the
Trust, the value of any portfolio securities or other assets of the
Fund for which the custodian and recordkeeping agent seeks assistance
from the Portfolio Manager or identifies for review by the Portfolio
Manager.
(g) Will make available to the Trust and Adviser, promptly upon request,
any of the Funds' investment records and ledgers as are necessary to
assist the Trust to comply with requirements of the 1940 Act and the
Investment Advisers Act of 1940, as well as other applicable laws, and
will furnish to regulatory authorities having the requisite
9
<PAGE>
authority any information or reports in connection with such services
which may be requested in order to ascertain whether the operations of
the Trust are being conducted in a manner consistent with applicable
laws and regulations.
(h) Will regularly report to the Trust's Board of Trustees on the
investment program for the Fund and the issuers and securities
represented in the Funds, and will furnish the Trust's Board of
Trustees with respect to the Funds such periodic and special reports as
the Trustees may reasonably request.
(i) The Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager has not, to the best of the Portfolio Manager's
knowledge:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor involving the purchase or sale of any security or
arising out of such person's conduct as an underwriter, broker,
dealer, investment adviser, municipal securities dealer, government
securities broker, government
10
<PAGE>
securities dealer, transfer agent, or entity or person required to
be registered under the Commodity Exchange Act, or as an affiliated
person, salesman, or employee of any investment company, bank,
insurance company, or entity or person required to be registered
under the Commodity Exchange Act; or
(ii) been permanently or temporarily enjoined by reason of any
misconduct, by order, judgment, or decree of any court of competent
jurisdiction from acting as an underwriter, broker, dealer,
investment adviser, municipal securities dealer, government
securities broker, government securities dealer, transfer agent, or
entity or person required to be registered under the Commodity
Exchange Act, or as an affiliated person, salesman or employee of
any investment company, bank, insurance company, or entity or person
required to be registered under the Commodity Exchange Act, or from
engaging in or continuing any conduct or practice in connection with
any such activity or in connection with the purchase or sale of any
security.
11
<PAGE>
3. Disclosure about Portfolio Manager. The Portfolio Manager has reviewed
----------------------------------
the initial Registration Statement for the Trust filed with the SEC and
represents and warrants that, with respect to the disclosure about the Portfolio
Manager or information relating, directly or indirectly, to the Portfolio
Manager, such Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make the statements
contained therein not misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under the Advisers Act
and a duly registered investment adviser in all states in which the Portfolio
Manager is required to be registered. The Adviser has received a current copy
of the Portfolio Manager's Uniform Application for Investment Adviser
Registration on Form ADV, as filed with the SEC. The Portfolio Manager agrees
to provide the Adviser with current copies of the Portfolio Manager's Form ADV,
and any supplements or amendments thereto, as filed with the SEC.
4. Expenses. During the term of this Agreement, the Portfolio Manager will
--------
pay all expenses incurred by it and its staff and for their activities in
connection with its
12
<PAGE>
services under this Agreement. The Portfolio Manager shall not be responsible
for any of the following:
(a) Expenses of all audits by the Trust's independent public accountants;
(b) Expenses of the Trust's transfer agent, registrar, dividend disbursing
agent, and shareholder recordkeeping services;
(c) Expenses of the Trust's custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of the
Funds' net assets;
(e) Expenses of obtaining Portfolio Activity Reports for each Fund;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who
13
<PAGE>
are not officers, directors, stockholders, or employees of the Adviser or
its subsidiaries or affiliates;
(h) Taxes, if any, levied against the Trust or any of its Funds;
(i) Brokerage fees and commissions in connection with the purchase and sale
of portfolio securities for the Funds;
(j) Costs, including the interest expenses, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's shareholders, the
preparation and mailings of prospectuses and reports of the Trust to its
shareholders, the filing of reports with regulatory bodies, the maintenance
of the Trust's existence, and the registration of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
14
<PAGE>
(m) Costs of printing stock certificates representing shares of the Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate
thereof;
(o) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise including expenses
incurred in connection with litigation, proceedings and other claims and
the legal obligations of the Trust to indemnify its trustees, officers,
employees, shareholders, distributors, and agents with respect thereto; and
(r) Organizational and offering expenses and, if applicable, reimbursement
(with interest) of underwriting discounts and commissions.
15
<PAGE>
5. Compensation. For the services provided, the Adviser will pay the
------------
Portfolio Manager a fee accrued and computed daily and, payable monthly, based
on the average daily net assets of the Fund at the annual rate of .45% of the
average daily net assets of the NFJ Diversified Low P/E and NFJ Equity Income
Funds and .60% of the average daily net assets of the NFJ Small Cap Value Fund.
6. Seed Money. The Adviser agrees that the Portfolio Manager shall not be
----------
responsible for providing money for the initial capitalization of the Trust or
the Fund.
7. Compliance.
-----------
(a) The Portfolio Manager agrees that it shall immediately notify the
Adviser and the Trust in the event (i) that the SEC has censured the
Portfolio Manager; placed limitations upon its activities, functions or
operations; suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result in any of
these actions, and (ii) upon having a reasonable basis for believing that a
Fund has ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. The
16
<PAGE>
Portfolio Manager further agrees to notify the Adviser and the Trust
immediately of any material fact known to the Portfolio Manager respecting
or relating to the Portfolio Manager that is not contained in the
Registration Statement or prospectus for the Trust, or any amendment or
supplement thereto, or of any statement contained therein that becomes
untrue in any material respect.
(b) The Adviser agrees that it shall immediately notify the Portfolio
Manager in the event (i) that the SEC has censured the Adviser or the
Trust; placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Adviser's registration as an
investment adviser; or has commenced proceedings or an investigation that
may result in any of these actions, and (ii) upon having a reasonable basis
for believing that a Fund has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code.
8. Independent Contractor. The Portfolio Manager shall for all purposes
----------------------
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Adviser from time to time, have
17
<PAGE>
no authority to act for or represent the Adviser in any way or otherwise be
deemed its agent. The Portfolio Manager understands that unless expressly
provided herein or authorized from time to time by the Trust, the Portfolio
Manager shall have no authority to act for or represent the Trust in any way or
otherwise be deemed the Trust's agent.
9. Books and Records. In compliance with the requirements of Rule 31a-3
-----------------
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Funds are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Adviser's request, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. The Portfolio Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained Rule 31a-1 under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
10. Cooperation. Each party to this Agreement agrees to cooperate with each
-----------
other party and with all appropriate governmental authorities having the
requisite jurisdiction (including, but not limited to, the SEC) in connection
with
18
<PAGE>
any investigation or inquiry relating to this Agreement or the Trust.
11. Services Not Exclusive. It is understood that the services of the
----------------------
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Funds) or from engaging in
other activities.
12. Liability. Except as provided in Section 13 and as may otherwise be
---------
required by the 1940 Act or the rules thereunder or other applicable law, the
Adviser agrees that the Portfolio Manager, any affiliated person of the
Portfolio Manager, and each person, if any, who, within the meaning of Section
15 of the Securities Act of 1933 (the "1933 Act") controls the Portfolio Manager
shall not be liable for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or arising out of any
services rendered under this Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the Portfolio Manager's
duties, or by reason of reckless disregard of the Portfolio Manager's
obligations and duties under this Agreement.
19
<PAGE>
13. Indemnification. The Portfolio Manager agrees to indemnify and hold
---------------
harmless, the Adviser, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if
any who, within the meaning of Section 15 of the 1933 Act, controls
("controlling person") the Adviser (collectively, "PM Indemnified Persons")
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses), to which the Adviser or such affiliated
person or controlling person may become subject under the 1933 Act, 1940 Act,
the Advisers Act, under any other statute, at common law or otherwise, arising
out of the Portfolio Manager's responsibilities to the Trust which (i) may be
based upon any misfeasance, malfeasance, or nonfeasance by the Portfolio
Manager, any of its employees or representatives, or any affiliate of or any
person acting on behalf of the Portfolio Manager (other than a PM Indemnified
Person), or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering the Shares of the Trust or any Fund, or any amendment thereof or any
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
20
<PAGE>
therein not misleading, if such a statement or omission was made in reliance
upon information furnished to the Adviser, the Trust, or any affiliated person
of the Trust by the Portfolio Manager or any affiliated person of the Portfolio
Manager (other than a PM Indemnified Person); provided, however, that in no case
is the Portfolio Manager's indemnity in favor of the Adviser or any affiliated
person or controlling person of the Adviser deemed to protect such person
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties, or by reason of his reckless disregard of obligation and duties
under this Agreement.
The Adviser agrees to indemnify and hold harmless the Portfolio Manager,
any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act of
the Portfolio Manager and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls the Portfolio Manager (collectively,
"Adviser Indemnified Persons") against any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses) to which the
Portfolio Manager or such affiliated person or controlling person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other
statute, at common law or
21
<PAGE>
otherwise, arising out of the Adviser's responsibilities as adviser of the Trust
which (i) may be based upon any misfeasance, malfeasance, or nonfeasance by the
Adviser, any of its employees or representatives or any affiliate of or any
person acting on behalf of the Adviser (other than an Adviser Indemnified
Person) or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering Shares of the Trust or any Fund, or any amendment thereof or any
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, unless such statement or omission was made in reliance
upon written information furnished to the Adviser or any affiliated person of
the Adviser by the Portfolio Manager or any affiliated person of the Portfolio
Manager (other than an Adviser Indemnified Person); provided however, that in no
case is the indemnity of the Adviser in favor of the Portfolio Manager, or any
affiliated person or controlling person of the Portfolio Manager deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of his reckless
disregard of obligations and duties under this Agreement.
22
<PAGE>
14. Duration and Termination. This Agreement shall take effect as of the
------------------------
"Closing Date" as that term is defined in the Agreement and Plan of
Consolidation for PIMCO Advisors L.P. dated November 15, 1994, and shall remain
in effect for two years from such date and continue thereafter on an annual
basis with respect to a Fund; provided that such annual continuance is
specifically approved at least annually (a) by the vote of a majority of the
Board of Trustees of the Trust, or (b) by the vote of a majority of the
outstanding voting shares of that Fund, and provided that continuance is also
approved by the vote of a majority of the Board of Trustees of the Trust who are
not parties to this Agreement or "interested persons" (as such term is defined
in the 1940 Act) of the Trust, the Adviser, or the Portfolio Manager, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may not be materially amended without a majority vote of the
outstanding shares (as defined in the 1940 Act) of the Fund. This Agreement may
be terminated:
(a) by the Trust at any time with respect to the services provided by the
Portfolio Manager, without the payment of any penalty, by vote of a
majority of the entire Board of Trustees of the Trust or by a vote of a
23
<PAGE>
majority of the outstanding voting shares of the Trust or, with respect to
a particular Fund, by vote of a majority of the outstanding voting shares
of such Fund, on 60 days' written notice to the Portfolio Manager;
(b) by the Portfolio Manager at any time, without the payment of any
penalty, upon 60 days' written notice to the Trust.
(c) by the Adviser at any time, without the payment of any penalty, upon 60
days' written notice to the Portfolio Manager.
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of a particular Fund shall be
effective to continue this Agreement with respect to such Fund notwithstanding
(a) that this Agreement has not been approved by the holders of a majority of
the outstanding shares of any other Fund or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding shares of the Trust,
unless such approval shall be required by any other applicable law or otherwise.
This Agreement will terminate automatically with respect to the services
provided by the Portfolio Manager in event of its
24
<PAGE>
assignment, as that term is defined in the 1940 Act, by the Portfolio Manager.
15. Use of Name.
------------
[Deleted]
16. Agreement and Declaration of Trust. A copy of the Agreement and
----------------------------------
Declaration of Trust for the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. The Agreement and Declaration of Trust has been
executed on behalf of the Trust by a Trustee of the Trust in his capacity as
Trustee of the Trust and not individually. The obligations of this Agreement
shall be binding upon the assets and property of the Trust and shall not be
binding upon any Trustee, officer, or shareholder of the Trust individually.
17. Miscellaneous.
--------------
(a) This Agreement shall be governed by the laws of California, provided
that nothing herein shall be construed in a manner inconsistent with the
1940 Act, the Investment Advisers Act of 1940 or rules or orders of the SEC
thereunder.
25
<PAGE>
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable. To the extent that any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise with regard to any party hereunder,
such provisions with respect to other parties hereto shall not be affected
thereby.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PIMCO ADVISORS L.P.
______________________ By: __________________________
Attest: Title:
Title:
_______________________ By: __________________________
Attest: Title:
Title:
NFJ Investment Group
_______________________ By: ___________________________
Attest: Title:
Title:
27
<PAGE>
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
WITH NFJ INVESTMENT GROUP
The Portfolio Management Agreement, made the 15/th/ day of November, 1994
between PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser"), a limited
partnership, and NFJ Investment Group ("NFJ"or "Portfolio Manager"), a general
partnership, (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this ____
day of ______________ 1996.
WITNESSETH:
WHEREAS, PIMCO Funds: Equity Advisors Series, formerly PIMCO Advisors
Institutional Funds, (the "Trust") is authorized to issue shares of beneficial
interest in separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust currently consists of thirteen series designated as the
NFJ Equity Income Fund, NFJ Diversified Low P/E Fund, Parametric Enhanced Equity
Fund, Cadence Capital Apreciation Fund, NFJ Small Cap Value Fund, Cadence Small
Cap Growth Fund, Balanced Fund, Cadence Mid Cap Growth Fund, Cadence Micro Cap
Growth Fund, Columbus Circle Investors Core Equity Fund, Columbus Circle
Investors Mid Cap Equity Fund, Blairlogie Emerging Markets Fund and Blairlogie
International Active Fund (each a "Fund"); and
WHEREAS, the Trust has retained PIMCO Advisors to render management
services to the Funds pursuant to an Investment Advisory Agreement dated as of
November 15, 1994, and such Agreement authorizes the Adviser to engage Portfolio
Managers to discharge the Adviser's responsibilities with respect to the
management of the Funds; and
WHEREAS, the Adviser has retained NFJ to furnish investment advisory
services to the Equity Income Fund, Diversified Low P/E Fund, and Small Cap
Value Fund pursuant to the Agreement; and
WHEREAS, PIMCO Advisors desires to retain NFJ as Portfolio Manager for the
Common Stock Segment of the Balanced Fund; and
WHEREAS, NFJ is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby appoints NFJ to act as Portfolio Manager with respect to
the
28
<PAGE>
Common Stock Segment of the Balanced Fund, which, in addition to the
Equity Income Fund, the Small Cap Value Fund, and the Diversified Low
P/E Fund shall each be deemed one of the Funds under the Agreement as
provided in paragraph one (1), subject to the terms and conditions as
specified in the Agreement, including paragraph five (5),
"Compensation," as amended by this Addendum.
------------
2. Paragraph five (5) ("Compensation") of the Agreement is amended by
------------
adding the following underscored language to paragraph five (5), which
is restated as follows:
"5. Compensation. For the services provided, the Adviser will
------------
pay the Portfolio Manager a fee accrued and computed daily and, payable
monthly, based on the average daily net assets of the Fund at the annual
rate of .45% of the average daily net assets of each of the Equity
Income Fund, the Diversified Low P/E Fund and the Common Stock Segment
of the Balanced Fund allocated to NFJ, and at the annual rate of .60% of
the average daily net assets of the Small Cap Value Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO ADVISORS, L.P.
________________________ By: ________________________________
ATTEST Name: William D. Cvengros
Name: Title: President and CEO
Title:
NFJ INVESTMENT GROUP
_______________________ By: ________________________________
ATTEST Name: John L. Johnson
Name: Title: Managing Director
Title:
29
<PAGE>
EXHIBIT 99.B5(b)(iv)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] PORTFOLIO MANAGEMENT AGREEMENT
WITH CADENCE CAPITAL MANAGEMENT
<PAGE>
EXHIBIT 99.B5(b)(iv)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of November, 1994 between PIMCO Advisors L.P.
("Adviser"), a limited partnership, and Cadence Capital Management ("Portfolio
Manager"), a general partnership.
WHEREAS, PIMCO Advisors Institutional Funds (the "Trust") is registered
with the Securities and Exchange Commission ("SEC") as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in a
separate portfolio; and
WHEREAS, the Trust has established a multiple series, including operational
series or series that are expected to be operational that are designated as the
Money Market Fund, the PIMCO Managed Bond and Income Fund, the Utility Stock
Fund, 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
<PAGE>
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 Columbus Circle Investors Small Cap Equity Fund, the Parametric
Enhanced Equity Fund, the Parametric International Equity Fund, the Blairlogie
Emerging Markets Fund, the Blairlogie International Active Fund, and the
Balanced Fund, such series together with any other series subsequently
established by the Trust, with respect to which the Trust desires to retain the
Portfolio Manager to render investment advisory services hereunder, and with
respect to which the Portfolio Manager is willing to do so, being herein
collectively referred to also as the "Funds"; and
WHEREAS, the Portfolio Manager is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Trust has retained the Adviser to render management services
to the Funds pursuant to an Investment Advisory Agreement dated as of 11/15/94,
and such Agreement authorizes the Adviser to engage Portfolio Managers to
discharge the Adviser's responsibilities with respect to the management of the
Funds; and
2
<PAGE>
WHEREAS, the Adviser desires to retain the Portfolio Manager to furnish
investment advisory services to one or more of the Funds of the Trust, and the
Portfolio Manager is willing to furnish such services to such Funds and the
Adviser in the manner and on the terms hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Adviser and the Portfolio
Manager as follows:
1. Appointment. The Adviser hereby appoints Cadence Capital Management to
-----------
act as Portfolio Manager to Cadence Capital Appreciation Fund, the Cadence Mid
Cap Growth Fund, the Cadence Micro Capo Growth Fund, and the Cadence Small Cap
Growth Fund(the "Funds")for the periods and on the terms set forth in this
Agreement. The Portfolio Manager accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
In the event the Adviser wishes to retain the Portfolio Manager to render
investment advisory services to one or more series other than the Funds, the
Adviser shall notify the Portfolio Manager in writing. If the Portfolio Manager
is willing to render such services, it shall notify the
3
<PAGE>
Adviser in writing, whereupon such series shall become a Fund hereunder, and be
subject to this Agreement.
2. Portfolio Management Duties. Subject to the supervision of the Trust's
---------------------------
Board of Trustees and the Adviser, the Portfolio Manager will provide a
continuous investment program for the Funds and determine the composition of the
assets of the Funds, including determination of the purchase, retention, or sale
of the securities, cash, and other investments for the Funds. The Portfolio
Manager will provide investment research and analysis, which may consist of
computerized investment methodology, and will conduct a continuous program of
evaluation, investment, sales, and reinvestment of the Funds' assets by
determining the securities and other investments that shall be purchased,
entered into, sold, closed, or exchanged for the Funds, when these transactions
should be executed, and what portion of the assets of the Funds should be held
in the various securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform such services on
behalf of each Fund. To the extent permitted by the investment policies of the
Funds, the Portfolio Manager shall make decisions for the Fund as to foreign
currency matters and make determinations as to the retention or
4
<PAGE>
disposition of foreign currencies or securities or other instruments denominated
in foreign currencies, or derivative instruments based upon foreign currencies,
including forward foreign currency contracts and options and futures on foreign
currencies and shall execute and perform the same on behalf of each Fund. The
Portfolio Manager will provide the services under this Agreement in accordance
with the Funds' investment objective or objectives, investment policies, and
investment restrictions as stated in the Trust's Registration Statement filed on
form N-1A with the SEC, as supplemented or amended from time to time, copies of
which shall be sent to the Portfolio Manager by the Adviser. In performing these
duties, the Portfolio Manager:
(a) Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and regulations,
with any applicable procedures adopted by the Trust's Board of Trustees,
and with the provisions of the Trust's Registration Statement filed on form
N-1A, as supplemented or amended from time to time.
(b) Shall use reasonable efforts to manage the Funds so that they qualify
as regulated investment company under Subchapter M of the Internal Revenue
code.
5
<PAGE>
(c) Is responsible, in connection with its responsibilities under this
Section 2, for decisions to buy and sell securities and other investments
for the Funds, for broker-dealer and futures commission merchant ("FCM")
selection, and for negotiation of commission rates. The Portfolio
Manager's primary consideration in effecting a security or other
transaction will be to obtain the best execution for the Funds, taking into
account the factors specified in the Prospectus and Statement of Additional
Information for the Trust, as they may be amended or supplemented from time
to time. Subject to such policies as the Board of Trustees may determine
and consistent with Section 28(e) of the Securities Exchange Act of 1934,
the Portfolio Manager shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer, acting as
agent, for effecting a portfolio transaction at a price in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction, if the Portfolio Manager determines in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage
6
<PAGE>
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Portfolio Manager's overall
responsibilities with respect to the Funds and to its other clients as to
which it exercises investment discretion. To the extent consistent with
these standards, and in accordance with Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-(T) thereunder, and subject to any other
applicable laws and regulations, the Portfolio Manager is further
authorized to allocate the orders placed by it on behalf of the Funds to
the Portfolio Manager if it is registered as a broker or dealer with the
SEC, to its affiliate that is registered as a broker or dealer with the
SEC, or to such brokers and dealers that also provide research or
statistical research and material, or other services to the Funds or the
Portfolio Manager. Such allocation shall be in such amounts and proportions
as the Portfolio Manager shall determine consistent with the above
standards, and, upon request, the Portfolio Manager will report on said
allocation to the Adviser and Board of Trustees of the Trust, indicating
the brokers or dealers to which such allocations have been made and the
basis therefor.
7
<PAGE>
(d) May, on occasions when the purchase or sale of a security is deemed to
be in the best interest of a Fund as well as any other investment
advisory clients, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to
be sold or purchased with those of its other clients where such
aggregation is not inconsistent with the policies set forth in the
Registration Statement. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Portfolio Manager in a manner that is fair and
equitable in the judgment of the Portfolio Manager in the exercise of
its fiduciary obligations to the Trust and to such other clients.
(e) Will, in connection with the purchase or sale of securities for each
Fund, arrange for the transmission to the custodian for the Trust on a
daily basis, such confirmation, trade tickets, and other documents and
information, including, but not limited to, Cusip, Sedol, or other
numbers that identify securities to be purchased or sold on behalf of
the Fund, as may be reasonably necessary
8
<PAGE>
to enable the custodian to perform its administrative and recordkeeping
responsibilities with respect to the Fund, and, with respect to
portfolio securities to be purchased or sold through the Depository
Trust Company, will arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian.
(f) The Portfolio Manager will assist the custodian and recordkeeping agent
for the Trust in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the
Trust, the value of any portfolio securities or other assets of the
Fund for which the custodian and recordkeeping agent seeks assistance
from the Portfolio Manager or identifies for review by the Portfolio
Manager.
(g) Will make available to the Trust and Adviser, promptly upon request,
any of the Funds' investment records and ledgers as are necessary to
assist the Trust to comply with requirements of the 1940 Act and the
Investment Advisers Act of 1940, as well as other applicable laws, and
will furnish to regulatory authorities having the requisite
9
<PAGE>
authority any information or reports in connection with such services
which may be requested in order to ascertain whether the operations of
the Trust are being conducted in a manner consistent with applicable
laws and regulations.
(h) Will regularly report to the Trust's Board of Trustees on the
investment program for the Fund and the issuers and securities
represented in the Funds, and will furnish the Trust's Board of
Trustees with respect to the Funds such periodic and special reports as
the Trustees may reasonably request.
(i) The Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the
Portfolio Manager has not, to the best of the Portfolio Manager's
knowledge:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor involving the purchase or sale of any security or
arising out of such person's conduct as an underwriter, broker,
dealer, investment adviser, municipal securities dealer,
government
10
<PAGE>
securities broker, government securities dealer, transfer agent, or
entity or person required to be registered under the Commodity
Exchange Act, or as an affiliated person, salesman, or employee of any
investment company, bank, insurance company, or entity or person
required to be registered under the Commodity Exchange Act; or
(ii) been permanently or temporarily enjoined by reason of any
misconduct, by order, judgment, or decree of any court of competent
jurisdiction from acting as an underwriter, broker, dealer, investment
adviser, municipal securities dealer, government securities broker,
government securities dealer, transfer agent, or entity or person
required to be registered under the Commodity Exchange Act, or as an
affiliated person, salesman or employee of any investment company,
bank, insurance company, or entity or person required to be registered
under the Commodity Exchange Act, or from engaging in or continuing
any conduct or practice in connection with any such activity or in
connection with the purchase or sale of any security.
11
<PAGE>
3. Disclosure about Portfolio Manager. The Portfolio Manager has reviewed
----------------------------------
the initial Registration Statement for the Trust filed with the SEC and
represents and warrants that, with respect to the disclosure about the Portfolio
Manager or information relating, directly or indirectly, to the Portfolio
Manager, such Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make the statements
contained therein not misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under the Advisers Act
and a duly registered investment adviser in all states in which the Portfolio
Manager is required to be registered. The Adviser has received a current copy
of the Portfolio Manager's Uniform Application for Investment Adviser
Registration on Form ADV, as filed with the SEC. The Portfolio Manager agrees
to provide the Adviser with current copies of the Portfolio Manager's Form ADV,
and any supplements or amendments thereto, as filed with the SEC.
4. Expenses. During the term of this Agreement, the Portfolio Manager will
--------
pay all expenses incurred by it and its staff and for their activities in
connection with its
12
<PAGE>
services under this Agreement. The Portfolio Manager shall not be responsible
for any of the following:
(a) Expenses of all audits by the Trust's independent public accountants;
(b) Expenses of the Trust's transfer agent, registrar, dividend disbursing
agent, and shareholder recordkeeping services;
(c) Expenses of the Trust's custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of the
Funds' net assets;
(e) Expenses of obtaining Portfolio Activity Reports for each Fund;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who
13
<PAGE>
are not officers, directors, stockholders, or employees of the Adviser or
its subsidiaries or affiliates;
(h) Taxes, if any, levied against the Trust or any of its Funds;
(i) Brokerage fees and commissions in connection with the purchase and sale
of portfolio securities for the Funds;
(j) Costs, including the interest expenses, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's shareholders, the
preparation and mailings of prospectuses and reports of the Trust to its
shareholders, the filing of reports with regulatory bodies, the maintenance
of the Trust's existence, and the registration of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
14
<PAGE>
(m) Costs of printing stock certificates representing shares of the Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate
thereof;
(o) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise including expenses
incurred in connection with litigation, proceedings and other claims and
the legal obligations of the Trust to indemnify its trustees, officers,
employees, shareholders, distributors, and agents with respect thereto; and
(r) Organizational and offering expenses and, if applicable, reimbursement
(with interest) of underwriting discounts and commissions.
5. Compensation. For the services provided, the Adviser will pay the
------------
Portfolio Manager a fee accrued and
15
<PAGE>
computed daily and, payable monthly, based on the average daily net assets of
the Fund at the annual rate of .45% of the average daily net assets of the
Cadence Capital Appreciation and Cadence Mid Cap Growth Funds, at the annual
rate of 1.25% of the average daily net assets of the Cadence Micro Cap Growth
Fund, and at the annual rate of 1.00% of the average daily net assets of the
Cadence Small Cap Growth Fund.
6. Seed Money. The Adviser agrees that the Portfolio Manager shall not be
----------
responsible for providing money for the initial capitalization of the Trust or
the Fund.
7. Compliance.
-----------
(a) The Portfolio Manager agrees that it shall immediately notify the
Adviser and the Trust in the event (i) that the SEC has censured the
Portfolio Manager; placed limitations upon its activities, functions or
operations; suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result in any of
these actions, and (ii) upon having a reasonable basis for believing that a
Fund has ceased to qualify or might not qualify as a regulated investment
company
16
<PAGE>
under Subchapter M of the Internal Revenue Code. The Portfolio Manager
further agrees to notify the Adviser and the Trust immediately of any
material fact known to the Portfolio Manager respecting or relating to the
Portfolio Manager that is not contained in the Registration Statement or
prospectus for the Trust, or any amendment or supplement thereto, or of any
statement contained therein that becomes untrue in any material respect.
(b) The Adviser agrees that it shall immediately notify the Portfolio
Manager in the event (i) that the SEC has censured the Adviser or the
Trust; placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Adviser's registration as an
investment adviser; or has commenced proceedings or an investigation that
may result in any of these actions, and (ii) upon having a reasonable basis
for believing that a Fund has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code.
8. Independent Contractor. The Portfolio Manager shall for all purposes
----------------------
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided
17
<PAGE>
herein or authorized by the Adviser from time to time, have no authority to act
for or represent the Adviser in any way or otherwise be deemed its agent. The
Portfolio Manager understands that unless expressly provided herein or
authorized from time to time by the Trust, the Portfolio Manager shall have no
authority to act for or represent the Trust in any way or otherwise be deemed
the Trust's agent.
9. Books and Records. In compliance with the requirements of Rule 31a-3
-----------------
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Funds are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Adviser's request, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. The Portfolio Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained Rule 31a-1 under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
10. Cooperation. Each party to this Agreement agrees to cooperate with each
-----------
other party and with all appropriate governmental authorities having the
requisite jurisdiction
18
<PAGE>
(including, but not limited to, the SEC) in connection with any investigation or
inquiry relating to this Agreement or the Trust.
11. Services Not Exclusive. It is understood that the services of the
----------------------
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Funds) or from engaging in
other activities.
12. Liability. Except as provided in Section 13 and as may otherwise be
---------
required by the 1940 Act or the rules thereunder or other applicable law, the
Adviser agrees that the Portfolio Manager, any affiliated person of the
Portfolio Manager, and each person, if any, who, within the meaning of Section
15 of the Securities Act of 1933 (the "1933 Act") controls the Portfolio Manager
shall not be liable for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or arising out of any
services rendered under this Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the Portfolio Manager's
19
<PAGE>
duties, or by reason of reckless disregard of the Portfolio Manager's
obligations and duties under this Agreement.
13. Indemnification. The Portfolio Manager agrees to indemnify and hold
---------------
harmless, the Adviser, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if
any who, within the meaning of Section 15 of the 1933 Act, controls
("controlling person") the Adviser (collectively, "PM Indemnified Persons")
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses), to which the Adviser or such affiliated
person or controlling person may become subject under the 1933 Act, 1940 Act,
the Advisers Act, under any other statute, at common law or otherwise, arising
out of the Portfolio Manager's responsibilities to the Trust which (i) may be
based upon any misfeasance, malfeasance, or nonfeasance by the Portfolio
Manager, any of its employees or representatives, or any affiliate of or any
person acting on behalf of the Portfolio Manager (other than a PM Indemnified
Person), or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering the Shares of the Trust or any Fund, or any amendment thereof or any
supplement thereto, or the omission or
20
<PAGE>
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such a statement
or omission was made in reliance upon information furnished to the Adviser, the
Trust, or any affiliated person of the Trust by the Portfolio Manager or any
affiliated person of the Portfolio Manager (other than a PM Indemnified Person);
provided, however, that in no case is the Portfolio Manager's indemnity in favor
of the Adviser or any affiliated person or controlling person of the Adviser
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of his reckless
disregard of obligation and duties under this Agreement.
The Adviser agrees to indemnify and hold harmless the Portfolio Manager,
any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act of
the Portfolio Manager and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls the Portfolio Manager (collectively,
"Adviser Indemnified Persons") against any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses) to which the
Portfolio Manager or such affiliated person or controlling person may
21
<PAGE>
become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any
other statute, at common law or otherwise, arising out of the Adviser's
responsibilities as adviser of the Trust which (i) may be based upon any
misfeasance, malfeasance, or nonfeasance by the Adviser, any of its employees or
representatives or any affiliate of or any person acting on behalf of the
Adviser (other than an Adviser Indemnified Person) or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering Shares of the Trust or any Fund,
or any amendment thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, unless such statement or
omission was made in reliance upon written information furnished to the Adviser
or any affiliated person of the Adviser by the Portfolio Manager or any
affiliated person of the Portfolio Manager (other than an Adviser Indemnified
Person); provided however, that in no case is the indemnity of the Adviser in
favor of the Portfolio Manager, or any affiliated person or controlling person
of the Portfolio Manager deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the
22
<PAGE>
performance of his duties, or by reason of his reckless disregard of obligations
and duties under this Agreement.
14. Duration and Termination. This Agreement shall take effect as of the
------------------------
"Closing Date" as that term is defined in the Agreement and Plan of
Consolidation for PIMCO Advisors L.P. dated November 15, 1994, and shall remain
in effect for two years from such date and continue thereafter on an annual
basis with respect to a Fund; provided that such annual continuance is
specifically approved at least annually (a) by the vote of a majority of the
Board of Trustees of the Trust, or (b) by the vote of a majority of the
outstanding voting shares of that Fund, and provided that continuance is also
approved by the vote of a majority of the Board of Trustees of the Trust who are
not parties to this Agreement or "interested persons" (as such term is defined
in the 1940 Act) of the Trust, the Adviser, or the Portfolio Manager, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may not be materially amended without a majority vote of the
outstanding shares (as defined in the 1940 Act) of the Fund. This Agreement may
be terminated:
(a) by the Trust at any time with respect to the services provided by the
Portfolio Manager, without the
23
<PAGE>
payment of any penalty, by vote of a majority of the entire Board of
Trustees of the Trust or by a vote of a majority of the outstanding voting
shares of the Trust or, with respect to a particular Fund, by vote of a
majority of the outstanding voting shares of such Fund, on 60 days' written
notice to the Portfolio Manager;
(b) by the Portfolio Manager at any time, without the payment of any
penalty, upon 60 days' written notice to the Trust.
(c) by the Adviser at any time, without the payment of any penalty, upon 60
days' written notice to the Portfolio Manager.
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of a particular Fund shall be
effective to continue this Agreement with respect to such Fund notwithstanding
(a) that this Agreement has not been approved by the holders of a majority of
the outstanding shares of any other Fund or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding shares of the Trust,
unless such approval shall be required by any other applicable law or otherwise.
This Agreement
24
<PAGE>
will terminate automatically with respect to the services provided by the
Portfolio Manager in event of its assignment, as that term is defined in the
1940 Act, by the Portfolio Manager.
15. Use of Name.
------------
[Deleted]
16. Agreement and Declaration of Trust. A copy of the Agreement and
----------------------------------
Declaration of Trust for the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. The Agreement and Declaration of Trust has been
executed on behalf of the Trust by a Trustee of the Trust in his capacity as
Trustee of the Trust and not individually. The obligations of this Agreement
shall be binding upon the assets and property of the Trust and shall not be
binding upon any Trustee, officer, or shareholder of the Trust individually.
17. Miscellaneous.
--------------
(a) This Agreement shall be governed by the laws of California, provided
that nothing herein shall be construed in a manner inconsistent with the
1940 Act,
25
<PAGE>
the Investment Advisers Act of 1940 or rules or orders of the SEC
thereunder.
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable. To the extent that any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise with regard to any party hereunder,
such provisions with respect to other parties hereto shall not be affected
thereby.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PIMCO ADVISORS L.P.
______________________ By: __________________________
Attest: Title: Title:
_______________________ By: __________________________
Attest: Title: Title:
CADENCE CAPITAL MANAGEMENT
_______________________ By: ___________________________
Attest: Title: Title:
27
<PAGE>
EX-99.B5(b)(iv)
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
WITH CADENCE CAPITAL MANAGEMENT
The Portfolio Management Agreement, made the 15/th/ day of November, 1994
between PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser"), a limited
partnership, and Cadence Capital Management ("Cadence"or "Portfolio Manager"), a
general partnership, (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this _____
day of _________ 1996.
WITNESSETH:
WHEREAS, PIMCO Funds: Equity Advisors Series, formerly PIMCO Advisors
Institutional Funds, (the "Trust") is authorized to issue shares of beneficial
interest in separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust currently consists of thirteen series designated as the
NFJ Equity Income Fund, NFJ Diversified Low P/E Fund, Parametric Enhanced Equity
Fund, Cadence Capital Apreciation Fund, NFJ Small Cap Value Fund, Cadence Small
Cap Growth Fund, Balanced Fund, Cadence Mid Cap Growth Fund, Cadence Micro Cap
Growth Fund, Columbus Circle Investors Core Equity Fund, Columbus Circle
Investors Mid Cap Equity Fund, Blairlogie Emerging Markets Fund and Blairlogie
International Active Fund (each a "Fund"); and
WHEREAS, the Trust has retained PIMCO Advisors to render management
services to the Funds pursuant to an Investment Advisory Agreement dated as of
November 15, 1994, and such Agreement authorizes the Adviser to engage Portfolio
Managers to discharge the Adviser's responsibilities with respect to the
management of the Funds; and
WHEREAS, the Adviser has retained Cadence to Furnish investment advisory
services to the Capital Appreciation Fund, the Small Cap Growth Fund, the Mid
Cap Growth Fund, and the Micro Cap Growth Fund pursuant to the Agreement; and
WHEREAS, PIMCO Advisors desires to retain Cadence as Portfolio Manager for
the Common Stock Segment of the Balanced Fund; and
WHEREAS, Cadence is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in hereby appoints
Cadence to act as Portfolio the Agreement, the Trust Manager with
respect to the
28
<PAGE>
Common Stock Segment of the Balanced Fund, which, in addition to the
Capital Appreciation Fund, the Small Cap Growth Fund, the Mid Cap
Growth Fund, and the Micro Cap Growth Fund, shall each be deemed one
of the Funds under the Agreement as provided in paragraph one (1),
subject to the terms and conditions as specified in the Agreement,
including paragraph five (5), "Compensation," as amended by this
------------
Addendum.
2. Paragraph five (5) ("Compensation") of the Agreement is amended by
------------
adding the following underscored language to paragraph five (5), which
is restated as follows:
"5. Compensation. For the services provided, the Adviser will
------------
pay the Portfolio Manager a fee accrued and computed daily and,
payable monthly, based on the average daily net assets of the Fund
at the annual rate of .45% of the average daily net assets of each of
the Capital Common Stock Appreciation Fund, the Mid Cap Growth Fund and
Common Stock Segment of the Balanced Fund allocated to Cadence, and at
the annual rate of 1.25% of daily net assets of the Micro Cap Growth
Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO ADVISORS, L.P.
________________________ By: ________________________________
ATTEST Name: William D. Cvengros
Name: Title: President and CEO
Title:
CADENCE CAPITAL MANAGEMENT
_______________________ By: ________________________________
ATTEST Name: David B. Breed
Name: Title: CEO and Managing Director
Title:
29
<PAGE>
EX-99.B5(b)(v)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] PORTFOLIO MANAGEMENT AGREEMENT WITH PARAMETRIC PORTFOLIO ASSOCIATES
<PAGE>
EXHIBIT 99.B5(b)(v)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of November, 1994 between PIMCO Advisors L.P.
("Adviser"), a limited partnership, and Parametric Portfolio Associates
("Portfolio Manager"), a general partnership.
WHEREAS, PIMCO Advisors Institutional Funds (the "Trust") is registered
with the Securities and Exchange Commission ("SEC") as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in a
separate portfolio; and
WHEREAS, the Trust has established a multiple series, including operational
series or series that are expected to be operational that are designated as the
Money Market Fund, the PIMCO Managed Bond and Income Fund, the Utility Stock
Fund, 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
<PAGE>
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 Columbus Circle Investors Small Cap Equity Fund, the Parametric
Enhanced Equity Fund, the Parametric International Equity Fund, the Blairlogie
Emerging Markets Fund, the Blairlogie International Active Fund, and the
Balanced Fund, such series together with any other series subsequently
established by the Trust, with respect to which the Trust desires to retain the
Portfolio Manager to render investment advisory services hereunder, and with
respect to which the Portfolio Manager is willing to do so, being herein
collectively referred to also as the "Funds"; and
WHEREAS, the Portfolio Manager is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Trust has retained the Adviser to render management services
to the Funds pursuant to an Investment Advisory Agreement dated as of 11/15/94,
and such Agreement authorizes the Adviser to engage Portfolio Managers to
discharge the Adviser's responsibilities with respect to the management of the
Funds; and
2
<PAGE>
WHEREAS, the investment objective of the Balanced Fund is to seek total
return, and the Fund will seek its objective by investing in the asset classes
of common stock, fixed income securities, and money market instruments, and the
percentage of the Fund's assets invested in these asset classes will vary from
time to time; and
WHEREAS, pursuant to the Investment Advisory Agreement, the Adviser will
allocate the Balanced Fund's assets among the asset classes of common stock,
fixed income securities, and money market instruments; and
WHEREAS, the Adviser desires to retain the Portfolio Manager to furnish
investment advisory services to one or more of the Funds of the Trust, and the
Portfolio Manager is willing to furnish such services to such Funds and the
Adviser in the manner and on the terms hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Adviser and the Portfolio
Manager as follows:
1. Appointment. The Adviser hereby appoints Parametric Portfolio
-----------
Associates to act as Portfolio Manager to the Parametric Enhanced Equity Fund,
Parametric International
3
<PAGE>
Equity Fund, and the portion of the assets of the Balanced Fund allocated by the
Adviser for investment in common stock (the "Funds") for the periods and on the
terms set forth in this Agreement. The Portfolio Manager accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Adviser wishes to retain the Portfolio Manager to render
investment advisory services to one or more series other than the Funds, the
Adviser shall notify the Portfolio Manager in writing. If the Portfolio Manager
is willing to render such services, it shall notify the Adviser in writing,
whereupon such series shall become a Fund hereunder, and be subject to this
Agreement.
2. Portfolio Management Duties. Subject to the supervision of the Trust's
---------------------------
Board of Trustees and the Adviser, the Portfolio Manager will provide a
continuous investment program for the Funds and determine the composition of the
assets of the Funds, including determination of the purchase, retention, or sale
of the securities, cash, and other investments for the Funds. The Portfolio
Manager will provide investment research and analysis, which may consist of
computerized investment methodology, and will conduct a continuous program of
4
<PAGE>
evaluation, investment, sales, and reinvestment of the Funds' assets by
determining the securities and other investments that shall be purchased,
entered into, sold, closed, or exchanged for the Funds, when these transactions
should be executed, and what portion of the assets of the Funds should be held
in the various securities and other investments in which it may invest, and the
Portfolio Manager is hereby authorized to execute and perform such services on
behalf of each Fund. To the extent permitted by the investment policies of the
Funds, the Portfolio Manager shall make decisions for the Fund as to foreign
currency matters and make determinations as to the retention or disposition of
foreign currencies or securities or other instruments denominated in foreign
currencies, or derivative instruments based upon foreign currencies, including
forward foreign currency contracts and options and futures on foreign currencies
and shall execute and perform the same on behalf of each Fund. The Portfolio
Manager will provide the services under this Agreement in accordance with the
Funds' investment objective or objectives, investment policies, and investment
restrictions as stated in the Trust's Registration Statement filed on form N-1A
with the SEC, as supplemented or amended from time to time, copies of which
shall be sent to the Portfolio Manager by the Adviser. In performing these
duties, the Portfolio Manager:
5
<PAGE>
(a) Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and regulations,
with any applicable procedures adopted by the Trust's Board of Trustees,
and with the provisions of the Trust's Registration Statement filed on form
N-1A, as supplemented or amended from time to time.
(b) Shall use reasonable efforts to manage the Funds so that they qualify
as regulated investment company under Subchapter M of the Internal Revenue
code.
(c) Is responsible, in connection with its responsibilities under this
Section 2, for decisions to buy and sell securities and other investments
for the Funds, for broker-dealer and futures commission merchant ("FCM")
selection, and for negotiation of commission rates. The Portfolio
Manager's primary consideration in effecting a security or other
transaction will be to obtain the best execution for the Funds, taking into
account the factors specified in the Prospectus and Statement of Additional
Information for the Trust, as they may be amended or supplemented from time
to time. Subject to such policies as the
6
<PAGE>
Board of Trustees may determine and consistent with Section 28(e) of the
Securities Exchange Act of 1934, the Portfolio Manager shall not be deemed
to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Funds to
pay a broker or dealer, acting as agent, for effecting a portfolio
transaction at a price in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction, if the
Portfolio Manager determines in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Portfolio Manager's overall responsibilities
with respect to the Funds and to its other clients as to which it exercises
investment discretion. To the extent consistent with these standards, and
in accordance with Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-(T) thereunder, and subject to any other applicable laws and
regulations, the Portfolio Manager is further authorized to allocate the
orders placed by it on behalf of the Funds to the Portfolio Manager if it
is registered as a broker or dealer with the SEC, to its
7
<PAGE>
affiliate that is registered as a broker or dealer with the SEC, or to such
brokers and dealers that also provide research or statistical research and
material, or other services to the Funds or the Portfolio Manager. Such
allocation shall be in such amounts and proportions as the Portfolio
Manager shall determine consistent with the above standards, and, upon
request, the Portfolio Manager will report on said allocation to the
Adviser and Board of Trustees of the Trust, indicating the brokers or
dealers to which such allocations have been made and the basis therefor.
(d) May, on occasions when the purchase or sale of a security is deemed to
be in the best interest of a Fund as well as any other investment advisory
clients, to the extent permitted by applicable laws and regulations, but
shall not be obligated to, aggregate the securities to be sold or purchased
with those of its other clients where such aggregation is not inconsistent
with the policies set forth in the Registration Statement. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the Portfolio Manager
in
8
<PAGE>
the exercise of its fiduciary obligations to the Trust and to such other
clients.
(e) Will, in connection with the purchase or sale of securities for each
Fund, arrange for the transmission to the custodian for the Trust on a
daily basis, such confirmation, trade tickets, and other documents and
information, including, but not limited to, Cusip, Sedol, or other numbers
that identify securities to be purchased or sold on behalf of the Fund, as
may be reasonably necessary to enable the custodian to perform its
administrative and recordkeeping responsibilities with respect to the Fund,
and, with respect to portfolio securities to be purchased or sold through
the Depository Trust Company, will arrange for the automatic transmission
of the confirmation of such trades to the Trust's custodian.
(f) The Portfolio Manager will assist the custodian and recordkeeping agent
for the Trust in determining or confirming, consistent with the procedures
and policies stated in the Registration Statement for the Trust, the value
of any portfolio securities or other assets of the Fund for which the
custodian and recordkeeping agent seeks assistance from the Portfolio
Manager or identifies for review by the Portfolio Manager.
9
<PAGE>
(g) Will make available to the Trust and Adviser, promptly upon request,
any of the Funds' investment records and ledgers as are necessary to assist
the Trust to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940, as well as other applicable laws, and will furnish to
regulatory authorities having the requisite authority any information or
reports in connection with such services which may be requested in order to
ascertain whether the operations of the Trust are being conducted in a
manner consistent with applicable laws and regulations.
(h) Will regularly report to the Trust's Board of Trustees on the
investment program for the Fund and the issuers and securities represented
in the Funds, and will furnish the Trust's Board of Trustees with respect
to the Funds such periodic and special reports as the Trustees may
reasonably request.
(i) The Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the Portfolio
Manager has not, to the best of the Portfolio Manager's knowledge:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor involving the purchase
10
<PAGE>
or sale of any security or arising out of such person's conduct as an
underwriter, broker, dealer, investment adviser, municipal securities
dealer, government securities broker, government securities dealer,
transfer agent, or entity or person required to be registered under
the Commodity Exchange Act, or as an affiliated person, salesman, or
employee of any investment company, bank, insurance company, or entity
or person required to be registered under the Commodity Exchange Act;
or
(ii) been permanently or temporarily enjoined by reason of any
misconduct, by order, judgment, or decree of any court of competent
jurisdiction from acting as an underwriter, broker, dealer, investment
adviser, municipal securities dealer, government securities broker,
government securities dealer, transfer agent, or entity or person
required to be registered under the Commodity Exchange Act, or as an
affiliated person, salesman or employee of any investment company,
bank, insurance company, or entity or person required to be registered
under the Commodity Exchange Act, or from engaging in or
11
<PAGE>
continuing any conduct or practice in connection with any such
activity or in connection with the purchase or sale of any security.
3. Disclosure about Portfolio Manager. The Portfolio Manager has reviewed
----------------------------------
the initial Registration Statement for the Trust filed with the SEC and
represents and warrants that, with respect to the disclosure about the Portfolio
Manager or information relating, directly or indirectly, to the Portfolio
Manager, such Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make the statements
contained therein not misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under the Advisers Act
and a duly registered investment adviser in all states in which the Portfolio
Manager is required to be registered. The Adviser has received a current copy
of the Portfolio Manager's Uniform Application for Investment Adviser
Registration on Form ADV, as filed with the SEC. The Portfolio Manager agrees
to provide the Adviser with current copies of the Portfolio Manager's Form ADV,
and any supplements or amendments thereto, as filed with the SEC.
12
<PAGE>
4. Expenses. During the term of this Agreement, the Portfolio Manager will
--------
pay all expenses incurred by it and its staff and for their activities in
connection with its services under this Agreement. The Portfolio Manager shall
not be responsible for any of the following:
(a) Expenses of all audits by the Trust's independent public accountants;
(b) Expenses of the Trust's transfer agent, registrar, dividend disbursing
agent, and shareholder recordkeeping services;
(c) Expenses of the Trust's custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of the
Funds' net assets;
(e) Expenses of obtaining Portfolio Activity Reports for each Fund;
(f) Expenses of maintaining the Trust's tax records;
13
<PAGE>
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Adviser or its subsidiaries or
affiliates;
(h) Taxes, if any, levied against the Trust or any of its Funds;
(i) Brokerage fees and commissions in connection with the purchase and sale
of portfolio securities for the Funds;
(j) Costs, including the interest expenses, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's shareholders, the
preparation and mailings of prospectuses and reports of the Trust to its
shareholders, the filing of reports with regulatory bodies, the maintenance
of the Trust's existence, and the registration of shares with federal and
state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
14
<PAGE>
(m) Costs of printing stock certificates representing shares of the Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate
thereof;
(o) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise including expenses
incurred in connection with litigation, proceedings and other claims and
the legal obligations of the Trust to indemnify its trustees, officers,
employees, shareholders, distributors, and agents with respect thereto; and
(r) Organizational and offering expenses and, if applicable, reimbursement
(with interest) of underwriting discounts and commissions.
15
<PAGE>
5. Compensation. For the services provided, the Adviser will pay the
------------
Portfolio Manager a fee accrued and computed daily and, payable monthly, based
on the average daily net assets of the Parametric Enhanced Equity Fund, the
Parametric International Equity Fund, and the portion of the assets of the
Balanced Fund allocated by the Adviser for investment in common stock at the
annual rate of .45% of the average daily net assets of each Fund, or, with
respect to the Balanced Fund, of the average daily net assets of the portion of
the Fund allocated by the Adviser for investment in common stock.
6. Seed Money. The Adviser agrees that the Portfolio Manager shall not be
----------
responsible for providing money for the initial capitalization of the Trust or
the Fund.
7. Compliance.
-----------
(a) The Portfolio Manager agrees that it shall immediately notify the
Adviser and the Trust in the event (i) that the SEC has censured the
Portfolio Manager; placed limitations upon its activities, functions or
operations; suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result in any
16
<PAGE>
of these actions, and (ii) upon having a reasonable basis for believing
that a Fund has ceased to qualify or might not qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. The
Portfolio Manager further agrees to notify the Adviser and the Trust
immediately of any material fact known to the Portfolio Manager respecting
or relating to the Portfolio Manager that is not contained in the
Registration Statement or prospectus for the Trust, or any amendment or
supplement thereto, or of any statement contained therein that becomes
untrue in any material respect.
(b) The Adviser agrees that it shall immediately notify the Portfolio
Manager in the event (i) that the SEC has censured the Adviser or the
Trust; placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Adviser's registration as an
investment adviser; or has commenced proceedings or an investigation that
may result in any of these actions, and (ii) upon having a reasonable basis
for believing that a Fund has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Internal Revenue
Code.
17
<PAGE>
8. Independent Contractor. The Portfolio Manager shall for all purposes
----------------------
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Adviser from time to time, have
no authority to act for or represent the Adviser in any way or otherwise be
deemed its agent. The Portfolio Manager understands that unless expressly
provided herein or authorized from time to time by the Trust, the Portfolio
Manager shall have no authority to act for or represent the Trust in any way or
otherwise be deemed the Trust's agent.
9. Books and Records. In compliance with the requirements of Rule 31a-3
-----------------
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Funds are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Adviser's request, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. The Portfolio Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained Rule 31a-1 under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
18
<PAGE>
10. Cooperation. Each party to this Agreement agrees to cooperate with each
-----------
other party and with all appropriate governmental authorities having the
requisite jurisdiction (including, but not limited to, the SEC) in connection
with any investigation or inquiry relating to this Agreement or the Trust.
11. Services Not Exclusive. It is understood that the services of the
----------------------
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Funds) or from engaging in
other activities.
12. Liability. Except as provided in Section 13 and as may otherwise be
---------
required by the 1940 Act or the rules thereunder or other applicable law, the
Adviser agrees that the Portfolio Manager, any affiliated person of the
Portfolio Manager, and each person, if any, who, within the meaning of Section
15 of the Securities Act of 1933 (the "1933 Act") controls the Portfolio Manager
shall not be liable for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or arising out of any
services rendered under this Agreement,
19
<PAGE>
except by reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under this
Agreement.
13. Indemnification. The Portfolio Manager agrees to indemnify and hold
---------------
harmless, the Adviser, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if
any who, within the meaning of Section 15 of the 1933 Act, controls
("controlling person") the Adviser (collectively, "PM Indemnified Persons")
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses), to which the Adviser or such affiliated
person or controlling person may become subject under the 1933 Act, 1940 Act,
the Advisers Act, under any other statute, at common law or otherwise, arising
out of the Portfolio Manager's responsibilities to the Trust which (i) may be
based upon any misfeasance, malfeasance, or nonfeasance by the Portfolio
Manager, any of its employees or representatives, or any affiliate of or any
person acting on behalf of the Portfolio Manager (other than a PM Indemnified
Person), or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering
21
<PAGE>
the Shares of the Trust or any Fund, or any amendment thereof or any supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon
information furnished to the Adviser, the Trust, or any affiliated person of the
Trust by the Portfolio Manager or any affiliated person of the Portfolio Manager
(other than a PM Indemnified Person); provided, however, that in no case is the
Portfolio Manager's indemnity in favor of the Adviser or any affiliated person
or controlling person of the Adviser deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties, or by reason of his reckless disregard of obligation and duties under
this Agreement.
The Adviser agrees to indemnify and hold harmless the Portfolio Manager,
any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act of
the Portfolio Manager and each person, if any, who, within the meaning of
Section 15 of the 1933 Act controls the Portfolio Manager (collectively,
"Adviser Indemnified Persons") against any and all losses, claims, damages,
liabilities or litigation
21
<PAGE>
(including legal and other expenses) to which the Portfolio Manager or such
affiliated person or controlling person may become subject under the 1933 Act,
the 1940 Act, the Advisers Act, under any other statute, at common law or
otherwise, arising out of the Adviser's responsibilities as adviser of the Trust
which (i) may be based upon any misfeasance, malfeasance, or nonfeasance by the
Adviser, any of its employees or representatives or any affiliate of or any
person acting on behalf of the Adviser (other than an Adviser Indemnified
Person) or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering Shares of the Trust or any Fund, or any amendment thereof or any
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, unless such statement or omission was made in reliance
upon written information furnished to the Adviser or any affiliated person of
the Adviser by the Portfolio Manager or any affiliated person of the Portfolio
Manager (other than an Adviser Indemnified Person); provided however, that in no
case is the indemnity of the Adviser in favor of the Portfolio Manager, or any
affiliated person or controlling person of the Portfolio Manager deemed to
protect such person against any liability to which any such
22
<PAGE>
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his duties, or by reason of his
reckless disregard of obligations and duties under this Agreement.
14. Duration and Termination. This Agreement shall take effect as of the
------------------------
"Closing Date" as that term is defined in the Agreement and Plan of
Consolidation for PIMCO Advisors L.P. dated November 15, 1994, and shall remain
in effect for two years from such date and continue thereafter on an annual
basis with respect to a Fund; provided that such annual continuance is
specifically approved at least annually (a) by the vote of a majority of the
Board of Trustees of the Trust, or (b) by the vote of a majority of the
outstanding voting shares of that Fund, and provided that continuance is also
approved by the vote of a majority of the Board of Trustees of the Trust who are
not parties to this Agreement or "interested persons" (as such term is defined
in the 1940 Act) of the Trust, the Adviser, or the Portfolio Manager, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may not be materially amended without a majority vote of the
outstanding shares (as defined in the 1940 Act) of the Fund. This Agreement may
be terminated:
23
<PAGE>
(a) by the Trust at any time with respect to the services provided by the
Portfolio Manager, without the payment of any penalty, by vote of a
majority of the entire Board of Trustees of the Trust or by a vote of a
majority of the outstanding voting shares of the Trust or, with respect to
a particular Fund, by vote of a majority of the outstanding voting shares
of such Fund, on 60 days' written notice to the Portfolio Manager;
(b) by the Portfolio Manager at any time, without the payment of any
penalty, upon 60 days' written notice to the Trust.
(c) by the Adviser at any time, without the payment of any penalty, upon 60
days' written notice to the Portfolio Manager.
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of a particular Fund shall be
effective to continue this Agreement with respect to such Fund notwithstanding
(a) that this Agreement has not been approved by the holders of a majority of
the outstanding shares of any other Fund or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding shares of the Trust,
unless such approval shall be required
24
<PAGE>
by any other applicable law or otherwise. This Agreement will terminate
automatically with respect to the services provided by the Portfolio Manager in
event of its assignment, as that term is defined in the 1940 Act, by the
Portfolio Manager.
15. Use of Name.
------------
[Deleted]
16. Agreement and Declaration of Trust. A copy of the Agreement and
----------------------------------
Declaration of Trust for the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. The Agreement and Declaration of Trust has been
executed on behalf of the Trust by a Trustee of the Trust in his capacity as
Trustee of the Trust and not individually. The obligations of this Agreement
shall be binding upon the assets and property of the Trust and shall not be
binding upon any Trustee, officer, or shareholder of the Trust individually.
17. Miscellaneous.
--------------
(a) This Agreement shall be governed by the laws of California, provided
that nothing herein shall be
25
<PAGE>
construed in a manner inconsistent with the 1940 Act, the Investment
Advisers Act of 1940 or rules or orders of the SEC thereunder.
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable. To the extent that any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise with regard to any party hereunder, such
provisions with respect to other parties hereto shall not be affected
thereby.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PIMCO ADVISORS L.P.
______________________ By: __________________________
Attest: Title:
Title:
_______________________ By: __________________________
Attest: Title:
Title:
PARAMETRIC PORTFOLIO ASSOCIATES
_______________________ By: ___________________________
Attest: Title:
Title:
27
<PAGE>
EX-99.B5(b)(v)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] PORTFOLIO MANAGEMENT AGREEMENTS
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
------------------------------------------
WITH PARAMETRIC PORTFOLIO ASSOCIATES
------------------------------------
The Portfolio Management Agreement, made the 15th day of November, 1994,
between PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser"), a California
limited partnership, and Parametric Portfolio Associates ("Parametric"), a
California corporation, (the "Agreement") is hereby amended by the addition of
the provisions set forth in this Addendum to the Agreement, which is made this
______ day of ______________, 1996.
WITNESSETH:
WHEREAS, PIMCO Funds: Equity Advisors Series, formerly PIMCO Advisors
Institutional Funds, formerly PFAMCo Funds, formerly PFAMCo Fund, (the "Trust")
is authorized to issue shares of beneficial interest in separate series with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Trust currently consists of thirteen series designated as 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 (each a "Fund"); and
WHEREAS, the Trust intends to establish one additional Fund to be
designated as the Parametric Structured Emerging Markets Fund; and
WHEREAS, the Trust has retained PIMCO Advisors to render management
services to
28
<PAGE>
the Funds pursuant to an Investment Advisory Agreement dated as of November 15,
1994, as amended, and such Agreement authorizes the Adviser to engage Portfolio
Managers to discharge the Adviser's responsibilities with respect to the
management of the Funds; and
WHEREAS, the Adviser has retained Parametric to furnish investment advisory
services to the Parametric Enhanced Equity Fund pursuant to the Agreement; and
WHEREAS, pursuant to an Addendum to the Investment Advisory Agreement, the
Trust has retained PIMCO Advisors as Adviser to render management services to
the Parametric Structured Emerging Markets Fund; and
WHEREAS, PIMCO Advisors desires to retain Parametric as Portfolio Manager
for the Parametric Structured Emerging Markets Fund; and
WHEREAS, Parametric is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby appoints Parametric to act as Portfolio Manager with respect to the
Parametric Structured Emerging Markets Fund in addition to the Parametric
Enhanced Equity Fund shall each be deemed one of The Funds under the Agreement
as provided in paragraph one (1), subject to the terms and conditions as
specified in the Agreement, including five (5), "Compensation," as amended by
------------
this Addendum.
2. Paragraph five (5) ("Compensation") of the agreement is amended by
--------------
adding the following language to paragraph five (5), which is restated as
follows:
29
<PAGE>
"5. Compensation. For the services provided, the Adviser will pay
-------------
the Portfolio Manager a fee accrued and computed daily and, payable
monthly, based on the average daily net assets of the Fund at the annual
rate of .45% of the average daily net assets of the Parametric Enhanced
Equity Fund and .00% of the average daily net assets of the Parametric
---
Structured Emerging Markets Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO ADVISORS L.P.
By: ____________________________________
Title:
PARAMETRIC PORTFOLIO ASSOCIATES
By: ____________________________________
Title:
30
<PAGE>
EX-99.B5(c)(i)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] ADMINISTRATION AGREEMENT
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EXHIBIT 99.B5(c)(i)
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made this 16th day of August, 1995 between PIMCO
Advisors Institutional Funds ("Trust"), a Massachusetts business trust, and
Pacific Investment Management Company (the "Administrator" or "Pimco"), a
corporation organized under the laws oF California.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust has established multiple series, including Money Market
Fund, Pimco Managed Bond and Income Fund, 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
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Fund, Parametric Enhanced Equity Fund, Blairlogie Emerging Markets Fund,
Blairlogie International Active Fund, and Balanced Fund (each a "Fund"); and
WHEREAS, the Trust wishes to retain PIMCO to provide administrative and
other services to the Trust with respect to the Funds in the manner and on the
terms hereinafter set forth; and
WHEREAS, PIMCO is willing to furnish such services in the manner and on the
terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints PIMCO as the Administrator to
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provide the administrative and other services with respect to the Funds for the
period and on the terms set forth in this Agreement. The Administrator accepts
such appointment and agrees during such period to render the services herein set
forth for the compensation herein provided.
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In the event the Trust establishes and designates additional series with
respect to which it desires to retain the Administrator to render administrative
and other services hereunder, it shall notify the Administrator in writing. If
the Administrator is willing to render such services, it shall notify the Trust
in writing, whereupon such additional series shall become a Fund hereunder.
2. DUTIES. Subject to the general supervision of the Board of Trustees,
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the Administrator shall provide all organizational, administrative and other
services reasonably necessary for the operation of the Funds other than the
investment advisory services provided by PIMCO Advisors L.P. pursuant to its
Investment Advisory Agreement with the Trust.
(a) Administrative Services. Subject to the general supervision of
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the Board of Trustees, the Administrator shall provide or procure, at the
Administrator's expense, services to include the following: (i) coordinating
matters relating to the operation of the Funds, including any necessary
coordination among the adviser or advisers to the Funds, the custodian, transfer
agent, dividend disbursing agent, and recordkeeping agent (including pricing and
valuation of the Funds), accountants,
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attorneys, and other parties performing services or operational functions for
the Funds; (ii) providing the Funds with the services of a sufficient number of
persons competent to perform such administrative and clerical functions as are
necessary to ensure compliance with federal securities laws, as well as other
applicable laws, and to provide effective administration of the Funds; (iii)
maintaining, or supervising the maintenance by third parties, of such books and
records of the Trust and the Funds as may be required by applicable federal or
state law other than the records and ledgers maintained under the Investment
Advisory Agreement; (iv) preparing or supervising the preparation by third
parties of all federal, state, and local tax returns and reports of the Funds
required by applicable law; (v) preparing, filing, and arranging for the
distribution of proxy materials and periodic reports to shareholders of the
Funds as required by applicable law; (vi) preparing and arranging for the filing
of such registration statements and other documents with the SEC and other
federal and state regulatory authorities as may be required to register the
shares of the Fund and qualify the Trust to do business or as otherwise required
by applicable law; (vii) taking such other action with respect to the Funds as
may be required by applicable law, including, without limitation, the rules and
regulations of the SEC and
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of state securities commissions and other regulatory agencies; and (viii)
providing the Funds with adequate personnel, office space, communications
facilities, and other facilities necessary for the Funds' operations as
contemplated in this Agreement.
(b) Shareholder Services. In addition to the Administrator's
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responsibilities as specified above, subject to the general supervision of the
Board of Trustees, the Administrator, at its own expense, also shall provide,
directly or through persons selected by the Administrator, the Trust and the
Funds with administrative, recordkeeping, and shareholder services reasonably
required by some or all of the shareholders of the Trust's Funds, which may
include some or all of the following services: furnishing sub-accounting
services; maintaining account records (reflecting shares purchased and redeemed,
including the date and price for all transactions, and share balances);
assistance in processing purchase and redemption transactions; disbursing or
crediting to shareholders and maintaining records of all proceeds of redemptions
of shares and all other distributions not reinvested in shares; preparing and
transmitting periodic account statements showing the total number of shares
owned as of the statement closing date, purchases and redemptions of shares
during the period
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covered by the statement, and the dividends and other distributions paid during
the statement period (whether paid in cash or reinvested in shares), and the
integration of such statements with those of other transactions and balances in
other accounts of the shareholder; transmitting prospectuses, proxy materials,
reports, and other information required to be sent to shareholders under the
federal securities laws; transmitting to the transfer agent purchase orders and
redemption requests; receiving, aggregating, and processing shareholder orders;
transmitting to the Trust or its agents periodic reports necessary to enable the
Trust to comply with state Blue Sky requirements; transmitting confirmations of
purchase orders and redemption requests; maintaining all account balance
information and daily and monthly purchase summaries expressed in shares and
dollar amounts; and preparing, filing, and transmitting all federal, state, and
local government reports and returns as required by law with respect to accounts
maintained on behalf of employee benefit plans; providing information about the
Trust and its Funds; answering inquiries regarding the Trust and its Funds;
answering questions and handling correspondence from shareholders about their
accounts; communicating periodically with shareholders; maintaining account
designations and addresses; providing and maintaining elective shareholder
services such as check
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writing and wire transfer services; providing and maintaining pre-authorized
investment plans; acting as the sole shareholder of record and nominee for
shareholders; issuing confirmations for transactions by shareholders; and
similar administrative, recordkeeping, and shareholder services.
(c) Other Services. The Administrator shall also procure on behalf of
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the Trust and the Funds, and at the expense of the Administrator, the following
persons to provide services to the Funds: (i) a custodian or custodians for the
Funds to provide for the safekeeping of the Funds' assets; (ii) a recordkeeping
agent to maintain the fund accounting records for the Funds; (iii) a transfer
agent for the Funds; and (iv) a dividend disbursing agent for the Funds. The
Trust may be a party to any agreement with any of the persons referred to in
this Section 2(c).
(d) The Administrator shall also make its officers and employees
available to the Board of Trustees and officers of the Trust for consultation
and discussions regarding the administration of the Funds and services provided
to the Funds under this agreement.
(e) In performing these services, the Administrator:
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(i) Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and regulations, with
any applicable procedures adopted by the Trust's Board of Trustees, and with the
provisions of the Trust's Registration Statement filed on Form N-1A as
supplemented or amended from time to time.
(ii) Will make available to the Trust, promptly upon request, any of the
Funds' books and records as are maintained under this Agreement, and will
furnish to regulatory authorities having the requisite authority any such books
and records and any information or reports in connection with the
Administrator's services under this Agreement that may be requested in order to
ascertain whether the operations of the Trust are being conducted in a manner
consistent with applicable laws and regulations.
(iii)Will regularly report to the Trust's Board of Trustees on the services
provided under this Agreement and will furnish the Trust's Board of Trustees
with respect to the Funds such periodic and special reports as the Trustees may
reasonably request.
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3. DOCUMENTATION. The Trust has delivered copies of each of the following
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documents to the Administrator and will deliver to it all future amendments and
supplements thereto, if any:
(a) the Trust's Registration Statement as filed with the SEC and any
amendments thereto; and
(b) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the
Registration Statement described above.
4. INDEPENDENT CONTRACTOR. The Administrator shall for all purposes herein
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be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees of the trust from time to
time, have no authority to act for or represent the trust in any way or
otherwise be deemed its agent.
5. COMPENSATION. As compensation for the services rendered under this
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Agreement, the Trust shall pay to the Administrator a fee based on the average
daily net assets of each of the Funds as follows: for the Money Market Fund,
PIMCO Managed BOnd and Income Fund, NFJ Equity Income Fund, NFJ Diversified Low
P/E Fund, NFJ Small Cap Value Fund,
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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, and Balanced Fund, a fee at an annual rate of .25% of each Fund's
average daily net assets; and for the blairlogie emerging markets fund and
Blairlogie International Active Fund, a fees at an annual rate of .50% of each
Fund's average daily net assets. the fees payable to the Administrator for all
of the Funds shall be computed and accrued daily and paid monthly. if the
Administrator shall serve for less than any whole month, the foregoing
compensation shall be prorated.
As compensation for the services rendered pursuant to Section 2(b), and in
addition to the compensation paid by the Trust to the Administrator as set forth
above, the Trust shall pay to the Administrator an amount equal to an annual
rate of 0.25% of the value of the average daily net assets of the Trust
attributable to the benefited class or classes of shares of the Funds. This fee
shall be computed and accrued daily and paid monthly. If the Administrator
shall provide such services for less than any whole month, the foregoing
compensation shall be prorated.
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6. NON-EXCLUSIVITY. It is understood that the services of the
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Administrator hereunder are not exclusive, and the Administrator shall be free
to render similar services to other investment companies and other clients.
7. EXPENSES. During the term of this Agreement, the Administrator will
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pay all expenses incurred by it in connection with its obligations under this
Agreement, except such expenses as are those of the Funds under this Agreement.
The Administrator shall pay for maintaining its staff and personnel and shall,
at its own expense provide the equipment, office space, and facilities necessary
to perform its obligations under this Agreement. In addition, the Administrator
shall, at its expense, furnish to the Trust:
(a) Services by the Trust's independent public accountants to perform
all audits;
(b) Services of the Trust's transfer agent, registrar, dividend
disbursing agent, and shareholder recordkeeping services;
(c) Services of the Trust's custodian including any recordkeeping
services provided by the custodian;
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(d) Services of obtaining quotations for calculating the value of each
Fund's net assets;
(e) Services of obtaining Fund Activity Reports for each Fund;
(f) Services of maintaining the Trust's tax records;
(g) Services, including procurement of legal services, incident to
meetings of the Trust's shareholders, the preparation and mailing
of prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the
Trust's existence and qualification to do business, and the
registration of shares with federal and state securities
authorities;
(h) Procurement of ordinary legal services, including the services
that arise in the ordinary course of business for a Massachusetts
business trust registered as an open-end management investment
company;
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(i) Certificates representing shares of the Trust;
(j) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(k) Association membership dues; and
(l) Services to organize and offer shares of the Trust and the Funds.
The Trust shall bear the following expenses:
(a) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Administrator or its
subsidiaries or affiliates;
(b) Taxes, if any, levied against the Trust or any of its Funds;
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(c) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for any of the Funds;
(d) Costs, including the interest expenses, of borrowing money;
(e) Fees and expenses of trustees who are not officers, employees, or
stockholders of PIMCO or its subsidiaries or affiliates, and the
fees and expenses of any counsel, accountants, or any other
persons engaged by such trustees in connection with the duties of
their office with the Trust; and
(f) Extraordinary expenses, including extraordinary legal expenses, as
may arise including expenses incurred in connection with
litigation, proceedings, other claims and the legal obligations of
the Trust to indemnify its trustees, officers, employees,
shareholders, distributors, and agents with respect thereto.
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8. LIABILITY. The Adviser shall give the Trust the benefit of the
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Administrator's best efforts in rendering services under this Agreement. The
Administrator may rely on information reasonably believed by it to be accurate
and reliable. As an inducement for the Administrator's undertaking to render
services under this Agreement, the Trust agrees that neither the Administrator
nor its stockholders, officers, directors, or employees shall be subject to any
liability for, or any damages, expenses or losses incurred in connection with,
any act or omission or mistake in judgment connected with or arising out of any
services rendered under this Agreement, except by reason of willful misfeasance,
bad faith, or gross negligence in performance of the administrator's duties, or
by reason of reckless disregard of the administrator's obligations and duties
under this Agreement. This provision shall govern only the liability to the
Trust of the Administrator and that of its stockholders, officers, directors,
and employees, and shall in no way govern the liability to the Trust or the
Administrator or provide a defense for any other person including persons that
provide services for the Funds as described in Section 2(a) of this Agreement.
9. TERM AND CONTINUATION. This Agreement shall take effect as of the date
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indicated above, and shall remain in
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effect, unless sooner terminated as provided herein, for two years from such
date, and shall continue thereafter on an annual basis with respect to each
Fund, provided that such continuance is specially approved at least annually (a)
by the vote of a majority of the Board of Trustees of the Trust, or (b) by vote
of a majority of the outstanding voting shares of the Funds, and provided
continuance is also approved by the vote of a majority of the Board of Trustees
of the Trust who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of the Trust, or PIMCO, cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated:
(a) by the Trust at any time with respect to the services provided by the
Administrator, by vote of a majority of the entire Board of Trustees
of the Trust or by a vote of a majority of the outstanding voting
shares of the Trust or, with respect to a particular Fund, by vote of
a majority of the outstanding voting shares of such Fund, on 60 days'
written notice to the Administrator; and
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(b) by the Administrator at any time, without the payment of any penalty,
upon 60 days' written notice to the Trust.
10. USE OF NAME. It is understood that the name "Pacific Investment
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Management Company" or "PIMCO" or any derivative thereof or logo associated with
those names are the valuable property of PIMCO and its affiliates, and that the
right of the Trust and/or the Funds to use such names (or derivatives or logos)
shall be governed by PIMCO.
11. NOTICES. Notices of any kind to be given to the Administrator by thE
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Trust shall be in writing and shall be duly given if mailed or delivered to the
Administrator at 840 Newport Center Drive, Newport Beach, California 92660, or
to such other address or to such individual as shall be specified by the
Administrator. Notices of any kind to be given to the Trust by the
Administrator shall be in writing and shall be duly given if mailed or delivered
to 840 Newport Center Drive, Suite 360, Newport Beach, California 92660, or to
such other address or to such individual as shall be specified by the trust.
12. TRUST OBLIGATION. A copy of the Trust's Amended and Restated Agreement
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and Declaration of Trust, as amended,
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is on file with the Secretary of the Commonwealth of Massachusetts, and notice
is hereby given that the Agreement has been executed on behalf of the Trust by a
Trustee of the Trust in his or her capacity as trustee and not individually. The
obligations of this Agreement shall only be binding upon the assets and property
of the Trust and shall not be binding upon any trustee, officer, or shareholder
of the Trust individually.
13. COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original.
14. MISCELLANEOUS.
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(a) This Agreement shall be governed by the laws of California,
provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the SEC
thereunder.
(b) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent,
the provisions of this
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Agreement shall be deemed to be severable. To the extent that any
provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise with regard to any
party hereunder, such provisions with respect to other parties
hereto shall not be affected thereby.
(c) The captions in this Agreement are included for convenience only
and in no way define any of the provisions hereof or otherwise
affect their construction or effect.
(d) This Agreement may not assigned by the Trust or the Administrator
without the consent of the other party.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
PIMCO ADVISORS INSTITUTIONAL FUNDS
______________________ By: __________________________
Attest: Title:
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY
______________________ By: __________________________
Attest: Title:
Title:
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SUPPLEMENT TO ADMINISTRATION AGREEMENT
February 5, 1996
Mr. R. Wesley Burns
Pacific Investment Management Company
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
Dear Mr. Burns:
In connection with the services provided by Pacific Investment
Management Company ("PIMCO") to PIMCO Advisors Institutional Funds (the "Trust")
pursuant to an Administration Agreement dated November 1, 1995, (the
"Agreement"), between PIMCO and the Trust, whereby PIMCO serves as Administrator
to the Trust with respect to the Funds (as defined in the Agreement) of the
Trust, the Trust wishes to inform PIMCO of certain matters as set forth below:
1. Effective November 1, 1995, the Trust comprises the following
Funds to which the Agreement applies: 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; and
2. Effective February 2, 1996, the name of the Trust is "PIMCO
Funds: Equity Advisors Series."
PIMCO Funds: Equity Advisors Series
__________________________________
By: William D. Cvengros
Title: Chairman of the Board,
President and Trustee
ACCEPTED:
Pacific Investment Management Company
________________________________
By: R. Wesley Burns
Title: Vice President
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EX-99.B5(c)(i)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] ADMINISTRATION AGREEMENT
ADDENDUM TO ADMINISTRATION AGREEMENT
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The Administration Agreement, made the 16th day of August, 1995, (and
subsequently amended heretofore), between the PIMCO Funds: Equity Advisors
Series (the "Trust"), formerly PIMCO Advisors Institutional Funds, formerly
PFAMCo Funds, formerly PFAMCo Fund, a Massachusetts business trust having its
principal place of business at 840 Newport Center Drive, Newport Beach,
California 92660, and Pacific Investment Management Company ("PIMCO"), a
corporation organized under the laws of California, having its principal place
of business at 840 Newport Center Drive, Newport Beach, California 92660 (the
"Agreement"), is hereby amended by the addition of the provisions set forth in
this Addendum to the Agreement, which is made this_____ day of __________, 1996.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Trust has appointed PIMCO as
Administrator and PIMCO has accepted such appointment; and
WHEREAS, the Trust has established multiple series, including operational
series or series that are expected to be operational that are designated as 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, Parametric Enhanced Equity Fund,
Blairlogie Emerging Markets Fund, Blairlogie International Active Fund, Balanced
Fund, Columbus Circle Investors Mid Cap Equity Fund, and Columbus Circle Core
Equity Fund (each a "Fund"); and
WHEREAS, the Trust intends to establish one additional series to be
designated as the
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Parametric Structured Emerging Markets Fund; and
WHEREAS, the Trust desires to appoint PIMCO as Administrator to the
Parametric Structured Emerging Markets Fund under the provisions set forth in
the Agreement and in this Addendum to the Agreement; and
WHEREAS, PIMCO is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby appoints PIMCO to act as Administrator with respect to the
Parametric Structured Emerging Markets Fund which, in addition to all other
Funds previously established, shall be deemed one of the Funds under the
Agreement as provided in paragraph one (1), subject to the terms and conditions
as specified in the Agreement, including paragraph five (5), "Compensation," as
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amended by this Addendum.
2. Paragraph five (5) ("Compensation") of the Agreement is amended by
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adding the following language to paragraph five (5), which is restated as
follows:
"5. Compensation. As compensation for the services rendered
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under this Agreement, the Trust shall pay to the Administrator a fee based
on the average daily net assets of each of the Funds as follows: for 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, Parametric
Enhanced Equity Fund, Balanced Fund, Columbus Circle Investors Mid Cap
Equity Fund, Columbus Circle Investors Core Equity Fund, a fee at an annual
rate of .25% of each Fund's
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average daily net assets; for the Blairlogie Emerging Markets Fund,
Blairlogie International Active Fund, and Parametric Structured Emerging
Markets Fund a fee at an annual rate of .00% of each Fund's average daily
net assets. The fees payable to the Administrator for all of the Funds
shall be computed and accrued daily and paid monthly. If the Administrator
shall serve for less than any whole month, the foregoing compensation shall
be prorated. The Trust and the Administrator agree that all payments made
to the Administrator under this Agreement shall be for the provision of
organizational services to the Trust and the Funds, which are described in
Section 2 of this Agreement, until such payments equal _______________."
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO FUNDS: EQUITY ADVISORS SERIES
By:________________________________________
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY
By:______________________________________________
Title:
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EX-99.B6
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] DISTRIBUTION AGREEMENT
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EXHIBIT 99(b)6
DISTRIBUTION AGREEMENT
AGREEMENT made this 15th day of November, 1994 between PIMCO Advisors
Institutional Funds (the "Trust"), a Massachusetts business trust, and PIMCO
Advisors Distribution Company ("PADCO" or "Distributor"), a Delaware
Corporation.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end, management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in a
separate fund; and
WHEREAS, the Trust has established multiple series, including operational
series or series that are expected to be operational that are designated as the
Money Market Fund, the PIMCO Managed Bond and Income Fund, the Utility Stock
Fund, 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
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Fund, the Columbus Circle Investors Core Equity Fund, the Columbus Circle
Investors Mid Cap Equity Fund, the Columbus Circle Investors Small Cap Equity
Fund, the Parametric Enhanced Equity Fund, the Parametric International Equity
Fund, the Blairlogie Emerging Markets Fund, the Blairlogie International Active
Fund, and the Balanced Fund, such series together with any other series
subsequently established by the Trust, with respect to which the Trust desires
to retain the Distributor to sell and distribute Shares of the Trust, and with
respect to which the Distributor is willing to do so, being herein collectively
referred to also as the "Funds"; and
WHEREAS, the Trust engages in the business of investing and reinvesting the
assets of the Funds in the manner and in accordance with the investment
objective, policies, and restrictions specified in the currently effective
Prospectus (the "Prospectus") relating to the Trust and the Funds included in
the Trust's Registration Statement, as amended from time to time (the
"Registration Statement"), as filed by the Trust under the 1940 Act and the
Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Trust has entered into an Investment Advisory Agreement dated
November 15, 1994 (the "Advisory
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Agreement") with PIMCO Advisors L.P. (the "Advisor") under which the Advisor
will provide the Trust with investment advisory services and the Trust has
entered into an Administration Agreement with the Advisor under which the
Advisor will administer all operations of the Trust and its Funds; and
WHEREAS, the Distributor is registered with the SEC as a broker-dealer
under the Securities Exchange Act of 1934 (the "1934 Act"); and
WHEREAS, the Trust desires to retain the Distributor to sell and distribute
Shares of the Trust, and the Distributor is willing to furnish such services to
the Trust in the manner and on the terms hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Advisor and the Distributor
as follows:
1. APPOINTMENT. The Trust hereby appoints PADCO to act as Distributor of
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the Trust's Shares for the period and on the terms set forth in this Agreement.
The Distributor accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
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This Agreement shall pertain to the Funds herein named, and to such
additional series as shall be designated, as supplements to this Agreement as
further agreed between the Trust and the Distributor.
2. DISTRIBUTOR'S DUTIES.
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(a) The Distributor shall be the nonexclusive distributor for the
unsold portion of the Shares of the Funds, which may from time to
time be registered under the 1933 Act. After effectiveness of the
Trust's Registration Statement, the Distributor will hold itself
available to receive orders for the purchase or redemption of the
Shares and will accept or reject such orders on behalf of the
Trust in accordance with the provisions of the Prospectus and any
instructions received from the Trust, and will transmit such
orders as are so accepted to the Trust's transfer agent promptly
for processing at the Shares' net asset value next determined in
accordance with the Prospectus and any instructions received from
the Trust.
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(b) The Trust shall sell Shares through the Distributor to the
eligible investors as described in the Prospectus. All orders
through the Distributor shall be subject to acceptance and
confirmation by the Trust.
(c) The Distributor may sell and distribute Shares in such manner not
inconsistent with the provisions hereof and the Trust's Prospectus
as the Distributor may determine from time to time.
(d) The Trust reserves the right to sell Shares to purchasers to the
extent that it or the transfer agent for its Shares receives
purchase requests therefor.
All Shares offered for sale and sold by the Distributor shall be
offered for sale and sold by the Distributor to designated investors at the
price per Share (the "offering price") specified and determined as provided in
the Prospectus. The Trust shall determine and promptly furnish to the
Distributor upon request a statement of the offering price at least once on each
day on which the New York Stock Exchange is open for trading and on each
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additional day on which the net asset value of any Fund of the Trust might be
materially affected by changes in the value of its fund securities. Each
offering price shall become effective at the time and shall remain in effect
during the period specified in the statement. Each such statement shall show
the basis of its computation.
(e) In performing its duties as Distributor;
(i) PADCO will act in conformity with the Prospectus of the Trust
included in the Trust's Registration Statement on Form N-1A
under the Securities Act of 1933 and the 1940 Act, as filed
with the SEC and as amended or supplemented from time to time,
and with the instructions and directions of the Board of
Trustees of the Trust, the requirements of the 1933 Act, the
1940 Act, and all other applicable federal and state laws and
regulations;
(ii)PADCO will not use any sales literature which has not been
previously approved by
6
<PAGE>
an officer of the Trust or the Trust's
investment advisor.
3. DISCLOSURE ABOUT DISTRIBUTOR. The Distributor further represents and
----------------------------
warrants that it is duly registered as a broker-dealer under the 1934 Act and is
registered in all states in which the Distributor is required to be registered.
4. EXPENSES. During the term of this Agreement, the Distributor, directly
--------
or through an affiliate acting as ministerial agent, will pay expenses incurred
by it and its staff and for their activities in connection with its services
under this Agreement.
The Distributor shall not be responsible for any of the Trust's operating
expenses.
5. COMPENSATION. Shares shall be sold without a sales charge. No
------------
commission or other fee will be paid to the Distributor by the Trust in
connection with the sale of the Shares. The Distributor shall not be obligated
to sell any certain number of Shares.
6. COMPLIANCE.
----------
7
<PAGE>
(a) PADCO agrees that it shall immediately notify the Trust in the event
(i) that the SEC or any state securities authority has censured the Distributor;
(ii) placed limitations upon its activities, functions or operations; (iii)
suspended or revoked its registration as a broker-dealer; (iv) or has commenced
proceedings or an investigation that may result in any of these actions.
7. INDEPENDENT CONTRACTOR. The Distributor shall for all purposes herein
----------------------
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees of the Trust from time to
time, have no authority to act for or represent the Trust in any way or
otherwise be deemed its agent.
8. COOPERATION. Each party to this Agreement agrees to cooperate with each
-----------
other party and with all appropriate governmental authorities having the
requisite jurisdiction (including, but not limited to, the SEC) in connection
with any investigation or inquiry relating to this Agreement or the Trust.
9. SERVICES NOT EXCLUSIVE. It is understood that the services of the
----------------------
Distributor are not exclusive, and nothing in this Agreement shall prevent the
Distributor (or its
8
<PAGE>
affiliates) from providing similar services to other clients, including
investment companies (whether or not their investment objectives and policies
are similar to those of the Fund) or from engaging in other activities.
10. LIABILITY OF THE DISTRIBUTOR. The Distributor shall not be liable for
----------------------------
any error of judgment or mistake of law or any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement. Any person, even though also an
officer, employee or agent of PADCO, who may be or become an officer, director,
employee or agent of the Trust shall be deemed, when rendering services to the
Trust or acting in any business of the Trust, to be rendering such services to
or acting solely for the Trust and not as an officer, partner, employee or agent
or one under the control or direction of PADCO even though paid by PADCO.
11. DURATION AND TERMINATION. This Agreement shall take effect as of the
------------------------
date indicated above and shall remain in effect for two years from such date and
continue thereafter on an annual basis with respect to each Fund;
9
<PAGE>
provided that such continuance is specifically approved at least annually (a) by
the vote of a majority of the Board of Trustees of the Trust, or (b) by the vote
of a majority of the outstanding voting Shares of each Fund and provided that
continuance is also approved by the vote of a majority of the Board of Trustees
of the Trust who are not parties to this Agreement or "interested persons" (as
such term is defined in the 1940 Act) of the Trust or Distributor, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may not be materially amended without a majority vote of the
outstanding Shares (as defined in the 1940 Act) of the Fund. This Agreement may
be terminated:
(a) by the Trust at any time with respect to the services provided by the
Distributor, without the payment of any penalty, by vote of a majority
of the entire Board of Trustees of the Trust or by a vote of a
majority of the outstanding voting Shares of the Trust or, with
respect to a particular Fund, by vote of a majority of the outstanding
voting shares of such Fund, on 60 days' written notice to the
Distributor;
10
<PAGE>
(b) by the Distributor at any time, without the payment of any penalty,
upon 60 days' written notice to the Trust.
However, any approval of this Agreement by the holders of a majority of the
outstanding Shares (as defined in the 1940 Act) of a particular Fund shall be
effective to continue this Agreement with respect to such Fund notwithstanding
(a) that this Agreement has not been approved by the holders of a majority of
the outstanding Shares of any other Fund, or (b) that this Agreement has not
been approved by the vote of a majority of the outstanding Shares of the Trust,
unless such approval shall be required by any other applicable law or otherwise.
This Agreement will terminate automatically with respect to the services
provided by the Distributor in the event of its assignment, as that term is
defined in the 1940 Act, by the Distributor.
12. USE OF NAME.
-----------
(a) It is understood that the name "PIMCO Advisors Institutional Funds" or
any derivative thereof or logo associated with that name is the valuable
property of the Trust and its affiliates, and that the Distributor has
the right to use such name (or
11
<PAGE>
derivative or logo) only with the approval of the Trust and only so long
as PADCO is the Distributor for the Trust and/or the Fund. Upon
termination of the Distribution Agreement between the Trust and the
Distributor, the Distributor shall forthwith cease to use such name (or
derivative or logo).
(b) It is understood that the name "PIMCO Advisors Distribution Company" or
"PADCO" or any derivative thereof or logo associated with that name is
the valuable property of the Distributor and that the Trust and/or the
Fund have the right to use such name (or derivative or logo) in offering
materials of the Trust with the approval of the Distributor and for so
long as PADCO is the Distributor for the Trust and/or the Fund. Upon
termination of this Agreement between the Trust and the Distributor, the
Trust shall forthwith cease to use such name (or derivative or logo).
13. AGREEMENT AND DECLARATION OF TRUST. A copy of the Agreement and
----------------------------------
Declaration of Trust for the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. The Agreement and Declaration of Trust has been
executed on behalf of the Trust by Trustees of the Trust in their
12
<PAGE>
capacity as Trustees of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the Trust and shall
not be binding upon any Trustee, officer, or shareholder of the Trust
individually.
14. NOTICES. Notices of any kind to be given to PADCO by the Trust shall
-------
be in writing and shall be duly given if mailed, first-class postage prepaid, or
delivered to PADCO, One Station Place, Stamford, Connecticut 06902, or at such
other address or to such individual as shall be specified by PADCO to the Trust.
Notices of any kind to be given to the Trust shall be in writing and shall be
duly given if mailed, first-class postage prepaid, or delivered to the Trust at
700 Newport Center Drive, Newport Beach, California 92660 or at such other
address or to such individual as shall be specified by the Trust.
15. MISCELLANEOUS.
-------------
(a) This Agreement shall be governed by the laws of California,
provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of
1940, or rules or orders of the SEC thereunder.
13
<PAGE>
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) If any provisions of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby, and to this extent,
the provisions of this Agreement shall be deemed to be severable.
To the extent that any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise
with regard to any party hereunder, such provisions with respect
to other parties hereto shall not be affected thereby.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of on the day and year first above written.
PIMCO ADVISORS INSTITUTIONAL FUNDS
______________________ By: __________________________
Attest: Title:
Title:
PIMCO ADVISORS DISTRIBUTION COMPANY
______________________ By: __________________________
Attest: Title:
Title:
15
<PAGE>
SUPPLEMENT TO DISTRIBUTION AGREEMENT
February 5, 1996
Mr. John O. Leasure
PIMCO Advisors Distribution Company
2187 Atlantic Street
Stamford, CT 06902
Dear Mr. Leasure:
In connection with the services provided by PIMCO Advisors Distribution
Company ("PADCO") to PIMCO Advisors Institutional Funds (the "Trust") pursuant
to a Distribution Agreement dated November 15, 1994 (the "Agreement") between
PADCO and the Trust, whereby PADCO serves as Distributor to the Trust's shares
with respect to the Funds (as defined in the Agreement) of the Trust, the Trust
wishes to inform PADCO of certain matters set forth below:
1. Effective November 1, 1995, the Trust comprises the following Funds to
which the Agreement applies: 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; and
2. Effective February 2, 1996, the name of the Trust is "PIMCO Funds:
Equity Advisors Series."
PIMCO Funds: Equity Advisors Series
________________________________
By: William D. Cvengros
Title: Chairman of the Board,
President and Trustee
ACCEPTED:
PIMCO Advisors Distribution Company
_________________________
By: John O. Leasure
Title: President
16
<PAGE>
EX-99.B6
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] DISTRIBUTION AGREEMENT
ADDENDUM TO DISTRIBUTION AGREEMENT
----------------------------------
The Distribution Agreement made the 15th day of November, 1994, between
PIMCO Funds: Equity Advisors Series, formerly PIMCO Advisors Institutional
Funds, formerly PFAMCo Funds, formerly PFAMCo Fund (the "Trust"), a
Massachusetts business trust having its principal place of business at 840
Newport Center Drive, Newport Beach, CA 92660, and PIMCO Advisors Distribution
Company ("PADCO" or "Distributor"), a Delaware corporation is hereby amended by
the addition of the provisions set forth in this Addendum to the Agreement,
which is made this _____ day of __________, 1996.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Trust has appointed PADCO as
Distributor and PADCO has accepted such appointment; and
WHEREAS, the Trust currently consists of thirteen series designated as 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 (each a "Fund"); and
WHEREAS, the Trust intends to establish one additional Fund to be
designated as the Parametric Structured Emerging Markets Fund; and
17
<PAGE>
WHEREAS, the Trust desires to appoint PADCO as Distributor for the
Parametric Structured Emerging Markets Fund on the terms set forth in the
Agreement and in this Addendum to the Agreement; and
WHEREAS, PADCO is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. The Parametric Structured Emerging Markets Fund together with all
other Funds previously established by the Trust are referred to as "Funds" as
that term is used in the Agreement. In addition to its responsibilities as
specified in the Agreement, PADCO shall serve as Distributor of the Shares of
the Parametric Structured Emerging Markets Fund of the Trust under the terms and
conditions specified in the Agreement. For purposes of the Agreement and this
Addendum, the phrase "Shares" shall mean the shares of beneficial interest
issued by the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO FUNDS: EQUITY ADVISORS SERIES
By: ____________________________________
Title:
PIMCO ADVISORS DISTRIBUTION COMPANY
By: ____________________________________
Title:
18
<PAGE>
EX-99.B8(i)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] CUSTODY AGREEMENT AND ADDENDA
<PAGE>
CUSTODY AGREEMENT
-----------------
THIS AGREEMENT made the 17th day of December, 1990, by and among Investors
Fiduciary Trust Company, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 127 West 10th Street, Kansas
City, Missouri 64105 ("Custodian"), PFAMCo Fund, a Massachusetts business trust
having its principal office and place of business at 700 Newport Center Drive,
Newport Beach, California 92660-9030 ("Fund"), and Pacific Financial Asset
Management Corporation, a California corporation, having its principal place of
business at 700 Newport Center Drive, Newport Beach, California 92660-9030
(PFAMCo").
WITNESSETH:
WHEREAS, PFAMCo and Fund desires to appoint Investors Fiduciary Trust
Company as Custodian of the securities and monies for the following of Fund's
investment portfolios: Money Market Portfolio, Managed Bond Portfolio, Equity
Income Portfolio, Diversified Low Price/Earnings Portfolio, Enhanced Index
Portfolio (formerly Index Plus Portfolio), Capital Appreciation Portfolio, Small
Capital Value, Small Capital Growth, International Equity Portfolio and together
with all other series subsequently established by the Fund with respect to which
the Fund desires to appoint Investors Fiduciary Trust Company as Custodian and
for which Investors Fiduciary Trust Company is willing to be so appointed
(collectively the "portfolios"); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
<PAGE>
1. APPOINTMENT OF CUSTODIAN. PFAMCo and Fund hereby constitutes and appoints
------------------------
Custodian as custodian with respect to the portfolios which are to include:
A. Appointment as custodian of the securities and monies at any time owned
by the portfolios; and
B. Appointment as agent to perform certain accounting and recordkeeping
functions required of a duly registered investment company in compliance
with applicable provisions of federal, state and local laws, rules and
regulations including, as may be required:
1. Provide information with respect to the portfolios necessary for Fund
to file required financial reports; maintaining and preserving
required books, accounts and records as the basis for such reports;
and performing certain daily functions in connection with such
accounts and records.
2. Calculating daily net asset value and per share net asset value of
the portfolios, and
3. Acting as liaison with independent auditors.
2. DELIVERY OF TRUST DOCUMENTS. Fund has delivered or will deliver to
---------------------------
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing Custodian as
custodian hereunder and approving the form of this Agreement; and
B. Resolutions of the Board of Trustees of Fund designating certain persons
to give instructions on behalf of Fund to Custodian and authorizing
Custodian to rely upon written instructions over their signatures.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
----------------------------------------
A. Delivery of Assets
------------------
Fund will deliver or cause to be delivered to Custodian on the effective
date of this Agreement, or as soon thereafter as practicable, and from
time to time thereafter, all portfolio securities acquired by the
portfolios and monies then owned by the portfolios except as permitted
by the Investment Company Act of
2
<PAGE>
1940, as amended, or from time to time coming into its possession during
the time this Agreement shall continue in effect. Custodian shall have
no responsibility or liability whatsoever for or on account of
securities or monies not so delivered. All securities so delivered to
Custodian (other than bearer securities) shall be registered in the name
of Fund or its nominee, or of a nominee of Custodian, or shall be
properly endorsed and in form for transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
--------------------------------
Fund shall turn over to Custodian all of the Fund's relevant accounts
and records with respect to the portfolios previously maintained by it.
Custodian shall be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned over to it by Fund, and
Fund shall indemnify and hold Custodian harmless of and from any and all
expenses, damages and losses whatsoever arising out of or in connection
with any error, omission, inaccuracy or other deficiency of such
accounts and records or in the failure of Fund to provide any portion of
such or to provide any information needed by the Custodian knowledgeably
to perform its function hereunder.
C. Delivery of Assets to Third Parties
-----------------------------------
Custodian will receive delivery and keep safely the assets of the
portfolios delivered to it from time to time segregated in separate
accounts. Custodian will not deliver, assign, pledge or hypothecate any
such assets to any person except as permitted by the provisions of this
Agreement or any agreement executed by it according to the terms of
Section 3.U. of this Agreement. Upon delivery of any such assets to a
subcustodian or eligible foreign custodian pursuant to Section 3.U. of
this Agreement, Custodian will create and maintain records identifying
those assets which have been delivered to the subcustodian or eligible
foreign custodian as belonging to the applicable portfolio of the Fund.
The Custodian is responsible for the securities and monies of Fund only
until they have been transmitted to and received by other persons as
permitted under the terms of this Agreement, except for securities and
monies transmitted to a subcustodian or eligible foreign custodian as
provided for by Section 3.U., for which Custodian
3
<PAGE>
remains responsible and which shall be deemed an agent of the Custodian.
Custodian shall be responsible only for the monies and securities of
Fund held by it or its nominees, subcustodians or eligible foreign
custodians under this Agreement. Custodian may participate directly or
indirectly through a subcustodian in the Depository Trust Company or
Treasury/Federal Reserve Book Entry System (in accordance with Rule 17f-
4(b)) or other depository approved by the Fund each of which shall be
deemed an agent of the Custodian. The book and records of the Custodian
shall at all times show Fund assets held in any such depository as part
of the account of the applicable portfolio of the Fund.
D. Registration of Securities
--------------------------
Custodian will hold stocks and other registerable portfolio securities
of Fund registered in the name of Fund or in the name of any nominee of
Custodian for whose fidelity and liability Custodian will be fully
responsible, or in street certificate form, so-called, with or without
any indication of fiduciary capacity. Unless otherwise instructed,
Custodian will register all such portfolio securities in the name of its
authorized nominee. All securities, and the ownership thereof by Fund,
which are held by Custodian hereunder, however, shall at all times be
identifiable on the records of the Custodian or its subcustodian. The
Fund agrees to hold Custodian and its nominee harmless for any liability
arising solely out of its being a record holder of securities held in
custody. All securities issued in bearer form shall be maintained in
that form and not be subject to reregistration definitive form; that is,
bearer form securities shall not be reregistered in the name of a
nominee of the Custodian, subcustodian, or any depository, except upon
specific instructions from the Fund as to a given security. Bearer form
securities shall be retained by the Custodian or subcustodian, unless
deposited with a depository authorized by the Securities and Exchange
Commission and, if applicable, a State Insurance Commissioner. At least
quarterly, Custodian shall provide the Fund an updated list of all
securities held by the Custodian including securities held by a
subcustodian, or redeposited by the Custodian (or subcustodian) with a
depository, Federal Reserve Bank, or correspondent bank.
4
<PAGE>
E. Exchange of Securities
----------------------
Upon receipt of instructions as defined herein in Section 5.A.,
Custodian will exchange, or cause to be exchanged, portfolio securities
held by it for the account of the applicable portfolio for other
securities or cash issued or paid in connection with any reorganization,
recapitalization, merger, consolidation, split-up of shares, change of
par value, conversion or otherwise, and will deposit any such securities
in accordance with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange securities
held by it in temporary form for securities in definitive form, to
effect an exchange of shares when the par value of the stock is changed,
and, upon receiving payment therefor, to surrender bonds or other
securities held by it at maturity or when advised of earlier call for
redemption, except that Custodian shall receive instructions prior to
surrendering any convertible security.
F. Purchases of Investments of the Fund
------------------------------------
Fund will, on each business day on which a purchase of securities shall
be made by it, deliver to Custodian instructions which shall specify
with respect to each such purchase:
1. The name of the issuer and description of the security;
2. The number of shares or the principal amount purchased, and accrued
interest, if any;
3. The trade date;
4. The settlement date;
5. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
6. The total amount payable upon such purchase;
7. The name of the person from whom or the broker or dealer through
whom the purchase was made; and
8. The name of the portfolio with respect to which the purchase was
made.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of the applicable portfolio, but only
insofar as monies are available
5
<PAGE>
therein for such purpose, and receive the portfolio securities so
purchased by or for the account of the applicable portfolio except that
Custodian may in its sole discretion advance funds to the portfolio
which may result in an overdraft because the monies held by the
Custodian on behalf of the portfolio are insufficient to pay the total
amount payable upon such purchase. Such payment will be made only upon
receipt by Custodian of the securities so purchased in form for transfer
satisfactory to Custodian.
G. Sales and Deliveries of Investments of the Fund- Other than Options and
-----------------------------------------------------------------------
Futures
-------
Fund will, on each business day on which a sale of investment securities
of a portfolio has been made, deliver to Custodian instructions
specifying with respect to each such sale:
1. The name of the issuer and description of the securities;
2. The number of shares or principal amount sold, and accrued interest,
if any;
3. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
4. The trade date;
5. The settlement date;
6. The sale price per unit and the brokerage commission, taxes or other
expenses payable in connection with such sale;
7. total amount to be received by Fund upon such sale;
8. The name of the broker or dealer through whom or person to whom the
sale was made; and
9. The name of the portfolio with respect to which the sale was made.
In accordance with such instructions, Custodian will deliver or cause to
be delivered the securities thus designated as sold for the account of
the applicable portfolio to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only upon
receipt of payment therefor in such form as is satisfactory to
Custodian, with the understanding that Custodian may deliver or cause to
be delivered securities for payment in accordance with the customs
prevailing among dealers in securities.
6
<PAGE>
H. Purchases or Sales of Security Options, Options on Indices, Index
-----------------------------------------------------------------
Futures Contracts, Interest Rate Futures Contracts, Foreign Currency
--------------------------------------------------------------------
Futures Contracts, and Options on Futures Contracts, Options on Foreign
-----------------------------------------------------------------------
Currency, and Forward Foreign Currency
--------------------------------------
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
1. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom the sale or
purchase was made; and
k. The name of the portfolio with respect to which the purchase or
sale was made.
2. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
7
<PAGE>
g. Whether the transaction is an opening, exercising, expiring or
closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through whom the
sale or purchase was made, or other applicable settlement
instructions; and
k. The name of the portfolio with respect to which the purchase or
sale was made.
3. Index Futures Contracts, Interest Rate Futures Contracts and Foreign
Currency Futures Contracts, and Forward Foreign Currency Contracts
a. The last trading date specified in the contract and, when
available, the closing level thereof;
b. The index level or price on the date the contract is entered
into;
c. The multiple (if applicable);
d. Any margin requirements;
e. Information relating to collateral identified as belonging to a
segregated margin account (in addition to instructions, and if
not already in the possession of Custodian, Fund shall deliver a
substantially complete and executed custodial safekeeping account
and procedural agreement with respect to futures contracts which
shall be incorporated by reference into this Custody Agreement);
f. The name and address of the futures commission merchant through
whom the sale or purchase was made, or other applicable
settlement instructions; and
g. The name of the portfolio with respect to which the purchase or
sale was made.
4. Options on Futures Contracts or Foreign Currency
a. The underlying futures contract or foreign currency;
b. The premium;
c. The expiration date;
8
<PAGE>
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising, expiring
or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. The market on which the option is traded; and
j. The name of the portfolio with respect to which the purchase or
sale was made.
I. Securities Pledged or Loaned
----------------------------
If specifically allowed for in the prospectus of Fund:
1. Upon receipt of instructions, Custodian will release or cause to be
released securities held in custody to the pledgee designated in such
instructions by way of pledge or hypothecation to secure any loan
incurred by a portfolio provided, however, that the securities shall
be released only upon payment to Custodian of the monies borrowed,
except that in cases where additional collateral is required to
secure a borrowing already made, further securities may be released
or caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will pay, but
only from funds available for such purpose, any such loan upon
redelivery to it of the securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities held
in custody to the borrower designated in such instructions; provided,
however, that if the borrower is a bank or securities broker-dealer,
the securities will be released only upon deposit with Custodian of
collateral in the form of cash or eligible securities as specified in
such instructions, and that the portfolio will retain the right to
any dividends, interest or distribution on such loaned securities.
Upon receipt of instructions and the loaned securities, Custodian
will release the cash collateral to the borrower.
9
<PAGE>
J. Routine Matters
---------------
Custodian will, in general, attend to all routine and mechanical matters
in connection with the sale, exchange, substitution, purchase, transfer,
or other dealings with securities or other property of a portfolio
except as may be otherwise provided in this Agreement or directed from
time to time by the Board of Trustees of Fund.
K. Deposit Account
---------------
Custodian will open and maintain special purpose deposit accounts in the
name of Custodian ("Account"), subject only to draft or order by
Custodian upon receipt of instructions. All monies received by Custodian
from or for the account of a portfolio shall be deposited in the Account
of the applicable portfolio. Barring events not in the control of the
Custodian such as strikes, lockouts or labor disputes, riots, war or
equipment or transmission failure or damage, fire, flood, earthquake or
other natural disaster, action or inaction of governmental authority or
other causes beyond its control, at 9:00 a.m., Kansas City time, on the
second business day after deposit of any check into Fund's Account,
Custodian agrees to make Fed Funds available to the Fund in the amount
of the check. Deposits made by Federal Reserve wire will be available to
the Fund immediately and Automated Clearinghouse (ACH) wires will be
available to the Fund on the next business day. Income earned on the
portfolio securities will be credited to the applicable portfolio of the
Fund based on the schedule attached as Exhibit A. The Custodian will be
entitled to reverse any credited amounts where credits have been made
and monies are not finally collected. If monies are collected after such
reversal, the Custodian will credit the applicable portfolio in that
amount. Custodian may open and maintain an Account in such other banks
or trust companies as may be designated by it or by properly authorized
resolution of the Board of Trustees of Fund, such Account, however, to
be in the name of custodian and subject only to its draft or order.
10
<PAGE>
L. Accounts
--------
Any account maintained by the Fund with the Custodian under this
Agreement, wherein there is deposited cash, interest, dividends or the
proceeds of security sales, shall be deemed to be a part of the custody
account and shall be subject to all of the other terms and provisions of
this Agreement.
M. Sweep Accounts
--------------
Any "sweep" account offered and maintained by the subcustodian or
foreign subcustodian on behalf of a portfolio wherein available cash is
invested shall be deemed a part of the Account of the portfolio subject
to the terms and provisions of this Agreement. The Fund shall have the
option of selecting the type of account when alternatives are available
into which the funds are to be swept and, if the available Accounts are
mutual funds, the particular mutual fund.
N. Income and other Payments to Fund
---------------------------------
Custodian will:
1. Collect, claim, and receive and deposit for the Account of the
applicable portfolio all income and other payments which become due
and payable on or after the effective date of this Agreement with
respect to the securities deposited under this Agreement, and credit
the account of the applicable portfolio with such income pursuant to
paragraph 3.K. of this Agreement.
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in connection
with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring presentation;
and
2. all other securities which may mature or be called, redeemed,
retired or otherwise become payable and regarding which the
Custodian has actual knowledge, or notice of which is
contained in publications of the type to which it normally
subscribes for such purpose; and
11
<PAGE>
b. the endorsement for collection, in the name of the applicable
portfolio of all checks, drafts or other negotiable instruments.
Custodian, however, will not be required to institute suit or take other
extraordinary action to enforce collection except upon receipt of
instructions and upon being indemnified to its satisfaction against the
costs and expenses of such suit or other actions. Custodian will
receive, claim and collect all stock dividends, rights and other similar
items and will deal with the same pursuant to instructions. Unless prior
instructions have been received to the contrary, Custodian will, without
further instructions, sell any rights held for the account of a
portfolio on the last trade date prior to the date of expiration of such
rights.
O. Payment of Dividends and other Distributions
--------------------------------------------
On the declaration of any dividend or other distribution on the shares
of Beneficial Interest of a portfolio ("Fund Shares") by the Board of
Trustees of Fund. Fund shall deliver to Custodian instructions with
respect thereto, including a copy of the Resolution of said Board of
Trustees certified by the Secretary or an Assistant Secretary of Fund
wherein there shall be set forth the record date as of which
shareholders entitled to receive such dividend or other distribution
shall be determined, the date of payment of such dividend or
distribution, and the amount payable per share on such dividend or
distribution.
Except if the ex-dividend date and the reinvestment date of any dividend
are the same, in which case funds shall remain in the Custody Account,
on the date specified in such Resolution for the payment of such
dividend or other distribution, Custodian will pay out of the monies
held for the account of a portfolio insofar as the same shall be
available for such purposes, and credit to the account of the Dividend
Disbursing Agent for Fund, such amount as may be necessary to pay the
amount per share payable in cash on Fund Shares issued and outstanding
on the record date established by such Resolution.
P. Shares of Fund Purchased
------------------------
Whenever any Fund Shares are repurchased or redeemed, Fund or its
transfer agent shall advise Custodian of the aggregate dollar amount to
be paid for such
12
<PAGE>
shares and shall confirm such advice in writing. Upon receipt of such
advice, Custodian shall charge such aggregate dollar amount to the
Account of the portfolio and either deposit the same in the account
maintained for the purpose of paying for the repurchase or redemption of
Fund Shares or deliver the same in accordance with such advice.
Custodian shall not have any duty or responsibility to determine that
Fund Shares repurchased or redeemed by Fund have been removed from the
proper shareholder account or accounts or that the proper number of such
shares have been canceled and removed from the shareholder records.
Q. Shares of Fund Purchased from Fund
----------------------------------
Whenever Fund Shares are purchased from Fund, Fund will deposit or cause
to be deposited with Custodian the amount received for such shares.
Custodian shall not have any duty or responsibility to determine that
Fund Shares purchased from Fund have been added to the proper
shareholder account or accounts or that the proper number of such shares
have been added to the shareholder records.
R. Proxies and Notices
-------------------
Custodian will promptly deliver or mail or have delivered or mailed to
Fund all proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting or
relating to securities held by Custodian for a portfolio and will, upon
receipt of instructions, execute and deliver or cause its nominee to
execute and deliver or mail or have delivered or mailed such proxies or
other authorizations as may be required. Except as provided by this
Agreement or pursuant to instructions hereafter received by Custodian,
neither it nor its nominee will exercise any power inherent in any such
securities, including any power to vote the same, or execute any proxy,
power of attorney, or other similar instrument voting any of such
securities, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
S. Disbursements
-------------
Custodian will pay or cause to be paid insofar as funds are available
for the purpose, bills, statements and other obligations of a portfolio
(including but not
13
<PAGE>
limited to obligations in connection with the conversion, exchange or
surrender of securities owned by a portfolio, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal fees,
auditors' fees, transfer agents' fees, brokerage commissions,
compensation to personnel, and other operating expenses of a portfolio)
pursuant to instructions of Fund setting forth the name of the person to
whom payment is to be made, the amount of the payment, the portfolio to
be charged, and the purpose of the payment.
T. Daily Statement of Accounts
---------------------------
Custodian will, within a reasonable time, render to Fund as of the close
of business on each day, a detailed statement of the amounts received or
paid and of securities received or delivered for the account of each
portfolio during said day. Custodian will, from time to time, upon
request by Fund, render a detailed statement of the securities and
monies held for one or more portfolios under this Agreement, and
Custodian will maintain such books and records as are necessary to
enable to do so and will permit such persons as authorized by Fund; and
if demanded, federal and state regulatory agencies to examine the
securities, books and records. Upon the instructions of Fund or as
demanded by federal and state regulatory agencies, Custodian will
instruct subcustodian to permit such persons as are authorized by Fund
and if demanded, federal and state regulatory agencies to examine the
books, records and securities held by subcustodian which relate to Fund.
U. Appointment of Subcustodian
---------------------------
1. Notwithstanding any other provisions of the Agreement, all or any of
the monies or securities of Fund may be held in Custodian's own
custody or in the custody of one or more other banks or trust
companies acting as subcustodians as may be selected by Custodian.
Any such subcustodian must have the qualifications required for
custodian under the Investment Company Act of 1940, as amended. The
subcustodian may participate directly or indirectly in the Depository
Trust Company or Treasury/Federal Reserve Book Entry System (in
accordance with Rule 17f-4(b)) or other depository approved by
14
<PAGE>
the Fund. Neither Custodian nor subcustodian will be entitled to
reimbursement by Fund for any fees or expenses of any subcustodian.
The appointment of a subcustodian will not relieve Custodian of any
of its obligations hereunder.
2. Notwithstanding any other provision of this Agreement, the Custodian
is authorized and instructed, in accordance with this Section U. of
this Agreement to employ as subcustodian, or to instruct a
subcustodian to employ as its subcustodian, for a portfolio's
securities and other assets maintained outside of the United States
the foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign subcustodians"), provided
that any such foreign subcustodian is an "eligible foreign custodian"
as defined under Rule 17f-5(c)(2) under the 1940 Act or is otherwise
eligible to serve as such a foreign subcustodian under an exemptive
order issued by the U.S. Securities and Exchange Commission from
Section 17(f) of the 1940 Act applicable to the custodian or
subcustodian. Upon receipt of instructions, together with a certified
resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as foreign subcustodians. Upon receipt
of instructions from the Fund, the Custodian shall cease the
employment or direct its subcustodian to cease the employment, as the
case may be, of any one or more of such foreign subcustodians for
maintaining custody of the portfolios' assets.
3. Monitoring Responsibilities. The Custodian shall furnish annually to
---------------------------
the Fund, upon the request of the Fund, information concerning any
subcustodian and any foreign subcustodians employed by the Custodian.
Such information shall be similar in kind and scope to that furnished
to the Fund in connection with the initial approval of this
Agreement. In addition, the Custodian will promptly inform the Fund
in the event that the Custodian learns of a material adverse change
in the financial condition of a subcustodian or foreign
15
<PAGE>
subcustodian or is notified by a foreign banking institution employed
as a foreign subcustodian that there appears to be a substantial
likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting
principles).
V. Accounts and Records
--------------------
Custodian will prepare and maintain complete, accurate and current
all accounts and records required to be maintained by Fund under the
Internal Revenue Code of 1986 as amended ("Code") and under the
General Rules and Regulations under the Investment Company Act of
1940, as amended ("Rules"), and as agreed upon between the parties
and will preserve said records in the manner and for the periods
described in said Code and Rules, or for such longer period as is
agreed upon by the parties. Custodian shall allow, upon not more than
48 hours' notice and during the course of the Custodian's regular
business hours, any insurance or banking authority having the
requisite authority to inspect the securities held by the Custodian
and all of the Custodian's records pertaining to the Fund's
securities held by the Custodian.
Custodian relies upon Fund to furnish, in writing, accurate and
timely information to complete Fund's records and perform daily
calculation of each portfolio's net asset value, as provided in
Section 3.Y., below.
Custodian shall incur no liability and Fund shall indemnify and hold
harmless Custodian from and against any liability arising from any
failure of Fund to furnish such information in a timely and accurate
manner, even if Fund subsequently provides accurate but untimely
information. It shall be the responsibility of Fund to furnish
Custodian with the declaration, record and payment dates and amounts
of any dividends or income and any other special actions required
concerning each of its securities when such information is not
readily available from generally accepted securities industry
services or publications.
16
<PAGE>
W. Accounts and Records Property of Fund
-------------------------------------
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to this Agreement are the property
of Fund, and will be made available to Fund for inspection or
reproduction within a reasonable period of time, upon demand.
Custodian will assist Fund's independent auditors, or upon approval
of Fund, or upon demand, any regulatory body, in any requested review
of Fund's accounts and records but shall be reimbursed for all
expenses and employee time invested in any such review outside of
routine and normal periodic reviews. Upon receipt from Fund of the
necessary information, Custodian will supply necessary data for
Fund's completion of any necessary tax returns, questionnaires,
periodic reports to regulatory authorities and Shareholders, and such
other reports and information requests as Fund and Custodian shall
agree upon from time to time.
X. Adoption of Procedures
----------------------
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no procedure
approved by Fund, or directed by Fund, conflicts with or violates any
requirements of its prospectus, Declaration of Trust, Bylaws, or any
rule or regulation of any regulatory body or governmental agency.
Fund will be responsible to notify Custodian of any changes in state
statutes, regulations, rules or policies which might necessitate
changes in Custodian's responsibilities or procedures.
Y. Calculation of Net Asset Value
------------------------------
Custodian will calculate each portfolio's net asset value, in
accordance with Fund's prospectus, once daily. Custodian will prepare
and maintain a daily evaluation of securities for which market
quotations are available by the use of outside services normally used
and contracted for this purpose, which shall be deemed an agent of
the Fund; all other securities will be evaluated in accordance with
Fund's instructions, provided, however that Custodian shall take all
reasonable steps to determine that these outside services use methods
of evaluation that are customary for their industry. Custodian will
have no
17
<PAGE>
responsibility for the accuracy of the prices quoted by these outside
services or for the information supplied by Fund or upon
instructions; provided however, that Custodian shall take all
reasonable steps to determine that these outside services use methods
of evaluation that are customary for their industry.
Z. Overdrafts
----------
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft because the monies
held by Custodian on behalf of the Fund are insufficient to pay the
total amount payable upon a purchase of securities as specified in
Fund's instructions or for some other reason, the amount of the
overdraft shall be payable by the Fund to IFTC upon demand and shall
bear an interest rate as agreed between Custodian and Fund from the
date advanced until the date of payment.
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
-----------------------------------------------------------------
OUTSIDE OF THE UNITED STATES.
----------------------------
A. Assets to be Held. The Fund shall limit the securities and other
-----------------
assets maintained in the custody of the foreign subcustodians to: (a)
"foreign securities," as defined in paragraph (c)(1) of Rule 17f-5
under the 1940 Act, and (b) cash and cash equivalents in such amounts
as the Fund may determine to be reasonably necessary to effect the
Fund's foreign securities transactions.
B. Foreign Securities Depositories. Except as may otherwise be agreed
-------------------------------
upon in writing by the Custodian and the Fund, assets of the Fund
shall be maintained in foreign securities depositories only through
arrangements implemented by the banking institutions serving as
subcustodians or foreign subcustodians pursuant to the terms thereof,
provided such depositories may be used under Rule 17f-5 under the
1940 Act or similar exemption applicable to the Custodian or
subcustodian from Section 17(f) of the 1940 Act. Such arrangements
shall provide that the Custodian and, if applicable, the subcustodian
shall identify on its books as belonging to the Fund any securities
held by such foreign securities depositories.
C. Identification of Securities. The Custodian shall identify on its
----------------------------
books as belonging to the portfolios, the foreign securities of the
portfolios held by each
18
<PAGE>
foreign subcustodian. Each agreement pursuant to which the Custodian
or subcustodian employs a foreign banking institution shall require
that such institution establish a custody account for the Custodian
or subcustodian on behalf of the Fund and its portfolios. In the
event that such foreign banking institution deposits that portfolios'
securities in a foreign securities depository, the foreign banking
institution shall identify on its books as belonging to the Custodian
or subcustodian, as agent for its customers, the securities so
deposited (all collectively referred to as the "Account").
D. Agreements with Foreign Banking Institutions. Each agreement with a
--------------------------------------------
foreign banking institution shall provide that: (a) the portfolios'
assets will not be subject to any right, charge, securities interest,
lien or claim of any kind in favor of the foreign banking
institutions or it creditors, except a claim of payment for their
safe custody or administration; (b) beneficial ownership for the
portfolios assets will be freely transferable without the payment of
money or value other than for custody or administration; (c) adequate
records will be maintained identifying the assets as belonging to
the Fund and its portfolios; (d) officers of or auditors employed by,
or other representatives of the Custodian including to the extent
permitted under applicable law the independent public accountants for
the Fund, will be given access to the books and records of the
foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of the Fund held by the
foreign subcustodian will be subject only to the instructions of the
Custodian or its agents.
E. Access by Independent Accountants of the Fund or by Banking or
--------------------------------------------------------------
Insurance Authority. Upon request of the Fund, the Custodian will
-------------------
use its best efforts to arrange for the independent accountants of
the Fund or any banking or insurance regulatory body having the
requisite authority to be afforded reasonable access to the books and
records of any foreign banking institution employed as a foreign
subcustodian to the extent authorized by applicable law insofar as
such books and records relate to the performance of such foreign
banking institutions under its
19
<PAGE>
agreement with the Custodian. Each contract between the Custodian or
subcustodian and such foreign banking institution shall provide for
such access.
F. Reports by Custodian. The Custodian will supply to the Fund from
--------------------
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the portfolios held by foreign
subcustodians, including but not shareslimited to an identification
of entities having possession of the portfolios' securities and other
assets and advises or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of the Fund indicating, as to
securities acquired for the Fund, the identity of the entity having
physical possession of such securities.
G. Transactions in Foreign Custody Account.
---------------------------------------
1. Upon receipt of instructions, the Custodian or subcustodian shall
make or cause its foreign subcustodian to deliver or exchange
foreign securities owned by the Fund, to the extent delivery or
exchange of domestic securities is authorized in Section III. of
this Agreement.
2. Upon receipt of instructions, the Custodian shall pay out or cause
its foreign subcustodians to pay out monies of the portfolios, to
the extent payment of monies by the Custodian is otherwise
authorized by this Agreement.
3. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of
the Fund its portfolios and delivery of securities maintained for
the account of the Fund and its portfolios may be effected in
accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction
or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a
dealer thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser or
dealer.
4. Securities maintained in the custody of a foreign subcustodian may
be maintained in the name of such entity's nominee.
20
<PAGE>
H. Liability of Foreign Subcustodians. Each agreement pursuant to
----------------------------------
which the Custodian or subcustodian employs a foreign banking
institution as a foreign subcustodian shall require the institution
to exercise reasonable care (which may be defined in such agreement
according to the standards of the country of such foreign
subcustodian) in the performance of its duties and to indemnify, and
hold harmless, the Custodian or subcustodian from and against any
loss or liability arising out of or in connection with the
institution's performance of such obligations.
I. Liability of Custodian and Subcustodian. The Custodian shall be
---------------------------------------
liable to the Fund for any loss which shall occur as the result of
the failure of a foreign subcustodian or an eligible foreign
securities depository engaged by such Custodian or subcustodian
thereof or the nominee of the foreign subcustodian or foreign
securities depository to exercise reasonable care with respect to the
safekeeping of such securities and other assets to the same extent
that the foreign subcustodian or foreign securities depository would
be liable to the Fund if the Custodian were holding such securities
and other assets in New York. In the event of any loss to the Fund by
reason of the failure of the Custodian, any subcustodian, a foreign
subcustodian or an eligible foreign securities depository engaged by
such foreign subcustodian or the nominee of either a foreign
subcustodian or foreign securities depository to utilize reasonable
care, the Custodian shall be liable to the Fund to the extent of the
Fund's or the Custodian's damages, to be determined based on the
market value of the property which is the subject of the loss at the
date of discovery of such loss and without reference to any special
conditions or circumstances. The Custodian shall be held to the
exercise of reasonable care in carrying out this Agreement but shall
be indemnified by, and shall be without liability to, Fund for any
action taken or omitted by the Custodian in good faith without
negligence.
J. Branches of U.S. Banks. Except as otherwise set forth in this
----------------------
Agreement, the provisions of this subsection other than Section IV.I
shall not apply where the custody of the Fund assets maintained in a
foreign branch of a banking institution
21
<PAGE>
which is a "bank" as defined by Section 2(a)(5) of the 1940 Act which
meets the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a subcustodian shall be governed by
Subsection III.U.1. of this Agreement.
5. INSTRUCTIONS.
------------
A. The term "instructions", as used herein, means written or oral
instructions to Custodian from a designated representative of Fund.
Certified copies of resolutions of the Board of Trustees of Fund
naming one or more designated representatives to give instructions in
the name and on behalf of Fund, may be received and accepted from
time to time by Custodian as conclusive evidence of the authority of
any designated representative to act for Fund and may be considered
to be in full force and effect (and Custodian will be fully protected
in acting in reliance thereon) until receipt by Custodian of notice
to the contrary. Unless the resolution delegating authority to any
person to give instructions specifically requires that the approval
of anyone else will first have been obtained, Custodian will be under
no obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing
provisions of this Section 5, no authorizations or instructions
received by Custodian from Fund will be deemed to authorize or permit
any trustee, officer, employee, or agent of Fund to withdraw any of
the securities or similar investments of Fund upon the mere receipt
of such authorization or instructions from such trustee, officer,
employee or agent.
Notwithstanding any other provision of this Agreement, Custodian,
upon receipt (and acknowledgment if required at the discretion of
Custodian) of the instructions of a designated representative of Fund
will undertake to deliver for a portfolio account monies (provided
such monies are on hand or available) in connection with the
portfolio's transactions and to wire transfer such monies to such
broker, dealer, subcustodian, bank or other agent specified in such
instructions by a designated representative of Fund.
22
<PAGE>
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may
record on tape, or otherwise, any oral instruction whether given in
person or via telephone, each such recording identifying the parties,
the date and the time of the beginning and ending of such oral
instruction.
6. LIMITATION OF LIABILITY OF CUSTODIAN.
------------------------------------
A. Custodian shall hold harmless and indemnify Fund from and against any
loss or liability arising out of the failure to comply with the terms
of this Agreement or arising out of Custodian's negligence, willful
misconduct, or bad faith by Custodian or any of the Custodian's
officers, directors or employees or agents. In the event of loss,
damage or injury to the securities and/or monies while on deposit in
Custodian's account, whether held by Custodian or by its
subcustodian, Depository or nominee, upon Fund's demand, Custodian
will cause the said securities and/or monies to be replaced with
securities and/or monies of like kind and quality, together with all
rights and privileges pertaining thereto, or, if acceptable to Fund,
remit cash equal to the value of the securities. Custodian may
request and obtain the advice and opinion of counsel for Fund at the
Fund's expense, or of its own counsel at its own expense, with
respect to questions or matters of law, at it shall be without
liability to Fund for any action reasonably taken or omitted by it in
good faith, in conformity with such advice or opinion.
B. Custodian may rely upon statements of Fund's independent certified
public accountants and any representative of Fund authorized to give
instructions, and Custodian shall not be liable for any actions
reasonably taken, in good faith, upon such statements.
C. If Fund requires Custodian in any capacity to take, with respect to
any securities, any action which involves the payment of money by it,
or which in Custodian's opinion might make it or its nominee liable
for payment of monies or in any other way, Custodian, upon notice to
Fund given prior to such actions, shall be and be
23
<PAGE>
kept indemnified by Fund in an amount and form satisfactory to
Custodian against any liability on account of such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for such cash disbursements,
costs and expenses as may be agreed upon from time to time by
Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder upon
any instructions, advice, notice, request, consent, certificate or
other instrument or paper reasonably appearing to it to be genuine
and to have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as conclusive
proof of any fact or matter required to be ascertained from Fund
hereunder, a certificate signed by the Fund's President, or other
officer specifically authorized for such purpose.
F. Without limiting the generality of the foregoing, Custodian shall be
under no duty or obligation to inquire into, and shall not be liable
for:
1. The legality of the purchase of any security by or for a
portfolio or evidence of ownership required by Fund to be
received by Custodian, or the propriety of the decision to
purchase or amount paid therefor;
2. The legality of the sale of any securities by or for a portfolio
or the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any shares of beneficial
interest of Fund, or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any shares of
beneficial interest of, or the propriety of the amount to be paid
therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any shares of beneficial interest of
Fund in payment of any stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer, clearing
house funds, uncollected funds, or instrument for the payment of
money received by it on behalf of Fund, until Custodian actually
receives such money, provided only that it shall advise
24
<PAGE>
Fund promptly if it fails to receive any such money in the ordinary
course of business, and use its best efforts and cooperate with Fund
toward the end that such money shall be received.
H. Except (1) subcustodians or eligible foreign custodians appointed
under Section 3.U. of this Agreement, and (2) its nominees and the
nominees of subcustodians or eligible subcustodians, Custodian shall
not be responsible for loss occasioned by the acts, neglects,
defaults or insolvency of any broker, bank, trust company, or any
other person with whom Custodian may deal in the absence of
dishonesty, negligence, misconduct, or bad faith on the part of
Custodian or its officers, directors, employees or agents.
I. Notwithstanding anything herein to the contrary, Custodian may
provide Fund for its approval, agreements with banks or trust
companies which will act as subcustodians for Fund pursuant to
Section 3.S. of this Agreement.
7. COMPENSATION. PFAMCo will pay to Custodian such compensation as is
------------
stated in the Fee Schedule attached hereto as Exhibit B which may be
changed from time to time as agreed to in writing by Custodian and Fund.
Custodian will not be entitled to reimbursement by Fund for any loss or
expenses of any subcustodian or eligible foreign custodian.
8. TERMINATION. This Agreement becomes effective as of its date of
-----------
execution and shall continue in full force and effect until terminated
as hereinafter provided. Either party to this Agreement may terminate
the same by notice in writing, delivered or mailed, postage prepaid, to
the other party hereto and received not less than sixty (60) days prior
to the date upon which such termination will take effect. Upon
termination of this Agreement, PFAMCo, or Fund as appropriate will pay
to Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date and Fund will use its best
efforts to obtain a successor custodian. The Board of Trustees of Fund
will, forthwith upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian a bank or trust company having
the necessary qualifications. Custodian will, upon termination of this
Agreement, deliver, free from any claim of its rights respecting the
records, funds
25
<PAGE>
and property of the Fund, to the successor custodian so specified or
appointed, at Custodian's office, all securities then held by Custodian
hereunder, duly endorsed and in form for transfer, all funds and other
properties of Fund deposited with or held by Custodian hereunder, or
will co-operate in effecting changes in book-entries at the Depository
Trust Company or in the Treasury/Federal Reserve Book-Entry System
pursuant to 31 CFR Sec. 306.118. In the event no written order
designating a successor custodian has been delivered to Custodian on or
before the date when such termination becomes effective, then Custodian
will deliver the securities, funds and properties of Fund to a bank or
trust company as the selection of Custodian and meeting the
qualifications for custodian, if any, set forth in the Bylaws of Fund.
Upon either such delivery to a successor custodian, Custodian will have
no further duties under this Agreement, although liabilities under
Section 5. of this Agreement will survive termination of this Agreement.
Thereafter such bank or trust company will be the successor custodian
under this Agreement and will be entitled to reasonable compensation for
its services. In the event that no such successor custodian can be
found, Fund will submit to its shareholders, before permitting delivery
of the cash and securities owned by Fund to anyone other than a
successor custodian, the question of whether Fund will be liquidated or
function without a custodian. Notwithstanding the foregoing requirement
as to delivery upon termination of this Agreement, Custodian may make
any other delivery of the securities, funds and property of Fund which
is permitted by the Investment Company Act of 1940, Fund's Declaration
of Trust and Bylaws then in effect or apply to a court of competent
jurisdiction for the appointment of a successor custodian. In addition
to the obligations of Custodian under this Agreement, upon termination
of this Agreement all records maintained by Custodian in machine
readable form relating to the services to be performed by Custodian
under this Agreement shall be surrendered to Fund or its agent in
machine readable form, and Custodian shall use its best efforts to
assist in the conversion of such records to the recordkeeping system of
the successor to Custodian and to provide other information relating to
its services provided hereunder for reasonable compensation therefore.
26
<PAGE>
9. NOTICES. Notices, requests, instructions and other writings received by
-------
Fund at 700 Newport Center Drive, Newport Beach, California 92660-9030
or at such other address as Fund may have designated to Custodian in
writing, will be deemed to have been properly given to Fund hereunder;
and notices, requests, instructions and other writings received by
Custodian at its offices at 127 West 10th Street, Kansas City, Missouri
64105, or to such other address as it may have designated to Fund in
writing, will be deemed to have been properly given to Custodian
hereunder.
10. EMPLOYEES. Custodian shall be responsible for making inquiries for
---------
reasonably insuring and, upon request of the Fund, for providing an
annual certification to the Fund that, to the best of the Custodian's
knowledge, Custodian or any employee thereof, or any subcustodian or any
employee thereof has not, in any material connection with the handling
of the assets of the Series:
A. been convicted, in the last 10 years, of any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion,
or misappropriation of funds or securities, involving violations of
Sections 1341, 1342, or 1343 of Title 18, United States Code; or
B. been found by any state regulatory authority, within the last 10
years, to have violated or to have acknowledged violation of any
provision of any state insurance law involving fraud, deceit or
knowing misrepresentation; or
C. been found by any federal or state regulatory authorities, within the
last 10 years, to have violated or to have acknowledged violation of
any provision of federal or state securities laws involving fraud,
deceit or knowing misrepresentation.
11. CONFIDENTIALITY. The Custodian, subcustodian, or any agent thereof
---------------
shall not disclose or use any records or information obtained
pursuant to this Agreement in any manner whatsoever except as
expressly authorized in this Agreement, will keep confidential any
information obtained pursuant to the arrangements under this
Agreement and will disclose such information only if the Fund has
authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
27
<PAGE>
12. RESERVATION OF AUTHORITY. Notwithstanding any other provision of
------------------------
this Agreement, it is understood and agreed that the Fund shall at
all times retain the ultimate responsibility for direction and
control of all services provided pursuant to this Agreement, and
retain the right to direct, approve, or disapprove any action
hereunder, which responsibility and right shall be reasonably
exercised.
13. MISCELLANEOUS.
-------------
A. This Agreement is executed and delivered in the State of New York
and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement is effective on the ____ day of _______________,
19____ .
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable
and not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not
contain the particular part, term or provision held to be illegal
or invalid.
H. This Agreement may not be assigned by either party without prior
written consent of the other party.
I. If any provision of the Agreement, either in its present form or
as amended from time to time, limits, qualifies or conflicts with
the Investment Company Act of
28
<PAGE>
1940 and the rules and regulations promulgated thereunder, such
statutes, rules and regulations shall be deemed to control and
supersede such provision without nullifying or terminating the
remainder of the provisions of this Agreement.
J. Custodian will not release the identity of Fund to an issuer which
requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and Fund unless the Fund
directs the Custodian otherwise.
K. A copy of the Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts. This Agreement has been
executed by the President of the Fund on behalf of the Fund in
his/her capacity as an officer of the Fund and not individually.
The obligations of this Agreement shall not be binding upon the
assets and property of the Fund and shall not be binding upon any
Trustee, officer or shareholder of the Fund individually.
29
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:______________________________________
Richard A. Winegar
Chief Operations Officer
ATTEST:
_________________________________________
Cheryl J. Naegler, Assistant Secretary
PFAMCo FUND
By: ____________________________________
Title: _________________________________
ATTEST:
_________________________________________
Secretary
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
By: ____________________________________
Title: _________________________________
By: ____________________________________
Title: _________________________________
ATTEST:
_________________________________________
Secretary
30
<PAGE>
EXHIBIT 99.B8I
SUPPLEMENT TO CUSTODY AGREEMENT
February 5, 1996
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
In connection with the services provided by Investors Fiduciary Trust
Company ("IFTC") to PIMCO Advisors Institutional Funds (the "Trust") pursuant to
an Custody Agreement dated December 17, 1990, as subsequently amended and
supplemented (the "Agreement"), under which Pacific Investment Management
Company ("PIMCO") and IFTC currently are the obligors, whereby IFTC serves as
Custodian to the Trust with respect to the Portfolios (as defined in the
Agreement) of the Trust, PIMCO wishes to inform IFTC of certain matters as set
forth below:
1. Effective November 1, 1995, the Trust comprises the following Funds to
which the Agreement applies: 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; and
2. Effective February 2, 1996, the name of the Trust is "PIMCO Funds:
Equity Advisors Series."
Pacific Investment Management Company
__________________________________
By: R. Wesley Burns
Title: Vice President
ACCEPTED:
Investors Fiduciary Trust Company
________________________________
By:
Title:
31
<PAGE>
EXHIBIT A
INVESTORS FIDUCIARY TRUST COMPANY
PIMCO FUNDS: PACIFIC INVESTMENT MANAGEMENT SERIES
PIMCO FUNDS: EQUITY ADVISORS SERIES
FEE SCHEDULE
I. INVESTMENT ACCOUNTING AND CUSTODY FEES
A. Asset Based Fee for the Relationship
4.75/100 of 1% (4.75 basis points) on the first $4 billion
1/100 of 1% (1 basis point) on assets in excess of $4 billion
B. Foreign Securities Premium (Investment Relationship)
.75/100 of 1% (.75 basis points) on all assets
C. Transaction Charge - Domestic only
Physical Delivery - $22.00
Book Entry - $12.00
Mortgage Backed Securities Principal & Interest Paydown-$10.00
SSB Repro - $50.00 per fund per month
Euro CD - $35.00
D. Foreign Securities Premium (Custody)
See Appendix I.
E. Balance Credits
IFTC will offset fees with balance credits calculated at 85%
of the average Federal Funds rate for the month less 50 basis
points applied to average custody collected cash balances for
the month. Balance credis can be used to offset fees. Any
credits in excess of fees will be carried forward from month
to month through the end of the calendar year. For calculation
purposes, IFTC uses an actual/actual basis.
F. Overdraft Charges
Overdrafts will be calculated at the Prime rate (as published
in the Wall Street Journal) and charged on a daily basis.
32
<PAGE>
II. TRANSFER AGENCY
A. Monthly Base Fee
$350 per month per fund (cusip) for the first forty (40) funds
(cusips), then $750 per month per fund (cusip) in excess of
forty (40) funds (cusips). Additional classes of each fund
(cusips), specifically class B shares, will be phased in
according to the following schedule:
<TABLE>
<CAPTION>
Month of Operation Discounts From Base
<S> <C>
1-3 75%
4-6 50%
7-9 25%
thereafter 0%
</TABLE>
B. Miscellaneous
Fiduciary Trustee Fees:
IRA's - $12.00 per account per year
Keoghs - $25.00 per social security number
C. Federal Fund Wires
There is a $7.00 fee for each federal fund wire received or
delivered. ACH transactions are provided at no additional
cost.
III. MISCELLANEOUS NOTES TO THE ABOVE FEE SCHEDULE
A. The asset based fees are calculated as follows: The cumulative
daily net assets are combined for the applicable portfolios and
divided by the days in the amount to create an aggregate average
daily net assets. This aggregate average daily net assets is then
multiplied by 1/12th of the applicable annual stated rate. The
resultant total monthly fee is then allocated to the individual
portfolios based upon the proportion of the aggregate average net
assets for the month.
B. For fee calculation purposes a series fund is treated as multiple
funds. For example, a 3 portfolio series fund would be treated as
3 separate funds when calculating set-up or minimum monthly fees.
C. Annual maintenance fees are payable monthly at 1/12th of the
annual stated rate, except for the foreign securities premium
which will be billed on month-end market value at 1/12th of the
annual stated rate.
33
<PAGE>
D. The above schedule does not include out-of-pocket expenses that
would be incurred by IFTC on the client's behalf. Example of out-
of-pocket expenses include but are not limited to forms, postage,
magnetic tapes, printing, proxy processing, microfilm,
microfiche, back-up recovery, pricing services, overnight mailing
services, FDIC insurance, foreign registration and script fees,
etc. IFTC bills out-of-pocket expenses separately from service
fees.
E. The fees stated above are exclusive of terminal equipment
required in the client's location(s) and communication line
costs.
F. Each month IFTC bills service fees and out-of-pocket expenses
separately.
G. Any fees not paid with 30 days of the date of the original
invoice will be charged a late payment fee of 1.5% per month
until payment of the fees are received by IFTC.
H. The above fee schedule is applicable for selections made and
communicated within 90 days of the date of this proposal. The
fees are guaranteed for a one year period commencing on the
effective date of the service agreement between IFTC and the
client. All changes to the fee schedule will be communicate in
writing at least 60 days prior to their effective date.
I. For existing clients establishing new funds (cusips), the
Shareholder Accounting (Transfer Agency) set-up fee is $2,500 per
new fund (cusip).
J. 12b-1 processing will be charged on an out-of-pocket basis at a
rate of $.15 per account per payment cycle.
K. This fee schedule covers the following portfolios:
Total Return Fund Columbus Circle Inv. Mid Cap Equity
Total Return Fund II Columbus Circle Inv. Core Equity
Total Return III NFJ Equity Income Fund
Low Duration Fund NFJ Diversified Low P/E Fund
Low Duration Fund II Parametric Enhanced Equity Fund
Short-Term Fund Cadence Capital Appreciation Fund
Growth Stock Fund NFJ Small Cap Value Fund
Global Fund Balanced Fund
Foreign Fund Cadence Small Cap Growth Fund
Long-Term U.S. Cadence Mid Cap Growth Fund
Government Fund Cadence Micro Cap Growth Fund
High Yield Fund Blairlogie International Active
Fund
International Fund Blairlogie Emerging Markets Fund
StocksPLUS Fund
34
<PAGE>
Money Market Fund
(section K. cont....)
VersaSTYLE Equity Fund
Moderate Duration Fund
Commercial Mortgage Securities Fund
__________________________________________________
Investors Fiduciary Trust Company
Date:
__________________________________________________
PIMCO Funds: Pacific Investment Management Series
Date:
__________________________________________________
PIMCO Funds: Equity Advisors Series
Date:
35
<PAGE>
APPENDIX I
PIMCO Funds
Global Fee Arrangement from
Investors Fiduciary Trust Company
I. 4.5/100 of 1% (4.5 basis points) on all settled securities held in
Euroclear/CEDEL
II. 12.75/100 of 1% (12.75 basis points) on all settled non-emerging market
assets. Five countries have been reclassified for asset charges as non-
emerging but still require transaction charges of $135.00. This additional
charge only applies to Hong Kong, Malaysia, Singapore, Spain and Thailand
as these are countries in transition from emerging market status.
III. 45/100 of 1% (45 basis points) on all settled securities held in emerging
markets with the exception of Argentina and the asterisked countries.
Argentina will be charged at 35/100 of 1% (35 basis poins) and $135 per
transaction. Asterisked countries are 55/100 of 1% (35 basis points). All
emerging market transactions are charged at $135.
Emerging Markets as of 1/1/96:
Argentina India Portugal
Bangladesh Indonesia Shanghai (China)*
Belize Israel Shenzhen (China)*
Botswana Jordon South Africa
Brazil Mauritus South Korea
Chile Morocco* Sri Lanka
Colombia Namibia Swaziland
Czech Republic Pakistan Taiwan
Ghana Peru Turkey
Greece Philippines Uruguay
Hungary Poland Venezuela
Zimbabwe
Other Services:
Out of Pocket Expenses: As incurred (e.g. stamp
taxes, registration
costs, script fees, special
transportation costs, etc.)
Transfer to successor custodian: Transaction charges in
accordance with fee
schedule.
Fees are to be paid monthly and based on the market value at previous
month end.
36
<PAGE>
ASSIGNMENT
OF CUSTODY AGREEMENT
AGREEMENT, made this 16th day of August, 1995 among PIMCO Advisors
Institutional Funds (the "Fund"), a Massachusetts business trust, Pacific
Investment Management Company ("PIMCO"), a corporation organized under the laws
of California, PIMCO Advisors Institutional Services, a division of PIMCO
Advisors L.P. ("PAIS"), a limited partnership, and Investors Fiduciary Trust
Company ("IFTC"), a state chartered trust company organized and existing under
the laws of the State of Missouri.
WHEREAS, the Fund, Pacific Financial Asset Management Corporation
("PFAMCO"), the corporate predecessor of PAIS, and IFTC entered into an Custody
Agreement dated December 17, 1990 (together with all Addenda thereto, the
"Custody Agreement"), pursuant to which IFTC agreed to serve as Custodian to the
Fund with respect to the Portfolios (as defined in the Custody Agreement); and
WHEREAS, in accordance with paragraph H of Section 13 of the Custody
Agreement, PFAMCo assigned its rights and obligations to PAIS under the Custody
Agreement effective November 15, 1994, and the Fund and Custodian consented to
such assignment; and
WHEREAS, PAIS wishes to assign its rights and obligations under the Custody
Agreement to PIMCO effective as of the date indicated above; and
WHEREAS, the Fund wishes for the Custodian to continue to serve as the
Custodian to the Portfolios, and the Custodian wishes to continue to so serve,
after the assignment described above;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and in the Custody Agreement, and in accordance with paragraph
H of section 13 of the Custody Agreement, the parties agree as follows:
1. Assignment.
----------
Effective as of the date indicated above, PAIS hereby assigns all
of its rights, duties, and obligations under the Custody Agreement to
PIMCO.
2. Performance of Duties.
---------------------
Effective as of the date indicated above, PIMCO hereby assumes
and agrees to perform all of PAIS's duties and obligations under the
Custody Agreement and be subject to all of the terms and conditions of said
Agreement as if they applied to PIMCO. PIMCO shall not be responsible for
any claim or demand arising under the Custody Agreement from services
rendered prior to the effective date of this Assignment unless otherwise
agreed by PIMCO, and PAIS
37
<PAGE>
shall not be responsible for any claim or demand arising under the Custody
Agreement from services rendered after the effective date of this
Assignment unless otherwise agreed by PAIS.
3. Consent.
-------
The Fund and the Custodian hereby consent to this assignment to
PIMCO of PAIS's rights, duties and obligations under the Custody Agreement
and the assumption by PIMCO of such rights, duties, and obligations, and
agree, subject to the terms and conditions of the Custody Agreement, to
look to PIMCO for the performance of the duties and obligations previously
assumed by PAIS under said Agreement after the effective date as described
above.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
PIMCO ADVISORS
INSTITUTIONAL FUNDS
___________________________ By: _______________________
Attest: Title:
Title:
PACIFIC INVESTMENT
MANAGEMENT CORPORATION
___________________________ By: _______________________
Attest: Title:
Title:
PIMCO ADVISORS
INSTITUTIONAL SERVICES, A
DIVISION OF PIMCO ADVISORS
L.P.
___________________________ By: _______________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
___________________________ By: _______________________
Attest: Title:
Title:
39
<PAGE>
ASSIGNMENT
OF CUSTODY AGREEMENT
AGREEMENT, made this 15th day of November, 1994 among PFAMCo Funds (the
"Fund"), formerly PFAMCo Fund, a Massachusetts business trust, Pacific Financial
Asset Management Corporation (the "Administrator" or "PFAMCo"), a corporation
organized under the laws of California, PIMCO Advisors L.P., a limited
partnership, and Investors Fiduciary Trust Company ("Custodian"), a trust
company chartered under the laws of the State of Missouri.
WHEREAS, the Fund, PFAMCo, and Custodian have entered into an Custody
Agreement dated December 17, 1990 (together with all Addenda thereto, the
"Custody Agreement"), pursuant to which Custodian has agreed to serve as
Custodian to the Fund with respect to the Portfolios (as defined in the Custody
Agreement); and
WHEREAS, certain of Pacific Mutual Insurance Company's investment advisory
subsidiaries, including PFAMCo, have entered into an agreement ("Consolidation
Agreement") with Thomson Advisory Group L.P. ("TAG"), providing for the
consolidation and recapitalization of such investment advisory subsidiaries,
including PFAMCo, with TAG ("Consolidation"); and
WHEREAS, as a result of the Consolidation, the investment advisory business
of PFAMCo will be transferred to a limited partnership to be named PIMCO
Advisors L.P., which is the current TAG; and
WHEREAS, PFAMCo wishes to assign its rights and obligations under the
Custody Agreement to PIMCO Advisors L.P. effective as of the "Closing Date" as
that term is defined in the Consolidation Agreement; and
40
<PAGE>
WHEREAS, the Fund wishes for the Custodian to continue to serve as the
Custodian to the Portfolios, and the Custodian wishes to continue to so serve,
after the Consolidation;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and in the Custody Agreement, and in accordance with paragraph
H of Section 13 of the Custody Agreement, the parties agree as follows:
1. Assignment.
----------
As of the Closing Date, PFAMCo hereby assigns all of its rights,
duties, and obligations under the Custody Agreement to PIMCO Advisors L.P.
2. Performance of Duties.
---------------------
As of the Closing Date, PIMCO Advisors L.P. hereby assumes and
agrees to perform all of PFAMCO's duties and obligations under the Custody
Agreement and be subject to all of the terms and conditions of said
Agreement as if they applied to PIMCO Advisors L.P.
3. Consent.
-------
The Fund and the Custodian hereby consent to this assignment to
PIMCO Advisors L.P. of PFAMCo's rights, duties and obligations under the
Custody Agreement and the assumption by PIMCO Advisors L.P. of such rights,
duties, and obligatins, and agrees, subject to the terms and conditions of
the Custody Agreement, to look to PIMCO Advisors L.P. for the performance
of the duties and obligations previously assumed by PFAMCo under said
Agreement after the effective date as described above.
41
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
PIMCO ADVISORS L.P.
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
42
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the _____ day of _______________, 1990, between
PFAMCo Funds, formerly PFAMCo Fund, (the "Fund") a Massachusetts business trust
having its principal place of business at 700 Newport Center Drive, Newport
Beach, CA 92660, Pacific Financial Asset Management Corporation, a California
corporation, having its principal place of business at 700 Newport Center Drive,
Newport Beach, California 92660 ("PFAMCo"), and Investors Fiduciary Trust
Company ("IFTC"), a state chartered trust company organized and existing under
the laws of the State of Missouri, having its principal place of business at 21
West 10th Street, Kansas City, Missouri 64105 (the "Agreement") is hereby
amended by the addition of the provisions set forth in this Addendum to the
Agreement, which is made this ____ day of _______________ , 1991.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Fund initially established nine separate series designated as
the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio (formerly,
Enhanced Index Portfolio), Capital Appreciation Portfolio, Small Cap Value
Portfolio, Small Cap Growth Portfolio, and International Equity Portfolio (each
a "Portfolio"); and
WHEREAS, the Fund intends to establish an additional Portfolio to be
designated as the Strategic Allocation Portfolio;
WHEREAS, the Fund desires to appoint IFTC as Custodian for the Strategic
Allocation Portfolio on the terms set forth in the Agreement and in this
Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the Fund
hereby constitutes and appoints IFTC as custodian with respect to the
Strategic Allocation Portfolio, which, together with all other Portfolios
previously established by the Fund, shall be a Portfolio under the
Agreement as provided in the Agreement subject to the terms and conditions
as specified in the Agreement and this Addendum, including the composition
provisions in paragraph seven (7)
43
<PAGE>
("Compensation") of the Agreement and in the Fee Schedule ("Exhibit B")
attached hereto.
IN WITNESS WHEREOF, the parties thereto have caused this Addendum to be executed
by their officers designated below on the date written above.
PFAMCo FUNDS
_________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
__________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
_________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
44
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended heretofore), between PIMCO Funds: Equity Advisors Series,
formerly PIMCO Advisors Institutional Funds, formerly PFAMCo Funds, formerly
PFAMCo Fund (the "Trust"), a Massachusetts business trust having its principal
place of business at 840 Newport Center Drive, Newport Beach, CA 92660, Pacific
Investment Management Company, a California limited partnership, having its
principal place of business at 840 Newport Center Drive, Newport Beach, CA 92660
("PIMCO Advisors"), and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this _____
day of __________, 1996.
WITNESSETH:
-----------
WHEREAS, pursuant to the Agreement, the Trust has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Trust currently consists of thirteen series designated as 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 (each a "Fund"); and
WHEREAS, the Trust intends to establish one additional Fund to be
designated as the Parametric Structured Emerging Markets Fund; and
WHEREAS, the Trust desires to appoint IFTC as Custodian for the Parametric
Structured Emerging Markets Fund on the terms set forth in the Agreement and in
this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
45
<PAGE>
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby constitutes and appoints IFTC as custodian with respect
to the Parametric Structured Emerging Markets Fund, which, in addition
to all other Funds previously established by the Trust, shall each be
deemed as a Fund under the Agreement as provided in the Agreement
subject to the terms and conditions as specified in the Agreement and
this Addendum, including the compensation provisions in paragraph
seven (7) ("Compensation") of the Agreement and in the Fee Schedule
("Exhibit B") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
_____________________________ By: ______________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET MANAGEMENT
CORPORATION
_____________________________ By: ______________________________
Attest: Title:
Title:
_____________________________ By: ______________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST COMPANY
_____________________________ By: ______________________________
Attest: Title:
Title:
46
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended), between the PFAMCo Funds, formerly PFAMCo Fund, (the
"Fund") a Massachusetts business trust having its principal place of business at
700 Newport Center Drive, Newport Beach, CA 92660, Pacific Financial Asset
Management Corporation ("PFAMCo"), a California corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this 13th
day of August, 1993.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of fourteen separate series designated
as the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio, Capital
Appreciation Portfolio, Small Cap Value Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Balanced Portfolio, Mid Cap Growth Portfolio,
Emerging Markets Portfolio, International Active Portfolio, and Micro Cap Growth
Portfolio (each a "Portfolio"); and
WHEREAS, the Fund intends to establish eleven additional Portfolios to be
designated as the Money Market Variable Portfolio, Managed Bond and Income
Variable Portfolio, Equity Income Variable Portfolio, Diversified Low P/E
Variable Portfolio, Small Cap Value Variable Portfolio, Capital Appreciation
Variable Portfolio, Mid Cap Growth Variable Portfolio, Enhanced Equity Variable
Portfolio, International Equity Variable Portfolio, Emerging Markets Variable
Portfolio, and International Active Variable Portfolio (the "Variable
Portfolios"); and
WHEREAS, the Fund desires to appoint IFTC as Custodian for the Variable
Portfolios on the terms set forth in the Agreement and in this Addendum to the
Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual premises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
47
<PAGE>
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby constitutes and appoints IFTC as Custodian with respect to
the Variable Portfolios, which, in addition to all other Portfolios
previously established by the Fund, shall each be deemed as a
Portfolio under the Agreement as provided in the Agreement subject to
the terms and conditions as specified in the Agreement and this
Addendum, including the compensation provisions in paragraph seven (7)
("Compensation") of the Agreement and in the Fee Schedule ("Exhibit
B") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
48
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended heretofore), between the PFAMCo Funds, formerly PFAMCo
Fund, (the "Fund") a Massachusetts business trust having its principal place of
business at 700 Newport Center Drive, Newport Beach, CA 92660, Pacific Financial
Asset Management Corporation ("PFAMCo"), a California corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this
___day of _________, 1993.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of eleven separate series designated
as the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio, Capital
Appreciation Portfolio, Small Cap Value Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Balanced Portfolio, Mid Cap Growth Portfolio,
(each a "Portfolio"); and
WHEREAS, the Fund intends to establish one additional series to be
designated as the Utility Stock Portfolio; and
WHEREAS, the Fund desires to appoint IFTC as Custodian for the Utility
Stock Portfolio on the terms set forth in the Agreement and in this Addendum to
the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual premises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby constitutes and appoints IFTC as Custodian with respect to
the Utility Stock Portfolio, which, in addition to all other
Portfolios previously established by the Fund, shall each be deemed as
a Portfolio under the Agreement as provided in the Agreement subject
to the terms and conditions as specified in the Agreement and this
49
<PAGE>
Addendum, including the compensation provisions in paragraph seven (7)
("Compensation") of the Agreement and in the Fee Schedule ("Exhibit
B") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
50
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended on April 2, 1991), between the PFAMCo Funds, formerly
PFAMCo Fund, (the "Fund") a Massachusetts business trust having its principal
place of business at 700 Newport Center Drive, Newport Beach, CA 92660, Pacific
Financial Asset Management Corporation ("PFAMCo"), a California Corporation,
having its principal place of business at 700 Newport Center Drive, Newport
Beach, California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this 1st
day of June, 1991.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of ten separate series designated as
the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio (formerly
Index Plus Portfolio and Enhanced Index Portfolio), Capital Appreciation
Portfolio, Small Cap Value Portfolio (formerly Low Cap Portfolio), Small Cap
Growth Portfolio (formerly Small Cap Portfolio), International Equity Portfolio,
and Strategic Allocation Portfolio (each a "Portfolio"); and
WHEREAS, the Fund intends to establish an additional Portfolio to be
designated as the Mid Cap Growth Portfolio; and
WHEREAS, the Fund desires to appoint IFTC as Custodian for the Mid Cap
Growth Portfolio on the terms set forth in the Agreement and in this Addendum to
the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby constitutes and appoints IFTC as Custodian with respect to
the Mid Cap Growth Portfolio, which, in addition to all other
Portfolios previously established by the Fund, shall each be deemed
one of the Portfolios under the Agreement as provided in the Agreement
subject to the terms and conditions
51
<PAGE>
as specified in the Agreement and this Addendum, including the
compensation provisions in paragraph seven (7) ("Compensation") of the
Agreement and in the Fee Schedule ("Exhibit B") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
52
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended heretofore), between the PFAMCo Funds, formerly PFAMCo
Fund, (the "Fund") a Massachusetts business trust having its principal place of
business at 700 Newport Center Drive, Newport Beach, CA 92660, Pacific Financial
Asset Management Corporation ("PFAMCo"), a California Corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this ____
day of __________, 1993.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of fifteen separate series designated
as the Money Market Fund, Managed Bond and Income Fund, Utility Stock Fund,
Equity Income Fund, Diversified Low P/E Fund, Small Cap Value Fund, Capital
Appreciation Fund, Mid Cap Growth Fund, Micro Cap Growth Fund, Small Cap Growth
Fund, Enhanced Equity Fund, International Equity Fund, Emerging Markets Fund,
International Active Fund and Balanced Funds (each a "Fund"); and
WHEREAS, the Trust intends to establish three additional series to be
designated as the Small Cap Equity Fund, Mid Cap Equity Fund and Core Equity
Fund; and
WHEREAS, the Fund desires to appoint IFTC as Custodian for the Small Cap
Equity Fund, Mid Cap Equity Fund adn Core Equity Fund on the terms set forth in
the Agreement and in this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual premises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
53
<PAGE>
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby constitutes and appoints IFTC as Custodian with respect to
the Small Cap Equity Fund, Mid Cap Equity Fund and Core Equity Fund
which, in addition to all other Funds previously established by the
Trust, shall each be deemed as a Fund under the Agreement as provided
in the Agreement subject to the terms and conditions as specified in
the Agreement and this Addendum, including the compensation provisions
in paragraph seven (7) ("Compensation") of the Agreement and in the
Fee Schedule ("Exhibit B") attached thereto.
54
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo ADVISORS INSTITUTIONAL
FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PIMCO ADVISORS, L.P.
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Name:
Title: Title:
55
<PAGE>
EX-99.B8(i)
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended heretofore), between PIMCO Funds: Equity Advisors Series,
formerly PIMCO Advisors Institutional Funds, formerly PFAMCo Funds, formerly
PFAMCo Fund (the "Trust"), a Massachusetts business trust having its principal
place of business at 840 Newport Center Drive, Newport Beach, CA 92660, Pacific
Investment Management Company, a California limited partnership, having its
principal place of business at 840 Newport Center Drive, Newport Beach, CA 92660
("PIMCO Advisors"), and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this _____
day of __________, 1996.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Trust has appointed IFTC as
Custodian and IFTC has accepted such appointment; and
WHEREAS, the Trust currently consists of thirteen series designated as 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 (each a "Fund"); and
56
<PAGE>
WHEREAS, the Trust intends to establish one additional Fund to be
designated as the Parametric Structured Emerging Markets Fund; and
WHEREAS, the Trust desires to appoint IFTC as Custodian for the Parametric
Structured Emerging Markets Fund on the terms set forth in the Agreement and in
this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby constitutes and appoints IFTC as custodian with respect to the
Parametric Structured Emerging Markets Fund, which, in addition to all other
Funds previously established by the Trust, shall each be deemed as a Fund under
the Agreement as provided in the Agreement subject to the terms and conditions
as specified in the Agreement and this Addendum, including the compensation
provisions in paragraph seven (7) ("Compensation") of the Agreement and in the
Fee Schedule ("Exhibit B") attached thereto.
57
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO FUNDS: EQUITY ADVISORS SERIES
By: ____________________________________
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY
By: ____________________________________
Title:
INVESTORS FIDUCIARY TRUST COMPANY
By: ____________________________________
Title:
58
<PAGE>
EX-99.B9(a)(i)
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] AGENCY AGREEMENT AND ADDENDA
<PAGE>
AGENCY AGREEMENT
THIS AGREEMENT made the 17th day of December, 1990, by and among PFAMCo
Fund, a Massachusetts business trust having its principal place of business at
700 Newport Center Drive, Newport Beach, California 92660-9030 ("Fund"), Pacific
Financial Asset Management Corporation, a California corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660-9030 ("PFAMCo") and Investors Fiduciary Trust Company, a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 ("IFTC"):
WITNESSETH:
WHEREAS, PFAMCo and Fund desire to appoint IFTC as Transfer Agent and
Dividend Disbursing Agent, and IFTC desires to accept such appointment for the
Money Market Portfolio, Managed Bond Portfolio, Equity Income Portfolio,
Diversified Low Price/Earnings Portfolio, Enhanced Index Portfolio (formerly
Index Plus Portfolio), Capital Appreciation Portfolio, Small Capital Value,
Small Capital Growth, International Equity Portfolio together with all other
portfolios subsequently established by the Fund and for which IFTC is willing to
be appointed (collectively the "Portfolios");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Documents to Filed with Appointment.
-----------------------------------
1
<PAGE>
In connection with the appointment of IFTC as Transfer Agent and Dividend
Disbursing Agent for Portfolios of Fund, there will be filed with IFTC the
following documents:
A. A certified copy of the resolutions of the Board of Trustees of Fund
appointing IFTC as Transfer Agent and Dividend Disbursing Agent, approving
the form of this Agreement, and designating certain persons to sign
certificates of shares of beneficial interest, if any, and give written
instructions and requests on behalf of Fund;
B. A certified copy of the Declaration of Trust of Fund and all amendments
thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements, and amendments thereto, filed with the
Securities and Exchange Commission.
E. Specimens of all forms of outstanding certificates of shares of beneficial
interest, in the forms approved by the Board of Trustees of Fund, with a
certificate of the Secretary of Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized to sign
certificates of shares of beneficial interest and individuals authorized to
sign written instructions and requests;
G. An opinion of counsel for Fund with respect to:
(1) Fund's organization and existence under the laws of its state of
organization,
(2) The status of all shares of beneficial interest of Fund covered by the
appointment under the Securities Act of 1933, as amended, and any other
applicable federal or state statute and
2
<PAGE>
(3) The fact that all issued shares are, and all unissued shares will be,
when issued, validly issued, fully paid and non-assessable.
2. Certain Representations and Warranties of IFTC. IFTC represents and warrants
----------------------------------------------
to Fund that:
A. It is a trust company duly organized and existing and in good standing
under the laws of Missouri.
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Articles of Incorporation
and bylaws to enter into and perform the services contemplated in this
Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. Certain Representations and Warranties of Fund. Fund represents and warrants
----------------------------------------------
to IFTC that:
A. It is a business trust duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
B. It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended, which consists of nine
separate Portfolios.
3
<PAGE>
C. A registration statement under the Securities Act of 1933 has been filed
and will be effective with respect to all shares of Fund being offered for
sale.
D. All requisite steps have been or will be taken to register Fund's shares
for sale in all applicable states to the extent necessary.
E. Fund is empowered under applicable laws and by its Declaration of Trust
and bylaws to enter into and perform this Agreement .
4. Scope of Appointment.
--------------------
A. Subject to the conditions set forth in this Agreement, PFAMCo and Fund
hereby employs and appoints IFTC as Transfer Agent and Dividend Disbursing
Agent for the Portfolio effective the __________.
B. IFTC hereby accepts such employment and appointment and agrees that it
will act as Fund's Transfer Agent and Dividend Disbursing Agent. IFTC
agrees that it will also act as agent in connection with Fund's exchange
privilege, special open-accounts or similar plans for shareholders, if
any.
C. IFTC agrees to provide the necessary facilities, equipment and personnel
to perform its duties and obligations hereunder in accordance with
industry practice.
D. Fund agrees to use its best efforts to deliver to IFTC in Kansas City,
Missouri, as soon as they are available, all of its shareholder account
records.
E. Subject to the provisions of Sections 19. and 20. hereof, IFTC agrees that
it will perform all of the usual and ordinary services of Transfer Agent
and Dividend Disbursing Agent and as Agent for the various shareholder
accounts, including, without limitation, the following: issuing,
transferring and canceling certificates of shares of beneficial interest,
if any, maintaining all shareholder accounts,
4
<PAGE>
preparing shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing shareholder reports and prospectuses,
withholding taxes on non-resident alien and foreign corporation accounts,
for pension and deferred income, backup withholding or other instances
agreed upon by the parties, preparing and mailing checks for disbursement
of income dividends and capital gains distributions, preparing and filing
U.S. Treasury Department Form 1099 for all shareholders, preparing and
mailing confirmation forms to shareholders and dealers with respect to all
purchases and redemptions of Fund shares and other transactions in
shareholder accounts for which confirmations are required, recording
reinvestments of dividends and distributions in Fund shares, recording
redemption of Fund shares and cooperating with broker-dealers and
financial intermediaries who represent shareholders of the Fund.
5. Limit of Authority.
------------------
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of IFTC as Transfer Agent will
be construed to cover the full amount of the shares of beneficial interest
for which IFTC is appointed as the same will, from time to time, be
constituted, and any subsequent increases in such authorized amount. In case
of such increase Fund will file with IFTC:
A. If the appointment of IFTC was theretofore expressly limited, a certified
copy of a resolution of the Board of Trustees of Fund increasing the
authority of IFTC;
B. A certified copy of the amendment to the Declaration of Trust of Fund
authorizing the issuance of additional shares of beneficial interest;
5
<PAGE>
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of
additional shares of beneficial interest, and an opinion of counsel that
the order or consent of no other governmental or regulatory authority is
required:
D. Opinion of counsel for Fund stating:
(1) The status of the additional shares of beneficial interest of Fund
under the Securities Act of 1933, as amended, and any other applicable
federal or state statute; and
(2) That the additional shares are, or when issued will be, validly
issued, fully paid and non-assessable.
6. Compensation and Expenses.
-------------------------
A. In consideration for its services hereunder as Transfer Agent and Dividend
Disbursing Agent, PFAMCo will pay to IFTC from time to time a reasonable
compensation for all services rendered as Agent, and also, all its
reasonable out-of-pocket expenses, charges, and other disbursements
incurred in connection with the agency. Such compensation is set forth in
a separate schedule to be agreed to by Fund and IFTC, a copy of which is
attached hereto as Exhibit A and incorporated herein by reference.
B. PFAMCo agrees to promptly reimburse IFTC, upon receipt of a statement
itemized to the extent itemization is available to IFTC, for all
reasonable out-of-pocket expenses or advances incurred by IFTC in
connection with the performance of services under this Agreement, for
postage (and first class mail insurance in connection with mailing share
certificates), envelopes, check forms,
6
<PAGE>
continuous forms, forms for reports and statements, stationery, and other
similar items, telephone and telegraph charges incurred in answering
inquires from dealers or shareholders, microfilm used each year to record
the previous year's transactions in shareholder accounts and computer
tapes used for permanent storage of records and cost of insertion of
materials in mailing envelopes by outside firms.
7. Efficient Operation of IFTC System.
----------------------------------
In connection with the performance of its services under this Agreement, IFTC
is responsible for such items as:
(1) The accuracy of entries in IFTC's records reflecting orders and
instructions received by IFTC from dealers, shareholders, Fund or its
principal underwriter;
(2) The timely posting of purchase and redemption orders except when a delay
in posting is caused by factors beyond IFTC's control;
(3) The availability and the accuracy of shareholder lists, shareholder
account verifications, confirmations and other shareholder account
information to be produced from its records or data;
(4) The accurate and timely issuance of dividend and distribution checks in
accordance with instructions received from Fund;
(5) The accuracy of redemption transactions and payments in accordance with
redemption instructions received from dealers, shareholders or Fund;
(6) The deposit daily in Fund's appropriate special bank account of all
checks and payments received from dealers or shareholders for investment
in shares;
7
<PAGE>
(7) The requiring of proper forms of instructions, signatures and signature
guarantees and any necessary documents supporting the legality of
transfers, redemptions and other shareholder account transactions, all in
conformance with IFTC's present procedures with such changes as may be
required or approved by Fund; and
(8) The maintenance of a current duplicate set of Fund's essential records at
a secure distant location, in a form available and usable forthwith in
the event of any breakdown or disaster disrupting its main operation.
8. Indemnification.
---------------
A. Except to the extent that IFTC is covered by and receives payment from
any insurance required hereunder, IFTC will not be responsible for, and
Fund will hold harmless and indemnify IFTC from and against any loss by
or liability to the Fund or a third party, including attorney's fees, in
connection with any claim or suit asserting any such liability arising
out of or attributable to actions taken or omitted by IFTC pursuant to
this Agreement, unless IFTC has acted negligently or in bad faith. The
matters covered by this indemnification include but are not limited to
those of Section 14 hereof. Fund will be responsible for, and will have
the right to conduct or control the defense of any litigation asserting
liability against which IFTC is indemnified hereunder. IFTC will not be
under any obligation to prosecute or defend any action or suit in respect
of the agency relationship hereunder, which, in its opinion, may involve
it in expense or liability, unless Fund will, as often as requested,
furnish IFTC with reasonable, satisfactory security and indemnity against
such expense or liability.
8
<PAGE>
B. IFTC will hold harmless and indemnify Fund from and against any loss or
liability to IFTC or a third party, including attorneys' fees, in
connection with any claim or suit asserting any such liability arising
out of IFTC's failure to comply with the terms of this Agreement or out
of IFTC's negligence, willful misconduct, or bad faith.
9. Certain Covenants of IFTC and Fund.
----------------------------------
A. All requisite steps will be taken by Fund from time to time when and as
necessary to register the Fund's shares for sale in all states in which
Fund's shares shall at the time be offered for sale and require
registration. If at any time Fund will receive notice of any stop order or
other proceeding in any such state affecting such registration or the sale
of Fund's shares, or of any stop order or other proceeding under the
Federal securities laws affecting the sale of Fund's shares, Fund will
give prompt notice thereof to IFTC.
B. IFTC hereby agrees to perform such transfer agency functions as are set
forth in Section 4.E. above and establish and maintain facilities and
procedures reasonably acceptable to Fund for safekeeping of share
certificates, check forms, and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices, and to carry insurance as specified in
Exhibit B which will not be lowered without notice to Fund.
C. To the extent required by Section 31 of the Investment Company Act of 1940
as amended and Rules thereunder, IFTC agrees that all records maintained
by IFTC relating to the services to be performed by IFTC under this
Agreement are the
9
<PAGE>
property of Fund and will be preserved and will be surrendered promptly to
Fund on request and will not be released to any other party except as
required by law. IFTC agrees to notify Fund of any request for records to
which, in its opinion it must respond, prior to responding.
D. IFTC agrees to furnish Fund semi-annual reports of its financial
condition, consisting of a balance sheet, earnings statement and any other
financial information reasonably requested by Fund. The annual financial
statements will be certified by IFTC's certified public accountants and
IFTC will promptly advise Fund of notification by such certified public
accountants of their intent to issue an opinion on such financial
statements which is other than unqualified .
E. IFTC represents and agrees that it will use its best efforts to keep
current on the trends of the investment company industry relating to
shareholder services and will use its best efforts to continue to
modernize and improve its system without additional cost to Fund.
F. IFTC will permit Fund and its authorized representatives to make periodic
inspections of its operations at reasonable times during business hours.
10.Recapitalization or Readjustment.
---------------------------------
In case of any recapitalization, readjustment or other change in the capital
structure of Fund or any portfolio thereof requiring a change in the form of
share certificates, IFTC will issue or register certificates in the new form
in exchange for, or in transfer of, the outstanding certificates in the old
form, upon receiving:
A. Written instructions from an officer of Fund;
10
<PAGE>
B. Certified copy of the amendment to the Declaration of Trust or other
document effecting the change;
C. Certified copy of the order or consent of each governmental or regulatory
authority required by law to the issuance of the shares in the new form,
and an opinion of counsel that the order or consent of no other government
or regulatory authority is required;
D. Specimens of the new certificates in the form approved by the Board of
Trustees of Fund, with a certificate of the Secretary of Fund as to such
approval;
E. Opinion of counsel for Fund stating:
(1) The status of the shares of beneficial interest of Fund in the new
form under the Securities Act of 1933, as amended and any other
applicable federal or state statute; and
(2) That the issued shares in the new form are, and all unissued shares
will be, when issued, validly issued, fully paid and non-assessable.
11. Share Certificates.
------------------
Fund will furnish IFTC with a sufficient supply of blank certificates of
shares of beneficial interest and from time to time will renew such supply
upon the request of IFTC. Such certificates will be signed manually or by
facsimile signatures of the officers of Fund authorized by law and by bylaws
to sign share certificates, and if required, will bear the Fund's seal or
facsimile thereof.
12. Death, Resignation or Removal of Signing Officer.
------------------------------------------------
Fund will file promptly with IFTC written notice of any change in the
officers authorized to sign share certificates, written instructions or
requests, together with
11
<PAGE>
two signature cards bearing the specimen signature of each newly authorized
officer. In case any officer of Fund who will have signed manually or whose
facsimile signature will have been affixed to blank share certificates will
die, resign, or be removed prior to the issuance of such certificates, IFTC
may issue or register such shares certificates as the share certificates of
Fund notwithstanding such death, resignation, or removal, until specifically
directed to the contrary by Fund in writing. In the absence of such
direction, Fund will file promptly with IFTC such approval, adoption, or
ratification as may be required by law.
13. Future Amendments to Declaration of Trust and Bylaws.
----------------------------------------------------
Fund will promptly file with IFTC copies of all material amendments to its
Declaration of Trust or bylaws made after the date of this Agreement.
14. Instructions, Opinion of Counsel and Signatures.
-----------------------------------------------
At any time IFTC may apply to any officer of the Fund or any person
authorized by the Fund to give instructions to IFTC for instructions, and
may with the approval of a Fund officer consult with legal counsel for Fund
at the expense of the Fund, or its own legal counsel at its own expense,
with respect to any matter arising in connection with the agency and it will
not be liable for any action taken or omitted by it in good faith in
reliance upon such instructions or upon the opinion of such counsel. IFTC
will be protected in acting upon any paper or document reasonably believed
by it to be genuine and have been signed by the proper person or persons and
will not be held to have notice of any change of authority of any person,
until receipt of written notice thereof from Fund. It will also be protected
in recognizing share certificates which it reasonably believes to bear the
proper manual or facsimile signatures of the officers
12
<PAGE>
of Fund, and the proper countersignature of any former Transfer Agent or
Registrar, or of a Co-Transfer Agent or Co-Registrar.
15. Papers Subject to Approval of Counsel.
-------------------------------------
The acceptance by IFTC of its appointment as Transfer Agent and Dividend
Disbursing Agent and all documents filed in connection with such appointment
and thereafter in connection with the agencies, will be subject to the
approval of legal counsel for IFTC (which approval will not be unreasonably
withheld).
16. Certification of Documents.
--------------------------
The required copy of the Declaration of Trust of Fund and copies of all
amendments thereto will be certified by the Secretary (or other appropriate
official) of the Commonwealth of Massachusetts, and if such Declaration of
Trust and amendments are required by law to be also filed with a county,
city or other officer of official body, a certificate of such filing will
appear on the certified copy submitted to IFTC. A copy of the order or
consent of each governmental or regulatory authority required by law to the
issuance of the shares will be certified by the Secretary or Clerk of such
governmental or regulatory authority, under proper seal of such authority.
The copy of the Bylaws and copies of all amendments thereto, and copies of
resolutions of the Board of Trustees of Fund, will be certified by the
Secretary or an Assistant Secretary of Fund under the Fund's seal.
17. Records.
-------
IFTC will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant
to sub-paragraph (2) Rules 31a-1(b)(2)(i)-(iv) under the Investment Company
Act of 1940, if any.
13
<PAGE>
18. Disposition of Books, Records and Canceled Certificates.
-------------------------------------------------------
IFTC will send periodically to Fund, or to where designated by the Secretary
or an Assistant Secretary of Fund, all books, documents, and all records no
longer deemed needed for current purposes and share certificates which have
been canceled in transfer or in exchange, upon the understanding that such
books, documents, records, and share certificates will not be destroyed by
Fund without the consent of IFTC (which consent will not be unreasonably
withheld), but will be safely stored for possible future reference.
19. Annual Certification.
--------------------
IFTC shall be responsible for making inquiries, for reasonably insuring, and
for providing an annual certification, upon request of the Fund, to the Fund
that, to the best of IFTC's knowledge, IFTC or any employee thereof has not,
in any material connection with the handling of separate account assets or
assets of an underlying fund:
(a) been convicted, in the last 10 years, if any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, or involving violations or
section 1341, 1342, or 1343 of Title 18, United States Code; or
(b) been found by any state regulatory authority, within the last 10 years,
to have violated or to have acknowledged violation or any provision of
any state insurance law involving fraud, deceit or knowing
misrepresentation; or
14
<PAGE>
(c) been found by any federal or state regulatory authorities, within the
last 10 years, to have violated or to have acknowledged violation of any
provision of federal or state securities laws involving fraud, deceit or
knowing misrepresentation.
20. Provisions Relating to IFTC as Transfer Agent.
---------------------------------------------
A. IFTC will make original issues of share certificates upon written
request of an officer of Fund and upon being furnished with a certified
copy of a resolution of the Board of Trustees authorizing such original
issue, an opinion of counsel as outlined in paragraphs 1.G. of this
Agreement, any documents required by paragraphs 5. or 10. of this
Agreement, any necessary funds for the payment of any original issue
tax.
B. Before making any original issue of certificates Fund will furnish IFTC
with sufficient funds to pay all required taxes on the original issue of
shares of beneficial interest, if any. Fund will furnish IFTC such
evidence as may be required by IFTC to show the actual value of the
shares. If no taxes are payable IFTC will be furnished with an opinion
of outside counsel to that effect.
C. Shares of beneficial interest will be transferred and new certificates
issued in transfer, or shares of beneficial interest accepted for
redemption and funds remitted therefor, upon surrender of the old
certificates in form deemed by IFTC properly endorsed for transfer or
redemption accompanied by such documents as IFTC may deem necessary to
evidence that authority of the person making the transfer or redemption,
and bearing satisfactory evidence of the payment of any applicable
transfer taxes. IFTC reserves the right to refuse to transfer or redeem
shares until it is satisfied that the endorsement or signature on the
certificate or
15
<PAGE>
any other document is valid and genuine, and for that purpose it may
require a guaranty of signature by a firm having membership in the New
York Stock Exchange, Midwest Stock Exchange, American Stock Exchange
Securities Corporation, Pacific Coast Stock Exchange, or any other
exchange acceptable to IFTC or by a bank or trust company approved by
it. IFTC also reserves the right to refuse to transfer or redeem shares
until it is satisfied that the requested transfer or redemption is
legally authorized, and it will incur no liability for the refusal in
good faith to make transfers or redemptions which, in its judgment, are
improper or unauthorized. IFTC may, in effecting transfers or
redemptions, rely upon Simplification Acts or other statutes which
protect it and Fund in not requiring complete fiduciary documentation.
In cases in which IFTC is not directed or otherwise required to maintain
the consolidated records of shareholder's accounts, IFTC will not be
liable for any loss which may arise by reason of not having such
records, provided that such loss could not have been prevented by the
exercise of ordinary diligence. IFTC will be under no duty to use a
greater degree of diligence by reason of not having such records.
D. When mail is used for delivery of share certificates IFTC will forward
share certificates in "nonnegotiable" form by first class or registered
mail and share certificates in "negotiable" form by registered mail, all
such mail deliveries to be covered while in transit to the addressee by
insurance arranged for by IFTC .
E. IFTC will issue and mail subscription warrants, certificates
representing dividends, exchanges or split ups, or act as Conversion
Agent upon receiving
16
<PAGE>
written instructions from any officer of Fund and such other documents
as IFTC deems necessary.
F. IFTC will issue, transfer, and split up certificates and will issue
certificates representing full shares of beneficial interest upon surrender
of scrip certificates aggregating one full share or more when presented to
IFTC for that purpose upon receiving written instructions from an officer
of Fund and such other documents as IFTC may deem necessary.
G. IFTC may issue new certificates in place of certificates represented to
have been lost, destroyed, stolen or otherwise wrongfully taken upon
receiving instructions from Fund and indemnity satisfactory to IFTC and
Fund, and may issue new certificates in exchange for, and upon surrender
of, mutilated certificates. Such instructions from Fund will be in such
form as will be approved by the Board of Trustees of Fund will be in
accordance with the provisions of law and the bylaws of Fund governing such
matter.
H. IFTC will supply a shareholder's list to Fund for its shareholders'
meetings, if any, upon receiving a request from an officer of Fund. It
will also supply lists at such other times as may be requested by an
officer of Fund.
I. Upon receipt of written instructions of an officer of Fund, IFTC will
address and mail notices to shareholders.
J. IFTC will furnish to regulatory authorities any information or reports
regarding the records of the Fund which may be requested in order to
ascertain whether the operations of the Fund are being conducted in a
manner consistent with applicable laws and regulations.
17
<PAGE>
K. In case of any request or demand for the inspection of the shareholder
records of Fund or any other books in the possession of IFTC, IFTC will
endeavor to notify Fund promptly and endeavor to secure instructions as to
permitting or refusing such inspection. IFTC reserves the right, however,
to exhibit the shareholder records or other books to any person in case it
is advised by its counsel that it may be held responsible for the failure
to exhibit the shareholder records or other books to such person.
L. Notwithstanding any other provision of the Agreement, it is understood and
agreed that Fund shall at all times retain the ultimate responsibility for
and control of all services provided pursuant to this Agreement and
reserves the right to direct, approve or disapprove any action hereunder
taken on their behalf by IFTC, which control and right will be reasonably
exercised.
21.Provisions Relating to Dividend Disbursing Agency.
-------------------------------------------------
A. IFTC will, at the expense of Fund, provide a special form of check
containing the imprint of any device or other matter desired by Fund. Said
checks must, however, be of a form and size convenient for use by IFTC.
B. If Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished
IFTC within a reasonable time prior to the date of mailing of the dividend
checks, at the expense of Fund.
C. If Fund desires its distributions mailed in any special form of envelopes,
sufficient supply of the same will be furnished to IFTC but the size and
form of said envelopes will be subject to the approval of IFTC. If stamped
envelopes are used, they must be furnished by Fund; or if postage stamps
are to be affixed to the
18
<PAGE>
envelopes, the stamps or the cash necessary for such stamps must be
furnished by Fund.
D. IFTC will maintain one or more deposit accounts as Agent for Fund, into
which the funds for payment of dividends, distributions, redemptions or
other disbursements provided for hereunder will be deposited, and against
which checks will be drawn.
E. IFTC is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees thereof
allege either that they have not received the checks or that such checks
have been mislaid, lost, stolen, destroyed or through no fault of theirs,
are otherwise beyond their control, and cannot be produced by them for
presentation and collection, and, to issue and deliver duplicate checks in
replacement thereof.
22.Termination of Agreement.
------------------------
A. This Agreement shall continue as of the date of its execution until
terminated as hereinafter provided. This Agreement may be terminated by
either party upon receipt of sixty (60) days written notice from the other
party.
B. Fund, in addition to any other rights and remedies, shall have the right
to terminate this Agreement forthwith upon the occurrence at any time of
any of the following events :
(1) Any interruption or cessation of operations by IFTC or its assigns
which materially interferes with the business operation of Fund;
(2) The bankruptcy of IFTC or its assigns or the appointment of a receiver
for IFTC or its assigns;
19
<PAGE>
(3) Any merger, consolidation or sale of substantially all the assets of
IFTC or its assigns;
(4) The acquisition of a controlling interest in IFTC or its assigns, by
any broker, dealer, investment adviser or investment company except as
may presently exist, or;
(5) Failure by IFTC or its assigns to perform its duties in accordance
with the Agreement, which failure materially adversely affects the
business operations of Fund and which failure continues for thirty
(30) days after receipt of written notice from Fund.
C. If at any time this Agreement will be terminated by Fund pursuant to
clause (1), (2) or (5) of Section 22.B, Fund will have and is hereby
granted the right, at its option, to use or cause its agents, employees or
independent contractors to use, for as long as Fund deems necessary for
its own operations, and no other, with payment of any compensation or
reimbursement to IFTC, IFTC's system including all of the programs,
manuals and other materials and information necessary to operate the
system.
D. In the event of termination, Fund will promptly pay IFTC all amounts due
to IFTC hereunder.
E. Sections 8 and 9.C. will survive termination.
F. In the event of termination, IFTC will use its best efforts to transfer
the books and records of the Fund, free from any claim or retention of
rights to the records by IFTC, to the successor transfer agent and to
provide other information relating to its services provided hereunder for
reasonable compensation therefore.
20
<PAGE>
23. Assignment.
----------
A. Neither this Agreement nor any rights obligations hereunder may be
assigned by IFTC without the written consent of Fund; provided, however,
no assignment will relieve IFTC of any of its obligations hereunder.
B. This Agreement will inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
24. Confidentiality.
---------------
A. IFTC agrees that, except as provided in the last sentence of Section
19.J. hereof, or as otherwise required by law, IFTC will keep
confidential all records of and information in its possession relating to
Fund or its shareholders or shareholder accounts and will not disclose
the same to any person except at the request or with the consent of Fund.
B. Fund agrees that, subject to Section 22.C. and except as otherwise
required by law, Fund will keep confidential all financial statements and
other financial records (other than statements and records relating
solely to Fund's business dealings with IFTC) and all manuals, systems
and other technical information and data, not publicly disclosed,
relating to IFTC's operations and programs furnished to it by IFTC
pursuant to this Agreement and will not disclose the same to any person
except at the request or with the consent of IFTC.
25. Survival of Representations and Warranties.
------------------------------------------
A. All representations and warranties by either party herein contained will
survive the execution and delivery of this Agreement.
21
<PAGE>
26. Miscellaneous.
-------------
A. This Agreement is executed and delivered in the State of New York and
shall be governed by the laws of said state .
B. All the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and to be enforceable by the respective
successors and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any manner
except by a written agreement properly authorized and executed by both
parties hereto.
D. The captions in this Agreement are included for convenience of reference
only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts held to
be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
G. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of the Commonwealth of Massachusetts and notice is hereby given
that the Agreement has been executed on behalf of Fund by the undersigned
officer of Fund in his/her
22
<PAGE>
capacity as an officer of Fund and not individually. The obligations of
this Agreement shall not be binding upon the assets and property of Fund
and shall not be binding upon any Trustee, officer or shareholder of Fund
individually.
23
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly
INVESTORS FIDUCIARY TRUST COMPANY
By: _____________________________________
Richard A. Winegar
Chief Operations Officer
ATTEST:
______________________________________
Cheryl J. Naegler, Assistant Secretary
PFAMCo FUND
By: ______________________________________
Title: ___________________________________
ATTEST:
_________________________________
Secretary
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
By: ______________________________________
Title: ___________________________________
By: ______________________________________
Title: ___________________________________
ATTEST:
__________________________________
Secretary
24
<PAGE>
EXHIBIT B
INSURANCE COVERAGE
Insurance coverages maintained by IFTC effective January 1, 1988.
Description of Policy:
Brokers Blanket Bond, Standard Form 14
Covering losses caused by dishonesty of employees, physical loss of securities
on or outside of premises while in possession of authorized person, loss
caused by forgery or alteration of checks or similar instruments.
Coverage: $75,000,000
Errors and Omissions Insurance
Covering replacement of destroyed records and computer errors and omissions.
Coverage: $10,000,000
Special Forgery Bond
Covering losses through forgery or alteration of checks or drafts of customers
processed by insured but drawn on or against them.
Coverage: $500,000
Mail Insurance (applies to all full service operations)
Provides indemnity for security lost in the mails.
Coverage:
$10,000,000 nonnegotiable securities mailed to domestic locations via
registered mail.
$1,000,000 nonnegotiable securities mailed to domestic locations via first-
class or certified mail.
$1,000,000 nonnegotiable securities mailed to foreign locations via
registered mail.
$1,000,000 negotiable securities mailed to all locations via registered
mail.
25
<PAGE>
SUPPLEMENT TO AGENCY AGREEMENT
February 5, 1996
Investors Fiduciary Trust Company
127 West 10/th/ Street
Kansas City, MO 64105
In connection with the services provided by Investors Fiduciary Trust
Company ("IFTC") to PIMCO Advisors Institutional Funds (the "Trust") pursuant to
an Agency Agreement dated December 17, 1990, as subsequently amended and
supplemented (the "Agreement"), under which Pacific Investment Management
Company ("PIMCO") and IFTC currently are the obligors, whereby IFTC serves as
Transfer Agent and Dividend Disbursing Agent to the Trust with respect to the
Portfolios (as defined in the Agreement) of the Trust, PIMCO wishes to inform
IFTC of certain matters as set forth below:
1. Effective November 1, 1995, the Trust comprises the following Funds to
which the Agreement applies: 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; and
2. Effective February 2, 1996, the name of the Trust is "PIMCO Funds:
Equity Advisors Series."
Pacific Investment Management Company
----------------------------------
By: R. Wesley Burns
Title: Vice President
ACCEPTED:
Investors Fiduciary Trust Company
- --------------------------------
By:
Title:
26
<PAGE>
EXHIBIT A
INVESTORS FIDUCIARY TRUST COMPANY
PIMCO FUNDS: PACIFIC INVESTMENT MANAGEMENT SERIES
PIMCO FUNDS: EQUITY ADVISORS SERIES
FEE SCHEDULE
I. INVESTMENT ACCOUNTING AND CUSTODY FEES
A. Asset Based Fee for the Relationship
4.75/100 of 1% (4.75 basis points) on the first $4 billion
1/100 of 1% (1 basis point) on assets in excess of $4 billion
B. Foreign Securities Premium (Investment Relationship)
.75/100 of 1% (.75 basis points) on all assets
C. Transaction Charge - Domestic only
Physical Delivery - $22.00
Book Entry - $12.00
Mortgage Backed Securities Principal & Interest Paydown-$10.00
SSB Repro - $50.00 per fund per month
Euro CD - $35.00
D. Foreign Securities Premium (Custody)
See Appendix I.
E. Balance Credits
IFTC will offset fees with balance credits calculated at 85% of the
average Federal Funds rate for the month less 50 basis points applied
to average custody collected cash balances for the month. Balance
credis can be used to offset fees. Any credits in excess of fees will
be carried forward from month to month through the end of the calendar
year. For calculation purposes, IFTC uses an actual/actual basis.
F. Overdraft Charges
Overdrafts will be calculated at the Prime rate (as published in the
Wall Street Journal) and charged on a daily basis.
27
<PAGE>
II. TRANSFER AGENCY
A. Monthly Base Fee
$350 per month per fund (cusip) for the first forty (40) funds
(cusips), then $750 per month per fund (cusip) in excess of forty
(40) funds (cusips). Additional classes of each fund (cusips),
specifically class B shares, will be phased in according to the
following schedule:
Month of Operation Discounts From Base
1-3 75%
4-6 50%
7-9 25%
thereafter 0%
B. Miscellaneous
Fiduciary Trustee Fees:
IRA's - $12.00 per account per year
Keoghs - $25.00 per social security number
C. Federal Fund Wires
There is a $7.00 fee for each federal fund wire received or delivered.
ACH transactions are provided at no additional cost.
III. MISCELLANEOUS NOTES TO THE ABOVE FEE SCHEDULE
A. The asset based fees are calculated as follows: The cumulative daily
net assets are combined for the applicable portfolios and divided by the
days in the amount to create an aggregate average daily net assets.
This aggregate average daily net assets is then multiplied by 1/12/th/
of the applicable annual stated rate. The resultant total monthly fee
is then allocated to the individual portfolios based upon the proportion
of the aggregate average net assets for the month.
B. For fee calculation purposes a series fund is treated as multiple
funds. For example, a 3 portfolio series fund would be treated as 3
separate funds when calculating set-up or minimum monthly fees.
C. Annual maintenance fees are payable monthly at 1/12/th/ of the annual
stated rate, except for the foreign securities premium which will be
billed on month-end market value at 1/12/th/ of the annual stated rate.
28
<PAGE>
D. The above schedule does not include out-of-pocket expenses that would
be incurred by IFTC on the client's behalf. Example of out-of-pocket
expenses include but are not limited to forms, postage, magnetic tapes,
printing, proxy processing, microfilm, microfiche, back-up recovery,
pricing services, overnight mailing services, FDIC insurance, foreign
registration and script fees, etc. IFTC bills out-of-pocket expenses
separately from service fees.
E. The fees stated above are exclusive of terminal equipment required in
the client's location(s) and communication line costs.
F. Each month IFTC bills service fees and out-of-pocket expenses
separately.
G. Any fees not paid with 30 days of the date of the original invoice will
be charged a late payment fee of 1.5% per month until payment of the
fees are received by IFTC.
H. The above fee schedule is applicable for selections made and
communicated within 90 days of the date of this proposal. The fees are
guaranteed for a one year period commencing on the effective date of the
service agreement between IFTC and the client. All changes to the fee
schedule will be communicate in writing at least 60 days prior to their
effective date.
I. For existing clients establishing new funds (cusips), the Shareholder
Accounting (Transfer Agency) set-up fee is $2,500 per new fund (cusip).
J. 12b-1 processing will be charged on an out-of-pocket basis at a rate of
$.15 per account per payment cycle.
K. This fee schedule covers the following portfolios:
Total Return Fund Columbus Circle Inv. Mid Cap Equity
Total Return Fund II Columbus Circle Inv. Core Equity
Total Return III NFJ Equity Income Fund
Low Duration Fund NFJ Diversified Low P/E Fund
Low Duration Fund II Parametric Enhanced Equity Fund
Short-Term Fund Cadence Capital Appreciation Fund
Growth Stock Fund NFJ Small Cap Value Fund
Global Fund Balanced Fund
Foreign Fund Cadence Small Cap Growth Fund
Long-Term U.S. Cadence Mid Cap Growth Fund
Government Fund Cadence Micro Cap Growth Fund
High Yield Fund Blairlogie International Active Fund
International Fund Blairlogie Emerging Markets Fund
StocksPLUS Fund
Money Market Fund
29
<PAGE>
(section K. cont....)
VersaSTYLE Equity Fund
Moderate Duration Fund
Commercial Mortgage Securities Fund
----------------------------------------------
Investors Fiduciary Trust Company
Date:
---------------------------------------------
PIMCO Funds: Pacific Investment Management Series
Date:
---------------------------------------------
PIMCO Funds: Equity Advisors Series
Date:
30
<PAGE>
APPENDIX I
PIMCO Funds
Global Fee Arrangement from
Investors Fiduciary Trust Company
I. 4.5/100 of 1% (4.5 basis points) on all settled securities held in
Euroclear/CEDEL
II. 12.75/100 of 1% (12.75 basis points) on all settled non-emerging market
assets. Five countries have been reclassified for asset charges as non-
emerging but still require transaction charges of $135.00. This additional
charge only applies to Hong Kong, Malaysia, Singapore, Spain and Thailand
as these are countries in transition from emerging market status.
III. 45/100 of 1% (45 basis points) on all settled securities held in emerging
markets with the exception of Argentina and the asterisked countries.
Argentina will be charged at 35/100 of 1% (35 basis poins) and $135 per
transaction. Asterisked countries are 55/100 of 1% (35 basis points). All
emerging market transactions are charged at $135.
Emerging Markets as of 1/1/96:
<TABLE>
<S> <C> <C>
Argentina India Portugal
Bangladesh Indonesia Shanghai(China)*
Belize Israel Shenzhen(China)*
Botswana Jordon South Africa
Brazil Mauritus South Korea
Chile Morocco* Sri Lanka
Colombia Namibia Swaziland
Czech Republic Pakistan Taiwan
Ghana Peru Turkey
Greece Philippines Uruguay
Hungary Poland Venezuela
Zimbabwe
</TABLE>
<TABLE>
<CAPTION>
Other Services:
<S> <C>
Out of Pocket Expenses: As incurred (e.g. stamp taxes,
registration costs, script fees,
special transportation costs, etc.)
Transfer to successor
custodian: Transaction charges in accordance with
fee schedule.
</TABLE>
Fees are to be paid monthly and based on the market value at previous
month end.
31
<PAGE>
Assignment
of Agency Agreement
AGREEMENT, made this 16/th/ day of August, 1995 among PIMCO Advisors
Institutional Funds (the "Fund"), a Massachusetts business trust, Pacific
Investment Management Company ("PIMCO"), a corporation organized under the laws
of California, PIMCO Advisors Institutional Services, a division of PIMCO
Advisors L.P. ("PAIS"), a limited partnership, and Investors Fiduciary Trust
Company ("IFTC"), a state chartered trust company organized and existing under
the laws of the State of Missouri.
WHEREAS, the Fund, Pacific Financial Asset Management Corporation
("PFAMCO"), the corporate predecessor of PAIS, and IFTC entered into an Agency
Agreement dated December 17, 1990 (together with all Addenda thereto, the
"Agency Agreement"), pursuant to which IFTC agreed to serve as Transfer Agent
and Dividend Disbursing Agent to the Fund with respect to the Portfolios (as
defined in the Agency Agreement); and
WHEREAS, in accordance with the terms of the Agency Agreement, PFAMCo
assigned its rights and obligations to PAIS under the Agency Agreement effective
November 15, 1994, and the Fund and IFTC consented to such assignment; and
WHEREAS, PAIS wishes to assign its rights and obligations under the Agency
Agreement to PIMCO effective as of the date indicated above; and
WHEREAS, the Fund wishes for IFTC to continue to serve as Transfer Agent
and Dividend Disbursing Agent to the Portfolios, and IFTC wishes to continue to
so serve, after the assignment described above;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and in the Agency Agreement, the parties agree as follows:
1. Assignment.
----------
Effective as of the date indicated above, PAIS hereby assigns all of
its rights, duties, and obligations under the Agency Agreement to PIMCO.
2. Performance of Duties.
---------------------
Effective as of the date indicated above, PIMCO hereby assumes and
agrees to perform all of PAIS's duties and obligations under the Agency
Agreement and be subject to all of the terms and conditions of said
Agreement as if they applied to PIMCO. PIMCO shall not be responsible for
any claim or demand arising under the Agency Agreement from services
rendered prior to the effective date of this Assignment unless otherwise
agreed by PIMCO, and PAIS shall not be responsible for any claim or demand
arising under the Agency
32
<PAGE>
Agreement from services rendered after the effective date of this
Assignment unless otherwise agreed by PAIS.
3. Consent.
-------
The Fund and IFTC hereby consent to this assignment to PIMCO of PAIS's
rights, duties and obligations under the Agency Agreement and the
assumption by PIMCO of such rights, duties, and obligations, and agree,
subject to the terms and conditions of the Agency Agreement, to look to
PIMCO for the performance of the duties and obligations previously assumed
by PAIS under said Agreement after the effective date as described above.
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first
above written.
PIMCO ADVISORS
INSTITUTIONAL FUNDS
___________________________ By: _______________________
Attest: Title:
Title:
PACIFIC INVESTMENT
MANAGEMENT CORPORATION
___________________________ By: _______________________
Attest: Title:
Title:
PIMCO ADVISORS
INSTITUTIONAL SERVICES, A
DIVISION OF PIMCO ADVISORS
L.P.
___________________________ By: _______________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
___________________________ By: _______________________
Attest: Title:
Title:
34
<PAGE>
Assignment
of Agency Agreement
AGREEMENT, made this 15/th/ day of November, 1994 among PFAMCo Funds (the
"Fund"), formerly PFAMCo Fund, a Massachusetts business trust, Pacific Financial
Asset Management Corporation (the "Administrator" or "PFAMCo"), a corporation
organized under the laws of California, PIMCO Advisors L.P., a limited
partnership, and Investors Fiduciary Trust Company ("IFTC"), a state chartered
trust company organized and existing under the laws of the State of Missouri.
WHEREAS, the Fund, PFAMCo, and IFTC have entered into an Agency Agreement
dated December 17, 1990 (together with all Addenda thereto, the "Agency
Agreement"), pursuant to which IFTC has agreed to serve as Transfer Agent and
Dividend Disbursing Agent to the Fund with respect to the Portfolios (as defined
in the Agency Agreement); and
WHEREAS, certain of Pacific Mutual Insurance Company's investment advisory
subsidiaries, including PFAMCo, have entered into an agreement ("Consolidation
Agreement") with Thomson Advisory Group L.P. ("TAG"), providing for the
consolidation and recapitalization of such investment advisory subsidiaries,
including PFAMCo, with TAG ("Consolidation"); and
WHEREAS, as a result of the Consolidation, the investment advisory business
of PFAMCo will be transferred to a limited partnership to be named PIMCO
Advisors L.P., which is the current TAG; and
WHEREAS, PFAMCo wishes to assign its rights and obligations under the
Agency Agreement to PIMCO Advisors L.P. effective as of the "Closing Date" as
that term is defined in the Consolidation Agreement; and
35
<PAGE>
WHEREAS, the Fund wishes for IFTC to continue to serve as Transfer Agent
and Dividend Disbursing Agent to the Portfolios, and IFTC wishes to continue to
so serve, after the Consolidation;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and in the Agency Agreement, the parties agree as follows:
1. Assignment.
----------
As of the Closing Date, PFAMCo hereby assigns all of its rights,
duties, and obligations under the Agency Agreement to PIMCO Advisors L.P.
2. Performance of Duties.
---------------------
As of the Closing Date, PIMCO Advisors L.P. hereby assumes and agrees
to perform all of PFAMCO's duties and obligations under the Agency
Agreement and be subject to all of the terms and conditions of said
Agreement as if they applied to PIMCO Advisors L.P.
3. Consent.
-------
The Fund and IFTC hereby consent to this assignment to PIMCO Advisors
L.P. of PFAMCo's rights, duties and obligations under the Agency Agreement
and the assumption by PIMCO Advisors L.P. of such rights, duties, and
obligatins, and agrees, subject to the terms and conditions of the Agency
Agreement, to look to PIMCO Advisors L.P. for the performance of the duties
and obligations previously assumed by PFAMCo under said Agreement after the
effective date as described above.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first
above written.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
PIMCO ADVISORS L.P.
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
37
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17/th/ day of December, 1990, (and
subsequently amended heretofore), between the PFAMCo Funds, formerly PFAMCo
Fund, (the "Fund") a Massachusetts business trust having its principal place of
business at 700 Newport Center Drive, Newport Beach, CA 92660, Pacific Financial
Asset Management Corporation ("PFAMCo"), a California corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10/th/ Street,
Kansas City, Missouri 64105 (the "Agreement") is hereby amended by the addition
of the provisions set forth in this Addendum to the Agreement, which is made
this ___day of _________, 1993.
WITNESSETH:
-----------
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as Transfer
Agent and Dividend Disbursing Agent and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of fourteen series designated as the
Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio, Capital
Appreciation Portfolio, Small Cap Value Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Balanced Portfolio, Mid Cap Growth Portfolio,
Micro Cap Growth Portfolio, International Active Portfolio, and Emerging Markets
Portfolio (each a "Portfolio"); and
WHEREAS, the Fund intends to establish one additional series to be
designated as the Utility Stock Portfolio; and
WHEREAS, the Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Utility Stock Portfolio on the terms set forth in the
Agreement and in this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual premises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby employs and appoints IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to the Utility Stock Portfolio, which, in
addition to all other Portfolios previously established by the Fund,
shall each be deemed one of the Portfolio under the Agreement as
provided in the Agreement subject to the terms and conditions as
specified in the Agreement and this Addendum,
38
<PAGE>
including the compensation provisions in paragraph six (6)
("Compensation and Expenses") of the Agreement and in the Fee Schedule
("Exhibit B") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
39
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17/th/ day of December, 1990, (and
subsequently amended), between the PFAMCo Funds, formerly PFAMCo Fund, (the
"Fund") a Massachusetts business trust having its principal place of business at
700 Newport Center Drive, Newport Beach, CA 92660, Pacific Financial Asset
Management Corporation ("PFAMCo"), a California corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10/th/ Street,
Kansas City, Missouri 64105 (the "Agreement") is hereby amended by the addition
of the provisions set forth in this Addendum to the Agreement, which is made
this 13/th/ day of August, 1993.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as Transfer
Agent and Dividend Disbursing Agent and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of fourteen separate series designated
as the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio, Capital
Appreciation Portfolio, Small Cap Value Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Balanced Portfolio, Mid Cap Growth Portfolio,
Emerging Markets Portfolio, International Active Portfolio, and Micro Cap Growth
Portfolio (each a "Portfolio"); and
WHEREAS, the Fund intends to establish eleven additional Portfolios to be
designated as the Money Market Variable Portfolio, Managed Bond and Income
Variable Portfolio, Equity Income Variable Portfolio, Diversified Low P/E
Variable Portfolio, Small Cap Value Variable Portfolio, Capital Appreciation
Variable Portfolio, Mid Cap Growth Variable Portfolio, Enhanced Equity Variable
Portfolio, International Equity Variable Portfolio, Emerging Markets Variable
Portfolio, and International Active Variable Portfolio (the "Variable
Portfolios"); and
WHEREAS, the Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Variable Portfolios on the terms set forth in the
Agreement and in this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual premises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
40
<PAGE>
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby employs and appoints IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to the Variable Portfolios, which, in
addition to all other Portfolios previously established by the Fund,
shall each be deemed one of the Portfolios under the Agreement as
provided in the Agreement subject to the terms and conditions as
specified in the Agreement and this Addendum, including the compensation
provisions in paragraph six (6) ("Compensation and Expenses") of the
Agreement and in the Compensation Schedule ("Exhibit A") attached
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
41
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17/th/ day of December, 1990, (and
subsequently amended), between the PFAMCo Funds, formerly PFAMCo Fund, (the
"Fund") a Massachusetts business trust having its principal place of business at
700 Newport Center Drive, Newport Beach, CA 92660, Pacific Financial Asset
Management Corporation ("PFAMCo"), a California Corporation, having its
principal place of business at 700 Newport Center Drive, Newport Beach,
California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10/th/ Street,
Kansas City, Missouri 64105 (the "Agreement") is hereby amended by the addition
of the provisions set forth in this Addendum to the Agreement, which is made
this 12/th/ day of February, 1993.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as Transfer
Agent and Dividend Disbursing Agent and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of eleven separate series designated
as the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio, Capital
Appreciation Portfolio, Small Cap Value Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Balanced Portfolio, and Mid Cap Growth Portfolio
(each a "Portfolio"); and
WHEREAS, the Fund intends to establish three additional Portfolios to be
designated as the Emerging Markets, the International Diversified, and the Micro
Cap Growth Portfolios; and
WHEREAS, the Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Emerging Markets, the International Diversified and
Micro Cap Growth Portfolios on the terms set forth in the Agreement and in this
Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual premises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby employs and appoints IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to the Emerging Markets, International
Diversified, and Micro Cap Growth Portfolios, which, in addition to all
other Portfolios previously established by the Fund, shall each be
deemed one of the Portfolios under the
42
<PAGE>
Agreement as provided in the Agreement, subject to the terms and
conditions as specified in the Agreement and this Addendum, including
the compensation provisions in paragraph six (6) ("Compensation and
Expenses") of the Agreement and in the Compensation Schedule ("Exhibit
A") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
43
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17/th/ day of December, 1990, (and
subsequently amended on April 2, 1991), between the PFAMCo Funds, formerly
PFAMCo Fund, (the "Fund") a Massachusetts business trust having its principal
place of business at 700 Newport Center Drive, Newport Beach, CA 92660, Pacific
Financial Asset Management Corporation ("PFAMCo"), a California Corporation,
having its principal place of business at 700 Newport Center Drive, Newport
Beach, California 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10/th/ Street,
Kansas City, Missouri 64105 (the "Agreement") is hereby amended by the addition
of the provisions set forth in this Addendum to the Agreement, which is made
this 1st day of June, 1991.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as Transfer
Agent and Dividend Disbursing Agent and IFTC has accepted such appointment; and
WHEREAS, the Fund currently consists of ten separate series designated as
the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio (formerly
Index Plus Portfolio and Enhanced Index Portfolio), Capital Appreciation
Portfolio, Small Cap Value Portfolio (formerly Low Cap Portfolio), Small Cap
Growth Portfolio (formerly Small Cap Portfolio), International Equity Portfolio,
and Strategic Allocation Portfolio (each a "Portfolio"); and
WHEREAS, the Fund intends to establish an additional Portfolio to be
designated as the Mid Cap Growth Portfolio; and
WHEREAS, the Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Mid Cap Growth Portfolio on the terms set forth in the
Agreement and in this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby employs and appoints IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to the Mid Cap Growth Portfolio, which, in
addition to all other Portfolios previously established by the Fund,
shall each be deemed one of the Portfolios under the Agreement as
provided in the Agreement, subject to the
44
<PAGE>
terms and conditions as specified in the Agreement and this Addendum,
including the compensation provisions in paragraph six (6)
("Compensation and Expenses") of the Agreement and in the Compensation
Schedule ("Exhibit A") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
45
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17/th/ day of December, 1990 between the
PFAMCo Funds, formerly PFAMCo Fund, (the "Fund") a Massachusetts business trust
having its principal place of business at 700 Newport Center Drive, Newport
Beach, CA 92660, Pacific Financial Asset Management Corporation ("PFAMCo"), a
California corporation, having its principal place of business at 700 Newport
Center Drive, Newport Beach, California 92660, and Investors Fiduciary Trust
Company ("IFTC"), a state chartered trust company organized and existing under
the laws of the State of Missouri, having its principal place of business at 127
West 10/th/ Street, Kansas City, Missouri 64105 (the "Agreement") is hereby
amended by the addition of the provisions set forth in this Addendum to the
Agreement, which is made this 2nd day of April, 1991.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Fund has appointed IFTC as Transfer
Agent and Dividend Disbursing Agent and IFTC has accepted such appointment; and
WHEREAS, the Fund initially established nine separate series designated as
the Money Market Portfolio, Managed Bond and Income Portfolio, Equity Income
Portfolio, Diversified Low P/E Portfolio, Enhanced Equity Portfolio (formerly
Index Plus Portfolio and Enhanced Index Portfolio), Capital Appreciation
Portfolio, Small Cap Value Portfolio (formerly Low Cap Portfolio), Small Cap
Growth Portfolio (formerly Small Cap Portfolio), and International Equity
Portfolio (each a "Portfolio"); and
WHEREAS, the Fund intends to establish an additional Portfolio to be
designated as the Strategic Allocation Portfolio; and
WHEREAS, the Fund desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Strategic Allocation Portfolio on the terms set forth
in the Agreement and in this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Fund hereby employs and appoints IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to the Strategic Allocation Portfolio,
which, in addition to all other Portfolios previously established by the
Fund, shall each be deemed one of the Portfolios under the Agreement as
provided in the Agreement, subject to the terms and conditions as
specified in the Agreement and this Addendum,
46
<PAGE>
including the compensation provisions in paragraph six (6)
("Compensation and Expenses") of the Agreement and in the Compensation
Schedule ("Exhibit A") attached thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PFAMCo FUNDS
____________________________ By: ________________________
Attest: Title:
Title:
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
____________________________ By: ________________________
Attest: Title:
Title:
____________________________ By: ________________________
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
____________________________ By: ________________________
Attest: Title:
Title:
47
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
The Agency Agreement, made the 17th day of December, 1990, (and
subsequently amended), between the PIMCO Advisors Institutional Funds (the
"Trust"), formerly PFAMCo Funds, formerly PFAMCo Fund, (the "Fund") a
Massachusetts business trust having its principal place of business at 700
Newport Center Drive, Newport Beach, CA 92660, PIMCO Advisors, L.P. a
California Corporation, having its principal place of business at 700 Newport
Center Drive, Newport Beach, California 92660, and Investors Fiduciary Trust
Company ("IFTC"), a state chartered trust company organized and existing under
the laws of the State of Missouri, having its principal place of business at 127
West 10th Street, Kansas City, Missouri 64105 (the "Agreement") is hereby
amended by the addition of the provisions set forth in this Addendum to the
Agreement, which is made this ____ day of _______________ , 1994.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Trust has appointed IFTC as
Transfer Agent and Dividend Disbursing Agent and IFTC has accepted such
appointment; and
WHEREAS, the Trust currently consists of fifteen series designated as the
Money Market Fund, Managed Bond and Income Fund, Utility Stock Fund, Equity
Income Fund, Diversified Low P/E Fund, Small Cap Value Fund, Capital
Appreciation Fund, Mid Cap Growth Fund, Micro Cap Growth Fund, Small Cap Growth
Fund, Enhanced Equity Fund, International Equity Fund, Emerging Markets Fund,
International Active Fund and Balanced Fund (each a "Fund"); and
WHEREAS, the Trust intends to establish three additional series to be
designated as the Small Cap Equity Fund, Mid Cap Equity Fund and Core Equity
Fund; and
WHEREAS, the Trust desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Small Cap Equity Fund, Mid Cap Equity Fund and Core
Equity Fund on the terms set forth in the Agreement and in this Addendum to the
Agreement,
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
48
<PAGE>
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby employs and appoints IFTC as Transfer Agent and Dividend
Disbursing Agent with respect to the Small Cap Equity Fund, Mid Cap Equity
Fund and Core Equity Fund which, in addition to all other Funds previously
established by the Trust, shall be deemed three of the Funds under the
Agreement as provided for in the Agreement, subject to the terms and
conditions as specified in the Agreement and this Addendum, including the
compensation provisions in paragraph six (6) ("Compensation and Expenses")
of the Agreement and in the Compensation Schedule ("Exhibit A") attached
thereto.
49
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO ADVISORS INSTITUTIONAL FUNDS
_________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
PIMCO ADVISORS, L.P.
__________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
__________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
INVESTORS FIDUCIARY TRUST COMPANY
_________________________________ By: ________________________________
ATTEST Name:
Name: Title:
Title:
50
<PAGE>
EX-99.B9(a)(i)
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17th day of December, 1990, (and
subsequently amended heretofore), between PIMCO Funds: Equity Advisors Series,
formerly PIMCO Advisors Institutional Funds, formerly PFAMCo Funds, formerly
PFAMCo Fund (the "Trust"), a Massachusetts business trust having its principal
place of business at 840 Newport Center Drive, Newport Beach, CA 92660, Pacific
Investment Management Company ("PIMCO"), a California limited partnership,
having its principal place of business at 840 Newport Center Drive, Newport
Beach, CA 92660, and Investors Fiduciary Trust Company ("IFTC"), a state
chartered trust company organized and existing under the laws of the State of
Missouri, having its principal place of business at 127 West 10th Street, Kansas
City, Missouri 64105 (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this _____
day of ___________, 1996.
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Trust has appointed IFTC as
Transfer Agent and Dividend Disbursing Agent and IFTC has accepted such
appointment; and
WHEREAS, the Trust currently consists of thirteen series designated as 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, (each a "Fund"); and
51
<PAGE>
WHEREAS, the Trust intends to establish one additional Fund to be
designated as the Parametric Structured Emerging Markets Fund; and
WHEREAS, the Trust desires to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent for the Parametric Structured Emerging Markets Fund on the
terms set forth in the Agreement and in this Addendum to the Agreement; and
WHEREAS, IFTC is willing to accept such appointment;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. In addition to its responsibilities as specified in the Agreement, the
Trust hereby employs and appoints IFTC as Transfer Agent and Dividend Disbursing
Agent with respect to the Parametric Structured Emerging Markets Fund, which, in
addition to all other Funds previously established by the Trust, shall each be
deemed as a Fund under the Agreement as provided in the Agreement subject to the
terms and conditions as specified in the Agreement and this Addendum, including
the compensation provisions in paragraph six (6) ("Compensation and Expenses")
of the Agreement and in the Compensation Schedule ("Exhibit A") attached
thereto.
52
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PIMCO FUNDS: EQUITY ADVISORS SERIES
By: ____________________________________
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY
By: ____________________________________
Title:
INVESTORS FIDUCIARY TRUST COMPANY
By: ____________________________________
Title:
53
<PAGE>
EX-99.B11
PIMCO FUNDS: EQUITY ADVISORS SERIES
CONSENT 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. 22 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
July 1, 1996
<PAGE>
EX-99.B18
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
<PAGE>
EX-99.B18
PIMCO FUNDS: EQUITY ADVISORS SERIES
[FORM OF] MULTIPLE CLASS PLAN
PURSUANT TO RULE 18F-3
COMPOSITE
MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
FOR
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
PARAMETIC ENHANCED EQUITY FUND
PARAMETRIC STRUCTURED EMERGING MARKETS FUND
BLAIRLOGIE EMERGING MARKETS FUND
BLAIRLOGIE INTERNATIONAL ACTIVE FUND
BALANCED FUND
WHEREAS, PIMCO Funds: Equity Advisors Series (the "Trust") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of beneficial interest of the Trust are currently divided
into a number of separate series, including the following series (the "Funds"):
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, and Balanced Fund;
WHEREAS, the Trust desires to adopt, on behalf of each of the Funds, a
Multiple Class Plan pursuant to Rule 18f-3 under the Act (the "Plan") with
respect to each of the Funds; and
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WHEREAS, pursuant to an Administration Agreement, the Trust employs Pacific
Investment Management Company (the "Administrator") as administrator of the
Funds.
NOW, THEREFORE, the Trust hereby adopts, on behalf of the Funds, the Plan,
in accordance with Rule 18f-3 under the Act on the following terms and
conditions:
1. FEATURES OF THE CLASS. Each of the Funds is authorized to issue its
shares of beneficial interest in four classes: (1) "Institutional
Class" shares offered solely to pension and profit sharing plans,
employee benefit trusts, endowments, foundations, corporations, other
institutions, and high net worth individuals; (2) "Administrative
Class" shares offered to the clients, members, or customers of banks,
broker-dealers, consultants, administrators, and other financial
institutions which provide certain services to their customers who
purchased such shares; (3) "Benefit Plan Class" shares offered only to
qualified or non-qualified employee benefit plans; and (4) "12b-1
Class" shares offered in connection with a plan adopted pursuant to
Rule 12b-1 under the Act. Shares of each class of a Fund shall
represent an equal pro rata interest in such Fund and, generally,
shall have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications and
terms and conditions, except that: (a) each class shall have a
different designation; (b) each class of shares shall bear any Class
Expenses, as defined in Section 4 below; and (c) each class shall have
separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any
other class. In addition, Institutional Class, Administrative Class,
Benefit Plan Class, and 12b-1 Class shares shall have the features
described in Sections 2, 3, 4 and 5 below.
2. SALES CHARGE STRUCTURE.
(a) Institutional Class Shares. Institutional Class shares of each
of the Funds shall be offered at the next determined net asset
value without the imposition of a front-end or contingent
deferred sales charge.
(b) Administrative Class Shares. Administrative Class shares of each
of the Funds shall be offered at the next determined net asset
value without the imposition of a front-end or contingent
deferred sales charge.
(c) Benefit Plan Class Shares. Benefit Plan Class shares of each of
the Funds presently are not offered to the public.
(d) 12b-1 Class Shares. 12b-1 Class shares of each of the Funds
presently are not offered to the public.
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3. SERVICE AND DISTRIBUTION PLANS. The Institutional Class shares and
the Administrative Class shares are sold pursuant to the following
terms:
(a) Institutional Class Shares. Institutional Class shares of each
Fund do not pay fees pursuant to a service plan or distribution
plan.
(b) Administrative Class Shares. Administrative Class shares of each
Fund pay the Administrator an amount equal to 0.25% of the
average daily value of the net assets of the Administrative Class
for service activities (as defined in paragraph (c) below)
rendered to Administrative Class shareholders (the "Service
Fee"). The Administrator may enter into agreements ("Service
Agreements") to pay certain financial institutions (which may
include banks) securities broker-dealers, and other industry
professionals a fee for service activities (as defined in
paragraph (c) below) rendered to Administrative Class
shareholders. The Administrative Class shares do not pay a fee
pursuant to a distribution plan.
Pursuant to Rule 12b-1 under the Act, the 12b-1 Class shares of
each of the Funds may enter into agreements ("12b-1 Agreements")
to pay certain financial institutions (which may include banks),
securities broker-dealers, and other industry professionals a fee
for distribution services (as defined in paragraph (c), below) as
well as a fee for service activities (as defined in paragraph (c)
below) rendered to 12b-1 Class shareholders.
(c) Distribution and Service Activities.
(i) As used herein, the term "distribution services" shall
include services rendered pursuant to a 12b-1 Agreement,
including, but not limited to, providing facilities to
answer questions from prospective investors about the Funds;
receiving and answering correspondence, including requests
for prospectuses and statements of additional information;
preparing, printing and delivering prospectuses and
shareholder reports to prospective 12b-1 Class shareholders;
complying with federal and state securities laws pertaining
to the sale of Fund shares; and assisting investors in
completing application forms and selecting dividend and
other account options.
(ii) As used herein, the term "service activities" shall mean
activities rendered pursuant to a Service Agreement or a
12b-1 Agreement in connection with the provision of
personal, continuing services to investors in the
Administrative Class of each Fund, including receiving,
aggregating, and processing shareholder orders; providing
and maintaining elective shareholder services such as check
writing and wire transfer services; providing and
maintaining pre-authorized investment plans; providing
shareholder subaccounting services; acting as the sole
shareholder of record and nominee for shareholders;
maintaining account records for shareholders; answering
questions and handling correspondence
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from shareholders about their accounts; issuing
confirmations for transactions by shareholders;
communicating periodically with shareholders; and performing
similar account administrative services. Overhead and other
expenses of the Administrator related to its "service
activities," including telephone and other communications
expenses, may be included in the information regarding
amounts expended for such activities.
4. ALLOCATION OF INCOME AND EXPENSES.
(a) The gross income of each Fund generally shall be allocated to
each class on the basis of net assets. To the extent practicable,
certain expenses (other than Class Expenses as defined below,
which shall be allocated more specifically) shall be subtracted
from the gross income on the basis of the net assets of each
class of the Fund. These expenses include:
(1) Expenses incurred by the Trust (including, but not limited
to, fees of Trustees, insurance and legal counsel) not
attributable to a particular Fund or to a particular class
of shares of a Fund ("Corporate Level Expenses"); and
(2) Expenses incurred by a Fund not attributable to any
particular class of the Fund's shares (for example, advisory
fees, custodial fees, or other expenses relating to the
management of the Fund's assets) ("Fund Expenses").
(b) Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (i) payments, if any, made pursuant to a
12b-1 Agreement ("12b-1 Fee"); (ii) service fees; (iii) fees
under a class addendum to the Administration Agreement between
the Trust and the Administrator that relate to a class; (iv)
litigation and indemnification expenses, if any, relating solely
to one class; and (v) independent Trustees' fees incurred as a
result of issues relating to one class. Expenses in categories
(i), and (ii), and (iii) above must be allocated to the class for
which such expense are incurred. All other "Class Expenses"
listed above may be allocated to a class, but only if the
President and Chief Financial Officer have determined, subject to
Board of Trustees approval or ratification, which of such
categories of expenses will be treated as Class Expenses,
consistent with applicable legal principles under the Act and the
Internal Revenue Code of 1986, as amended (the "Code").
Therefore, expenses of a Fund shall be apportioned to each class
of shares depending on the nature of the expense item. Corporate
Level
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Expenses and Fund Expenses will be allocated among the classes
of shares based on their relative net asset values in relation to
the net asset value of the Trust. Approved Class Expenses shall be
allocated to the particular class to which they are attributable.
In addition, certain expenses may be allocated differently if their
method of impositions changes. Thus, if a Class Expense can no
longer be attributed to a class, it shall be charged to a Fund for
allocation among classes, as determined by the Board of Trustees.
Any additional Class Expenses not specifically identified above
which are subsequently identified and determined to be properly
allocated to one class of shares shall not be so allocated until
approved by the Board of Trustees of the Trust in light of the
requirements of the Act and the Code.
5. EXCHANGE PRIVILEGES. Shareholders may exchange shares of one class of
a Fund at net asset value without any sales charge for shares of the
same class offered by another Fund or by a series of PIMCO Funds, a
registered investment company advised by the Administrator, provided
that the exchange is made in states where the securities being acquired
are properly registered. Shareholders also may exchange from one class
of shares of a fund into another class of shares of a fund, or PIMCO
Funds, provided that the shareholder meets eligibility requirements of
the class into which the shareholder seeks the exchange.
6. CONVERSION FEATURES. At the present time, there exists no conversion
feature between classes of shares of the Funds.
7. QUARTERLY AND ANNUAL REPORTS. The Trustees shall receive quarterly and
annual statements concerning all allocated Class Expenses and
distribution and servicing expenditures complying with paragraph
(b)(3)(ii) of Rule 12b-1, to the extent applicable, as it may be
amended from time to time. In the statements, only expenditures
properly attributable to a particular class of shares will be used to
justify any expense charged to that class. Expenditures not related to
a particular class shall not be presented to the Trustees to justify
any fee attributable to that class. The statements, including the
allocations upon which they are based, shall be subject to the review
and approval of those Trustees of the Trust who are not "interested
persons" of the Trust (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan (the
"Independent Trustees") in the exercise of their fiduciary duties.
8. ACCOUNTING METHODOLOGY. (a) The following procedures shall be
implemented in order to meet the objective of properly allocating
income and expenses among the Funds:
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(1) On a daily basis, a fund accountant shall calculate the 12b-1 Fee
to be charged to the 12b-1 Class shares and the service fee to be
charged to the Administrative Class shares by calculating the
average daily net asset value of such shares outstanding and
applying the applicable fee rate of the 12b-1 Class or
Administrative Class, as appropriate, to the result of that
calculation.
(2) The fund accountant will allocate all other designated Class
Expenses, if any, to the respective classes.
(3) The fund accountant shall allocate income and Corporate Level and
Fund Expenses among the respective classes of shares based on the
net asset value of each class in relation to the net asset value
of the Fund for Fund Expenses, and in relation to the net asset
value of the Trust for Corporate Level Expenses. These
calculations shall be based on net asset values.
(4) The fund accountant shall then complete a worksheet developed for
purposes of complying with Section 8 of this Plan, using the
allocated income and expense calculations from paragraph (3)
above, and the additional fees calculated from paragraphs (1) and
(2) above.
(5) The fund accountant shall develop and use appropriate internal
control procedures to assure the accuracy of its calculations and
appropriate allocation of income and expenses in accordance with
this Plan.
9. WAIVER OR REIMBURSEMENT OF EXPENSE. Expenses may be waived or
reimbursed by any advisor or subadvisor to the Trust, by the Trust's
underwriter or any other provider of services to the Trust without the
prior approval of the Trust's Board of Trustees.
10. EFFECTIVENESS OF PLAN. This Plan shall not take effect until it has
been approved by votes of a majority of both (a) the Trustees of the
Trust and (b) the Independent Trustees.
11. MATERIAL MODIFICATIONS. This Plan may not be amended to modify
materially its terms unless such amendment is approved in the manner
provided for initial approval in paragraph 10 hereof.
12. LIMITATION OF LIABILITY. The Trustees of the Trust and the
shareholders of each Fund shall not be liable for any obligations of
the Trust or any Fund under this Plan, and the Administrator or any
other person, in asserting any rights or claims under this Plan, shall
look only to the assets and property of the Trust or such Funds in
settlement of such right or claim, and not to such Trustees or
shareholders.
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IN WITNESS WHEREOF, the Trust, on behalf of the Funds, has adopted this
Multiple Class Plan on August 11, 1995 and amended and restated this day
_________ of ______________, 1996.
PIMCO Funds: Equity Advisors Series
By: ______________________________________
Title:
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EXHIBIT 99.B19
PIMCO FUNDS: EQUITY ADVISORS SERIES
POWERS OF ATTORNEY AND
CERTIFICATE OF SECRETARY
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EXHIBIT 99.B19
PIMCO ADVISORS INSTITUTIONAL FUNDS
CERTIFICATE OF SECRETARY
The undersigned being the duly appointed and qualified Secretary of PIMCO
Advisors Institutional Funds (the "Fund"), hereby certifies that the Fund's
Board of Trustees duly adopted the following resolution at its meeting on
November 16, 1990:
RESOLVED, that the Officers of the Fund be, and each of them hereby
is, authorized to take any and all actions in accordance with the
respective duties of each, including without limitation, to prepare,
execute, or grant powers of attorney to execute, acknowledge, and deliver
all documents, pay all necessary fees and expenses, appoint agents for
services of process, and determine the state or other jurisdictions in
which necessary and appropriate actions shall be taken, as in such
officer's judgment may be necessary or appropriate in order to establish,
qualify, register and maintain the Fund and to comply with the applicable
laws of the United States and any such state or jurisdiction, including,
but not limited to, preparing and filing registration statements and any
amendments thereto, with the Securities and Exchange Commission relating to
the registration of the Fund under the Investment Company Act of 1940 and
relating to the registration of its shares of beneficial interest, par
value of $.001, of all shares under the Securities Act of 1933, and any
necessary exemptive applications and amendments thereto, and to make such
other filings or seek any interpretations that are necessary or advisable
from the Securities and Exchange Commission or any other agency of the U.S.
Government, or state, or jurisdiction, and the authority granted is to be
conclusively evidenced by the taking of any such actions or the execution
and delivery of any such document.
/s/ TERESA A. WAGNER
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Teresa A. Wagner
Secretary
Date: 10/30, 1995
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Michele Mitchell, William D. Cvengros and Jeffrey
S. Puretz his true and lawful attorney-in-fact and agent, each with full power
of substitution and resubstitution for him in his name, place, and stead, in any
and all Registration Statements and applications seeking an exemption from the
Investment Company Act of 1940 applicable to PIMCO Advisors Institutional Funds
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Date: 8/9/95 /s/ ROBERT M. BRANDENBERGER
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Robert M. Brandenberger
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Michele Mitchell, William D. Cvengros and Jeffrey
S. Puretz his true and lawful attorney-in-fact and agent, each with full power
of substitution and resubstitution for him in his name, place, and stead, in any
and all Registration Statements and applications seeking an exemption from the
Investment Company Act of 1940 applicable to PIMCO Advisors Institutional Funds
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Date: August 11, 1995 /s/ RICHARD L. NELSON
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Richard L. Nelson
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Michele Mitchell, William D. Cvengros and Jeffrey
S. Puretz his true and lawful attorney-in-fact and agent, each with full power
of substitution and resubstitution for him in his name, place, and stead, in any
and all Registration Statements and applications seeking an exemption from the
Investment Company Act of 1940 applicable to PIMCO Advisors Institutional Funds
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Date: August 11, 1995 /s/ LYMAN W. PORTER
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Lyman W. Porter
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Michele Mitchell, William D. Cvengros and Jeffrey
S. Puretz his true and lawful attorney-in-fact and agent, each with full power
of substitution and resubstitution for him in his name, place, and stead, in any
and all Registration Statements and applications seeking an exemption from the
Investment Company Act of 1940 applicable to PIMCO Advisors Institutional Funds
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Date: August 11, 1995 /s/ ALAN RICHARDS
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Alan Richards
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Michele Mitchell and Jeffrey S. Puretz his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place, and stead, in any and all
Registration Statements and applications seeking an exemption from the
Investment Company Act of 1940 applicable to PIMCO Advisors Institutional Funds
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Date: 8/20/95 /s/ WILLIAM D. CVENGROS
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William D. Cvengros
