<PAGE>
As filed with the Securities and Exchange Commission on January 13, 1997
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. 25 [ X ]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 27 [ X ]
(Check appropriate box or boxes)
PIMCO FUNDS: Equity Advisors Series
(to be renamed PIMCO Funds: Multi-Manager 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) 760-4867
R. Wesley Burns
Pacific Investment Management Company
840 Newport Center Drive
Newport Beach, CA 92660
(Name and Address of Agent for Service)
Copies to:
Jeffrey S. Puretz Newton B. Schott, Jr. Joseph B. Kittredge
Robert W. Helm PIMCO Advisors L.P. Ropes & Gray
Dechert Price & Rhoads 2187 Atlantic Street One International Place
1500 K Street, N.W. Stamford, Boston,
Suite 500 Connecticut 06902 Massachusetts 02110
Washington, D.C. 20005
[X] It is proposed that this filing will become effective on January 14,
1997 pursuant to paragraph (b) of Rule 485.
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed its Notice pursuant to Rule 24f-2
for the fiscal year ended June 30, 1996 on August 28, 1996.
Pursuant to Agreements and Plans of Reorganization dated November 1, 1996
approved by shareholders of certain series of PIMCO Advisors Funds ("PAF")
(File Nos. 2-87203 and 811-3881), the Registrant will be permitted to use
any redemption credits pursuant to Rules 24e-2 and 24f-2 of the
International Fund, Equity Income Fund, Growth Fund, Target Fund,
Opportunity Fund, Innovation Fund, Tax Exempt Fund, and Precious Metals
Fund of PAF, in connection with the acquisition of these series by the
Registrant's PIMCO International Fund, PIMCO Renaissance Fund, PIMCO Growth
Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Tax Exempt Fund, and PIMCO Precious Metals Fund, respectively, in
reliance on Rule 24f-2(b)(3)(ii) under the Investment Company Act of
1940.
<PAGE>
"Cross"
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 Shares of PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small Cap
Value Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap Growth Fund, PIMCO
Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO Renaissance Fund,
PIMCO Core Equity Fund, PIMCO Mid Cap Equity Fund, PIMCO Opportunity Fund,
PIMCO Innovation Fund, PIMCO Tax Exempt Fund, PIMCO Enhanced Equity Fund,
PIMCO Structured Emerging Markets Fund, PIMCO Emerging Markets Fund, PIMCO
International Developed Fund, PIMCO International Fund, PIMCO Balanced Fund,
and PIMCO Precious Metals Fund
Part A
Item Heading
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;
Portfolio Transactions
6. Capital Stock and Other Other Information; Portfolio Transactions;
Securities Dividends, Distributions and Taxes
7. Purchase of Securities Management of the Trust;
Being Offered Purchase of Shares; Net Asset Value
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings Not Applicable
<PAGE>
PIMCO FUNDS: EQUITY ADVISORS SERIES
CROSS-REFERENCE SHEET
Required by Rule 404 Under the Securities Act of 1933
Prospectus for the Class A, Class B, and/or
Class C Shares of PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small Cap
Value Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap Growth Fund, PIMCO
Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO Renaissance Fund,
PIMCO Growth Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation
Fund, PIMCO Tax Exempt Fund, PIMCO Enhanced Equity Fund, PIMCO Emerging
Markets Fund, PIMCO International Developed Fund, PIMCO International Fund,
PIMCO Balanced Fund, and PIMCO Precious Metals Fund
Part A
Item Heading
1. Cover Page Cover Page
2. Synopsis Prospectus Summary; Schedule of Fees
3. Condensed Financial Financial Highlights;
Information Performance Information
4. General Description of Investment Objectives and Policies;
Registrant Characteristics and Risks of Securities
and Investment Techniques; Description
of the Trust
5. Management of the Fund Management of the Trust; Back Cover
6. Capital Stock and Other Description of the Trust; Distributions;
Securities Taxes; Back Cover
7. Purchase of Securities How to Buy Shares; General; How Net Asset
Being Offered Value is Determined; Alternative Purchase
Arrangements; Distributor and Distribution and
Servicing Plans
8. Redemption or Repurchase How to Redeem
9. Legal Proceedings Not Applicable
<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 PIMCO Equity Income Fund, PIMCO
Value Fund, PIMCO Small Cap Value Fund, PIMCO Capital Appreciation Fund, PIMCO
Mid Cap Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund,
PIMCO Renaissance Fund, PIMCO Growth Fund, PIMCO Core Equity Fund, PIMCO
Target Fund, PIMCO Mid Cap Equity Fund, PIMCO Opportunity Fund, PIMCO
Innovation Fund, PIMCO Tax Exempt Fund, PIMCO Enhanced Equity Fund, PIMCO
Structured Emerging Markets Fund, PIMCO Emerging Markets Fund, PIMCO
International Developed Fund, PIMCO International Fund, PIMCO Balanced Fund,
and PIMCO Precious Metals Fund
Part B
Item Heading
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Cover Page
History
13. Investment Objectives and Investment Objectives and
Policies Policies; Investment
Restrictions
14. Management of the Management of the Trust;
Registrant
15. Control Persons and Other Information
Principal Holders of
Securities
16. Investment Advisory and Management of the Trust;
Other Services Distribution of Trust Shares
17. Brokerage Allocation Portfolio Transactions and
Brokerage
18. Capital Stock and Other Other Information
Securities
19. Purchase, Redemption and Distribution of Trust
Pricing Shares; Net Asset Value
20. Tax Status Taxation
21. Underwriters Distribution of Trust Shares
22. Calculation of Performance Other Information
23. Financial Statements Other Information
<PAGE>
PIMCO Funds
Prospectus
January 14, 1997
---------------------------------------------------------------
PIMCO Funds: STOCK FUNDS
Multi-Manager
Series Equity Income Fund Enhanced Equity Fund
Renaissance Fund Capital Appreciation Fund
Value Fund Growth Fund
---------------------------------------------------------------
AGGRESSIVE STOCK FUNDS
Mid Cap Growth Fund Small Cap Growth Fund
Target Fund Opportunity Fund
Small Cap Value Fund Micro Cap Growth Fund
---------------------------------------------------------------
INTERNATIONAL STOCK FUNDS
International Developed Fund Emerging Markets Fund
International Fund
---------------------------------------------------------------
SPECIALIZED STOCK FUNDS
Innovation Fund Precious Metals Fund
---------------------------------------------------------------
STOCK AND BOND FUNDS
Balanced Fund
---------------------------------------------------------------
BOND FUNDS
Tax Exempt Fund
P I M C O
<PAGE>
PIMCO Funds: Multi-Manager Series
Prospectus
January 14, 1997
PIMCO Funds: Multi-Manager Series (the "Trust") is an open-end se-
ries management investment company offering nineteen separate di-
versified investment portfolios (each a "Fund") in this Prospec-
tus, each with different investment objectives and strategies. The
address of PIMCO Funds: Multi-Manager Series is 840 Newport Center
Drive, Suite 360, Newport Beach, CA 92660.
Each Fund (except the Opportunity, Small Cap Growth and Micro Cap
Growth Funds) offers three classes of shares in this Prospectus:
Class A shares (generally sold subject to an initial sales
charge), Class B shares (sold subject to a contingent deferred
sales charge) and Class C shares (sold subject to an asset based
sales charge). As of the date of this Prospectus, the Opportunity
Fund does not offer Class B shares and the Small Cap Growth and
Micro Cap Growth Funds do not offer Class A, Class B or Class C
shares. Through a separate prospectus, certain Funds offer up to
two additional classes of shares, Institutional Class shares and
Administrative Class shares. See "Alternative Purchase Arrange-
ments."
This Prospectus concisely describes the information investors
should know before investing in Class A, Class B and Class C
shares of the Funds. Please read this Prospectus carefully and
keep it for further reference.
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, is 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 each Fund's investments
will change, the investment returns and net asset value per share
of each Fund will vary.
A Statement of Additional Information dated January 14, 1997, as
amended or supplemented from time to time, is available free of
charge by writing to PIMCO Funds Distribution Company (the "Dis-
tributor"), 2187 Atlantic Street, Stamford, Connecticut 06902, or
by telephoning 800-426-0107. The Statement of Additional Informa-
tion, which contains more detailed information about the Trust,
has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION, 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 OF-
FENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARAN-
TEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, AND THE SHARES ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORA-
TION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INFORMATION CONCERNING THE RENAISSANCE, GROWTH, TARGET, OPPORTUNI-
TY, INTERNATIONAL, INNOVATION, PRECIOUS METALS AND TAX EXEMPT
FUNDS ASSUMES THE COMPLETION OF CERTAIN REORGANIZATIONS NOT SCHED-
ULED TO OCCUR UNTIL JANUARY 17, 1997 AND, ACCORDINGLY, THIS PRO-
SPECTUS MAY NOT BE USED IN RESPECT OF SUCH FUNDS UNTIL SUCH DATE
AS THE REORGANIZATIONS OCCUR.
TABLE OF CONTENTS
Overview..........................................3
Schedule of Fees..................................4
Financial Highlights..............................8
Investment Objectives and Policies...............16
Characteristics and Risks of Securities
and Investment Techniques.......................27
Performance Information..........................39
How to Buy Shares................................40
Alternative Purchase Arrangements................45
Exchange Privilege...............................54
How to Redeem....................................55
Distributor and Distribution and
Servicing Plans..................................58
How Net Asset Value Is Determined................61
Distributions....................................62
Taxes............................................63
Management of the Trust..........................64
Description of the Trust.........................70
Mailings to Shareholders.........................71
2 PIMCO Funds: Multi-Manager Series
<PAGE>
Overview
PIMCO Advisors L.P. ("PIMCO Advisors" or the "Advisor") is the in-
vestment adviser of all the Funds. PIMCO Advisors is one of the
largest investment management firms in the U.S. As of November 30,
1996, PIMCO Advisors and its subsidiary partnerships had over $111
billion in assets under management. Each of the Funds also has a
sub-adviser (each a "Portfolio Manager") responsible for portfolio
investment decisions. All of the Funds' Portfolio Managers are af-
filiates of PIMCO Advisors except for Van Eck Associates Corpora-
tion ("Van Eck"), an independent Portfolio Manager that advises
the Precious Metals Fund. The affiliated Portfolio Managers are
listed below.
PIMCO FUND PORTFOLIO
MANAGERS
<TABLE>
<CAPTION>
LOCATION INVESTMENT SPECIALTY
-----------------------------------------------------------------------------
<S> <C> <C>
COLUMBUS CIRCLE Stamford, CT Stocks, using its "Positive Momentum &
INVESTORS ("COLUMBUS Positive Surprise" discipline
CIRCLE")
-----------------------------------------------------
CADENCE CAPITAL Boston, MA Stocks of growth companies that the
MANAGEMENT ("CADENCE") Portfolio Manager believes are trading
at a reasonable price
-----------------------------------------------------
NFJ INVESTMENT GROUP Dallas, TX Value stocks that the Portfolio
("NFJ") Manager believes are undervalued
and/or offer above-average dividend
yields
-----------------------------------------------------
BLAIRLOGIE CAPITAL Edinburgh, International stocks
MANAGEMENT Scotland
("BLAIRLOGIE")
-----------------------------------------------------
PACIFIC INVESTMENT Newport Beach, All sectors of the bond market using
MANAGEMENT COMPANY CA its total return philosophy--seeking
("PACIFIC INVESTMENT both yield and capital appreciation
MANAGEMENT")
-----------------------------------------------------------------------------
</TABLE>
PIMCO FUND
PROFILES
<TABLE>
<CAPTION>
PIMCO INVESTMENT PRIMARY PORTFOLIO
FUND NAME OBJECTIVE INVESTMENTS (/1/) MANAGER
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STOCK FUNDS Equity Income Current income as a Common stocks with NFJ
primary objective; long- below-average price to
term growth of capital earnings ratios and
as a secondary objective higher dividend yields
relative to their
industry groups
------------------------------------------------------------------------------------------
Renaissance Long-term growth of Income-producing stocks Columbus Circle
capital and income and convertible
securities of companies
with small, medium and
large market
capitalizations
------------------------------------------------------------------------------------------
Value Long-term growth of Common stocks with NFJ
capital and income below-average price to
earnings ratios relative
to their industry groups
------------------------------------------------------------------------------------------
Enhanced Equity Total return which Common stocks Parametric
equals or exceeds the represented in the S&P
total return performance 500
of the S&P 500
------------------------------------------------------------------------------------------
Capital Appreciation Growth of capital Common stocks of Cadence
companies with market
capitalizations of at
least $100 million that
have improving
fundamentals and whose
stock is reasonably
valued by the market
------------------------------------------------------------------------------------------
Growth Long-term growth of Common stocks of Columbus Circle
capital; income is companies with medium to
incidental large market
capitalizations
---------------------------------------------------------------------------------------------------------
AGGRESSIVE Mid Cap Growth Growth of capital Common stocks of Cadence
STOCK FUNDS companies with market
capitalizations in
excess of $500 million
that have improving
fundamentals and whose
stock is reasonably
valued by the market
------------------------------------------------------------------------------------------
Target Capital appreciation; no Common stocks of Columbus Circle
consideration given to companies with medium
income market capitalizations
------------------------------------------------------------------------------------------
Small Cap Value Long-term growth of Common stocks of NFJ
capital and income companies with market
capitalizations between
$50 million and $1
billion and below-
average price to
earnings ratios relative
to their industry groups
------------------------------------------------------------------------------------------
Small Cap Growth (/2/) Growth of capital Common stocks of Cadence
companies with market
capitalizations between
$50 million and $1
billion that have
improving fundamentals
and whose stock is
reasonably valued by the
market
------------------------------------------------------------------------------------------
Opportunity (/3/) Capital appreciation; no Common stock of Columbus Circle
consideration given to companies with small
income market capitalizations
(less than $1 billion)
------------------------------------------------------------------------------------------
Micro Cap Growth (/2/) Long-term growth of Common stocks of Cadence
capital companies with market
capitalizations of less
than $100 million that
have improving
fundamentals and whose
stock is reasonably
valued by the market
---------------------------------------------------------------------------------------------------------
INTERNATIONAL International Long-term growth of Diversified portfolio of Blairlogie
STOCK FUNDS Developed capital international equity
securities (developed
markets)
------------------------------------------------------------------------------------------
International Capital appreciation; Non-U.S. stocks of Blairlogie
income is incidental companies with small,
medium and large market
capitalizations
(developed and emerging
markets)
------------------------------------------------------------------------------------------
Emerging Markets Long-term growth of Common stocks of Blairlogie
capital companies located in
emerging market
countries
---------------------------------------------------------------------------------------------------------
SPECIALIZED Innovation Capital appreciation; no Common stocks of Columbus Circle
STOCK FUNDS consideration given to companies with small,
income medium and large market
capitalizations
(technology-related
stocks)
------------------------------------------------------------------------------------------
Precious Metals Capital appreciation; no U.S. and non-U.S. stocks Van Eck
consideration given to of companies with medium
income and large market
capitalizations
(precious metals-related
stocks)
---------------------------------------------------------------------------------------------------------
STOCK & Balanced Total return consistent Common stocks, fixed Cadence, NFJ and Pacific
BOND FUNDS with prudent investment income securities and Investment Management
management money market instruments
---------------------------------------------------------------------------------------------------------
BOND FUNDS Tax Exempt High current income Investment grade Columbus Circle
exempt from federal municipal securities
income tax, consistent (tax-exempt bonds)
with preservation of
capital
</TABLE>
1. For specific information concerning the market capitalizations
of companies in which each Fund may invest and each Fund's invest-
ment style, see "Investment Objectives and Policies" in this Pro-
spectus.
2. Class A, Class B and Class C shares of the Small Cap Growth and
Micro Cap Growth Funds are not offered as of the date of this Pro-
spectus; however, investment opportunities in Class A, Class B or
Class C shares of these Funds may be available in the future.
3. Except to the extent described under "How to Buy Shares--Lim-
ited Offering of Shares of the Opportunity Fund to New Investors,"
the Opportunity Fund is closed to new investors. See "How to Buy
Shares--Restrictions on Sales of and Exchanges for Shares of the
Opportunity Fund."
January 14, 1997 Prospectus 3
<PAGE>
Schedule of Fees
SHAREHOLDER
TRANSACTION
EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES(/1/) SHARES
---------------------------------------------------------------------
<S> <C> <C> <C>
MAXIMUM INITIAL SALES CHARGE
IMPOSED ON PURCHASES
(as a percentage of offering
price at time of purchase)
ALL FUNDS EXCEPT THE TAX EX-
EMPT FUND 5.50% None None
TAX EXEMPT FUND 4.50% None None
---------------------------------------------------------------------
MAXIMUM SALES CHARGE IMPOSED
ON REINVESTED DIVIDENDS
(as a percentage of net asset
value at time of purchase) None None None
---------------------------------------------------------------------
MAXIMUM CONTINGENT DEFERRED
SALES CHARGE ("CDSC")
(as a percentage of original
purchase price) 1%(/2/) 5%(/3/) 1%(/4/)
---------------------------------------------------------------------
EXCHANGE FEE None None None
</TABLE>
1. The Opportunity Fund does not offer Class B shares.
2. Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of pur-
chase. See "Alternative Purchase Arrangements" in this Prospectus.
3. The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines ac-
cording to the schedule set forth under "Alternative Purchase Ar-
rangements -- Deferred Sales Charge Alternative -- Class B Shares"
in this Prospectus.
4. The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
4 PIMCO Funds: Multi-Manager Series
<PAGE>
The purpose of the following tables is to assist investors in un-
derstanding the various costs and expenses of the Trust that are
borne directly or indirectly by Class A, Class B and Class C
shareholders of the Funds. Class A, Class B and Class C shares of
the Funds were not offered prior to the date of this Prospectus,
although Class A, Class B (except for the Opportunity Fund) and
Class C shares were previously offered by the predecessor of each
of the Renaissance, Growth, Target, Opportunity, International,
Innovation, Precious Metals and Tax Exempt Funds, each of which
was a series of PIMCO Advisors Funds that reorganized as a Fund of
the Trust on January 17, 1997. The information provided below for
each of these Funds reflects the Fund's current fees and expenses
and not the actual fees and expenses of its predecessor. The Exam-
ples for Class A shares assume payment of the current maximum ap-
plicable sales load. Due to the 12b-1 distribution fee imposed on
Class B and Class C shares, a Class B or Class C shareholder of
the Trust may, depending on the length of time the shares are
held, pay more than the economic equivalent of the maximum front-
end sales charges permitted by relevant rules of the National As-
sociation of Securities Dealers, Inc.
NOTE: THE FIGURES SHOWN IN THE EXAMPLES ARE ENTIRELY HYPOTHETICAL.
THEY ARE NOT REPRESENTATIONS OF PAST OR FUTURE PERFORMANCE OR EX-
PENSES; ACTUAL PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS
THAN SHOWN.
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5% annual
ANNUAL FUND OPERATING EXPENSES return and (2) redemption at the end
(As a percentage of average net assets): of each time period:
TOTAL
ADMINI- FUND
ADVISORY STRATIVE 12B-1 OPERATING YEAR
FUND FEES FEES(/1/) FEES(/2/) EXPENSES 1 3 5 10
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME .45% .40% .25% 1.10% $ 66 $ 88 $ 112 $ 182
- ------------------------------------------------------------------------------------------------------
RENAISSANCE .60 .40 .25 1.25 67 92 120 198
- ------------------------------------------------------------------------------------------------------
VALUE .45 .40 .25 1.10 66 88 112 182
- ------------------------------------------------------------------------------------------------------
ENHANCED EQUITY .45 .40 .25 1.10 66 88 112 182
- ------------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION .45 .40 .25 1.10 66 88 112 182
- ------------------------------------------------------------------------------------------------------
GROWTH .50 .40 .25 1.15 66 90 115 187
- ------------------------------------------------------------------------------------------------------
MID CAP GROWTH .45 .40 .25 1.10 66 88 112 182
- ------------------------------------------------------------------------------------------------------
TARGET .55 .40 .25 1.20 67 91 117 192
- ------------------------------------------------------------------------------------------------------
SMALL CAP VALUE .60 .40 .25 1.25 67 92 120 198
- ------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH 1.00 .40 .25 1.65 71 104 140 240
- ------------------------------------------------------------------------------------------------------
OPPORTUNITY .65 .40 .25 1.30 68 94 122 203
- ------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH 1.25 .40 .25 1.90 73 111 152 265
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL
DEVELOPED .60 .65 .25 1.50 69 100 132 224
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL .55 .65 .25 1.45 69 98 130 219
- ------------------------------------------------------------------------------------------------------
EMERGING MARKETS .85 .65 .25 1.75 72 107 145 250
- ------------------------------------------------------------------------------------------------------
INNOVATION .65 .40 .25 1.30 68 94 122 203
- ------------------------------------------------------------------------------------------------------
PRECIOUS METALS .60 .45 .25 1.30 68 94 122 203
- ------------------------------------------------------------------------------------------------------
BALANCED .45 .40 .25 1.10 66 88 112 182
- ------------------------------------------------------------------------------------------------------
TAX EXEMPT .30 .40 .25 .95 54 74 95 156
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5%
annual return and (2) no
redemption:
YEAR
FUND 1 3 5 10
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME $ 66 $ 88 $ 112 $ 182
- ------------------------------------------------------------------------------------------------------
RENAISSANCE 67 92 120 198
- ------------------------------------------------------------------------------------------------------
VALUE 66 88 112 182
- ------------------------------------------------------------------------------------------------------
ENHANCED EQUITY 66 88 112 182
- ------------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION 66 88 112 182
- ------------------------------------------------------------------------------------------------------
GROWTH 66 90 115 187
- ------------------------------------------------------------------------------------------------------
MID CAP GROWTH 66 88 112 182
- ------------------------------------------------------------------------------------------------------
TARGET 67 91 117 192
- ------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 67 92 120 198
- ------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH 71 104 140 240
- ------------------------------------------------------------------------------------------------------
OPPORTUNITY 68 94 122 203
- ------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH 73 111 152 265
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL
DEVELOPED 69 100 132 224
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL 69 98 130 219
- ------------------------------------------------------------------------------------------------------
EMERGING MARKETS 72 107 145 250
- ------------------------------------------------------------------------------------------------------
INNOVATION 68 94 122 203
- ------------------------------------------------------------------------------------------------------
PRECIOUS METALS 68 94 122 203
- ------------------------------------------------------------------------------------------------------
BALANCED 66 88 112 182
- ------------------------------------------------------------------------------------------------------
TAX EXEMPT 54 74 95 156
</TABLE>
CLASS A
SHARES
1. The Administrative Fees for each Fund are subject to reduction in the extent
that the average net assets attributable in the aggregate to the Fund's Class A.
Class B. Class C. shares exceed $2.5 billion. See "Management of the trust --
Advisory and Administrative Fees."
2. 12b-1 fees represent servicing fees which are paid annually to the
Distributor and repaid to participating brokers, certain banks and other
financial intermediaries. See "Distributor and Distribution and Servicing
Plans."
January 14, 1997 Prospectus 5
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5% annual
ANNUAL FUND OPERATING EXPENSES return and (2) redemption at the end
(As a percentage of average net assets): of each time period:
TOTAL
ADMINI- FUND
ADVISORY STRATIVE 12B-1 OPERATING YEAR
FUND FEES FEES(/1/) FEES(/2/) EXPENSES 1 3 5 10
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME .45% .40% 1.00% 1.85% $ 69 $ 88 $ 120 $ 188
- -------------------------------------------------------------------------------------------------------
RENAISSANCE .60 .40 1.00 2.00 70 93 128 204
- -------------------------------------------------------------------------------------------------------
VALUE .45 .40 1.00 1.85 69 88 120 188
- -------------------------------------------------------------------------------------------------------
ENHANCED EQUITY .45 .40 1.00 1.85 69 88 120 188
- -------------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION .45 .40 1.00 1.85 69 88 120 188
- -------------------------------------------------------------------------------------------------------
GROWTH .50 .40 1.00 1.90 69 90 123 193
- -------------------------------------------------------------------------------------------------------
MID CAP GROWTH .45 .40 1.00 1.85 69 88 120 188
- -------------------------------------------------------------------------------------------------------
TARGET .55 .40 1.00 1.95 70 91 125 198
- -------------------------------------------------------------------------------------------------------
SMALL CAP VALUE .60 .40 1.00 2.00 70 93 128 204
- -------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH 1.00 .40 1.00 2.40 74 105 148 246
- -------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH 1.25 .40 1.00 2.65 77 112 161 271
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL
DEVELOPED .60 .65 1.00 2.25 73 100 140 230
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL .55 .65 1.00 2.20 72 99 138 225
- -------------------------------------------------------------------------------------------------------
EMERGING MARKETS .85 .65 1.00 2.50 75 108 153 256
- -------------------------------------------------------------------------------------------------------
INNOVATION .65 .40 1.00 2.05 71 94 130 209
- -------------------------------------------------------------------------------------------------------
PRECIOUS METALS .60 .45 1.00 2.05 71 94 130 209
- -------------------------------------------------------------------------------------------------------
BALANCED .45 .40 1.00 1.85 69 88 120 188
- -------------------------------------------------------------------------------------------------------
TAX EXEMPT .30 .40 1.00 1.70 67 84 112 171
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5% annual
return and (2) no redemption:
YEAR
FUND 1 3 5 10
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME $ 19 $ 58 $ 100 $ 188
- -------------------------------------------------------------------------------------------------------
RENAISSANCE 20 63 108 204
- -------------------------------------------------------------------------------------------------------
VALUE 19 58 100 188
- -------------------------------------------------------------------------------------------------------
ENHANCED EQUITY 19 58 100 188
- -------------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION 19 58 100 188
- -------------------------------------------------------------------------------------------------------
GROWTH 19 60 103 193
- -------------------------------------------------------------------------------------------------------
MID CAP GROWTH 19 58 100 188
- -------------------------------------------------------------------------------------------------------
TARGET 20 61 105 198
- -------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 20 63 108 204
- -------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH 24 75 128 246
- -------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH 27 82 141 271
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL
DEVELOPED 23 70 120 230
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL 22 69 118 225
- -------------------------------------------------------------------------------------------------------
EMERGING MARKETS 25 78 133 256
- -------------------------------------------------------------------------------------------------------
INNOVATION 21 64 110 209
- -------------------------------------------------------------------------------------------------------
PRECIOUS METALS 21 64 110 209
- -------------------------------------------------------------------------------------------------------
BALANCED 19 58 100 188
- -------------------------------------------------------------------------------------------------------
TAX EXEMPT 17 54 92 171
</TABLE>
CLASS B
SHARES
1. The Administrative Fees for each Fund are subject to reduction to the extent
that the average net assets attributable in the aggregate to the Fund's Class A.
Class B. Class C shares exceed $2.5 billion. See "Management of the Trust --
Advisory and Administrative Fees."
2. 12b-1 fees which are equal to .25% represent fees which are paid annually to
the Distributor and repair to participating brokers, certain banks and other
financial intermediaries. 12b-1 fees which exceed .25% represent aggregate
distribution and servicing fees. See "Distributor and Distribution and Servicing
Plan."
6 PIMCO Funds:Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5% annual
ANNUAL FUND OPERATING EXPENSES return and (2) redemption at the end
(As a percentage of average net assets): of each time period:
TOTAL
ADMINI- FUND
ADVISORY STRATIVE 12B-1 OPERATING YEAR
FUND FEES FEES(/1/) FEES(/2/) EXPENSES 1 3 5 10
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME .45% .40% 1.00% 1.85% $ 29 $ 58 $ 100 $ 217
- -------------------------------------------------------------------------------------------------------
RENAISSANCE .60 .40 1.00 2.00 30 63 108 233
- -------------------------------------------------------------------------------------------------------
VALUE .45 .40 1.00 1.85 29 58 100 217
- -------------------------------------------------------------------------------------------------------
ENHANCED EQUITY .45 .40 1.00 1.85 29 58 100 217
- -------------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION .45 .40 1.00 1.85 29 58 100 217
- -------------------------------------------------------------------------------------------------------
GROWTH .50 .40 1.00 1.90 29 60 103 222
- -------------------------------------------------------------------------------------------------------
MID CAP GROWTH .45 .40 1.00 1.85 29 58 100 217
- -------------------------------------------------------------------------------------------------------
TARGET .55 .40 1.00 1.95 30 61 105 227
- -------------------------------------------------------------------------------------------------------
SMALL CAP VALUE .60 .40 1.00 2.00 30 63 108 233
- -------------------------------------------------------------------------------------------------------
SMALL CAP
GROWTH 1.00 .40 1.00 2.40 34 75 128 274
- -------------------------------------------------------------------------------------------------------
OPPORTUNITY .65 .40 1.00 2.05 31 64 110 238
- -------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH 1.25 .40 1.00 2.65 37 82 141 298
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL
DEVELOPED .60 .65 1.00 2.25 33 70 120 258
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL .55 .65 1.00 2.20 32 69 118 253
- -------------------------------------------------------------------------------------------------------
EMERGING
MARKETS .85 .65 1.00 2.50 35 78 133 284
- -------------------------------------------------------------------------------------------------------
INNOVATION .65 .40 1.00 2.05 31 64 110 238
- -------------------------------------------------------------------------------------------------------
PRECIOUS METALS .60 .45 1.00 2.05 31 64 110 238
- -------------------------------------------------------------------------------------------------------
BALANCED .45 .40 1.00 1.85 29 58 100 217
- -------------------------------------------------------------------------------------------------------
TAX EXEMPT .30 .40 1.00 1.70 27 54 92 201
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5% annual
return and (2) no redemption:
FUND 1 3 5 10
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME $ 19 $ 58 $ 100 $ 217
- -------------------------------------------------------------------------------------------------------
RENAISSANCE 20 63 108 233
- -------------------------------------------------------------------------------------------------------
VALUE 19 58 100 217
- -------------------------------------------------------------------------------------------------------
ENHANCED EQUITY 19 58 100 217
- -------------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION 19 58 100 217
- -------------------------------------------------------------------------------------------------------
GROWTH 19 60 103 222
- -------------------------------------------------------------------------------------------------------
MID CAP GROWTH 19 58 100 217
- -------------------------------------------------------------------------------------------------------
TARGET 20 61 105 227
- -------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 20 63 108 233
- -------------------------------------------------------------------------------------------------------
SMALL CAP
GROWTH 24 75 128 274
- -------------------------------------------------------------------------------------------------------
OPPORTUNITY 21 64 110 238
- -------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH 27 82 141 298
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL
DEVELOPED 23 70 120 258
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL 22 69 118 253
- -------------------------------------------------------------------------------------------------------
EMERGING
MARKETS 25 78 133 284
- -------------------------------------------------------------------------------------------------------
INNOVATION 21 64 110 238
- -------------------------------------------------------------------------------------------------------
PRECIOUS METALS 21 64 110 238
- -------------------------------------------------------------------------------------------------------
BALANCED 19 58 100 217
- -------------------------------------------------------------------------------------------------------
TAX EXEMPT 17 54 92 201
</TABLE>
CLASS C
SHARES
1. The Administrative Fees for each Fund are subject to reduction to the extent
that the average net assets attributable in the aggregate to the Fund's Class A.
Class B and Class C shares exceed $2.5 billion. See "Management of the Trust --
Advisory and Administrative Fees."
2. 12b-1 fees which are equal to 25% represent servicing fees which are paid
annually to the Distributor and repaid to participating brokers, certain banks
and other financial intermediaries. 12b-1 fees which exceed .25% represent
aggregate distribution and servicing fees. See "Distributor and Distribution and
Servicing Plans."
January 14, 1997 Prospectus 7
<PAGE>
Financial Highlights
The financial highlights set forth on the following pages present
certain information and ratios as well as performance information
for Funds whose predecessors offered Class A, Class B, or Class C
shares prior to the date of this Prospectus as series of PIMCO Ad-
visors Funds (each of which intends to reorganize as a series of
the Trust on January 17, 1997). ALL OF THE INFORMATION IN THIS
SECTION ASSUMES THAT THE REORGANIZATIONS WILL OCCUR ON THAT DATE.
THIS PROSPECTUS WILL BE AMENDED IF SUCH REORGANIZATIONS DO NOT OC-
CUR. The expense ratios provided in the financial highlights for
these Funds reflect fee arrangements in effect for PIMCO Advisors
Funds which differ from the fee arrangements applicable to the
Funds of the Trust. The information provided below, which is in-
cluded in the PIMCO Advisors Funds' Annual Report dated September
30, 1996, has been audited by the former independent accountants
for the predecessors to the Funds listed below for the periods
listed, whose report thereon is also included in such Annual Re-
port. The PIMCO Advisors Funds' Annual Report is incorporated by
reference in the Statement of Additional Information and may be
obtained without charge from the Distributor. Financial Statements
and related Notes are also incorporated by reference in the State-
ment of Additional Information. The remaining Funds did not offer
Class A, Class B or Class C shares prior to the date of this Pro-
spectus.
The following schedule of financial highlights for the Renais-
sance Fund is for shares outstanding throughout the periods list-
ed. The information provided reflects results of operations under
the Fund's former investment objective and policies through Janu-
ary 31, 1992; such results would not necessarily have been
achieved had the Fund's current objective and policies then been
in effect.
RENAISSANCE FUND(/1/)
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------------- -----------------
2/1/91- 5/22/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------- ---------------
Net Asset
Value,
Beginning of
Period $14.14 $12.50 $12.88 $10.57 $9.92 $8.38 $14.13 $12.55
------------------------------------------------- ---------------
Income From
Investment
Operations:
Net Investment
Income 0.23 0.36 0.34 0.33 0.34 0.28 0.09 0.11
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 2.79 1.61 (0.17) 2.30 0.71 1.54 2.83 1.55
------------------------------------------------- ---------------
Total From
Investment
Operations 3.02 1.97 0.17 2.63 1.05 1.82 2.92 1.66
------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income)
(0.23) (0.33) (0.33) (0.32) (0.40) (0.28) (0.11) (0.08)
Dividends (in
excess of net
investment
income) (0.07) 0.00 0.00 0.00 0.00 0.00 (0.04) 0.00
Distributions
(from
capital gain) (0.78) 0.00 (0.22) 0.00 0.00 0.00 (0.78) 0.00
------------------------------------------------- ---------------
Total
Distributions (1.08) (0.33) (0.55) (0.32) (0.40) (0.28) (0.93) (0.08)
------------------------------------------------- ---------------
Net Asset
Value,
End of Period $16.08 $14.14 $12.50 $12.88 $10.57 $9.92 $16.12 $14.13
================================================= ===============
TOTAL RETURN
(without
sales charge) 22.37% 16.1% 1.4% 25.3% 10.7% 34.8% 21.54% 13.3%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $20,631 $12,933 $14,942 $6,328 $2,593 $15 $15,693 $1,760
Ratio of
Expenses to
Average Net
Assets 1.25% 1.3% 1.3% 1.3% 1.4% 1.6%* 2.00% 2.1%*
Ratio of Net
Investment
Income to
Average
Net Assets 1.60% 2.9% 2.7% 2.9% 3.3% 4.4%* 0.85% 2.2%*
Portfolio
Turnover Rate 203.07% 176.9% 174.9% 167.9% 149.0% 142.7% 203.07% 176.9%
Average
Commission
Rate $0.06 $0.06
<CAPTION>
Class C
-----------------------------------------------------------------------------------
4/18/88-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
Net Asset
Value,
Beginning of
Period $14.09 $12.47 $12.85 $10.56 $9.91 $8.16 $11.17 $10.05 $10.00
-----------------------------------------------------------------------------------
Income From
Investment
Operations:
Net Investment
Income 0.12 0.27 0.24 0.25 0.29 0.36 0.49 0.55 0.24
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 2.78 1.59 (0.16) 2.29 0.68 1.75 (2.32) 1.19 (0.05)
-----------------------------------------------------------------------------------
Total From
Investment
Operations 2.90 1.86 0.08 2.54 0.97 2.11 (1.83) 1.74 0.19
-----------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) (0.13) (0.24) (0.24) (0.25) (0.32) (0.36) (0.49) (0.62) (0.14)
Dividends (in
excess of net
investment
income) (0.03) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) (0.78) 0.00 (0.22) 0.00 0.00 0.00 (0.69) 0.00 0.00
-----------------------------------------------------------------------------------
Total
Distributions (0.94) (0.24) (0.46) (0.25) (0.32) (0.36) (1.18) (0.62) (0.14)
-----------------------------------------------------------------------------------
Net Asset
Value,
End of Period $16.05 $14.09 $12.47 $12.85 $10.56 $9.91 $8.16 $11.17 $10.05
===================================================================================
TOTAL RETURN
(without
sales charge) 21.52% 15.2% 0.7% 24.4% 9.9% 26.5% (18.0%) 17.9% 4.3%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $230,058 $174,316 $178,892 $94,247 $45,101 $22,651 $25,758 $45,168 $47,118
Ratio of
Expenses to
Average Net
Assets 2.00% 2.1% 2.0% 2.1% 2.1% 2.2% 2.0% 1.9% 2.0%*
Ratio of Net
Investment
Income to
Average
Net Assets 0.85% 2.1% 2.0% 2.2% 2.7% 4.2% 5.1% 5.2% 5.4%*
Portfolio
Turnover Rate 203.07% 176.9% 174.9% 167.9% 149.0% 142.7% 70.2% 84.8% 22.9%
Average
Commission
Rate $0.06
</TABLE>
*Annualized
(1) Formerly, the PIMCO Advisors Equity Income Fund.
8 PIMCO Funds: Multi-Manager Series
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Growth Fund
is for shares outstanding throughout the periods listed.
GROWTH FUND
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------------- -----------------
10/26/90- 5/23/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------- ---------------
Net Asset
Value,
Beginning of
Period $25.73 $22.01 $23.64 $20.76 $20.63 $16.99 $24.94 $22.63
------------------------------------------------------- ---------------
Income From
Investment
Operations:
Net Investment
Income (Loss) 0.06 0.12 0.12 0.09 0.14 0.21 (0.07) (0.03)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 3.72 4.79 0.12 3.53 1.38 5.28 3.52 2.34
------------------------------------------------------- ---------------
Total From
Investment
Operations 3.78 4.91 0.24 3.62 1.52 5.49 3.45 2.31
------------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income)
0.00 0.00 0.00 0.00 (0.14) (0.19) 0.00 0.00
Distributions
(from
capital gain) (2.93) (1.19) (1.87) (0.74) (1.25) (1.66) (2.93) 0.00
------------------------------------------------------- ---------------
Total
Distributions (2.93) (1.19) (1.87) (0.74) (1.39) (1.85) (2.93) 0.00
------------------------------------------------------- ---------------
Net Asset
Value,
End of Period $26.58 $25.73 $22.01 $23.64 $20.76 $20.63 $25.46 $24.94
======================================================= ===============
TOTAL RETURN
(without
sales charge) 16.11% 23.7% 1.3% 17.7% 7.7% 38.6% 15.22% 10.2%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $151,103 $134,819 $107,269 $97,509 $71,209 $17,064 $37,256 $7,671
Ratio of
Expenses to
Average Net
Assets 1.11% 1.1% 1.1% 1.1% 1.1% 1.2%* 1.86% 1.9%*
Ratio of Net
Investment
Income to
Average
Net Assets 0.24% 0.5% 0.6% 0.4% 0.7% 0.9%* (0.51)% (0.4)%*
Portfolio
Turnover Rate 104.07% 110.6% 115.3% 109.9% 92.3% 95.3% 104.07% 110.6%
Average
Commission
Rate $0.07 $0.07
<CAPTION>
Class C
-----------------------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 99/30/87
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
Net Asset
Value,
Beginning of
Period $24.94 $21.52 $23.32 $20.64 $20.54 $16.93 $19.71 $13.93 $18.04 $14.76
-----------------------------------------------------------------------------------------------------------
Income From
Investment
Operations:
Net Investment
Income (Loss) (0.12) (0.04) (0.04) (0.07) (0.01) 0.12 0.19 0.11 0.09 0.14
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 3.57 4.65 0.11 3.49 1.37 5.32 (1.67) 5.77 (2.96) 5.24
-----------------------------------------------------------------------------------------------------------
Total From
Investment
Operations 3.45 4.61 0.07 3.42 1.36 5.44 (1.48) 5.88 (2.87) 5.38
-----------------------------------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 (0.01) (0.17) (0.18) (0.10) (0.11) (0.18)
Distributions
(from
capital gain) (2.93) (1.19) (1.87) (0.74) (1.25) (1.66) (1.12) 0.00 (1.13) (1.92)
-----------------------------------------------------------------------------------------------------------
Total
Distributions (2.93) (1.19) (1.87) (0.74) (1.26) (1.83) (1.30) (0.10) (1.24) (2.10)
-----------------------------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $25.46 $24.94 $21.52 $23.32 $20.64 $20.54 $16.93 $19.71 $13.93 $18.04
===========================================================================================================
TOTAL RETURN
(without
sales charge) 15.22% 22.8% 0.5% 16.9% 6.9% 35.1% (8.0)% 42.4% (14.8)% 41.5%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $1,450,216 $1,290,152 $1,085,427 $1,077,490 $853,121 $564,398 $314,075 $373,490 $338,493 $509,348
Ratio of
Expenses to
Average Net
Assets 1.86% 1.9% 1.9% 1.9% 1.9% 1.8% 1.7% 1.7% 1.8% 1.6%
Ratio of Net
Investment
Income to
Average
Net Assets (0.51)% (0.2)% (0.2)% (0.3)% (0.1)% 0.6% 1.0% 0.7% 0.6% 0.8%
Portfolio
Turnover Rate 104.07% 110.6% 115.3% 109.9% 92.3% 95.3% 88.7% 82.5% 103.6% 128.1%
Average
Commission
Rate $0.07
</TABLE>
*Annualized
January 14, 1997 Prospectus 9
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Target Fund
is for shares outstanding throughout the periods listed.
TARGET FUND
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------ --------------- --------------------------------------
<CAPTION>
12/17/92- 5/22/95- 12/17/92-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/96 9/30/95 9/30/96 9/30/95 9/30/94 9/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------ --------------- --------------------------------------
Net Asset
Value,
Beginning of
Period $16.40 $13.13 $12.72 $10.00 $16.06 $13.93 $16.05 $12.95 $12.65 $10.00
------------------------------------ --------------- --------------------------------------
Income From
Investment
Operations:
Net Investment
Loss (0.05) (0.02) (0.04) (0.02) (0.09) (0.05) (0.16) (0.12) (0.14) (0.09)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 2.54 3.45 0.57 2.74 2.39 2.18 2.47 3.38 0.56 2.74
------------------------------------ --------------- --------------------------------------
Total From
Investment
Operations 2.49 3.43 0.53 2.72 2.30 2.13 2.31 3.26 0.42 2.65
------------------------------------ --------------- --------------------------------------
Less
Distributions:
Distributions
(from
capital gain) (1.78) (0.16) (0.12) 0.00 (1.78) 0.00 (1.78) (0.16) (0.12) 0.00
------------------------------------ --------------- --------------------------------------
Net Asset
Value,
End of Period $17.11 $16.40 $13.13 $12.72 $16.58 $16.06 $16.58 $16.05 $12.95 $12.65
==================================== =============== ======================================
TOTAL RETURN
(without
sales charge) 16.50% 26.5% 4.2% 27.2% 15.58% 15.3% 15.66% 25.6% 3.4% 26.5%
RATIOS /
SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $156,027 $121,915 $90,527 $48,787 $49,851 $7,554 $974,948 $780,355 $556,043 $298,238
Ratio of
Expenses to
Average Net
Assets 1.18% 1.2% 1.2% 1.3%* 1.93% 2.0%* 1.93% 2.0% 2.0% 2.0%*
Ratio of Net
Investment
Income to
Average
Net Assets (0.34)% (0.1)% (0.3)% (0.3)%* (1.09)% (0.9)%* (1.09)% (0.9)% (1.1)% (1.0)%*
Portfolio
Turnover Rate 140.51% 128.3% 103.5% 76.0% 140.51% 128.3% 140.51% 128.3% 103.5% 76.0%
Average
Commission
Rate $0.06 $0.06 $0.06
</TABLE>
*Annualized
10 PIMCO Funds: Multi-Manager Series
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Opportunity
Fund is for shares outstanding throughout the periods listed.
OPPORTUNITY FUND
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------
12/17/90-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------
Net Asset
Value,
Beginning of Period $39.08 $28.87 $33.43 $19.84 $17.95 $11.78
------------------------------------------------------
Income From
Investment Operations:
Net Investment
Loss (0.11) (0.11) (0.17) (0.15) (0.04) (0.03)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 6.12 11.19 (2.02) 14.00 3.61 6.20
------------------------------------------------------
Total From
Investment
Operations 6.01 11.08 (2.19) 13.85 3.57 6.17
------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income)
0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) (7.73) (0.87) (2.26) (0.26) (1.68) 0.00
Return of
capital
distribution 0.00 0.00 (0.11) 0.00 0.00 0.00
------------------------------------------------------
Total
Distributions (7.73) (0.87) (2.37) (0.26) (1.68) 0.00
------------------------------------------------------
Net Asset
Value,
End of Period $37.36 $39.08 $28.87 $33.43 $19.84 $17.95
======================================================
TOTAL RETURN
(without
sales charge) 18.35% 39.7% (6.7)% 70.4% 21.6% 70.9%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $134,859 $120,830 $95,261 $106,666 $22,454 $1,623
Ratio of
Expenses to
Average Net
Assets 1.13% 1.2% 1.1% 1.2% 1.3% 1.4%*
Ratio of Net
Investment
Income to
Average
Net Assets (0.32)% (0.4)% (0.6)% (0.6)% (0.2)% (0.5)%*
Portfolio
Turnover Rate 91.23% 101.6% 78.4% 105.4% 93.8% 144.6%
Average
Commission
Rate $0.07
<CAPTION>
Class C
----------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
Net Asset
Value,
Beginning of Period $37.64 $28.04 $32.77 $19.60 $17.87 $11.93 $15.78 $11.84 $16.73 $13.18
----------------------------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Loss (0.35) (0.34) (0.38) (0.34) (0.18) (0.11) (0.01) (0.03) 0.03 0.02
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 5.82 10.81 (1.98) 13.77 3.59 6.42 (2.13) 3.97 (2.34) 4.80
----------------------------------------------------------------------------------------------
Total From
Investment
Operations 5.47 10.47 (2.36) 13.43 3.41 6.31 (2.14) 3.94 (2.31) 4.82
----------------------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.03) 0.00
Distributions
(from
capital gain) (7.73) (0.87) (2.26) (0.26) (1.68) (0.37) (1.71) 0.00 (2.55) (1.27)
Return of
capital
distribution 0.00 0.00 (0.11) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------------
Total
Distributions (7.73) (0.87) (2.37) (0.26) (1.68) (0.37) (1.71) 0.00 (2.58) (1.27)
----------------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $35.38 $37.64 $28.04 $32.77 $19.60 $17.87 $11.93 $15.78 $11.84 $16.73
==============================================================================================
TOTAL RETURN
(without
sales charge) 17.47% 38.6% (7.4)% 69.1% 20.8% 54.4% (14.8)% 33.3% (9.0)% 40.2%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $800,250 $715,191 $553,460 $618,193 $179,081 $58,656 $33,472 $51,680 $51,062 $74,235
Ratio of
Expenses to
Average Net
Assets 1.88% 1.9% 1.9% 2.0% 2.0% 2.0% 1.9% 1.9% 2.0% 1.7%
Ratio of Net
Investment
Income to
Average
Net Assets (1.07)% (1.1)% (1.4)% (1.3)% (1.0)% (0.8)% (0.1)% (0.2)% 0.3% 0.1%
Portfolio
Turnover Rate 91.23% 101.6% 78.4% 105.4% 93.8% 144.6% 106.2% 153.4% 124.9% 188.7%
Average
Commission
Rate $0.07
</TABLE>
*Annualized
January 14, 1997 Prospectus 11
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Interna-
tional Fund is for shares outstanding throughout the periods list-
ed. The information provided reflects results of operations of the
Fund's former investment objective and policies through August 31,
1992; such results would not necessarily have been achieved had
the Fund's current objective and policies been in effect. On No-
vember 15, 1994, Blairlogie became the Portfolio Manager of the
Fund.
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------- -----------------------
2/1/91- 5/22/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------- ---------------------
Net Asset
Value,
Beginning of
Period $12.19 $12.92 $12.17 $10.04 $10.54 $9.48 $11.75 $11.30
-------------------------------------------------- ---------------------
Income From
Investment Operations:
Net Investment
Income (Loss) 0.07 0.07 0.04 0.07 0.05 0.02 0.00(/1/) 0.00
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 0.77 (0.56) 0.94 2.80 (0.37) 1.04 0.73(/1/) 0.45
-------------------------------------------------- ---------------------
Total From
Investment
Operations 0.84 (0.49) 0.98 2.87 (0.32) 1.06 0.73 0.45
-------------------------------------------------- ---------------------
Less
Distributions:
Distributions
(from
capital gain) 0.00 (0.24) (0.23) (0.74) (0.18) 0.00 0.00 0.00
-------------------------------------------------- ---------------------
Net Asset
Value,
End of Period $13.03 $12.19 $12.92 $12.17 $10.04 $10.54 $12.48 $11.75
================================================== =====================
TOTAL RETURN
(without
sales charge) 6.89% (3.7)% 8.2% 30.4% (3.1)% 17.3% 6.21% 4.0%
RATIOS /
SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $20,056 $17,951 $23,289 $11,992 $471 $22 $5,893 $503
Ratio of
Expenses to
Average Net
Assets 1.41% 1.5% 1.4% 1.4% 1.9% 1.9%* 2.16% 2.3%*
Ratio of Net
Investment
Income to
Average
Net Assets 0.49% 0.6% 0.3% 0.6% 0.5% 0.7%* (0.26)% (0.1)%*
Portfolio
Turnover Rate 109.58% 169.8% 55.1% 67.6% 159.6% 107.1% 109.58% 169.8%
Average
Commission
Rate $0.00 $0.00
<CAPTION>
Class C
----------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
Net Asset
Value,
Beginning of
Period $11.75 $12.56 $11.92 $9.92 $10.49 $10.04 $13.33 $10.07 $12.87 $9.70
----------------------------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Income (Loss) (0.05) (0.02) (0.06) (0.01) (0.06) (0.08) (0.10) (0.18) (0.10) (0.10)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 0.77 (0.55) 0.93 2.75 (0.33) 1.76 (2.02) 3.44 (1.83) 3.27
----------------------------------------------------------------------------------------------
Total From
Investment
Operations 0.72 (0.57) 0.87 2.74 (0.39) 1.68 (2.12) 3.26 (1.93) 3.17
----------------------------------------------------------------------------------------------
Less
Distributions:
Distributions
(from
capital gain) 0.00 (0.24) (0.23) (0.74) (0.18) (1.23) (1.17) 0.00 (0.87) 0.00
----------------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $12.47 $11.75 $12.56 $11.92 $9.92 $10.49 $10.04 $13.33 $10.07 $12.87
==============================================================================================
TOTAL RETURN
(without
sales charge) 6.13% (4.5)% 7.4% 29.4% (3.8)% 18.3% (17.4)% 32.4% (14.0)% 32.7%
RATIOS /
SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $203,544 $215,349 $294,492 $147,194 $28,299 $33,594 $36,282 $56,150 $60,394 $107,584
Ratio of
Expenses to
Average Net
Assets 2.16% 2.2% 2.2% 2.2% 2.6% 2.6% 2.3% 2.3% 2.4% 2.4%
Ratio of Net
Investment
Income to
Average
Net Assets (0.26)% (0.2)% (0.5)% (0.1)% (0.6)% (0.2)% (0.3)% (0.7)% (0.5)% (0.9)%
Portfolio
Turnover Rate 109.58% 169.8% 55.1% 67.6% 159.6% 107.1% 93.0% 83.6% 94.9% 134.0%
Average
Commission
Rate $0.00
</TABLE>
1. Per share amounts based on average number of shares outstanding during the
period 10/1/95-9/30/96.
*Annualized
12 PIMCO Funds: Multi-Manager Series
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Innovation
Fund is for shares outstanding throughout the periods listed.
INNOVATION FUND
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C>
---------------- --------------- -----------------
<CAPTION>
12/22/94- 5/22/95- 12/22/94-
9/30/96 9/30/95 9/30/96 9/30/95 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C>
---------------- --------------- -----------------
Net Asset Value,
Beginning of Period $14.74 $10.00 $14.66 $11.81 $14.65 $10.00
---------------- --------------- -----------------
Income From
Investment Operations:
Net Investment Loss (0.07) (0.06)(/1/) (0.11) (0.08) (0.15) (0.13)(/1/)
Net Gains or Losses on
Securities (both
realized and
unrealized) 2.94 4.80 2.84 2.93 2.89 4.78
---------------- --------------- -----------------
Total From Investment
Operations 2.87 4.74 2.73 2.85 2.74 4.65
---------------- --------------- -----------------
Less Distributions:
Distributions (from
capital gain) (0.35) 0.00 (0.35) 0.00 (0.35) 0.00
---------------- --------------- -----------------
Net Asset Value,
End of Period $17.26 $14.74 $17.04 $14.66 $17.04 $14.65
================ =============== =================
TOTAL RETURN (without
sales charge) 19.86% 47.4% 18.99% 24.1% 19.08% 46.5%
RATIOS / SUPPLEMENTAL
DATA
Net Assets, End of
Period
(in 000s) $50,067 $28,239 $33,778 $6,509 $137,752 $63,952
Ratio of Expenses to
Average Net Assets 1.31% 1.4%* 2.06% 2.3%* 2.06% 2.2%*
Ratio of Net Investment
Income to
Average Net Assets (0.61)% (0.6)%* (1.36)% (1.7)%* (1.36)% (1.4)%*
Portfolio Turnover Rate 123.14% 86.1% 123.14% 86.1% 123.14% 86.1%
Average Commission Rate $0.06 $0.06 $0.06
</TABLE>
1. Reflecting voluntary waiver of investment advisory fee of $4,666 (0.00 per
share) by the Advisor as more fully described in Note 3(a) to the Financial
Statements in the PIMCO Advisors Funds' 1996 Annual Report.
*Annualized
January 14, 1997 Prospectus 13
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Precious
Metals Fund is for shares outstanding throughout the periods list-
ed. The information provided reflects results of operations under
the Fund's former investment objective and policies through Novem-
ber 14, 1994; such results would not necessarily have been
achieved had the Fund's current objective and policies been in ef-
fect.
PRECIOUS METALS FUND
<TABLE>
<CAPTION>
Class A Class B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------- ---------------
<CAPTION>
2/1/91- 6/15/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------- ---------------
Net Asset
Value,
Beginning of
Period $12.33 $14.14 $10.32 $7.54 $7.51 $7.19 $11.90 $11.61
------------------------------------------------- ---------------
Income From
Investment Operations:
Net Investment
Income (Loss) 0.03 0.07 0.08 0.06 (0.01) (0.07) (0.03) (0.01)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) (0.24) (1.88) 3.74 2.72 0.04 0.39 (0.25) 0.30
------------------------------------------------- ---------------
Total From
Investment
Operations (0.21) (1.81) 3.82 2.78 0.03 0.32 (0.28) 0.29
------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income)
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------- ---------------
Total
Distributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------- ---------------
Net Asset
Value,
End of Period $12.12 $12.33 $14.14 $10.32 $7.54 $7.51 $11.62 $11.90
================================================= ===============
TOTAL RETURN
(without
sales charge) (1.70)% (12.8)% 37.0% 36.9% 0.4% 6.8% (2.35)% 2.5%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $6,245 $7,670 $11,229 $3,425 $668 $514 $2,218 $251
Ratio of
Expenses to
Average Net
Assets 1.32% 1.4% 1.3% 1.4% 1.9% 2.1%* 2.07% 2.2%*
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 0.19% 0.6% 0.6% 0.6% (0.1)% (1.4)%* (0.56)% (0.2)%*
Portfolio
Turnover Rate 35.27% 8.7% 11.0% 10.0% 29.6% 19.4% 35.27% 8.7%
Average
Commission
Rate $0.02 $0.02
<CAPTION>
Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
<CAPTION>
10/10/88-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
Net Asset
Value,
Beginning of
Period $11.90 $13.75 $10.11 $7.44 $7.46 $9.40 $9.86 $10.00
------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Income (Loss) (0.07) (0.02) (0.02) (0.02) (0.06) (0.05) (0.05) (0.05)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) (0.21) (1.83) 3.66 2.69 0.04 (1.89) (0.41) (0.08)
------------------------------------------------------------------------
Total From
Investment
Operations (0.28) (1.85) 3.64 2.67 (0.02) (1.94) (0.46) (0.13)
------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.01)
Distributions
(from
capital gain) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------
Total
Distributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.01)
------------------------------------------------------------------------
Net Asset
Value,
End of Period $11.62 $11.90 $13.75 $10.11 $7.44 $7.46 $9.40 $9.86
========================================================================
TOTAL RETURN
(without
sales charge) (2.35)% (13.5)% 36.0% 35.9% (0.3)% (20.6)% (4.7)% (1.3)%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $37,609 $42,341 $62,825 $23,884 $6,633 $ 6,995 $9,918 $6,630
Ratio of
Expenses to
Average Net
Assets 2.07% 2.2% 2.1% 2.2% 2.6% 2.4% 2.4% 2.5%*
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (0.56)% (0.2)% (0.2)% (0.2)% (0.8)% (0.8)% (0.8)% (0.6)%*
Portfolio
Turnover Rate 35.27% 8.7% 11.0% 10.0% 29.6% 19.4% 22.5% 8.8%
Average
Commission
Rate $0.02
</TABLE>
*Annualized
14 PIMCO Funds: Multi-Manager Series
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Tax Exempt
Fund is for shares outstanding throughout the periods listed.
TAX EXEMPT FUND
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------------------- -----------------
3/14/91- 5/30/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------- ---------------
Net Asset
Value,
Beginning of
Period $11.83 $11.21 $12.74 $11.94 $11.53 $11.30 $11.84 $11.90
--------------------------------------------------- ---------------
Income From
Investment Operations:
Net Investment
Income 0.62 0.57 0.56 0.61 0.65 0.38 0.53 0.16
Net Gains or
Losses on
Securities
(both realized
and
unrealized) (0.01) 0.63 (1.31) 1.02 0.42 0.23 0.00 (0.07)
--------------------------------------------------- ---------------
Total From
Investment
Operations 0.61 1.20 (0.75) 1.63 1.07 0.61 0.53 0.09
--------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income)
(0.52) (0.58) (0.58) (0.64) (0.66) (0.38) (0.44) (0.15)
Dividends (in
excess of net
investment
income) (0.05) 0.00 0.00 0.00 0.00 0.00 (0.04) 0.00
Distributions
(from
capital gain) 0.00 0.00 (0.20) (0.19) 0.00 0.00 0.00 0.00
--------------------------------------------------- ---------------
Total
Distributions (0.57) (0.58) (0.78) (0.83) (0.66) (0.38) (0.48) (0.15)
--------------------------------------------------- ---------------
Net Asset
Value,
End of Period $11.87 $11.83 $11.21 $12.74 $11.94 $11.53 $11.89 $11.84
=================================================== ===============
TOTAL RETURN
(without
sales charge) 5.22% 11.0% (6.1)% 14.2% 9.5% 10.4% 4.54% 0.8%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $5,864 $2,701 $2,726 $2,852 $2,295 $321 $2,258 $228
Ratio of
Expenses to
Average Net
Assets 1.07% 1.1% 1.1% 1.1% 1.1% 1.1%* 1.82% 1.9%*
Ratio of Net
Investment
Income to
Average
Net Assets 5.12% 5.0% 4.7% 5.0% 5.6% 5.8%* 4.37% 4.0%*
Portfolio
Turnover Rate 49.33% 35.0% 63.2% 55.9% 107.4% 119.0% 49.33% 35.0%
<CAPTION>
Class C
-----------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
Net Asset
Value,
Beginning of
Period $11.82 $11.21 $12.73 $11.94 $11.53 $10.97 $11.10 $10.82 $10.23 $11.51
-----------------------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Income 0.52 0.48 0.47 0.52 0.58 0.62 0.63 0.65 0.65 0.66
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 0.00 0.62 (1.30) 1.01 0.41 0.56 (0.13) 0.28 0.59 (0.84)
-----------------------------------------------------------------------------------------
Total From
Investment
Operations 0.52 1.10 (0.83) 1.53 0.99 1.18 0.50 0.93 1.24 (0.18)
-----------------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) (0.44) (0.49) (0.49) (0.55) (0.58) (0.62) (0.63) (0.65) (0.65) (0.66)
Dividends (in
excess of net
investment
income) (0.04) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) 0.00 0.00 (0.20) (0.19) 0.00 0.00 0.00 0.00 0.00 (0.44)
-----------------------------------------------------------------------------------------
Total
Distributions (0.48) (0.49) (0.69) (0.74) (0.58) (0.62) (0.63) (0.65) (0.65) (1.10)
-----------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $11.86 $11.82 $11.21 $12.73 $11.94 $11.53 $10.97 $11.10 $10.82 $10.23
=========================================================================================
TOTAL RETURN
(without
sales charge) 4.46% 10.1% (6.7)% 13.3% 8.8% 11.0% 4.5% 8.8% 12.4% (2.1)%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $47,082 $54,224 $68,214 $81,475 $52,113 $46,663 $46,630 $60,609 $63,261 $66,610
Ratio of
Expenses to
Average Net
Assets 1.82% 1.8% 1.8% 1.8% 1.8% 1.8% 1.7% 1.7% 1.8% 1.8%
Ratio of Net
Investment
Income to
Average
Net Assets 4.37% 4.3% 4.0% 4.2% 4.9% 5.5% 5.6% 5.9% 6.1% 5.9%
Portfolio
Turnover Rate 49.33% 35.0% 63.2% 55.9% 107.4% 119.0% 77.5% 203.6% 211.3% 204.4%
</TABLE>
*Annualized
January 14, 1997 Prospectus 15
<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 in-
vestment objective of any Fund will be achieved. Because the mar-
ket value of each Fund's investments will change, the net asset
value per share of each Fund will also vary.
FUND EQUITY INCOME FUND seeks current income as a primary investment
DESCRIP- objective, and long-term growth of capital as a secondary objec-
TIONS tive. 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 approx-
imately 2,000 stocks by industry, each of which has a minimum mar-
ket 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 ap-
plication 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, re-
placements 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 in-
vestment policies, see "Investment Objectives and Policies--Equity
Funds." See "Characteristics and Risks of Securities and Invest-
ment Techniques" in this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more de-
tails on investment practices and related risks. The Portfolio
Manager for the Equity Income Fund is NFJ.
RENAISSANCE FUND seeks long-term growth of capital and income. The
Fund invests primarily in a variety of income-producing equity se-
curities. Income-producing equity securities include common stocks
that pay dividends, preferred stocks and securities (including
debt securities) that are convertible into common stocks ("con-
vertible securities").
The Fund may invest a portion of its assets in preferred stocks
and convertible securities rated at least B by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P")
(or similarly rated by another Nationally Recognized Statistical
Rating Organization ("NRSRO"), or unrated but determined by the
Portfolio Manager to be of comparable quality), and may invest up
to 10% of its total assets in convertible securities rated below B
by Moody's or S&P (or similarly rated by another NRSRO or unrated
but determined by the Portfolio Manager to be of comparable quali-
ty). Securities rated Ba or below by Moody's or BB or below by S&P
(or of similar quality) are not considered to be of "investment
grade" quality. These lesser rated debt securities may involve
special risks. See "Characteristics and Risks of Securities and
Investment Techniques--Risks of High Yield Securities ("Junk
Bonds")." Although the Fund may invest in such securities, it nei-
ther invests nor has the present intention of investing 35% or
more of its net assets in securities that are not considered to be
of "investment grade" quality. The Fund will not invest in con-
vertible securities that are in default at the time of acquisi-
tion.
The non-convertible debt securities in which the Fund may in-
vest include corporate or government debt securities of any matu-
rity, including zero coupon securities. These non-convertible debt
securities may be rated B or higher by Moody's or S&P (or simi-
larly rated by another NRSRO or unrated and determined by the
Portfolio Manager to be of comparable quality). The Fund may in-
vest a portion of its assets in securities of foreign issuers
traded in foreign securities markets (not including Eurodollar
certificates of deposit), which will not exceed 15% of the Fund's
assets at the time of investment. Investing in the securities of
foreign issuers involves special risks and considerations not typ-
ically associated with investing in U.S. companies. The Fund may
also purchase and write call and put options on securities and se-
curities indexes; enter into futures contracts and use options on
futures contracts; buy or sell foreign currencies; and enter into
forward foreign currency contracts. For information on other in-
vestment policies, see "Investment Objectives and Policies--Equity
Funds." See "Characteristics and Risks of Securities and Invest-
ment Techniques" in this
16 PIMCO Funds: Multi-Manager Series
<PAGE>
Prospectus and "Investment Objectives and Policies" in the State-
ment of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Renais-
sance Fund is Columbus Circle.
VALUE FUND seeks long-term growth of capital and income. 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 approx-
imately 2,000 stocks by industry, each of which has a minimum mar-
ket 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 low-
est P/E ratios that pass the quality and price momentum screens
are then selected for the Fund. The Fund usually invests in ap-
proximately 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 poli-
cies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of Securities and Investment Tech-
niques" in this Prospectus and "Investment Objectives and Poli-
cies" in the Statement of Additional Information for more details
on investment practices and related risks. The Portfolio Manager
for the Value Fund is NFJ.
ENHANCED EQUITY FUND seeks to provide a total return which equals
or exceeds the total return performance of an index that repre-
sents the performance of a reasonably broad spectrum of common
stocks that are publicly traded in the United States. The Fund
currently attempts to equal or exceed the total return performance
of the Standard & Poor's 500 Composite Stock Price Index ("S&P
500"). The Portfolio Manager uses quantitative techniques to con-
struct a portfolio that consists of some, but not all, of the com-
mon stocks that are represented in the S&P 500. The Fund may in-
vest in common stock of foreign issuers if included in the index.
The Fund is designed to meet simultaneously 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 op-
timization model analyzes the return pattern of thousands of port-
folios 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 perfor-
mance 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.
The Fund may engage in the purchase and writing of options on
securities indexes, and may also invest in stock index futures and
options thereon. For information on other investment policies, see
"Investment Objectives and Policies--Equity Funds." See "Charac-
teristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the En-
hanced Equity Fund is Parametric.
CAPITAL APPRECIATION FUND seeks growth of capital. The Fund in-
vests 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
selected from a universe of the approximately 1,000 largest market
capitalization stocks, all of which are those of companies with
market capitalizations of at least $100 million at the time of in-
vestment. The Fund usually invests in approximately 60 to 100 com-
mon 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
valua
January 14, 1997 Prospectus 17
<PAGE>
tions. Stocks are replaced when they score worse-than-median
screen ranks, have negative earnings surprises, or show poor rela-
tive 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 "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Capital
Appreciation Fund is Cadence.
GROWTH FUND seeks long-term growth of capital. Income is an inci-
dental consideration. The Fund invests primarily in common stocks
of companies with medium to large market capitalizations. The Fund
may invest a portion of its assets in securities of foreign is-
suers traded in foreign securities markets (not including Eurodol-
lar certificates of deposit), which will not exceed 15% of the
Fund's assets at the time of investment. Investing in the securi-
ties 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 securi-
ties and securities indexes; enter into futures contracts and use
options on futures contracts; buy or sell foreign currencies; and
enter into forward foreign currency contracts. For information on
other investment policies, see "Investment Objectives and Poli-
cies--Equity Funds." See "Characteristics and Risks of Securities
and Investment Techniques" in this Prospectus and "Investment Ob-
jectives and Policies" in the Statement of Additional Information
for more details on investment practices and related risks. The
Portfolio Manager for the Growth Fund is Columbus Circle.
MID CAP GROWTH FUND seeks growth of capital. The Fund invests pri-
marily in common stocks of middle capitalization companies that
have improving fundamentals (such as growth of earnings and divi-
dends) 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 invest-
ment, excluding the 200 companies with the highest market capital-
ization. The Fund usually invests in approximately 60 to 100 com-
mon 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 rela-
tive 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 "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Mid Cap
Growth Fund is Cadence.
TARGET FUND seeks capital appreciation. No consideration is given
to income. The Fund invests primarily in common stocks of compa-
nies with medium market capitalizations. The Fund may invest a
portion of its assets in securities of foreign issuers traded in
foreign securities markets (not including Eurodollar certificates
of deposit), which will not exceed 15% of the Fund's 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 and securities indexes;
enter into futures contracts and use options on futures contracts;
buy or sell foreign currencies; and enter into forward foreign
currency contracts. For information on other investment policies,
see "Investment Objectives and Policies--Equity Funds." See "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of
18 PIMCO Funds: Multi-Manager Series
<PAGE>
Additional Information for more details on investment practices
and related risks. The Portfolio Manager for the Target Fund is
Columbus Circle.
SMALL CAP VALUE FUND seeks long-term growth of capital and income.
The Fund invests primarily in common stocks of companies with mar-
ket capitalizations between $50 million and $1 billion at the time
of investment. In selecting securities, the Portfolio Manager di-
vides a universe of up to approximately 2,000 stocks into quar-
tiles 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 ra-
tio than the S&P 500's P/E ratio or its industry average P/E ra-
tio, or when an alternative stock within the same industry has a
significantly lower P/E ratio than the current Fund holding. The
Fund is intended for aggressive investors seeking above-average
gains and willing to accept the greater risks associated there-
with. For information on other investment policies, see "Invest-
ment Objectives and Policies--Equity Funds." See "Characteristics
and Risks of Securities and Investment Techniques" in this Pro-
spectus and "Investment Objectives and Policies" in the Statement
of Additional Information for more details on investment practices
and related risks. The Portfolio Manager for the Small Cap Value
Fund is NFJ.
SMALL CAP GROWTH FUND seeks growth of capital. The Fund invests
primarily in common stocks of companies that have improving funda-
mentals (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 earn-
ings surprise screen. The Portfolio Manager believes that the mod-
els identify the stocks in the universe exhibiting growth charac-
teristics 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. The Fund is
intended for aggressive investors seeking above-average gains and
willing to accept the greater risks associated therewith. For in-
formation on other investment policies, see "Investment Objectives
and Policies--Equity Funds." See "Characteristics and Risks of Se-
curities and Investment Techniques" in this Prospectus and "In-
vestment Objectives and Policies" in the Statement of Additional
Information for more details on investment practices and related
risks. The Portfolio Manager for the Small Cap Growth Fund is Ca-
dence.
OPPORTUNITY FUND seeks capital appreciation. No consideration is
given to income. EXCEPT TO THE EXTENT DESCRIBED UNDER "HOW TO BUY
SHARES--LIMITED OFFERING OF SHARES OF THE OPPORTUNITY FUND TO NEW
INVESTORS," THE FUND IS CLOSED TO NEW INVESTORS. The Fund invests
primarily in common stocks of companies with market capitaliza-
tions of less than $1 billion. The Fund is intended for aggressive
investors seeking above-average gains and willing to accept the
greater risks associated therewith.
The Fund may invest a portion of its assets in securities of
foreign issuers traded in foreign securities markets (not includ-
ing Eurodollar certificates of deposit), which will not exceed 15%
of the Fund's assets at the time of investment. Investing in the
securities of foreign issuers involves special risks and consider-
ations not typically associated with investing in U.S. companies.
The Fund may also purchase and write call and put options on secu-
rities and securities indexes; enter into futures contracts and
use options on futures contracts; buy or sell foreign currencies;
and enter into forward foreign currency contracts. For information
on other investment policies, see "Investment Objectives and Poli-
cies--Equity Funds." See "Characteristics and Risks of Securities
and Investment Techniques" in this Prospectus and
January 14, 1997 Prospectus 19
<PAGE>
"Investment Objectives and Policies" in the Statement of Addi-
tional Information for more details on investment practices and
related risks. The Portfolio Manager for the Opportunity Fund is
Columbus Circle.
MICRO CAP GROWTH FUND seeks long-term growth of capital. The Fund
invests primarily in common stocks of companies that have improv-
ing 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, in-
cluding: (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 ex-
hibiting 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 perfor-
mance. The universe is rescreened frequently to obtain a favorable
composition of growth and value characteristics for the entire
Fund. The Fund is intended for aggressive investors seeking above-
average gains and willing to accept the greater risks associated
therewith. For information on other investment policies, see "In-
vestment Objectives and Policies--Equity Funds." See "Characteris-
tics and Risks of Securities and Investment Techniques" in this
Prospectus and "Investment Objectives and Policies" in the State-
ment of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Micro
Cap Growth Fund is Cadence.
INTERNATIONAL DEVELOPED FUND seeks long-term growth of capital.
The Fund invests primarily in a diversified portfolio of interna-
tional 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. Under normal market conditions, the Fund will
invest no more than 35% of its assets in securities issued by com-
panies located in countries that the Portfolio Manager determines,
on the basis of market capitalization, liquidity, and other con-
siderations, to have underdeveloped securities markets. The Port-
folio Manager applies two levels of screening in selecting invest-
ments for the Fund. First, an active country selection model ana-
lyzes 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 and also
provides a sell discipline for fully valued securities. In select-
ing 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 signifi-
cant portion of its revenues, or in which a significant portion of
its goods or services are produced.
Most of the international equity securities in which the Fund
invests will be traded in foreign currencies. The Fund may engage
in foreign currency transactions to protect itself against fluctu-
ations 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 for-
eign currency contracts, foreign exchange futures contracts, and
options thereon, currency exchange transactions on a spot (i.e.,
cash) basis, and put and call options on foreign currencies. Up to
10% of the Fund's assets may be invested in the securities of
other investment companies. The Fund may invest in
20 PIMCO Funds: Multi-Manager Series
<PAGE>
stock index 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 "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Inter-
national Developed Fund is Blairlogie.
INTERNATIONAL FUND seeks capital appreciation through investments
in an international portfolio. Income is an incidental considera-
tion. Under normal market conditions, at least 65% of the Fund's
total assets will be invested in common stocks, which may or may
not pay dividends, as well as convertible bonds, convertible pre-
ferred stocks, warrants, rights or other equity securities, for a
combination of capital appreciation and income. Convertible secu-
rities may include securities convertible only by certain classes
of investors (which may not include the Fund). The Fund may not
invest in convertible securities which are of less than investment
grade quality at the time of purchase.
The Fund will normally invest in securities traded in developed
foreign securities markets. Particular consideration is given to
investments principally traded in developed North American (other
than United States), Japanese, European, Pacific and Australian
securities markets, and in securities of foreign issuers traded on
United States securities markets. The Fund will also invest in
emerging markets, where markets may not yet fully reflect the po-
tential of the developing economy. There are no prescribed limits
on geographic asset distribution and the Fund has the authority to
invest in securities traded in securities markets of any country
in the world. In allocating the Fund's assets among the various
securities markets of the world, the Portfolio Manager will con-
sider such factors as the condition and growth potential of the
various economies and securities markets, currency and taxation
considerations and other pertinent financial, social, national and
political factors. Under certain adverse investment conditions,
the Fund may restrict the number of securities markets in which
its assets will be invested, although under normal market circum-
stances the Fund's investments will include securities principally
traded in at least three different countries. The Fund will not
limit its investments to any particular type or size of company.
The Fund may invest up to 10% of its assets in securities of
other investment companies, such as closed-end management invest-
ment companies which invest in foreign markets. 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, including futures contracts
on stock indexes and on foreign currencies; buy or sell foreign
currencies; and enter into forward foreign currency contracts.
The Fund will not normally invest in securities of U.S. issuers
traded on U.S. securities markets. However, when the Portfolio
Manager believes that conditions in international securities mar-
kets warrant a defensive investment strategy, the Fund may invest
up to 100% of its assets in domestic debt, foreign debt and equity
securities principally traded in the U.S., including money market
instruments, obligations issued or guaranteed by the U.S. or a
foreign government or their respective agencies, authorities or
instrumentalities, or corporate bonds and sponsored American De-
pository Receipts.
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 "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Inter-
national Fund is Blairlogie.
January 14, 1997 Prospectus 21
<PAGE>
EMERGING MARKETS FUND seeks long-term growth of capital. The Fund
invests primarily in common stocks of companies located in coun-
tries identified as emerging market countries. The Morgan Stanley
Capital International Emerging Markets Free Index ("MSCI Free In-
dex") and the International Finance Corporation Emerging Markets
Index ("IFC Index") are used as the bases for choosing the coun-
tries 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 select-
ing 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 (this list is not exclusive):
Argentina Greece Jordan Poland Thailand
Brazil Hong Kong Malaysia Portugal Turkey
Chile Hungary Mexico South AfricaVenezuela
China India Pakistan South Korea Zimbabwe
Colombia Indonesia Peru Sri Lanka
Czech Republic
Israel PhilippinesTaiwan
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 signifi-
cant 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 for-
eign 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 in-
clude forward foreign currency contracts, foreign exchange futures
contracts, and options thereon, currency exchange transactions on
a spot (i.e., cash) basis, and put and call options on foreign
currencies. Up to 10% of the Fund's assets may be invested in the
securities of other investment companies. The Fund may invest in
stock index 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 cer-
tain risks posed by investing in emerging market countries, see
"Characteristics and Risks of Securities and Investment Tech-
niques--Foreign Securities." See "Characteristics and Risks of Se-
curities and Investment Techniques" in this Prospectus and "In-
vestment Objectives and Policies" in the Statement of Additional
Information for more details on investment practices and related
risks. The Portfolio Manager for the Emerging Markets Fund is
Blairlogie.
INNOVATION FUND seeks capital appreciation. No consideration is
given to income. The Fund invests primarily (i.e., at least 65% of
its assets) in common stocks of companies which utilize innovative
technologies to gain a strategic competitive advantage in their
industry as well as companies that provide and service those tech-
nologies. Securities will be selected
22 PIMCO Funds: Multi-Manager Series
<PAGE>
with minimal emphasis on more traditional factors such as growth
potential or value relative to intrinsic worth. Instead, the Fund
will be guided by the theory of Positive Momentum & Positive Sur-
prise (see "Management of the Trust--Portfolio Managers--Columbus
Circle"), with special emphasis on common stocks of companies
whose perceived strength lies in their use of innovative technolo-
gies in new products, enhanced distribution systems and improved
management techniques. Although the Fund emphasizes the utiliza-
tion of technologies, it is not restricted to investment in compa-
nies in a particular business sector or industry.
The Fund may invest a portion of its assets in securities of
foreign issuers traded in foreign securities markets (not includ-
ing Eurodollar certificates of deposit), which will not exceed 15%
of the Fund's assets at the time of investment. Investing in the
securities of foreign issuers involves special risks and consider-
ations not typically associated with investing in U.S. companies.
The Fund may also purchase and write call and put options on secu-
rities and securities indexes; enter into futures contracts and
use options on futures contracts; buy or sell foreign currencies;
and enter into forward foreign currency contracts. For information
on other investment policies, see "Investment Objectives and Poli-
cies--Equity Funds." See "Characteristics and Risks of Securities
and Investment Techniques" in this Prospectus and "Investment Ob-
jectives and Policies" in the Statement of Additional Information
for more details on investment practices and related risks. The
Portfolio Manager for the Innovation Fund is Columbus Circle.
PRECIOUS METALS FUND seeks capital appreciation. No consideration
is given to income. The Fund concentrates investments in a global
portfolio of common stocks of companies principally engaged in
precious metals-related activities, which include companies prin-
cipally engaged in the extraction, processing, distribution or
marketing of precious metals (the "precious metals industry"). A
particular company is deemed to be "principally engaged" in the
precious metals industry if at the time of investment the Portfo-
lio Manager considers that at least 50% of the company's assets,
revenues or profits are derived from the precious metals industry.
Normally, at least 65% of the assets of the Fund will be invested
in the precious metals industry and in securities the value of
which is linked to the price of a precious metal. See "Character-
istics and Risks of Securities and Investment Techniques--Precious
Metals."
The Fund will seek to identify securities of companies which,
based upon the Portfolio Manager's evaluation of their fundamental
investment characteristics, are undervalued in comparison to the
present or anticipated value of the precious metals relevant to
them. Examples of precious metals include gold, silver and plati-
num. To the extent permitted by federal tax law, the Fund may in-
vest directly in gold bullion and other precious metals. The Fund
has no present intention of investing directly in precious metals
other than gold.
The Fund does not presently intend to invest more than 10% of
its assets in either precious metals such as gold bullion or in
futures on precious metals, such as gold futures, and options
thereon. The Fund may invest up to 100% of its assets in securi-
ties principally traded on foreign securities markets and in secu-
rities of foreign issuers that are traded on U.S. securities mar-
kets, and may invest up to 100% of its assets in securities of
companies whose assets, revenues or profits are derived from a
single precious metal. At the present time, the Fund has no inten-
tion of investing more than 5% of its assets in securities the
value of which is linked to the price of a single precious metal.
The Fund may invest without limit in securities of foreign is-
suers traded in foreign securities markets. Investing in the secu-
rities of foreign issuers involves special risks and considera-
tions not typically associated with investing in U.S. companies.
The Fund may also purchase and write call and put options on secu-
rities, securities indexes, commodity indexes, and on foreign cur-
rencies; enter into futures contracts and use options on futures
contracts, including futures contracts on stock indexes, foreign
currencies, and precious metals; buy or sell foreign currencies;
and enter into forward foreign currency contracts.
The Fund, because of its emphasis on one industrial sector,
should be considered as one aspect of a diversified portfolio and
may not be suitable by itself as a balanced investment program.
For information on other investment
January 14, 1997 Prospectus 23
<PAGE>
policies, see "Investment Objectives and Policies--Equity Funds."
See "Characteristics and Risks of Securities and Investment Tech-
niques" in this Prospectus and "Investment Objectives and Poli-
cies" in the Statement of Additional Information for more details
on investment practices and related risks. The Portfolio Manager
for the Precious Metals Fund is Van Eck.
BALANCED FUND seeks total return consistent with prudent invest-
ment 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 in-
struments will vary from time to time and will be determined by
the Advisor. In determining the allocation of the Fund's assets
among the three asset classes, the Advisor will employ asset allo-
cation principles which take into account certain economic fac-
tors, 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 in-
come security (other than a short-term instrument) if, at the time
of investment, more than 80% of the Fund's assets would be in-
vested 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 Advisor 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 Advisor for investment in common
stock (the "Common Stock Segment") will be further allocated by
the Advisor for investment by NFJ and Cadence. The portion of the
Common Stock Segment allocated to NFJ will be managed in accor-
dance with the investment policies of the Value Fund; the portion
allocated to Cadence will be managed in accordance with the in-
vestment policies of the Capital Appreciation Fund. Allocations of
the Common Stock Segment to NFJ and Cadence will vary from time to
time as determined by the Advisor.
The portion of the assets of the Fund allocated by the Advisor
for investment in fixed income debt securities (the "Fixed Income
Securities Segment") will be managed by Pacific Investment Manage-
ment. The Fund may invest the Fixed Income Securities Segment in
the following types of securities: securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities; corpo-
rate debt securities, including convertible securities and corpo-
rate commercial paper; mortgage-related and other asset-backed se-
curities; inflation-indexed bonds issued both by governments and
corporations; structured notes and loan participations; bank cer-
tificates of deposit, fixed time deposits and bankers' accept-
ances; repurchase agreements and reverse repurchase agreements;
obligations of foreign governments or their subdivisions, agencies
and instrumentalities; and obligations of international agencies
or supranational entities. Fixed income securities may have fixed,
variable, or floating rates of interest.
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 Pacific Investment Management be-
lieves to be relatively undervalued. Fixed income securities in
which the Fund may invest will, at the time of investment, be
rated Baa or better by Moody's, BBB or better by S&P or, if not
rated by Moody's or S&P, will be of comparable quality as deter-
mined by Pacific Investment Management, 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 Pacific Investment Manage-
ment to be of comparable quality. High yield fixed income securi-
ties rated lower than Baa by Moody's or BBB by S&P, or of equiva-
lent quality, are not
24 PIMCO Funds: Multi-Manager Series
<PAGE>
considered to be investment grade, and are commonly referred to as
"junk bonds." Securities rated below investment grade and compara-
ble unrated securities are subject to greater risks than higher
quality fixed income securities. See "Characteristics and Risks of
Securities and Investment Techniques--Risks of High Yield Securi-
ties ("Junk Bonds")." The Fund also may invest up to 20% of the
Fixed Income Securities Segment in securities denominated in for-
eign currencies, and may invest beyond this limit in U.S. dollar-
denominated securities of foreign issuers.
PIMCO Advisors will manage directly the assets of the Fund al-
located for investment in money market instruments (the "Money
Market Segment"). Because of the Fund's flexible investment poli-
cy, portfolio turnover may be greater than for a fund that does
not allocate assets among various types of securities. See "Char-
acteristics and Risks of Securities and Investment Techniques--
Portfolio Turnover."
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, en-
tering into forward foreign currency 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 the Fund's in-
vestment 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 cur-
rency fluctuations from one country to another. See "Characteris-
tics and Risks of Securities and Investment Techniques" in this
Prospectus and "Investment Objectives and Policies" in the State-
ment of Additional Information for more details on investment
practices and related risks.
TAX EXEMPT FUND seeks high current income exempt from federal in-
come tax, consistent with preservation of capital, by investing in
debt securities whose interest is, in the opinion of bond counsel
for the issuer at the time of issuance, exempt from federal income
tax ("Tax Exempt Bonds"). Tax Exempt Bonds generally are issued by
states and local governments and their agencies, authorities and
other instrumentalities. It is a policy of the Fund that, under
normal market conditions, at least 80% of its net assets will be
invested in Tax Exempt Bonds rated Baa or higher by Moody's or BBB
or higher by S&P, or which are similarly rated by another NRSRO,
or if unrated, determined by the Portfolio Manager to be of qual-
ity comparable to obligations so rated. Tax Exempt Bonds rated in
the fourth highest rating category (e.g., Baa by Moody's) may be
considered to possess some speculative characteristics by certain
NRSROs.
The Fund may invest up to 20% of its net assets, under normal
market conditions, in any combination of (1) Tax Exempt Bonds
which are rated at least Ba by Moody's or BB by S&P (or similarly
rated by another NRSRO or, if unrated, determined by the Portfolio
Manager to be of comparable quality) and (2) U.S. Government secu-
rities, money market instruments or "private activity" bonds. Se-
curities rated below investment grade and comparable unrated secu-
rities are subject to greater risks than higher quality fixed in-
come securities. See "Characteristics and Risks of Securities and
Investment Techniques--Risks of High Yield Securities ("Junk
Bonds")." For temporary defensive purposes the Fund may invest all
or a portion of its assets in U.S. Government securities and money
market instruments. The Fund may purchase put or call options on
U.S. Government Securities, Tax Exempt Bonds and Tax Exempt Bond
indexes, purchase and sell futures contracts on U.S. Government
Securities, Tax Exempt Bonds and Tax Exempt Bond indexes, and pur-
chase put and call options on such futures contracts. The Fund may
enter into repurchase agreements with banks and broker-dealers;
make short sales of securities held in the Fund's portfolio or
which the Fund has the right to acquire without the payment of
further consideration; and purchase and sell securities on a when-
issued or delayed
January 14, 1997 Prospectus 25
<PAGE>
delivery basis and enter into forward commitments to purchase se-
curities. The Fund may also invest a portion or, for temporary de-
fensive purposes, up to 100% of its assets in money market instru-
ments.
Dividends to Fund shareholders derived from money market in-
struments and U.S. Government securities are taxable as ordinary
income. The Fund may seek to reduce fluctuations in its net asset
value by engaging in portfolio strategies involving options on se-
curities, futures contracts, and options on futures contracts. Any
gain derived by the Fund from the use of such instruments will be
treated as a combination of short-term and long-term capital gain
and, if not offset by realized capital losses incurred by the
Fund, will be distributed to shareholders and will be taxable to
shareholders as a combination of ordinary income and long-term
capital gain. See "Characteristics and Risks of Securities and In-
vestment Techniques" in this Prospectus and "Investment Objectives
and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio
Manager for the Tax Exempt Fund is Columbus Circle.
EQUITY
FUNDS The Equity Income, Value, Enhanced Equity, Capital Appreciation,
Mid Cap Growth, Small Cap Value, Small Cap Growth, Micro Cap
Growth, International Developed and Emerging Markets Funds will
each invest primarily (normally at least 65% of its assets) in
common stock. Each of these Funds may maintain a portion of its
assets, which will usually not exceed 10%, in U.S. Government se-
curities, high quality debt securities (whose maturity or remain-
ing maturity will not exceed five years), money market obliga-
tions, and in cash to provide for payment of the Fund's expenses
and to meet redemption requests. It is the policy of these Funds
to be as fully invested in common stocks as practicable at all
times. This policy precludes these Funds from investing in debt
securities as a defensive investment posture (although these 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. These Funds may also invest in con-
vertible securities, preferred stocks, and warrants, subject to
certain limitations.
The Renaissance, Growth, Target, Opportunity, International,
Innovation and Precious Metals Funds (together with the Funds
listed in the preceding paragraph, the "Equity Funds") will each
invest primarily (normally at least 65% of its assets) in equity
securities (income-producing equity securities in the case of the
Renaissance Fund), including common stocks, preferred stocks and
securities (including debt securities and warrants) convertible
into or exercisable for common stocks. Each of these Funds may in-
vest a portion or, for temporary defensive purposes, up to 100% of
its assets in short-term U.S. Government securities and other
money market instruments.
One or more of the Equity Funds may temporarily not be invested
primarily in equity securities immediately following the commence-
ment of operations or after receipt of significant new monies. Any
of the Equity Funds may temporarily not contain the number of se-
curities in which the Fund normally invests if the Fund does not
have sufficient assets to be fully invested, or pending the Port-
folio Manager's ability to prudently invest new monies.
The Equity Funds may also lend portfolio securities; enter into
repurchase agreements and reverse repurchase agreements (subject
to the Funds' investment limitations described below) and purchase
and sell securities on a when-issued or delayed delivery basis and
enter into forward commitments to purchase securities. Each of the
Equity Funds may invest in American Depository Receipts ("ADRs").
The International Developed, International, Emerging Markets and
Precious Metals Funds may invest in European Depository Receipts
("EDRs") and Global Depository Receipts ("GDRs"). The Equity Funds
that invest primarily in securities of foreign issuers may invest
a portion of their assets in debt securities and money market ob-
ligations issued by U.S. and foreign issuers that are either U.S.
dollar-denominated or denominated in foreign currency. For more
information on these investment practices, see "Characteristics
and Risks of Securities and Investment Techniques" in this Pro-
spectus and "Investment Objectives and Policies" in the Statement
of Additional Information.
26 PIMCO Funds: Multi-Manager Series
<PAGE>
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, and the average portfolio
duration of the Tax Exempt Fund will vary within a three- to ten-
year time frame, based on the relevant Portfolio Manager's fore-
cast for interest rates. Duration is a measure of the expected
life of a fixed income security that was developed as a more pre-
cise alternative to the concept of "term to maturity." Tradition-
ally, 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 Managers for the Fixed Income Securi-
ties Segment of the Balanced Fund and the Tax Exempt Fund. For
more information on investments in fixed income securities, see
"Characteristics and Risks of Securities and Investment Tech-
niques" in this Prospectus and "Investment Objectives and Poli-
cies" in the Statement of Additional Information.
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 de-
grees. 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. 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. There-
fore, investors should carefully consider the investment objec-
tive, investment policies, and potential risks of any Fund or
Funds before investing.
The following describes potential risks associated with differ-
ent types of investment techniques that may be used by the indi-
vidual 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.
INVESTMENTSIN
COMPANIES
WITH SMALL
AND MEDIUM
MARKET
CAPITALIZATIONS
Certain of the Funds may invest in common stock of companies with
market capitalizations that are small compared to other publicly
traded companies. Generally, small market capitalization is con-
sidered to be less than $1 billion and large market capitalization
is considered to be more than $5 billion. Under normal market con-
ditions, the Small Cap Value, Small Cap Growth and Opportunity
Funds will invest primarily in companies with market capitaliza-
tions of $1 billion or less, and the Micro Cap Growth Fund will
invest primarily 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 small-
er, less seasoned companies may present greater opportunities for
growth but also may involve greater risks than customarily are as-
sociated 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 secu-
rities may be traded only in the over-the-counter market or on a
regional securities exchange. As a result, the disposition of se-
curities to meet redemptions may require a Fund to sell these se-
curities at a disadvantageous time, or at disadvantageous prices,
or to make many small sales over a lengthy period of time.
January 14, 1997 Prospectus 27
<PAGE>
Many of the Funds may also invest in stocks of companies with
medium market capitalizations. The Target Fund may invest primar-
ily in such securities. Whether a U.S. issuer's market capitaliza-
tion is medium is determined by reference to the capitalization
for all issuers whose equity securities are listed on a United
States national securities exchange or which are reported on
NASDAQ. Issuers with market capitalizations within the range of
capitalization of companies included in the S&P Mid Cap 400 Index
may be regarded as being issuers with medium market capitaliza-
tions. Such investments share some of the risk characteristics of
investments in stocks of companies with small market capitaliza-
tions described above, although such companies tend to have longer
operating histories, broader product lines and greater financial
resources and their stocks tend to be more liquid and less vola-
tile than those of smaller capitalization issuers.
FOREIGNINVESTMENTS
The International Developed, International and Emerging Markets
Funds may invest directly in foreign equity securities; U.S. dol-
lar- or foreign currency-denominated foreign corporate debt secu-
rities; 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 supra-
national entities; and securities represented by ADRs, EDRs, or
GDRs. ADRs are dollar-denominated receipts issued generally by do-
mestic banks and representing the deposit with the bank of a secu-
rity 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 Precious Metals Fund may invest
primarily in securities of foreign issuers, securities denominated
in foreign currencies, securities principally traded on securities
markets outside of the United States and in securities of foreign
issuers that are traded on U.S. securities markets, including
ADRs, EDRs, and GDRs. The remaining Equity Funds and the Balanced
Fund may also invest in ADRs. The 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. The Renaissance,
Growth, Target, Opportunity and Innovation Funds may invest up to
15% of their respective assets in securities which are traded
principally in securities markets outside the United States (Euro-
dollar certificates of deposit are excluded for purposes of these
limitations), and may invest without limit in securities of for-
eign issuers that are traded in U.S. markets.
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 securi-
ties 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, expro-
priation 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 coun-
tries. Additionally, foreign securities and dividends and interest
payable on those securities may be subject to foreign taxes, in-
cluding taxes withheld from payments on those securities. Foreign
securities often trade with less frequency and volume than domes-
tic securities and therefore may exhibit greater price volatility.
Additional costs associated with an investment in foreign securi-
ties may include higher custodial fees than apply to domestic cus-
todial arrangements and transaction costs of foreign currency con-
versions. Changes in foreign exchange rates also will affect the
value of securities denominated or quoted in currencies other than
the U.S. dollar.
A Fund's investments in foreign currency denominated debt obli-
gations and hedging activities will likely produce a difference
between its book income and its taxable income. This difference
may cause a portion of the Fund's income
28 PIMCO Funds: Multi-Manager Series
<PAGE>
distributions to constitute returns of capital for tax purposes or
require the Fund to make distributions exceeding book income to
qualify as a regulated investment company for federal tax purpos-
es.
Certain of the Funds and, in particular, the Emerging Markets
Fund, may invest in the securities of issuers based in countries
with developing economies. Investing in developing (or "emerging
market") 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 coun-
tries. 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 emerging
market 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 pe-
riods of relative illiquidity, and are characterized by signifi-
cant price volatility. There is a risk in emerging market coun-
tries that a future economic or political crisis could lead to
price controls, forced mergers of companies, expropriation or con-
fiscatory taxation, seizure, nationalization, or creation of gov-
ernment 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, eco-
nomic and political uncertainty and instability (including the
risk of war); more substantial governmental involvement in the
economy; less governmental supervision and regulation of the secu-
rities markets and participants in those markets; unavailability
of currency hedging techniques in certain emerging market coun-
tries; the fact that companies in emerging market countries may be
newly organized and may be smaller and less seasoned companies;
the difference in, or lack of, auditing and financial reporting
standards, which may result in unavailability of material informa-
tion about issuers; the risk that it may be more difficult to ob-
tain and/or enforce a judgment in a court outside the United
States; and significantly smaller market capitalization of securi-
ties markets.
FOREIGN
CURRENCY Foreign currency exchange rates may fluctuate significantly over
TRANSACTIONSshort periods of time. They generally are determined by the forces
of supply and demand in the foreign exchange markets and the rela-
tive merits of investments in different countries, actual or per-
ceived 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, or
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 Renaissance, Growth, Target, Opportunity, International De-
veloped, International, Emerging Markets, Innovation, Precious
Metals and Balanced Funds may enter into forward foreign currency
exchange contracts to reduce the risks of adverse changes in for-
eign exchange rates. In addition, the International Developed, In-
ternational, Emerging Markets, Precious Metals and Balanced Funds
may buy and sell foreign currency futures contracts and options on
foreign currencies and foreign currency futures. All of the Funds
that may buy or sell foreign currencies may enter into forward
foreign currency exchange contracts to reduce the risks of adverse
changes in foreign exchange rates. A forward foreign currency ex-
change contract involves an obligation to purchase or sell a spe-
cific 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 for-
ward foreign currency exchange contract, the fund "locks in" the
exchange rate between the currency it will deliver and the cur-
rency it will receive for the duration of the contract. As a re-
sult, a Fund reduces its exposure to changes in the value of the
currency it will deliver and increases its exposure to changes in
the
January 14, 1997 Prospectus 29
<PAGE>
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 cur-
rency. Contracts to sell foreign currency would limit any poten-
tial 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. Such hedging transactions may
not be successful and may eliminate any chance for a Fund to bene-
fit from favorable fluctuations in relevant foreign currencies.
The International Developed, International and Emerging Markets
Funds may also enter into hedging contracts for purposes of in-
creasing exposure to a foreign currency or to shift exposure to
foreign currency fluctuations from one currency to another. To the
extent that they do so, the International Developed, International
and Emerging Markets Funds will be subject to the additional risk
that the relative value of currencies will be different than an-
ticipated by the particular Fund's Portfolio Manager. These Funds
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. Each Fund will segregate assets determined
to be liquid by the Advisor or a Portfolio Manager in accordance
with procedures established by the Board of Trustees in a segre-
gated account to cover its obligations under forward foreign cur-
rency exchange contracts entered into for non-hedging purposes.
MONEY Each of the Funds may invest at least a portion of its assets in
MARKET the following kinds of money market instruments:
INSTRUMENTS (1) short-term U.S. Government securities;
(2) certificates of deposit, bankers' acceptances and other
bank obligations rated in the two highest rating categories by
at least two NRSRO's, or, if rated by only one NRSRO, in such
agency's two highest grades, or, if unrated, determined to be
of comparable quality by the Advisor or a Portfolio Manager.
Bank obligations must be those of a bank that has deposits in
excess of $2 billion or that is a member of the Federal Deposit
Insurance Corporation. A Fund may invest in obligations of U.S.
branches or subsidiaries of foreign banks ("Yankee dollar obli-
gations") or foreign branches of U.S. banks ("Eurodollar obli-
gations");
(3) commercial paper rated in the two highest rating categories
by at least two NRSROs, or, if rated by only one NRSRO, in such
agency's two highest grades, or, if unrated, determined to be
of comparable quality by the Advisor or a Portfolio Manager;
(4) corporate obligations with a remaining maturity of 397 days
or less whose issuers have outstanding short-term debt obliga-
tions rated in the highest rating category by at least two
NRSROs, or, if rated by only one NRSRO, in such agency's high-
est grade, or, if unrated, determined to be of comparable qual-
ity by the Advisor or a Portfolio Manager; and
(5) repurchase agreements with domestic commercial banks or
registered broker-dealers.
The Balanced Fund may invest in mortgage-related securities, and
MORTGAGE- in other asset-backed securities (unrelated to mortgage loans)
RELATEDAND that are offered to investors in the future. The value of some
OTHERASSET- mortgage-related or asset-backed securities in which the Fund in-
BACKED vests may be particularly sensitive to changes in prevailing in-
SECURITIES terest rates, and, like the other investments of the Fund, the
ability of the Fund to successfully utilize these instruments may
depend in part upon the ability of the Portfolio Manager to fore-
cast interest rates and other economic factors correctly.
MORTGAGE PASS-THROUGH SECURITIES are securities representing in-
terests 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 borrow-
ers on the mortgage loans which underlie the securities (net of
fees paid to the issuer or guarantor of the securities). Early re-
payment of principal on some mortgage-related securities (arising
from prepayments of principal due to sale of the underlying prop-
erty, refinancing, or
30 PIMCO Funds: Multi-Manager Series
<PAGE>
foreclosure, net of fees and costs which may be incurred) may ex-
pose the Fund to a lower rate of return upon reinvestment of prin-
cipal. Also, if a security subject to prepayment has been pur-
chased at a premium, the value of the premium would be lost in the
event of prepayment. Like other fixed income securities, when in-
terest rates rise, the value of a mortgage-related security gener-
ally 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. The rate of
prepayments on underlying mortgages will affect the price and vol-
atility of a mortgage-related security, and may have the effect of
shortening or extending the effective maturity of the security be-
yond what was anticipated at the time of purchase. To the extent
that unanticipated rates of prepayment on underlying mortgages in-
crease the effective maturity of a mortgage-related security, the
volatility of such security can be expected to increase.
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. Govern-
ment (in the case of securities guaranteed by the Government Na-
tional Mortgage Association ("GNMA")); or guaranteed by agencies
or instrumentalities of the U.S. Government (in the case of secu-
rities 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 guaran-
tees, including individual loan, title, pool and hazard insurance
and letters of credit, which may be issued by governmental enti-
ties, 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 typi-
cally collateralized by portfolios of mortgage pass-through secu-
rities 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 prin-
cipal only after the first class has been retired. CMOs that are
issued or guaranteed by the U.S. Government or by any of its agen-
cies or instrumentalities will be considered U.S. Government secu-
rities 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 re-
flect an interest in, and are secured by, mortgage loans on com-
mercial real property. The market for commercial mortgage-backed
securities developed more recently and in terms of total outstand-
ing 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 secu-
rities 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-related or asset-backed securities.
MORTGAGE-RELATED SECURITIES include securities other than those
described above that directly or indirectly represent a participa-
tion 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.
January 14, 1997 Prospectus 31
<PAGE>
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 remain-
der of the principal. In the most extreme case, one class will re-
ceive all of the interest (the interest-only, or "IO" class),
while the other class will receive all of the principal (the prin-
cipal-only, or "PO" class). The yield to maturity on an IO class
is extremely sensitive to the rate of principal payments (includ-
ing prepayments) on the related underlying mortgage assets, and a
rapid rate of principal payments may have a material adverse ef-
fect on the Fund's yield to maturity from these securities. The
Balanced 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 characteris-
tics of some of these instruments, see the Statement of Additional
Information.
TAX EXEMPT The Tax Exempt Fund invests in Tax Exempt Bonds which are gener-
BONDS ally issued by states and local governments and their agencies,
authorities and other instrumentalities. Tax Exempt Bonds are sub-
ject to credit and market risk. Credit risk relates to the ability
of the issuer to make payments of principal and interest. The is-
suer of a Tax Exempt Bond may make such payments from money raised
through a variety of sources, including (1) the issuer's general
taxing power, (2) a specific type of tax, or (3) a particular fa-
cility or project. The ability of an issuer to make such payments
could be affected by litigation, legislation or other political
events or the bankruptcy of the issuer. Market risk relates to
changes in a security's value as a result of changes in interest
rates. Lower rated Tax Exempt Bonds generally provide higher
yields but are subject to greater credit and market risk than
higher quality Tax Exempt Bonds.
CONVERTIBLE Many of the Funds may invest in convertible securities. Convert-
SECURITIES ible securities are generally preferred stocks or fixed income se-
curities that are convertible into common stock at either a stated
price or a stated rate. The price of the convertible security will
normally vary in some proportion to changes in the price of the
underlying common stock because of this conversion feature. A con-
vertible security will normally also provide a fixed income
stream. For this reason, the convertible security may not decline
in price as rapidly as the underlying common stock.
A Fund's Portfolio Manager will select convertible securities
to be purchased by the Fund based primarily upon its evaluation of
the fundamental investment characteristics and growth prospects of
the issuer of the security. As a fixed income security, a convert-
ible security tends to increase in market value when interest
rates decline and to decrease in value when interest rates rise.
While convertible securities generally offer lower interest or
dividend yields than non-convertible fixed income securities of
similar quality, their value tends to increase as the market value
of the underlying stock increases and to decrease when the value
of the underlying stock decreases.
The Renaissance Fund may invest in so-called "synthetic con-
vertible securities," which are composed of two or more different
securities whose investment characteristics, taken together, re-
semble those of convertible securities. For example, the Renais-
sance Fund may purchase a non-convertible debt security and a war-
rant or option. The synthetic convertible differs from the true
convertible security in several respects. Unlike a true convert-
ible security, which is a single security having a unitary market
value, a synthetic convertible comprises two or more separate se-
curities, each with its own market value. Therefore, the "market
value" of a synthetic convertible is the sum of the values of its
fixed income component and its convertible component. For this
reason, the values of a synthetic convertible and a true convert-
ible security may respond differently to market fluctuations.
RISKS OF
HIGH YIELD The Renaissance, Balanced and Tax Exempt Funds may invest a por-
SECURITIES tion of their assets in fixed income securities rated lower than
("JUNK Baa by Moody's or lower than BBB by S&P but rated at least B by
BONDS") Moody's or S&P or, if not rated, determined by the Portfolio Man-
ager 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 these
Funds.
32 PIMCO Funds: Multi-Manager Series
<PAGE>
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 oppor-
tunity 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 continu-
ing 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 a Fund's investment objective may, to the ex-
tent 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 se-
curities. High yield securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions
than higher grade securities.
The following chart provides information on the weighted aver-
age percentage of rated and unrated debt or fixed income securi-
ties in the portfolios of each Fund that invested at least 5% of
its average assets in high yield securities during the Fund's most
recent fiscal year. The numerical rating designations correspond
to the associated rating categories. The designation "1st" corre-
sponds to the top rating category (i.e., Aaa by Moody's and/or AAA
by S&P), "2nd" corresponds to the second highest rating category
(i.e., Aa by Moody's and/or AA by S&P), etc. For a further de-
scription of these rating categories, see the Appendix to the
Statement of Additional Information. The columns related to
unrated securities present the percentage of a Fund's total net
assets invested during such fiscal year (1) in unrated high yield
securities believed by the Advisor or the relevant Portfolio Man-
ager to be equivalent in quality to fixed income securities of the
indicated rating and (2) in all unrated fixed income securities.
RATED
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Renaissance* 5.06 -- -- -- 2.94 4.16 -- -- -- --
UNRATED BUT CONSIDERED EQUIVALENT TO
<CAPTION>
TOTAL
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH UNRATED
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Renaissance* -- -- -- -- -- 1.58 -- -- -- -- 1.58
</TABLE>
*Represents holdings of the PIMCO Advisors Equity Income Fund for
its fiscal year ended September 30, 1996. The Equity Income Fund
reorganized as the Renaissance Fund of the Trust on January 17,
1997.
For additional discussion of the characteristics of lower rated
fixed income securities, see the Statement of Additional Informa-
tion. 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 secu-
rities, 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
Renaissance, Growth, Target, Opportunity, International Developed,
International, Emerging Markets, Innovation, Precious Metals and
Balanced Funds may engage in the purchase and writing of call and
put options on securities; each of these Funds, along with the En-
hanced Equity Fund, may engage in the purchase and writing of op-
tions on securities indexes. The Tax Exempt Fund may purchase call
or put options on U.S. Government securities, Tax Exempt Bonds and
Tax Exempt Bond indexes. The Precious Metals Fund may purchase and
write options on commodities indexes. The Funds that may invest in
foreign-currency denominated securities may engage in
January 14, 1997 Prospectus 33
<PAGE>
the purchase and writing of call and put options on foreign cur-
rencies. The International Developed, Emerging Markets and Bal-
anced Funds may also 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 in-
terest rates, foreign currency exchange rates or securities pric-
es; and for the International Developed, International and Emerg-
ing Markets Funds, 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 a segregated account consisting of assets
determined to be liquid by the Advisor or a Portfolio Manager in
accordance with procedures established by the Board of Trustees
(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.
For these purposes, derivative instruments are deemed to con-
sist 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-related or asset-backed securities. See "Mort-
gage-Related and Other Asset-Backed Securities." The value of some
derivative instruments in which the Funds invest may be particu-
larly sensitive to changes in prevailing interest rates, and, like
the other investments of the Funds, the ability of a Fund to suc-
cessfully 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 incor-
rectly forecasts such factors and has taken positions in deriva-
tive instruments contrary to prevailing market trends, the Funds
could be exposed to the risk of loss.
The Funds might not employ any of the strategies described be-
low, 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 de-
rivatives strategy for a Fund, the Fund might have been in a bet-
ter position if it had not entered into the transaction at all.
The use of these strategies involves certain special risks, in-
cluding a possible imperfect correlation, or even no correlation,
between price movements of derivative instruments and price move-
ments of related investments. While some strategies involving de-
rivative instruments can reduce the risk of loss, they can also
reduce the opportunity for gain or even result in losses by off-
setting favorable price movements in related investments, or due
to the possible inability of a Fund to purchase or sell a portfo-
lio 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 secu-
rity 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, COMMODITY 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 secu-
rities. One purpose of purchasing call options is to protect
against substantial increases in prices of securities the Fund in-
tends 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 de-
pending 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 im-
mediate satisfaction of the Fund's obligation as writer of the op-
tion. 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
34 PIMCO Funds: Multi-Manager Series
<PAGE>
security 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 pur-
chase transaction in order to terminate its obligation under the
option and must deliver the underlying security 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 under-
lying security remains equal to or greater than the exercise price
(in the case of a put), or remains less than or equal to the exer-
cise 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 re-
strictions or suspensions are imposed on the options markets, a
Fund may be unable to close out a position.
For each of the Renaissance, Growth, Target, Opportunity, In-
ternational, Innovation, and Precious Metals Funds, in the case of
a written call option on a securities index, the Fund will own
corresponding securities whose historic volatility correlates with
that of the index.
The International Developed, International, Emerging Markets,
Precious Metals 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 International Developed and Emerging Markets
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 currency exchange rates or se-
curities 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 calculate the
obligations of the parties to the agreement on a "net basis." Con-
sequently, 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 con-
sisting of assets determined to be liquid by the Portfolio Manager
in accordance with procedures established by the Board of Trust-
ees, to limit 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 a Fund's investment re-
striction concerning senior securities. A Fund will not enter into
a swap agreement
January 14, 1997 Prospectus 35
<PAGE>
with any single party if the net amount owed or to be received un-
der 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 in-
vestments. 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 credit-
worthiness (generally, such counterparties would have to be eligi-
ble counterparties under the terms of the Funds' repurchase agree-
ment 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 Precious Metals Fund may purchase and sell futures
contracts on precious metals (such as gold), and purchase and
write options on precious metals futures contracts. The Enhanced
Equity, International Developed, International, Emerging Markets,
Precious Metals and Balanced Funds may invest in stock index
futures contracts and options thereon. The International Devel-
oped, International, Emerging Markets, Precious Metals and Bal-
anced 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. The Tax Exempt Fund may purchase
and sell futures contracts on U.S. Government securities and Tax
Exempt Bonds, as well as purchase put and call options on such
futures contracts. These Funds may engage in such futures transac-
tions 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 portfo-
lio 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 con-
tract 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 in-
struments are relatively new and without a significant trading
history. As a result, there is no assurance that an active second-
ary market will develop or continue to exist. Lack of a liquid
market for any reason may prevent a Fund from liquidating an unfa-
vorable position, and the Fund would remain obligated to meet mar-
gin requirements until the position is closed.
The Funds will only enter into futures contracts or futures op-
tions which are standardized and traded on a U.S. or foreign ex-
change or board of trade, or similar entity, or quoted on an auto-
mated quotation system. Each Fund will use financial futures con-
tracts 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.
36 PIMCO Funds: Multi-Manager Series
<PAGE>
PRECIOUS
METALS The Precious Metals Fund will concentrate its investments in the
precious metals industry. Prices of precious metals can be ex-
pected to respond to changes in rates of inflation and to percep-
tions of economic and political instability. The values of compa-
nies engaged in precious metal-related activities whose securities
are principally traded on foreign securities exchanges may also be
affected by changes in the exchange rate between the relevant for-
eign currency and the U.S. dollar. Based on historical experience,
the prices of precious metals and of securities of companies en-
gaged in precious metal-related activities may be subject to ex-
treme fluctuations, reflecting wider economic or political insta-
bility or for other reasons.
LOANS OF
PORTFOLIO For the purpose of achieving income, each Fund (with the exception
SECURITIES of the Tax Exempt Fund) may lend its portfolio securities to bro-
kers, dealers, and other financial institutions, provided: (i) the
loan is secured continuously by collateral consisting of U.S. Gov-
ernment securities, cash or cash equivalents (negotiable certifi-
cates of deposit, bankers' acceptances or letters of credit) main-
tained 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 the
Fund's limitation on lending its portfolio securities. Each Fund's
performance will continue to reflect changes in the value of the
securities loaned and will also reflect the receipt of either in-
terest, through investment of cash collateral by the Fund in per-
missible investments, or a fee, if the collateral is U.S. Govern-
ment securities. Securities lending involves the risk of loss of
rights in the collateral or delay in recovery of the collateral
should the borrower fail to return the security loaned or become
insolvent. The Funds may pay lending fees to the party arranging
the loan.
SHORT SALES Each Fund may from time to time make short sales involving securi-
ties held in the Fund's portfolio or which the Fund has the right
to acquire without the payment of further consideration. Short
sales expose the Fund to the risk that it will be required to pur-
chase securities to cover its short position at a time when the
securities have appreciated in value, thus resulting in a loss to
the Fund.
FORWARD Each Fund may purchase securities which it is eligible to purchase
COMMITMENTS,on a when-issued basis, may purchase and sell such securities for
WHEN-ISSUED delayed delivery and may make contracts to purchase such securi-
AND DELAYED ties for a fixed price at a future date beyond normal settlement
DELIVERY time (forward commitments). When-issued transactions, delayed de-
TRANSACTIONSlivery purchases and forward commitments involve a risk of loss if
the value of the securities declines prior to the settlement date,
which risk is in addition to the risk of decline in the value of
the Fund's other assets. No income accrues to the purchaser of
such securities prior to delivery.
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 bank-
ruptcy or otherwise, the Fund will seek to sell the securities
which it holds, which action could involve procedural costs or de-
lays 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 re-
purchase agreements only as a cash management technique with re-
spect 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 in-
vestment in illiquid securities.
January 14, 1997 Prospectus 37
<PAGE>
REVERSE
REPURCHASE A reverse repurchase agreement may for some purposes be considered
AGREEMENTS borrowing that involves the sale of a security by a Fund and its
AND OTHER agreement to repurchase the instrument at a specified time and
BORROWINGS price. The Fund will maintain a segregated account consisting of
assets determined to be liquid by the Advisor or Portfolio Manager
in accordance with procedures established by the Board of Trustees
maturing not later than the expiration of the reverse repurchase
agreement to cover its obligations under reverse repurchase agree-
ments. Reverse repurchase agreements will be subject to the Funds'
limitations on borrowings. A Fund also may borrow money for in-
vestment purposes subject to any policies of the Fund currently
described in this Prospectus or in the Statement of Additional In-
formation. Such a practice will result in leveraging of a Fund's
assets. Leverage will tend to exaggerate the effect on net asset
value of any increase or decrease in the value of a Fund's portfo-
lio and may cause a Fund to liquidate portfolio positions when it
would not be advantageous to do so.
PORTFOLIO The length of time a Fund has held a particular security is not
TURNOVER generally a consideration in investment decisions. The investment
policies of a Fund may lead to frequent changes in the Fund's in-
vestments, particularly in periods of volatile market movements. A
change in the securities held by a Fund is known as "portfolio
turnover." High portfolio turnover (e.g., over 100%) involves cor-
respondingly greater expenses to a Fund, including brokerage com-
missions or dealer mark-ups and other transaction costs on the
sale of securities and reinvestments in other securities. Such
sales may result in realization of taxable capital gains. See
"Taxes." The portfolio turnover rate for each Fund which offered
Class A, Class B or Class C shares prior to the date of this Pro-
spectus is set forth under "Financial Highlights." Portfolio turn-
over for the remaining Funds which offered Institutional or Admin-
istrative Class shares prior to the date of this Prospectus is in-
corporated by reference in the Statement of Additional Informa-
tion.
ILLIQUID
SECURITIES Each of the Equity Income, Value, Enhanced Equity, Capital Appre-
ciation, Mid Cap Growth, Small Cap Value, Small Cap Growth 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 the 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 re-
strictions 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). Each of the Renaissance, Growth, Target,
Opportunity, Micro Cap Growth, International Developed, Interna-
tional, Emerging Markets, Innovation, Precious Metals and Tax Ex-
empt Funds may invest in securities that are illiquid so long as
no more than 15% of the value of the Fund's net assets (taken at
market value at the time of investment) would be invested in such
securities. Certain illiquid securities may require pricing at
fair value as determined in good faith under the supervision of
the Board of Trustees. A Portfolio Manager may be subject to sig-
nificant delays in disposing of illiquid securities, and transac-
tions in illiquid securities may entail registration expenses and
other transaction costs that are higher than transactions in liq-
uid securities.
The term "illiquid securities" for this purpose means securi-
ties 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 in-
clude, among other things, written over-the-counter options, secu-
rities or other liquid assets being used as cover for such op-
tions, 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 pen-
alties 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 Se-
curities Act of 1933 and certain commercial paper that the Advisor
or a Portfolio Manager has determined to be liquid under proce-
dures approved by the Board of Trustees).
38 PIMCO Funds: Multi-Manager Series
<PAGE>
INVESTMENT
IN
INVESTMENTCOMPANIES
The International Developed, International and Emerging Markets
Funds may invest in securities of other investment companies, such
as closed-end management investment companies, or in pooled ac-
counts or other investment vehicles which invest in foreign mar-
kets. As a shareholder of an investment company, these Funds may
indirectly bear service and other fees which are in addition to
the fees the Funds pay their service providers.
CREDIT AND All fixed income securities are subject to market risk and credit
MARKET RISK risk. Market risk relates to market-induced changes in a
OF security's value, usually as a result of changes in interest
FIXEDINCOME rates. The value of a Fund's investments in fixed income securi-
SECURITIES ties will change as the general level of interest rates fluctuate.
During periods of falling interest rates, the value of a Fund's
fixed income securities generally rise. Conversely, during periods
of rising interest rates, the value of a Fund's fixed income secu-
rities generally decline. Credit risk relates to the ability of
the issuer to make payments of principal and interest.
The investment objective of each of the Renaissance, Growth, Tar-
get, Opportunity, International, Innovation, Precious Metals and
Tax Exempt Funds described in this Prospectus may be changed by
the Board of Trustees without shareholder approval. The investment
objective of each other Fund is fundamental and may not be changed
without shareholder approval by vote of a majority of the out-
standing shares of that Fund. If there is a change in a Fund's in-
vestment objective, including a change approved by shareholder
vote, shareholders should consider whether the Fund remains an ap-
propriate investment in light of their then current financial po-
sition and needs.
"FUNDAMENTAL"
POLICIES
Performance Information
From time to time the Trust may make available certain information
about the performance of the Class A, Class B and Class C shares
of some or all of the Funds. Information about a Fund's perfor-
mance is based on that Fund's (or its predecessor's) record to a
recent date and is not intended to indicate future performance.
Performance information is computed separately for each Fund's
Class A, Class B and Class C shares in accordance with the formu-
las described below. Because Class B and Class C shares bear the
expense of the distribution fee attending the deferred sales
charge (Class B) and asset based sales charge (Class C) alterna-
tives and certain other expenses, it is expected that, under nor-
mal circumstances, the level of performance of a Fund's Class B
and Class C shares will be lower than that of the Fund's Class A
shares although an investment in Class B or Class C shares is not
reduced by the front-end sales charge generally applicable to an
investment in Class A shares.
All Funds may include the total return of Class A, Class B
and/or Class C shares in advertisements or other written material.
When a Fund advertises its total return with respect to its Class
A, Class B and/or Class C shares, it will be calculated for the
past year, the past five years, and the past ten years (or if the
Fund has been offered for a period shorter than one, five or ten
years, that period will be substituted) since the establishment of
the Fund or its predecessor series of PIMCO Advisors Funds, as
more fully described in the Statement of Additional Information.
Consistent with Securities and Exchange Commission rules and in-
formal guidance, for periods prior to the initial offering date of
a particular class, total return presentations for the class will
be based on the historical performance of an older class of the
Fund (the older class to be used in each case is set forth in the
Statement of Additional Information) restated to reflect current
sales charges (if any) of the newer class, but not reflecting any
higher operating expenses (such as 12b-1 distribution and servic-
ing fees and administrative fee charges) associated with the newer
class. All other things being equal, such higher expenses would
have adversely affected (i.e., reduced) total return for a newer
class (i.e., if the newer class had been issued since the incep-
tion of the Fund) by the amount of such higher expenses, com-
pounded over the relevant period. Total return for each class is
measured by comparing the value of an investment in
January 14, 1997 Prospectus 39
<PAGE>
the Fund at the beginning of the relevant period (in the case of
Class A shares, giving effect to the maximum initial sales charge)
to the redemption value of the investment in the Fund at the end
of the period (assuming immediate reinvestment of any dividends or
capital gains distributions at net asset value and giving effect
to the deduction of the maximum CDSC which would be payable). The
Funds may advertise total return using alternative methods that
reflect all elements of return, but that may be adjusted to re-
flect the cumulative impact of alternative fee and expense struc-
tures, such as the currently effective advisory and administrative
fees for the Funds.
Quotations of yield for a Fund or class will be based on the
investment income per share (as defined by the Securities and Ex-
change Commission) during a particular 30-day (or one-month) pe-
riod (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. The Tax Exempt Fund
may also advertise the tax equivalent yield of its Class A, Class
B and Class C shares, calculated like yield except that, for any
given tax bracket, net investment income will be calculated as the
sum of (i) any taxable income of the class plus (ii) the tax ex-
empt income of the class divided by the difference between 1 and
the effective federal income tax rates for taxpayers in that tax
bracket.
The Trust also may provide current distribution information to
its shareholders in shareholder reports or other shareholder com-
munications, or in certain types of sales literature provided to
prospective investors. Current distribution information for a par-
ticular class of a Fund will be based on distributions for a spec-
ified 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 distri-
butions 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 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.
The Adviser and each Portfolio Manager may also report to
shareholders or to the public in advertisements concerning its
performance as adviser to clients other than the Funds, and on its
comparative performance or standing in relation to other money
managers. Such comparative information may be compiled or provided
by independent ratings services or by news organizations. Any per-
formance information, whether related to the Funds, the Advisor 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 representa-
tive of what may be achieved in the future.
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.
How To Buy Shares
Class A, Class B (except the Opportunity Fund) and Class C shares
of each Fund (except the Small Cap Growth and Micro Cap Growth
Funds) of the Trust are continuously offered through the Trust's
principal underwriter, PIMCO Funds Distribution Company (the "Dis-
tributor"), and through other firms which have dealer agreements
with the Distributor ("participating brokers") or which have
agreed to act as introducing brokers for the Distributor ("intro-
ducing brokers"). EXCEPT TO THE EXTENT DESCRIBED UNDER "LIMITED
OFFERING OF SHARES OF THE OPPORTUNITY FUND TO NEW INVESTORS" BE-
LOW, THE OPPORTUNITY FUND IS CLOSED TO NEW INVESTORS. SEE "RE-
STRICTIONS ON SALES OF AND EXCHANGES FOR SHARES OF THE OPPORTUNITY
FUND." THE OPPORTUNITY FUND DOES NOT OFFER CLASS B SHARES. CLASS
A, CLASS B AND CLASS C SHARES OF THE SMALL CAP GROWTH AND MICRO
CAP GROWTH FUNDS ARE NOT OFFERED AS OF THE DATE OF THIS PROSPEC-
TUS; HOWEVER, INVESTMENT OPPORTUNITIES IN CLASS A, CLASS B AND
CLASS C SHARES OF THESE FUNDS MAY BE AVAILABLE IN THE FUTURE.
40 PIMCO Funds: Multi-Manager Series
<PAGE>
There are two ways to purchase Class A, Class B or Class C
shares: either 1) through your dealer or broker which has a dealer
agreement with the Distributor; or 2) directly by mailing a PIMCO
Funds Account Application included with this Prospectus (an "Ac-
count Application") with payment, as described below under the
heading Direct Investment, to the Distributor (if no dealer is
named in the Account Application, the Distributor may act as deal-
er).
Each Fund (except the Opportunity, Small Cap Growth and Micro
Cap Growth Funds) currently offers and sells three classes of
shares in this Prospectus (Class A, Class B and Class C). The Op-
portunity Fund does not offer Class B shares and the Small Cap
Growth and Micro Cap Growth Funds do not offer Class A, Class B or
Class C shares as of the date of this Prospectus. Institutional
Class and Administrative Class shares of certain of the Funds are
offered through a separate prospectus. Shares may be purchased at
a price equal to their net asset value per share next determined
after receipt of an order, plus a sales charge which, at the elec-
tion of the purchaser, may be imposed either (i) at the time of
the purchase in the case of Class A shares (the "initial sales
charge alternative"), (ii) on a contingent deferred basis in the
case of Class B shares (the "deferred sales charge alternative"),
or (iii) by the deduction of an ongoing asset based sales charge
in the case of Class C shares (the "asset based sales charge al-
ternative"). In certain circumstances Class A and Class C shares
are also subject to a CDSC. See "Alternative Purchase Arrange-
ments." Purchase payments for Class B and Class C shares are fully
invested at the net asset value next determined after acceptance
of the trade. Purchase payments for Class A shares, less the ap-
plicable sales charge, are invested at the net asset value next
determined after acceptance of the trade.
All purchase orders received by the Distributor prior to the
close of regular trading (normally 4:00 p.m. Eastern time) on the
New York Stock Exchange (the "Exchange"), on a regular business
day, are processed at that day's offering price. However, orders
received by the Distributor from dealers or brokers after the of-
fering price is determined that day will receive such offering
price if the orders were received by the dealer or broker from its
customer prior to such determination and were transmitted to and
received by the Distributor prior to its close of business that
day (normally 5:00 p.m. Eastern time) or, in the case of certain
retirement plans, received by the Distributor prior to 10:00 a.m.
Eastern time on the next business day. Purchase orders received on
other than a regular business day will be executed on the next
succeeding regular business day. The Distributor, in its sole dis-
cretion, may accept or reject any order for purchase of Fund
shares. The sale of shares will be suspended during any period in
which the Exchange is closed for other than weekends or holidays,
or if permitted by the rules of the Securities and Exchange Com-
mission when trading on the Exchange is restricted or during an
emergency which makes it impracticable for the Funds to dispose of
their securities or to determine fairly the value of their net as-
sets, or during any other period as permitted by the Securities
and Exchange Commission for the protection of investors.
Except for gifts to minors or purchases through the PIMCO Auto
Invest plan, the PIMCO Auto Exchange plan and tax-qualified pro-
grams referred to below, the minimum initial investment in Class
A, Class B or Class C shares of the Trust is $1,000 and in any
Fund is $250, and the minimum additional investment is $100 per
Fund. The minimum initial investment for gifts to minors is $250
per Fund. For information about dealer commissions, see "Alterna-
tive Purchase Arrangements" below. Persons selling Fund shares may
receive different compensation for selling Class A, Class B or
Class C shares. Normally, Fund shares purchased through partici-
pating brokers are held in the investor's account with that bro-
ker. No share certificates will be issued unless specifically re-
quested in writing by an investor or broker-dealer.
DIRECT Investors who wish to invest in Class A, Class B or Class C shares
INVESTMENT of the Trust directly, rather than through a participating broker,
may do so by opening an account with the Distributor. To open an
account, an investor should complete the Account Application in-
cluded with this Prospectus. All shareholders who open direct ac-
counts with the Distributor will receive from the Distributor in-
dividual confirmations of each purchase, redemption, dividend
January 14, 1997 Prospectus 41
<PAGE>
reinvestment, exchange or transfer of Trust shares, including the
total number of Trust shares owned as of the confirmation date,
except that purchases which result from the reinvestment of daily-
accrued dividends and/or distributions will be confirmed once each
calendar quarter. See "Distributions" below. Information regarding
direct investment or any other features or plans offered by the
Trust may be obtained by calling the Distributor at 800-426-0107
or by calling your broker.
PURCHASE BY Investors who wish to invest directly may send a check payable to
MAIL PIMCO Funds Distribution Company, along with a completed applica-
tion form to:
PIMCO Funds Distribution Company
P.O. Box 5866
Denver, CO 80217-5866
Purchases are accepted subject to collection of checks at full
value and conversion into federal funds. Payment by a check drawn
on any member of the Federal Reserve System can normally be con-
verted into federal funds within two business days after receipt
of the check. Checks drawn on a non-member bank may take up to 15
days to convert into federal funds. In all cases, the purchase
price is based on the net asset value next determined after the
purchase order and check are accepted, even though the check may
not yet have been converted into federal funds.
SUBSEQUENT Subsequent purchases of Class A, Class B or Class C shares can be
PURCHASES made as indicated above by mailing a check with a letter describ-
OF SHARES ing the investment or with the additional investment portion of a
confirmation statement. Except for subsequent purchases through
the PIMCO Auto Invest plan, the PIMCO Auto Exchange plan, tax-
qualified programs and PIMCO Fund Link referred to below, and ex-
cept during periods when an Automatic Withdrawal Plan is in ef-
fect, the minimum subsequent purchase is $100 in any Fund. All
payments should be made payable to PIMCO Funds Distribution Com-
pany and should clearly indicate the shareholder's account number.
Checks should be mailed to the address above under "Purchase by
Mail."
TAX- The Distributor makes available retirement plan services and docu-
QUALIFIED ments for Individual Retirement Accounts (IRAs) for which First
RETIREMENT National Bank of Boston serves as trustee and for IRA Accounts es-
PLANS tablished with Form 5305-SIMPLE under the Internal Revenue Code.
These accounts include Simplified Employee Pension Plan (SEP) and
Salary Reduction Simplified Employee Pension Plan (SAR/SEP) IRA
accounts, and prototype documents. In addition, prototype docu-
ments are available for establishing 403(b)(7) Custodial Accounts
with First National Bank of Boston as custodian. This type of plan
is available to employees of certain non-profit organizations.
The Distributor also makes available prototype documents for
establishing Money Purchase and/or Profit Sharing Plans and 401(k)
Retirement Savings Plans. Investors should call the Distributor at
800-426-0107 for further information about these plans and should
consult with their own tax advisers before establishing any re-
tirement plan. Investors who maintain their accounts with partici-
pating brokers should consult their broker about similar types of
accounts that may be offered through the broker. The minimum ini-
tial and subsequent investment in any Fund for tax-qualified plans
is $25.
PIMCO AUTO
INVEST The PIMCO Auto Invest plan provides for periodic investments into
the shareholder's account with the Trust by means of automatic
transfers of a designated amount from the shareholder's bank ac-
count. Investments may be made monthly or quarterly, and may be in
any amount subject to a minimum of $50 per month for each Fund in
which
42 PIMCO Funds: Multi-Manager Series
<PAGE>
shares are purchased through the plan. Further information regard-
ing the PIMCO Auto Invest plan is available from the Distributor
or participating brokers. You may enroll by completing the appro-
priate section on the Account Application, or you may obtain an
Auto Invest Application by calling the Distributor or your broker.
PIMCO AUTO The PIMCO Auto Exchange plan establishes regular, periodic ex-
EXCHANGE changes from one Fund to another Fund or a series of PIMCO Funds:
Pacific Investment Management Series which offers Class A, Class B
or Class C shares. The plan provides for regular investments into
a shareholder's account in a specific Fund by means of automatic
exchanges of a designated amount from another Fund account of the
same class of shares and with identical account registration. Ex-
changes for shares of the Opportunity Fund are currently re-
stricted to the extent provided under "Limited Offering of Shares
of the Opportunity Fund to New Investors" and "Restrictions on
Sales of and Exchanges for Shares of the Opportunity Fund" below.
The Small Cap Growth and Micro Cap Growth Funds do not currently
offer Class A, Class B or Class C shares and exchanges for these
classes of these Funds are not currently available.
Exchanges may be made monthly or quarterly, and may be in any
amount subject to a minimum of $50 for each Fund whose shares are
purchased through the plan. Further information regarding the
PIMCO Auto Exchange plan is available from the Distributor at 800-
426-0107 or participating brokers. You may enroll by completing an
application which may be obtained from the Distributor or by tele-
phone request at 800-426-0107. For more information on exchanges,
see "Exchange Privilege."
PIMCO FUND PIMCO Fund Link ("Fund Link") connects your Fund account with a
LINK bank account. Fund Link may be used for subsequent purchases and
for redemptions and other transactions described under "How to Re-
deem." Purchase transactions are effected by electronic funds
transfers from the shareholder's account at a U.S. bank or other
financial institution that is an Automated Clearing House ("ACH")
member. Investors may use Fund Link to make subsequent purchases
of shares in amounts from $50 to $10,000. To initiate such pur-
chases, call 800-852-8457. All such calls will be recorded. Fund
Link is normally established within 45 days of receipt of a Fund
Link Application by Shareholder Services, Inc. (the "Transfer
Agent"). The minimum investment by Fund Link is $50 per Fund.
Shares will be purchased on the regular business day the Distribu-
tor receives the funds through the ACH system, provided the funds
are received before the close of regular trading on the Exchange.
If the funds are received after the close of regular trading, the
shares will be purchased on the next regular business day.
Fund Link privileges must be requested on the Account Applica-
tion. To establish Fund Link on an existing account, complete a
Fund Link Application, which is available from the Distributor or
your broker, with signatures guaranteed from all shareholders of
record for the account. See "Signature Guarantee" below. Such
privileges apply to each shareholder of record for the account un-
less and until the Distributor receives written instructions from
a shareholder of record canceling such privileges. Changes of bank
account information must be made by completing a new Fund Link Ap-
plication signed by all owners of record of the account, with all
signatures guaranteed. The Distributor, the Transfer Agent and the
Fund may rely on any telephone instructions believed to be genuine
and will not be responsible to shareholders for any damage, loss
or expenses arising out of such instructions. The Fund reserves
the right to amend, suspend or discontinue Fund Link privileges at
any time without prior notice. Fund Link does not apply to shares
held in broker "street name" accounts.
LIMITED OFFERING OF SHARES OF THE OPPORTUNITY FUND TO NEW INVEST-
ORS As described below under "Restrictions on Sales of and Ex-
changes for Shares of the Opportunity Fund," shares of the Oppor-
tunity Fund are normally not available for purchase by new invest-
ors in the Fund. However, beginning January 27, 1997, the Opportu-
nity Fund will begin offering Class A shares (and Class C shares
to the extent determined by the Distributor as described below) to
new investors (the "Offering") on a limited basis as described be-
low.
January 14, 1997 Prospectus
43
<PAGE>
During the first ten business days of the Offering, only Class
A Opportunity Fund shares will be offered. During such period,
there will be an aggregate purchase minimum of $20,000 (per ac-
count, per transaction) and an aggregate purchase maximum of
$250,000 (per account, per transaction) of Class A shares. The
Distributor may adjust the length of this period and the minimum
and maximum purchase levels for Class A shares, and may determine
that, after the period, Class C shares of the Fund will also be
offered at minimum and maximum purchase levels established by the
Distributor.
Employees of the Advisor, any affiliated Portfolio Manager and
the Distributor (and any spouse or child of any such employee, or
any trust, profit sharing or pension plan for the benefit of any
such employee) may acquire Opportunity Fund shares during the Of-
fering for a minimum aggregate investment of $1,000.
With the exception of certain benefit plans not currently eli-
gible to acquire Opportunity Fund shares, all investors eligible
to purchase shares of other Funds of the Trust may participate in
the Offering. Existing Class A shareholders (and to the extent
Class C shares are offered, Class C shareholders) of other Funds
of the Trust or series of PIMCO Funds: Pacific Investment Manage-
ment Series may, in addition to purchasing shares, acquire Oppor-
tunity Fund shares during the Offering by exchanging their Class A
(or Class C) shares for the same class of Opportunity Fund shares
in the manner described under "Exchange Privilege" below.
The Offering will close (and the Opportunity Fund will again be
closed to new investors) at the close of business on the day (the
"Closing Date") on which an aggregate gross amount of $250 million
of the Fund's Class A and Class C shares has been sold to new in-
vestors (including shares acquired through exchanges as described
above). Shares purchased and subsequently redeemed during the Of-
fering will not be resold during the Offering. All purchase orders
for the Opportunity Fund's shares received on the Closing Date
will be honored even if the result would be to exceed the $250
million limit. However, if purchase orders for an aggregate of
greater than $250 million of Opportunity Fund Class A shares are
received on January 27, 1996 (the commencement date of the Offer-
ing), aggregate gross sales will be limited to $250 million and
will be allocated among the potential purchasers by the Distribu-
tor as it deems appropriate.
For additional information regarding the terms of the Offering,
please contact the Distributor (at 800-426-0107) or your broker.
RESTRICTIONS ON SALES OF AND EXCHANGES FOR SHARES OF THE OPPORTU-
NITY FUND Except to the extent described under "Limited Offering
of Shares of the Opportunity Fund to New Investors" above, shares
of the Opportunity Fund are not available for purchase by new in-
vestors in the Fund. The following categories of existing share-
holders will still be permitted to purchase additional shares of
the Fund: (i) shareholders who owned shares of the Opportunity
Fund on December 31, 1992 will be permitted to purchase additional
shares of the Fund for as long as they continue to own some shares
of the Fund; (ii) participants in any self-directed qualified ben-
efit plan (for example, 401(k), 403(b) and Keogh Plans, but not
IRAs or SEP IRAs) that owned Opportunity Fund shares on March 1,
1993 for any single plan participant will be eligible to direct
the purchase of the Fund's shares by their plan account for so
long as the plan continues to own some shares of the Fund for any
single plan participant; and (iii) shareholders who acquire shares
during the Offering described under "Limited Offering of Shares of
the Opportunity Fund to New Investors" above will be permitted to
purchase additional shares of the Fund for as long as they con-
tinue to own some shares of the Fund. In the event a shareholder
redeems all of his or her shares of the Opportunity Fund, or all
participants in a self-directed qualified benefit plan described
above redeem their shares of the Opportunity Fund, such sharehold-
er, or the participants in such plan, will no longer be eligible
to purchase shares of the Opportunity Fund. The Opportunity Fund
does not offer Class B shares to new or existing investors.
Shareholders of other Funds are not permitted to exchange any
of their shares for Opportunity Fund shares unless the sharehold-
ers are independently eligible to purchase Opportunity Fund shares
because they already owned such
44 PIMCO Funds: Multi-Manager Series
<PAGE>
shares of the Fund on December 31, 1992 (March 1, 1993, in the
case of the self-directed qualified benefit plans described above)
or acquired such shares during the Offering described under "Lim-
ited Offering of Shares of the Opportunity Fund to New Investors"
above.
The Trust reserves the right at any time to modify these re-
strictions, including the suspension of all sales of Opportunity
Fund shares or the lifting of restrictions on different classes of
investors and/or transactions.
SIGNATURE When a signature guarantee is called for, the shareholder should
GUARANTEE have "Signature Guaranteed" stamped under his signature and guar-
anteed by any of the following entities: U.S. banks, foreign banks
having a U.S. correspondent bank, credit unions, savings associa-
tions, U.S. registered dealers and brokers, municipal securities
dealers and brokers, government securities dealers and brokers,
national securities exchanges, registered securities associations
and clearing agencies (each an "Eligible Guarantor Institution").
The Distributor reserves the right to reject any signature guaran-
tee pursuant to its written signature guarantee standards or pro-
cedures, which may be revised in the future to permit it to reject
signature guarantees from Eligible Guarantor Institutions that do
not, based on credit guidelines, satisfy such written standards or
procedures. The Trust may change the signature guarantee require-
ments from time to time upon notice to shareholders, which may be
given by means of a new or supplemented Prospectus.
ACCOUNT Changes in registration or account privileges may be made in writ-
REGISTRATIONing to the Transfer Agent. Signature guarantees may be required.
CHANGES See "Signature Guarantee" above. All correspondence must include
the account number and must be sent to:
PIMCO Funds Distribution Company
P.O. Box 5866
Denver, CO 80217-5866
Alternative Purchase Arrangements
The Trust offers investors three classes of shares in this Pro-
spectus (Class A, Class B and Class C) which bear sales charges in
different forms and amounts and which bear different levels of ex-
penses. Through a separate prospectus, certain of the Funds offer
up to two additional classes of shares, Institutional Class shares
and Administrative Class shares, to pension and profit sharing
plans, employee benefit trusts, endowments, foundations, corpora-
tions and other high net worth individuals. Institutional Class
shares and Administrative Class shares are sold without sales
charges and have different expenses than Class A, Class B and
Class C shares. As a result of lower sales charges and/or operat-
ing expenses, Administrative Class and Institutional Class shares
are generally expected to achieve a higher investment return than
Class A, Class B or Class C shares. To obtain more information
about Institutional Class or Administrative Class shares, please
call the Distributor at 800-426-0107.
The alternative purchase arrangements offered in this Prospec-
tus are designed to enable a retail investor to choose the method
of purchasing Fund shares that is most beneficial to the investor
based on all factors to be considered, which include: the amount
and intended length of the investment; the particular Fund; and
whether the investor intends to exchange shares for shares of
other Funds. Generally, when making an investment decision, in-
vestors should consider the anticipated life of an intended in-
vestment in the Funds, the accumulated distribution and servicing
fees plus CDSCs on Class B or Class C shares, the initial sales
charge plus accumulated servicing fees on Class A shares (plus a
CDSC in certain circumstances), the possibility that the antici-
pated higher return on Class A shares due to the lower ongoing
charges will offset the initial sales charge paid on such shares,
the automatic conversion of Class B shares to Class A shares and
the difference in the contingent deferred sales charges applicable
to Class A, Class B and Class C shares.
January 14, 1997 Prospectus 45
<PAGE>
CLASS A The initial sales charge alternative (Class A) might be
preferred by investors purchasing shares of sufficient aggregate
value to qualify for reductions in the initial sales charge appli-
cable to such shares. Similar reductions are not available on the
contingent deferred sales charge alternative (Class B) or the as-
set based sales charge alternative (Class C). Class A shares are
subject to a servicing fee but are not subject to a distribution
fee and, accordingly, such shares are expected to pay correspond-
ingly higher dividends on a per share basis. However, because ini-
tial sales charges are deducted at the time of purchase, not all
of the purchase payment for Class A shares is invested initially.
Class B and Class C shares might be preferable to investors who
wish to have all purchase payments invested initially, although
remaining subject to higher distribution and servicing fees and,
for certain periods, being subject to a CDSC. An investor who
qualifies for an elimination of the Class A initial sales charge
should also consider whether he or she anticipates redeeming
shares in a time period which will subject such shares to a CDSC
as described below. See "Initial Sales Charge Alternative -- Class
A Shares -- Class A Deferred Sales Charge" below.
CLASS B Class B shares might be preferred by investors who intend
to invest in the Funds for longer periods and who do not intend to
purchase shares of sufficient aggregate value to qualify for sales
charge reductions applicable to Class A shares. Both Class B and
Class C shares can be purchased at net asset value without an ini-
tial sales charge. However, unlike Class C shares, Class B shares
convert into Class A shares after the shares have been held for
seven years. After the conversion takes place, the shares will no
longer be subject to a CDSC, and will be subject to the servicing
fees charged for Class A shares which are lower than the distribu-
tion and servicing fees charged on either Class B or Class C
shares. See "Deferred Sales Charge Alternative -- Class B Shares"
below.
CLASS C Class C shares might be preferred by investors who intend
to purchase shares which are not of sufficient aggregate value to
qualify for Class A sales charges of 1% or less and who wish to
have all purchase payments invested initially. Class C shares are
preferable to Class B shares for investors who intend to maintain
their investment for intermediate periods and therefore may also
be preferable for investors who are unsure of the intended length
of their investment. Unlike Class B shares, Class C shares are not
subject to a CDSC after they have been held for one year and are
subject to only a 1% CDSC during the first year. However, because
Class C shares do not convert into Class A shares, Class B shares
are preferable to Class C shares for investors who intend to main-
tain their investment in the Funds for long periods. See "Asset
Based Sales Charge Alternative--Class C Shares" below.
In determining which class of shares to purchase, an investor
should always consider whether any waiver or reduction of a sales
charge or a CDSC is available. See generally "Initial Sales Charge
Alternative--Class A Shares" and "Waiver of Contingent Deferred
Sales Charges" below.
The maximum single purchase of Class B shares accepted is
$249,999. The maximum single purchase of Class C shares accepted
is $999,999. The Funds may refuse any order to purchase shares.
For a description of the Distribution and Servicing Plans and
distribution and servicing fees payable thereunder with respect to
Class A, Class B and Class C shares, see "Distributor and Distri-
bution and Servicing Plans" below.
WAIVER OF CONTINGENT DEFERRED SALES CHARGES The CDSC applicable to
Class A and Class C shares is currently waived for (i) any partial
or complete redemption in connection with a distribution without
penalty under Section 72(t) of the Internal Revenue Code of 1986,
as amended (the "Code"), from a retirement plan, including a
403(b)(7) plan or an IRA (a) upon attaining age 59 1/2, (b) as
part of a series of substantially equal periodic payments, or (c)
in the case of an employer sponsored retirement plan, upon separa-
tion from service and attaining age 55; (ii) any partial or com-
plete redemption in connection with a qualifying loan or hardship
withdrawal from an employer sponsored retirement plan;
46 PIMCO Funds: Multi-Manager Series
<PAGE>
(iii) any complete redemption in connection with a distribution
from a qualified employer retirement plan in connection with ter-
mination of employment or termination of the employer's plan and
the transfer to another employer's plan or to an IRA; (iv) any
partial or complete redemption following death or disability (as
defined in the Code) of a shareholder (including one who owns the
shares as joint tenant with his or her spouse) from an account in
which the deceased or disabled is named, provided the redemption
is requested within one year of the death or initial determination
of disability; (v) any redemption resulting from a return of an
excess contribution to a qualified employer retirement plan or an
IRA; (vi) certain periodic redemptions under an Automatic With-
drawal Plan from an account meeting certain minimum balance re-
quirements, in amounts meeting certain maximums established from
time to time by the Distributor; (vii) redemptions by Trustees,
officers and employees of the Trust, and by directors, officers
and employees of the Distributor and the Advisor; (viii) redemp-
tions effected pursuant to a Fund's right to involuntarily redeem
a shareholder's account if the aggregate net asset value of shares
held in such shareholder's account is less than a minimum account
size specified in such Fund's prospectus; (ix) involuntary redemp-
tions caused by operation of law; (x) redemption of shares of any
Fund that is combined with another Fund, investment company, or
personal holding company by virtue of a merger, acquisition or
other similar reorganization transaction; (xi) redemptions by a
shareholder who is a participant making periodic purchases of not
less than $50 through certain employer sponsored savings plans
that are clients of a broker-dealer with which the Distributor has
an agreement with respect to such purchases; (xii) redemptions ef-
fected by trustees or other fiduciaries who have purchased shares
for employer sponsored plans, the administrator for which has an
agreement with the Distributor with respect to such purchases; or
(xiii) redemptions in connection with IRA accounts established
with Form 5305--SIMPLE under the Code for which the Trust is the
designated financial institution.
The CDSC applicable to Class B shares is currently waived for
any partial or complete redemption (a) in connection with a dis-
tribution without penalty under Section 72(t) of the Code from a
403(b)(7) plan or an IRA upon attaining age 59 1/2; (b) following
death or disability (as defined in the Code) of a shareholder (in-
cluding one who owns the shares as joint tenant with his or her
spouse) from an account in which the deceased or disabled is
named, provided the redemption is requested within one year of the
death or initial determination of disability; and (c) of up to 10%
per year of the value of an account subject to an Automatic With-
drawal Plan. See "How to Redeem--Automatic Withdrawal Plan."
The Distributor may require documentation prior to waiver of
the CDSC for any class, including distribution letters, certifica-
tion by plan administrators, applicable tax forms, death certifi-
cates, physicians' certificates, etc.
January 14, 1997 Prospectus 47
<PAGE>
INITIAL Class A shares are sold at a public offering price equal to their
SALES net asset value per share plus a sales charge, as set forth below.
CHARGE As indicated below under "Class A Deferred Sales Charge," certain
ALTERNA- investors that purchase $1,000,000 or more of any Fund's Class A
TIVE-- shares (and thus pay no initial sales charge) may be subject to a
CLASS A 1% CDSC if they redeem such shares during the first 18 months af-
SHARES ter their purchase.
ALL FUNDS EXCEPT TAX EXEMPT FUND
<TABLE>
<CAPTION>
DISCOUNT OR
SALES CHARGE AS SALES CHARGE COMMISSION TO
AMOUNT OF % OF NET AS % OF PUBLIC DEALERS AS % OF
PURCHASE AMOUNT INVESTED OFFERING PRICE PUBLIC OFFERING PRICE
----------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 5.82% 5.50% 4.75%
----------------------------------------------------------------------
$50,000 - $99,999 4.71% 4.50% 4.00%
----------------------------------------------------------------------
$100,000 - $249,999 3.63% 3.50% 3.00%
----------------------------------------------------------------------
$250,000 - $499,999 2.56% 2.50% 2.00%
----------------------------------------------------------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
----------------------------------------------------------------------
$1,000,000+ 0.00%(/1/) 0.00%(/1/) 0.75%(/2/)
</TABLE>
TAX EXEMPT FUND
<TABLE>
<CAPTION>
DISCOUNT OR
SALES CHARGE AS SALES CHARGE AS COMMISSION
AMOUNT OF % OF NET % OF PUBLIC TO DEALERS AS % OF
PURCHASE AMOUNT INVESTED OFFERING PRICE PUBLIC OFFERING PRICE
-----------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 4.71% 4.50% 4.00%
-----------------------------------------------------------------------
$50,000 - $99,999 4.17% 4.00% 3.50%
-----------------------------------------------------------------------
$100,000 - $249,999 3.63% 3.50% 3.00%
-----------------------------------------------------------------------
$250,000 - $499,999 2.56% 2.50% 2.00%
-----------------------------------------------------------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
-----------------------------------------------------------------------
$1,000,000+ 0.00%(/1/) 0.00%(/1/) 0.50%(/2/)
</TABLE>
1. As shown, investors that purchase more than $1,000,000 of any
Fund's Class A shares will not pay any initial sales charge on
such purchase. However, purchasers of $1,000,000 or more of Class
A shares (other than those purchasers described below under "Sales
at Net Asset Value" where no commission is paid) will be subject
to a CDSC of 1% if such shares are redeemed during the first 18
months after such shares are purchased unless such purchaser is
eligible for a waiver of the CDSC as described under "Waiver of
Contingent Deferred Sales Charge" above. See "Class A Deferred
Sales Charge" below.
2. The Distributor will pay a commission to dealers who sell
amounts of $1,000,000 or more of Class A shares (or who sell Class
A shares at net asset value to certain employer-sponsored plans as
outlined in "Sales at Net Asset Value" below) of each Fund except
the Tax Exempt Fund, according to the following schedule: 0.75% of
the first $2,000,000, 0.50% of amounts from $2,000,001 to
$5,000,000, and 0.25% of amounts over $5,000,000; and for Class A
shares of the Tax Exempt Fund, according to the following sched-
ule: 0.50% of the first $2,000,000, and 0.25% of amounts over
$2,000,000.
Each Fund receives the entire net asset value of its Class A
shares purchased by investors. The Distributor receives the sales
charge shown above less any applicable discount or commission
"reallowed" to participating brokers in the amounts indicated in
the table above. The Distributor may, however, elect to reallow
the entire sales charge to participating brokers for all sales
with respect to which orders are placed with the Distributor for
any particular Fund during a particular period. During such peri-
ods as may from time to time be designated by the Distributor, the
Distributor will pay an additional amount of up to .50% of the
purchase price on sales of Class A shares of all or selected Funds
purchased to each participating broker which obtains purchase or-
ders in amounts exceeding thresholds established from time to time
by the Distributor. From time to time, the Distributor, its parent
and/or its affiliates may make additional
48 PIMCO Funds: Multi-Manager Series
<PAGE>
payments to one or more participating brokers based upon factors
such as the level of sales or the length of time clients' assets
have remained in the Trust.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are issued at net asset
value and are not subject to any sales charges.
Under the circumstances described below, investors may be enti-
tled to pay reduced sales charges for Class A shares.
COMBINED PURCHASE PRIVILEGE Investors may qualify for a reduced
sales charge by combining purchases of the Class A shares of one
or more Funds or series of PIMCO Funds: Pacific Investment Manage-
ment Series which offer Class A shares (together, "eligible PIMCO
Funds") into a "single purchase," if the resulting purchase totals
at least $50,000. The term single purchase refers to: (i) a single
purchase by an individual, or concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an in-
dividual, his or her spouse and their children under the age of 21
years purchasing Class A shares of the eligible PIMCO Funds for
his, her or their own account; (ii) a single purchase by a trustee
or other fiduciary purchasing shares for a single trust, estate or
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. For further information, call the Distributor at
800-426-0107 or your broker.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION) A purchase of
additional Class A shares of any eligible PIMCO Fund may qualify
for a Cumulative Quantity Discount at the rate applicable to the
discount bracket obtained by adding:
(i) the investor's current purchase;
(ii) the value (at the close of business on the day of the
current purchase) of all Class A shares of any eligible
PIMCO Fund held by the investor computed at the maximum of-
fering price; and
(iii) the value of all shares described in paragraph (ii)
owned by another shareholder eligible to be combined with
the investor's purchase into a "single purchase" as defined
above under "Combined Purchase Privilege."
For example, if you owned Class A shares of the Tax Exempt Fund
worth $25,000 at the current maximum offering price and wished to
purchase Class A shares of the Growth Fund worth an additional
$30,000, the sales charge for the $30,000 purchase would be at the
4.50% rate applicable to a single $55,000 purchase of shares of
the Growth Fund, rather than the 5.50% rate.
LETTER OF INTENT An investor may also obtain a reduced sales
charge by means of a written Letter of Intent, which expresses an
intention to invest not less than $50,000 within a period of 13
months in Class A shares of any eligible PIMCO Fund(s). Each pur-
chase of shares under a Letter of Intent will be made at the pub-
lic offering price or prices applicable at the time of such pur-
chase to a single transaction of the dollar amount indicated in
the Letter. At the investor's option, a Letter of Intent may in-
clude purchases of Class A shares of any eligible PIMCO Fund made
not more than 90 days prior to the date the Letter of Intent is
signed; however, the 13-month period during which the Letter is in
effect will begin on the date of the earliest purchase to be in-
cluded and the sales charge on any purchases prior to the Letter
will not be adjusted.
Investors qualifying for the Combined Purchase Privilege de-
scribed above may purchase shares of the eligible PIMCO Funds un-
der a single Letter of Intent. For example, if at the time you
sign a Letter of Intent to invest at least $100,000 in Class A
shares of any Fund, you and your spouse each purchase Class A
shares of the Growth Fund worth $30,000 (for a total of $60,000),
it will only be necessary to invest a total of $40,000 during the
following 13 months in Class A shares of any of the Funds to qual-
ify for the 3.50% sales charge on the total amount being invested
(the sales charge applicable to an investment of $100,000 in any
of the Funds).
January 14, 1997 Prospectus 49
<PAGE>
A Letter of Intent is not a binding obligation to purchase the
full amount indicated. The minimum initial investment under a Let-
ter of Intent is 5% of such amount. Shares purchased with the
first 5% of such amount will be held in escrow (while remaining
registered in your name) to secure payment of the higher sales
charge applicable to the shares actually purchased in the event
the full intended amount is not purchased. If the full amount in-
dicated is not purchased, a sufficient amount of such escrowed
shares will be involuntarily redeemed to pay the additional sales
charge applicable to the amount actually purchased, if necessary.
Dividends on escrowed shares, whether paid in cash or reinvested
in additional eligible PIMCO Fund shares, are not subject to es-
crow. When the full amount indicated has been purchased, the es-
crow will be released.
If you wish to enter into a Letter of Intent in conjunction
with your initial investment in Class A shares of a Fund, you
should complete the appropriate portion of the Account Application
included with this Prospectus. If you are a current Class A share-
holder desiring to do so you can obtain a form of Letter of Intent
by contacting the Distributor at 800-426-0107 or any broker par-
ticipating in this program.
REINSTATEMENT PRIVILEGE A Class A shareholder who has caused any
or all of his shares to be redeemed may reinvest all or any por-
tion of the redemption proceeds in Class A shares of any eligible
PIMCO Fund at net asset value without any sales charge, provided
that such reinvestment is made within 120 calendar days after the
redemption or repurchase date. Shares are sold to a reinvesting
shareholder at the net asset value next determined. See "How Net
Asset Value is Determined." A reinstatement pursuant to this priv-
ilege will not cancel the redemption transaction and, consequent-
ly, any gain or loss so realized may be recognized for federal tax
purposes except that no loss may be recognized to the extent that
the proceeds are reinvested in shares of the same Fund within 30
days. The reinstatement privilege may be utilized by a shareholder
only once, irrespective of the number of shares redeemed, except
that the privilege may be utilized without limit in connection
with transactions whose sole purpose is to transfer a sharehold-
er's interest in a Fund to his Individual Retirement Account or
other qualified retirement plan account. An investor may exercise
the reinstatement privilege by written request sent to the Dis-
tributor or to the investor's broker.
SALES AT NET ASSET VALUE Each Fund may sell its Class A shares at
net asset value without a sales charge to (a) current or retired
officers, trustees, directors or employees of the Trust, the Advi-
sor or the Distributor, to a spouse or child of such person or to
any trust, profit sharing or pension plan for the benefit of any
such person, (b) current or retired trustees of PIMCO Funds: Pa-
cific Investment Management Series and Cash Accumulation Trust,
registered investment companies for which the Advisor or an affil-
iate acts as investment adviser, (c) current registered represent-
atives and other full-time employees of participating brokers or
such persons' spouses, (d) trustees or other fiduciaries purchas-
ing shares for certain employer sponsored plans that have at least
100 eligible participants or at least $1 million in total plan as-
sets, (e) trustees or other fiduciaries purchasing shares for cer-
tain employer-sponsored plans, the trustee, fiduciary or adminis-
trator for which has an agreement with the Distributor with re-
spect to such purchases, (f) participants investing through ac-
counts known as "wrap accounts" established with brokers or deal-
ers approved by the Distributor where such brokers or dealers are
paid a single, inclusive fee for brokerage and investment manage-
ment services, (g) broker-dealers or registered investment advis-
ers affiliated with such broker-dealers with which the Distributor
has an agreement for the use of PIMCO Funds: Multi-Manager Series
in particular investment products for which a fee is charged, and
(h) trust accounts for which trust companies affiliated with the
Trust or the Advisor serve as trustee. As described above, the
Distributor will not pay any initial commission to dealers upon
the sale of Class A shares to the purchasers described in this
paragraph except for sales to purchasers described under (d) or
(e) in this paragraph.
An investor or participating broker must notify the Distributor
whenever a quantity discount or reduced sales charge is applicable
to a purchase and must provide the Distributor with sufficient in-
formation at the time of purchase
50 PIMCO Funds: Multi-Manager Series
<PAGE>
to verify that each purchase qualifies for the privilege or dis-
count. Upon such notification, the investor will receive the low-
est applicable sales charge. The quantity discounts described
above may be modified or terminated at any time.
CLASS A DEFERRED SALES CHARGE For all Funds, investors who pur-
chase $1,000,000 or more of Class A shares (and, thus, purchase
such shares without any initial sales charge) may be subject to a
1% CDSC (the "Class A CDSC") if such shares are redeemed within 18
months of their purchase. The Class A CDSC does not apply to in-
vestors purchasing $1,000,000 or more of any Fund's Class A shares
if such investors are otherwise eligible to purchase Class A
shares without any sales charge because they are described under
"Sales at Net Asset Value" above.
For purchases subject to the Class A CDSC, a 1% CDSC will apply
for any redemption of such Class A shares that occurs within 18
months of their purchase. No CDSC will be imposed if the shares
redeemed have been acquired through the reinvestment of dividends
or capital gains distributions or if the amount redeemed is de-
rived from increases in the value of the account above the amount
of purchase payments subject to the CDSC. In determining whether a
CDSC is payable, it is assumed that Class A shares acquired
through the reinvestment of dividends and distributions are re-
deemed first, and thereafter that Class A shares that have been
held by an investor for the longest period of time are redeemed
first.
The Class A CDSC is currently waived in connection with certain
redemptions as described above under "Alternative Purchase Ar-
rangements--Waiver of Contingent Deferred Sales Charges."
For more information about the Class A CDSC, call the Distribu-
tor at 800-426-0107.
PARTICIPATING BROKERS Investment dealers and other financial in-
termediaries provide varying arrangements for their clients to
purchase and redeem Fund shares. Some may establish higher minimum
investment requirements than set forth above. Firms may arrange
with their clients for other investment or administrative services
and may independently establish and charge additional amounts to
their clients for such services, which charges would reduce cli-
ents' return. Firms also may hold Fund shares in nominee or street
name as agent for and on behalf of their customers. In such in-
stances, the Trust's transfer agent will have no information with
respect to or control over accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information
about their accounts only from their broker. In addition, certain
privileges with respect to the purchase and redemption of shares
or the reinvestment of dividends may not be available through such
firms. Some firms may participate in a program allowing them ac-
cess to their clients' accounts for servicing including, without
limitation, transfers of registration and dividend payee changes;
and may perform functions such as generation of confirmation
statements and disbursement of cash dividends. This Prospectus
should be read in connection with such firms' material regarding
their fees and services.
DEFERRED Class B shares are sold at their current net asset value without
SALESCHARGE any initial sales charge. The full amount of an investor's pur-
ALTERNA- chase payment will be invested in shares of the Fund(s) selected.
TIVE-- A CDSC will be imposed on Class B shares if an investor redeems an
CLASS B amount which causes the current value of the investor's account
SHARES for a Fund to fall below the total dollar amount of purchase pay-
ments subject to the CDSC, except that no CDSC is imposed if the
shares redeemed have been acquired through the reinvestment of
dividends or capital gains distributions or if the amount redeemed
is derived from increases in the value of the account above the
amount of purchase payments subject to the CDSC. Class B shares
are not available for purchase by employer sponsored retirement
plans. The Opportunity Fund does not offer Class B shares.
January 14, 1997 Prospectus 51
<PAGE>
Whether a CDSC is imposed and the amount of the CDSC will de-
pend on the number of years since the investor made a purchase
payment from which an amount is being redeemed. Purchases are sub-
ject to the CDSC according to the following schedule:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PERCENTAGE CONTINGENT
PAYMENT WAS MADE DEFERRED SALES CHARGE
----------------------------------------
<S> <C>
First 5
----------------------------------------
Second 4
----------------------------------------
Third 3
----------------------------------------
Fourth 3
----------------------------------------
Fifth 2
----------------------------------------
Sixth 1
----------------------------------------
Seventh 0*
</TABLE>
*After the seventh year, Class B shares convert into Class A
shares as described below.
In determining whether a CDSC is payable, it is assumed that
the purchase payment from which a redemption is made is the earli-
est purchase payment from which a redemption or exchange has not
already been fully effected.
The following example will illustrate the operation of the
Class B CDSC:
Assume that an individual opens an account and makes a pur-
chase payment of $10,000 for Class B shares of a Fund and that
six months later the value of the investor's account for that
Fund has grown through investment performance and reinvestment
of distributions to $11,000. The investor then may redeem up
to $1,000 from that Fund ($11,000 minus $10,000) without in-
curring a CDSC. If the investor should redeem $3,000, a CDSC
would be imposed on $2,000 of the redemption (the amount by
which the investor's account for the Fund was reduced below
the amount of the purchase payment). At the rate of 5%, the
Class B CDSC would be $100.
In determining whether an amount is available for redemption
without incurring a CDSC, the purchase payments made for all Class
B shares in the shareholder's account with the particular Fund are
aggregated, and the current value of all such shares is aggregat-
ed. Any CDSC imposed on a redemption of Class B shares is paid to
the Distributor.
Class B shares are subject to higher distribution fees than
Class A shares for a fixed period after their purchase, after
which they automatically convert to Class A shares and are no
longer subject to such higher distribution fees. Class B shares of
each Fund automatically convert into Class A shares after they
have been held for seven years.
For sales of Class B shares made and services rendered to Class
B shareholders, the Distributor intends to make payments to par-
ticipating brokers, at the time a shareholder purchases Class B
shares, of 4% of the purchase amount for each of the Funds. During
such periods as may from time to time be designated by the Dis-
tributor, the Distributor will pay selected participating brokers
an additional amount of up to .50% of the purchase price on sales
of Class B shares of all or selected Funds purchased to each par-
ticipating broker which obtains purchase orders in amounts exceed-
ing thresholds established from time to time by the Distributor.
The Class B CDSC is currently waived in connection with certain
redemptions as described above under "Alternative Purchase Ar-
rangements --Waiver of Contingent Deferred Sales Charges."
For more information about the Class B CDSC, call the Distribu-
tor at 800-426-0107.
52 PIMCO Funds: Multi-Manager Series
<PAGE>
ASSET
BASEDSALES
CHARGE
ALTERNATIVE --
CLASS C
SHARES
Class C shares are sold at their current net asset value without
any initial sales charge. A CDSC is imposed on Class C shares if
an investor redeems an amount which causes the current value of
the investor's account for a Fund to fall below the total dollar
amount of purchase payments subject to the CDSC, except that no
CDSC is imposed if the shares redeemed have been acquired through
the reinvestment of dividends or capital gains distributions or if
the amount redeemed is derived from increases in the value of the
account above the amount of purchase payments subject to the CDSC.
All of an investor's purchase payments are invested in shares of
the Fund(s) selected.
Whether a CDSC is imposed and the amount of the CDSC will de-
pend on the number of years since the investor made a purchase
payment from which an amount is being redeemed. Purchases are sub-
ject to the CDSC according to the following schedule:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PERCENTAGE CONTINGENT
PAYMENT WAS MADE DEFERRED SALES CHARGE
----------------------------------------
<S> <C>
First 1
----------------------------------------
Thereafter 0
</TABLE>
In determining whether a CDSC is payable, it is assumed that
the purchase payment from which the redemption is made is the ear-
liest purchase payment (from which a redemption or exchange has
not already been effected).
The following example will illustrate the operation of the
Class C CDSC:
Assume that an individual opens an account and makes a pur-
chase payment of $10,000 for Class C shares of a Fund and that
six months later the value of the investor's account for that
Fund has grown through investment performance and reinvestment
of distributions to $11,000. The investor then may redeem up
to $1,000 from that Fund ($11,000 minus $10,000) without in-
curring a CDSC. If the investor should redeem $3,000, a CDSC
would be imposed on $2,000 of the redemption (the amount by
which the investor's account for the Fund was reduced below
the amount of the purchase payment). At the rate of 1%, the
Class C CDSC would be $20.
In determining whether an amount is available for redemption
without incurring a CDSC, the purchase payments made for all Class
C shares in the shareholder's account with the particular Fund are
aggregated, and the current value of all such shares is aggregat-
ed. Any CDSC imposed on a redemption of Class C shares is paid to
the Distributor. Unlike Class B shares, Class C shares do not au-
tomatically convert to any other class of shares of the Funds.
Except as described below, for sales of Class C shares made and
services rendered to Class C shareholders, the Distributor expects
to make payments to participating brokers, at the time the share-
holder purchases Class C shares, of 1.00% (representing .75% dis-
tribution fees and .25% servicing fees) of the purchase amount for
all Funds. For sales of Class C shares made to participants making
periodic purchases of not less than $50 through certain employer
sponsored savings plans which are clients of a broker-dealer with
which the Distributor has an agreement with respect to such pur-
chases, no payments are made at the time of purchase. During such
periods as may from time to time be designated by the Distributor,
the Distributor will pay an additional amount of up to .50% of the
purchase price on sales of Class C shares of all or selected Funds
purchased to each participating broker which obtains purchase or-
ders in amounts exceeding thresholds established from time to time
by the Distributor.
The Class C CDSC is currently waived in connection with certain
redemptions as described above under "Alternative Purchase Ar-
rangements--Waiver of Contingent Deferred Sales Charges."
For more information about the Class C CDSC, contact the Dis-
tributor at 800-426-0107.
January 14, 1997 Prospectus 53
<PAGE>
Exchange Privilege
Except with respect to exchanges for shares of the Opportunity
Fund (which are currently subject to certain restrictions), and
the Small Cap Growth and Micro Cap Growth Funds (of which Class A,
Class B and Class C shares are not currently offered), a share-
holder may exchange Class A, Class B and Class C shares of any
Fund for the same Class of shares of any other Fund in an account
with identical registration on the basis of their respective net
asset values. For information on restrictions applicable to ex-
changes of shares for shares of the Opportunity Fund, see "Limited
Offering of Shares of the Opportunity Fund to New Investors" and
"Restrictions on Sales of and Exchanges for Shares of the Opportu-
nity Fund" under "How to Buy Shares" above. Class A, Class B and
Class C shares of each Fund may also be exchanged for shares of
the same class of a series of PIMCO Funds: Pacific Investment Man-
agement Series, an affiliated mutual fund family comprised primar-
ily of fixed income portfolios managed by Pacific Investment Man-
agement, an affiliate of the Advisor. There are currently no ex-
change fees or charges. Except with respect to tax-qualified pro-
grams and exchanges effected through the PIMCO Auto Exchange plan,
exchanges are subject to the $250 minimum initial purchase re-
quirement for each Fund. An exchange will constitute a taxable
sale for federal income tax purposes.
Investors who maintain their account with the Distributor may
exchange shares by a written exchange request sent to PIMCO Funds
Distribution Company, P.O. Box 5866, Denver, CO 80217-5866 or, un-
less the investor has specifically declined telephone exchange
privileges on the Account Application or elected in writing not to
utilize telephone exchanges, by a telephone request to the Trans-
fer Agent at 800-852-8457. The Trust will employ reasonable proce-
dures to confirm that instructions communicated by telephone are
genuine, and may be liable for any losses due to unauthorized or
fraudulent instructions if it fails to employ such procedures. The
Trust will require a form of personal identification prior to act-
ing on a caller's telephone instructions, will provide written
confirmations of such transactions and will record telephone in-
structions. Exchange forms are available from the Distributor at
800-426-0107 and may be used if there will be no change in the
registered name or address of the shareholder. Changes in regis-
tration information or account privileges may be made in writing
to the Transfer Agent, Shareholder Services, Inc., P.O. Box 5866,
Denver, Colorado 80217-5866, or by use of forms which are avail-
able from the Distributor. A signature guarantee is required. See
"How to Buy Shares--Signature Guarantee." Telephone exchanges may
be made between 9:00 a.m. Eastern time and the close of regular
trading (normally 4:00 p.m. Eastern time) on the Exchange on any
day the Exchange is open (generally weekdays other than normal
holidays). The Trust reserves the right to refuse exchange pur-
chases if, in the judgment of the Advisor, the purchase would ad-
versely affect the Fund and its shareholders. In particular, a
pattern of exchanges characteristic of "market-timing" strategies
may be deemed by the Advisor to be detrimental to the Trust or a
particular Fund. Although the Trust has no current intention of
terminating or modifying the exchange privilege, it reserves the
right to do so at any time. Except as otherwise permitted by Secu-
rities and Exchange Commission regulations, the Trust will give 60
days' advance notice to shareholders of any termination or mate-
rial modification of the exchange privilege. For further informa-
tion about exchange privileges, contact your participating broker
or call the Transfer Agent at 800-426-0107.
With respect to Class B and Class C shares, or Class A shares
subject to a CDSC, if less than all of an investment is exchanged
out of a Fund, any portion of the investment attributable to capi-
tal appreciation and/or reinvested dividends or capital gains dis-
tributions will be exchanged first, and thereafter any portions
exchanged will be from the earliest investment made in the Fund
from which the exchange was made. Shareholders should take into
account the effect of any exchange on the applicability of any
CDSC that may be imposed upon any subsequent redemption.
PIMCO AUTO
EXCHANGE Investors may also select the PIMCO Auto Exchange plan which es-
tablishes automatic periodic exchanges. For further information on
automatic exchanges see "How to Buy Shares--PIMCO Auto Exchange"
above."
54 PIMCO Funds: Multi-Manager Series
<PAGE>
How To Redeem
Class A, Class B or Class C shares may be redeemed through a par-
ticipating broker, by telephone, by submitting a written redemp-
tion request directly to the Transfer Agent (for non-broker ac-
counts), or through an Automatic Withdrawal Plan or PIMCO Fund
Link. In the event a shareholder or participants in certain self-
directed qualified employee benefit plans eligible to purchase
shares of the Opportunity Fund redeem(s) all of the shareholder's
or the participants' shares of the Fund (including shares acquired
during the Offering described under "How to Buy Shares--Limited
Offering of Shares of the Opportunity Fund to New Investors"
above), such shareholder or participants in such plans will no
longer be eligible to purchase shares of the Opportunity Fund. See
"How to Buy Shares--Restrictions on Sales of and Exchanges for
Shares of the Opportunity Fund."
A CDSC may apply to a redemption of Class A, Class B or Class C
shares. See "Alternative Purchase Arrangements" above. Shares are
redeemed at their net asset value next determined after a proper
redemption request has been received, less any applicable CDSC.
There is no charge by the Distributor (other than an applicable
CDSC) with respect to a redemption; however, a participating bro-
ker who processes a redemption for an investor may charge custom-
ary commissions for its services. Dealers and other financial
services firms are obligated to transmit orders promptly. Requests
for redemption received by dealers or other firms prior to the
close of regular trading (normally 4:00 p.m. Eastern time) on the
Exchange on a regular business day and received by the Distributor
prior to the close of the Distributor's business day will be con-
firmed at the net asset value effective as of the closing of the
Exchange on that day, less any applicable CDSC.
DIRECT REDEMPTION A shareholder's original Account Application
permits the shareholder to redeem by written request and by tele-
phone (unless the shareholder specifically elects not to utilize
telephone redemptions) and to elect one or more of the additional
redemption procedures described below. A shareholder may change
the instructions indicated on his original Account Application, or
may request additional redemption options, only by transmitting a
written direction to the Transfer Agent. Requests to institute or
change any of the additional redemption procedures will require a
signature guarantee.
Redemption proceeds will normally be mailed to the redeeming
shareholder within seven days or, in the case of wire transfer or
Fund Link redemptions, sent to the designated bank account within
one business day. Fund Link redemptions may be received by the
bank on the second or third business day. In cases where shares
have recently been purchased by personal check, redemption pro-
ceeds may be withheld until the check has been collected, which
may take up to 15 days. To avoid such withholding, investors
should purchase shares by certified or bank check or by wire
transfer.
WRITTEN REQUESTS (Does not apply to shares held in broker "street
name" accounts.) To redeem shares in writing (whether or not rep-
resented by certificates), a shareholder must send the following
items to the Transfer Agent, Shareholder Services, Inc., P.O. Box
5866, Denver, Colorado 80217-5866: (1) a written request for re-
demption signed by all registered owners exactly as the account is
registered on the Transfer Agent's records, including fiduciary
titles, if any, and specifying the account number and the dollar
amount or number of shares to be redeemed; (2) for certain redemp-
tions described below, a guarantee of all signatures on the writ-
ten request or on the share certificate or accompanying stock pow-
er, if required, as described under "How to Buy Shares--Signature
Guarantee"; (3) any share certificates issued for any of the
shares to be redeemed (see "Certificated Shares" below); and (4)
any additional documents which may be required by the Transfer
Agent for redemption by corporations, partnerships or other orga-
nizations, executors, administrators, trustees, custodians or
guardians, or if the redemption is requested by anyone other than
the
January 14, 1997 Prospectus 55
<PAGE>
shareholder(s) of record. Transfers of shares are subject to the
same requirements. A signature guarantee is not required for re-
demptions of $50,000 or less, requested by and payable to all
shareholders of record for the account, to be sent to the address
of record for that account. To avoid delay in redemption or trans-
fer, shareholders having any questions about these requirements
should contact the Transfer Agent in writing or call 1-800-426-
0107 before submitting a request. Redemption or transfer requests
will not be honored until all required documents in the proper
form have been received by the Transfer Agent.
If the proceeds of the redemption (i) exceed $50,000, (ii) are
to be paid to a person other than the record owner, (iii) are to
be sent to an address other than the address of the account on the
Transfer Agent's records, or (iv) are to be paid to a corporation,
partnership, trust or fiduciary, the signature(s) on the redemp-
tion request and on the certificates, if any, or stock power must
be guaranteed as described above, except that the Distributor may
waive the signature guarantee requirement for redemptions up to
$2,500 by a trustee of a qualified retirement plan, the adminis-
trator for which has an agreement with the Distributor.
TELEPHONE REDEMPTIONS (Does not apply to shares held in broker
"street name" accounts.) The Trust accepts telephone requests for
redemption of uncertificated shares for amounts up to $50,000
within any 7 calendar day period, except for investors who have
specifically declined telephone redemption privileges on the Ac-
count Application or elected in writing not to utilize telephone
redemptions. The proceeds of a telephone redemption will be sent
to the record shareholder at his record address. Changes in ac-
count information must be made in a written authorization with a
signature guarantee. See "How to Buy Shares--Signature Guarantee."
Telephone redemptions will not be accepted during the 30-day pe-
riod following any change in an account's record address.
By completing an Account Application, an investor agrees that
the Trust, the Distributor and the Transfer Agent shall not be li-
able for any loss incurred by the investor by reason of the Trust
accepting unauthorized telephone redemption requests for his ac-
count if the Trust reasonably believes the instructions to be gen-
uine. Thus, shareholders risk possible losses in the event of a
telephone redemption not authorized by them. The Trust may accept
telephone redemption instructions from any person identifying him-
self as the owner of an account or the owner's broker where the
owner has not declined in writing to utilize this service. The
Trust will employ reasonable procedures to confirm that instruc-
tions communicated by telephone are genuine, and may be liable for
any losses due to unauthorized or fraudulent instructions if it
fails to employ such procedures. The Trust will require a form of
personal identification prior to acting on a caller's telephone
instructions, will provide written confirmations of such transac-
tions and will record telephone instructions.
A shareholder making a telephone redemption should call the
Transfer Agent at 800-852-8457 and state (i) the name of the
shareholder as it appears on the Transfer Agent's records, (ii)
his account number with the Trust, (iii) the amount to be with-
drawn and (iv) the name of the person requesting the redemption.
Usually the proceeds are sent to the investor on the next Trust
business day after the redemption is effected, provided the re-
demption request is received prior to the close of regular trading
(normally 4:00 p.m. Eastern time) on the Exchange that day. If the
redemption request is received after the close of the Exchange,
the redemption is effected on the following Trust business day at
that day's net asset value and the proceeds are usually sent to
the investor on the second following Trust business day. The Trust
reserves the right to terminate or modify the telephone redemption
service at any time. During times of severe disruptions in the se-
curities markets, the volume of calls may make it difficult to re-
deem by telephone, in which case a shareholder may wish to send a
written request for redemption as described under "Written Re-
quests" above. Telephone communications may be recorded by the
Distributor or the Transfer Agent.
56 PIMCO Funds: Multi-Manager Series
<PAGE>
FUND LINK REDEMPTIONS (Does not apply to shares held in broker
"street name" accounts.) If a shareholder has established Fund
Link, the shareholder may redeem shares by telephone and have the
redemption proceeds sent to a designated account at a financial
institution. Fund Link is normally established within 45 days of
receipt of a Fund Link Application by the Transfer Agent. To use
Fund Link for redemptions, call the Transfer Agent at 800-852-
8457. Subject to the limitations set forth above under "Telephone
Redemptions," the Distributor, the Trust and the Transfer Agent
may rely on instructions by any registered owner believed to be
genuine and will not be responsible to any shareholder for any
loss, damage or expense arising out of such instructions. Requests
received by the Transfer Agent prior to the close of regular trad-
ing (normally 4:00 p.m. Eastern time) on the Exchange on a busi-
ness day will be processed at the net asset value on that day and
the proceeds (less any CDSC) will normally be sent to the desig-
nated bank account on the following business day and received by
the bank on the second or third business day. If the redemption
request is received after the close of regular trading on the Ex-
change, the redemption is effected on the following business day.
Shares purchased by check may not be redeemed through Fund Link
until such shares have been owned (i.e., paid for) for at least 15
days. Fund Link may not be used to redeem shares held in certifi-
cated form. Changes in bank account information must be made by
completing a new Fund Link Application, signed by all owners of
record of the account, with all signatures guaranteed. See "How to
Buy Shares--Signature Guarantee." See "How to Buy Shares--PIMCO
Fund Link" for information on establishing the Fund Link privi-
lege. The Trust may terminate the Fund Link program at any time
without notice to shareholders.
EXPEDITED WIRE TRANSFER REDEMPTIONS (Does not apply to shares held
in broker "street name" accounts.) If a shareholder has given au-
thorization for expedited wire redemption, shares can be redeemed
and the proceeds sent by federal wire transfer to a single previ-
ously designated bank account. Requests received by the Trust
prior to the close of the Exchange will result in shares being re-
deemed that day at the next determined net asset value (less any
CDSC) and normally the proceeds being sent to the designated bank
account the following business day. The bank must be a member of
the Federal Reserve wire system. Delivery of the proceeds of a
wire redemption request may be delayed by the Trust for up to 7
days if the Distributor deems it appropriate under then current
market conditions. Once authorization is on file, the Trust will
honor requests by any person identifying himself as the owner of
an account or the owner's broker by telephone at 800-852-8457 or
by written instructions. The Trust cannot be responsible for the
efficiency of the Federal Reserve wire system or the shareholder's
bank. The Trust does not currently charge for wire transfers. The
shareholder is responsible for any charges imposed by the share-
holder's bank. The minimum amount that may be wired is $2,500. The
Trust reserves the right to change this minimum or to terminate
the wire redemption privilege. Shares purchased by check may not
be redeemed by wire transfer until such shares have been owned
(i.e., paid for) for at least 15 days. Expedited wire transfer re-
demptions may be authorized by completing a form available from
the Distributor. Wire redemptions may not be used to redeem shares
in certificated form. To change the name of the single bank ac-
count designated to receive wire redemption proceeds, it is neces-
sary to send a written request with signatures guaranteed to PIMCO
Funds Distribution Company, P.O. Box 5866, Denver, CO 80217-5866.
See "How to Buy Shares--Signature Guarantee."
CERTIFICATED SHARES To redeem shares for which certificates have
been issued, the certificates must be mailed to or deposited with
the Trust, duly endorsed or accompanied by a duly endorsed stock
power or by a written request for redemption. Signatures must be
guaranteed as described under "How to Buy Shares--Signature Guar-
antee." Further documentation may be requested from institutions
or fiduciary accounts, such as corporations, custodians (e.g., un-
der the Uniform Gifts to Minors Act), executors, administrators,
trustees or guardians ("institutional account owners"). The re-
demption request and stock power must be signed exactly as the ac-
count is registered, including indication of any special capacity
of the registered owner.
January 14, 1997 Prospectus 57
<PAGE>
AUTOMATIC WITHDRAWAL PLAN An investor who owns or buys shares of a
Fund having a net asset value of $10,000 or more may open an Auto-
matic Withdrawal Plan and have a designated sum of money (not less
than $100 per Fund) paid monthly (or quarterly) to the investor or
another person. Such a plan may be established by completing the
appropriate section of the Account Application or you may obtain
an Automatic Withdrawal Plan Application from the Distributor or
your broker. If an Automatic Withdrawal Plan is set up after the
account is established providing for payment to a person other
than the record shareholder or to an address other than the ad-
dress of record, a signature guarantee is required. See "How to
Buy Shares--Signature Guarantee." Class A, Class B and Class C
shares of any Fund are deposited in a plan account and all distri-
butions are reinvested in additional shares of the particular
class of the Fund at net asset value. Shares in a plan account are
then redeemed at net asset value (less any applicable CDSC) to
make each withdrawal payment. Any applicable CDSC may be waived
for certain redemptions under an Automatic Withdrawal Plan. See
"Alternative Purchase Arrangements--Waiver of Contingent Deferred
Sales Charges."
Redemptions for the purpose of withdrawals are ordinarily made
on the business day preceding the day of payment at that day's
closing net asset value and checks are mailed on the day of pay-
ment selected by the shareholder. The Transfer Agent may acceler-
ate the redemption and check mailing date by one day to avoid
weekend delays. Payment will be made to any person the investor
designates; however, if the shares are registered in the name of a
trustee or other fiduciary, payment will be made only to the fidu-
ciary, except in the case of a profit-sharing or pension plan
where payment will be made to the designee. As withdrawal payments
may include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor. The
redemption of shares in connection with an Automatic Withdrawal
Plan may result in a gain or loss for tax purposes. Continued
withdrawals in excess of income will reduce and possibly exhaust
invested principal, especially in the event of a market decline.
The maintenance of an Automatic Withdrawal Plan concurrently with
purchases of additional shares of the Fund would be disadvanta-
geous to the investor because of the CDSC that may become payable
on such withdrawals in the case of Class A, Class B or Class C
shares and because of the initial sales charge in the case of
Class A shares. For this reason, the minimum investment accepted
for a Fund while an Automatic Withdrawal Plan is in effect for
that Fund is $1,000, and an investor may not maintain a plan for
the accumulation of shares of the Fund (other than through rein-
vestment of distributions) and an Automatic Withdrawal Plan at the
same time. The Trust or the Distributor may terminate or change
the terms of the Automatic Withdrawal Plan at any time.
Because the Automatic Withdrawal Plan may involve invasion of
capital, investors should consider carefully with their own finan-
cial advisers whether the plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The Trust and
the Distributor make no recommendations or representations in this
regard.
Distributor and Distribution and Servicing Plans
PIMCO Funds Distribution Company (the "Distributor"), a wholly
owned subsidiary of the Advisor, is the principal underwriter of
the Trust's shares and in that connection makes distribution and
servicing payments to participating brokers and servicing payments
to certain banks and other financial intermediaries in connection
with the sale of Class B and Class C shares and servicing payments
to participating brokers, certain banks and other financial inter-
mediaries in connection with the sale of Class A shares. In the
case of Class A shares, these parties are also compensated based
on the amount of the front-end sales charge reallowed by the Dis-
tributor, except in cases where Class A shares are sold without a
front-end sales charge. In the case of Class B shares, participat-
ing brokers and other financial intermediaries are compensated by
an advance of a sales commission by the Distributor. In the case
of Class C shares, part or all of the first year's distribution
and servicing fee is generally paid at the time of sale. Pursuant
to a Distribution Agreement with
58 PIMCO Funds: Multi-Manager Series
<PAGE>
the Trust, with respect to each Fund's Class A, Class B and Class
C shares, the Distributor bears various other promotional and
sales related expenses, including the cost of printing and mailing
prospectuses to persons other than current shareholders.
CLASS A SERVICING FEES: As compensation for services rendered and
expenses borne by the Distributor in connection with personal
services rendered to Class A shareholders of the Trust and the
maintenance of Class A shareholder accounts, the Trust pays the
Distributor servicing fees up to the annual rate of .25% (calcu-
lated as a percentage of each Fund's average daily net assets at-
tributable to Class A shares).
CLASS B AND CLASS C DISTRIBUTION AND SERVICING FEES: As compensa-
tion for services rendered and expenses borne by the Distributor
in connection with the distribution of Class B and Class C shares
of the Trust, and in connection with personal services rendered to
Class B and Class C shareholders of the Trust and the maintenance
of Class B and Class C shareholder accounts, the Trust pays the
Distributor servicing and distribution fees up to the annual rates
set forth below (calculated as a percentage of each Fund's average
daily net assets attributable to Class B and Class C shares,
respectively):
<TABLE>
<CAPTION>
SERVICING DISTRIBUTION
FUND FEE FEE
------------------------------
<S> <C> <C>
All Funds .25% .75%
</TABLE>
The Class A servicing fees and Class B and Class C distribution
and servicing fees paid to the Distributor are made under Distri-
bution and Servicing Plans adopted pursuant to Rule 12b-l under
the Investment Company Act of 1940, as amended (the "1940 Act"),
and are of the type known as "compensation" plans. This means
that, although the Trustees of the Trust are expected to take into
account the expenses of the Distributor and its predecessors in
their periodic review of the Distribution and Servicing Plans, the
fees are payable to compensate the Distributor for services ren-
dered even if the amount paid exceeds the Distributor's expenses.
The distribution fee applicable to Class B and Class C shares
may be spent by the Distributor on any activities or expenses pri-
marily intended to result in the sale of Class B or Class C
shares, respectively, including compensation to, and expenses (in-
cluding overhead and telephone expenses) of, financial consultants
or other employees of the Distributor or of participating or in-
troducing brokers who engage in distribution of Class B or Class C
shares, printing of prospectuses and reports for other than exist-
ing Class B or Class C shareholders, advertising, and preparation,
printing and distribution of sales literature. The servicing fee,
applicable to Class A, Class B and Class C shares of the Trust,
may be spent by the Distributor on personal services rendered to
shareholders of the Trust and the maintenance of shareholder ac-
counts, including compensation to, and expenses (including tele-
phone and overhead expenses) of, financial consultants or other
employees of participating or introducing brokers, certain banks
and other financial intermediaries who aid in the processing of
purchase or redemption requests or the processing of dividend pay-
ments, who provide information periodically to shareholders show-
ing their positions in a Fund's shares, who forward communications
from the Trust to shareholders, who render ongoing advice concern-
ing the suitability of particular investment opportunities offered
by the Trust in light of the shareholders' needs, who respond to
inquiries from shareholders relating to such services, or who
train personnel in the provision of such services. Distribution
and servicing fees may also be spent on interest relating to
unreimbursed distribution or servicing expenses from prior years.
Many of the Distributor's sales and servicing efforts involve
the Trust as a whole, so that fees paid by Class A, Class B or
Class C shares of any Fund may indirectly support sales and ser-
vicing efforts relating to the other Funds'
January 14, 1997 Prospectus 59
<PAGE>
shares of the same class. In reporting its expenses to the Trust-
ees, the Distributor itemizes expenses that relate to the distri-
bution and/or servicing of a single Fund's shares, and allocates
other expenses among the Funds based on their relative net assets.
Expenses allocated to each Fund are further allocated among its
classes of shares annually based on the relative sales of each
class, except for any expenses that relate only to the sale or
servicing of a single class. The Distributor may make payments to
brokers (and with respect to servicing fees only, to certain banks
and other financial intermediaries) of up to the following per-
centages annually of the average daily net assets attributable to
shares in the accounts of their customers or clients:
ALL FUNDS(/1/)
<TABLE>
<CAPTION>
SERVICING DISTRIBUTION
FEE FEE
------------------------------------
<S> <C> <C>
Class A .25% N/A
------------------------------------
Class B (/2/) .25% None
------------------------------------
Class C
(purchased
before July 1,
1991) .25% None
------------------------------------
Class C (/3/)
(purchased on
or after July
1, 1991) .25% .65%
</TABLE>
1. Applies, in part, to Class A, Class B and Class C shares of the
Trust issued to former shareholders of PIMCO Advisors Funds in
connection with the reorganizations/mergers of series of PIMCO Ad-
visors Funds as/with Funds of the Trust in a transaction which
took place on January 17, 1997.
2. Payable only with respect to shares outstanding for one year or
more.
3. Payable only with respect to shares outstanding for one year or
more except in the case of shares for which no payment is made to
the party at the time of sale.
The Distributor may from time to time pay additional cash bo-
nuses or other incentives to selected participating brokers in
connection with the sale or servicing of Class A, Class B and
Class C shares of the Funds. On some occasions, such bonuses or
incentives may be conditioned upon the sale of a specified minimum
dollar amount of the shares of a Fund and/or all of the Funds to-
gether or a particular class of shares, during a specific period
of time. The Distributor currently expects that such additional
bonuses or incentives will not exceed .50% of the amount of any
sale. In its capacity as administrator for the Funds, PIMCO Advi-
sors may pay participating brokers and other intermediaries for
sub-transfer agency and other services.
If in any year the Distributor's expenses incurred in connec-
tion with the distribution of Class B and Class C shares and, for
Class A, Class B and Class C shares, in connection with the ser-
vicing of shareholders and the maintenance of shareholder ac-
counts, exceed the distribution and/or servicing fees paid by the
Trust, the Distributor would recover such excess only if the Dis-
tribution and Servicing Plan with respect to such class of shares
continues to be in effect in some later year when the distribution
and/or servicing fees exceed the Distributor's expenses. The Trust
is not obligated to repay any unreimbursed expenses that may exist
at such time, if any, as the relevant Distribution and Servicing
Plan terminates.
60 PIMCO Funds: Multi-Manager Series
<PAGE>
From time to time, expenses of principal underwriters incurred
in connection with the sale of Class B and Class C shares of the
Funds and, in connection with the servicing of Class B and Class C
shareholders of the Funds and the maintenance of Class B and Class
C shareholder accounts, may exceed the distribution and servicing
fees collected by the Distributor. Class B and Class C Distribu-
tion and Servicing Plans, which are similar to the Trust's current
Plans, were in effect prior to the date of this Prospectus in re-
spect of certain series of PIMCO Advisors Funds that were prede-
cessors of the Funds listed below. The remaining Funds did not of-
fer Class B or Class C shares prior to the date of this Prospec-
tus. As of September 30, 1996, such expenses were approximately
$11,408,000 in excess of payments under the PIMCO Advisors Funds'
Class B Distribution and Servicing Plan and $2,822,000 in excess
of payments under the PIMCO Advisors Funds' Class C Distribution
and Servicing Plan. The allocation of such excess (on a pro rata
basis) among the predecessors to the Funds listed below as of Sep-
tember 30, 1996 was a follows:
EXCESS EXPENSES*
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------------------------------------------------
(AS A PERCENTAGE (AS A PERCENTAGE
($ IN THOUSANDS) OF NET ASSETS) ($ IN THOUSANDS) OF NET ASSETS)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Renaissance Fund 621 3.96 140 .06
--------------------------------------------------------------------------------------
Growth Fund 1,474 3.96 884 .06
--------------------------------------------------------------------------------------
Target Fund 1,972 3.96 595 .06
--------------------------------------------------------------------------------------
Opportunity Fund N/A N/A 488 .06
--------------------------------------------------------------------------------------
International Fund 233 3.96 124 .06
--------------------------------------------------------------------------------------
Innovation Fund 1,336 3.96 84 .06
--------------------------------------------------------------------------------------
Precious Metals Fund 88 3.96 23 .06
--------------------------------------------------------------------------------------
Tax Exempt Fund 89 3.96 29 .06
</TABLE>
* The table lists such excess expenses, as of September 30, 1996,
for predecessor series of PIMCO Advisors Funds which reorganized
as the listed Funds of the Trust.
How Net Asset Value is Determined
The net asset values of Class A, Class B and Class C shares of
each Fund of the Trust will be determined once on each day on
which the Exchange is open (a "Business Day"), as of the close of
regular trading (normally 4:00 p.m., Eastern time) on the Ex-
change. Portfolio securities for which market quotations are read-
ily available are valued at market value. Fixed income securities
generally are valued on the basis of quotations obtained from bro-
kers and dealers or pricing services, which take into account ap-
propriate 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. Certain
fixed income securities for which daily market quotations are not
readily available may be valued, pursuant to guidelines estab-
lished by the Board of Trustees, with reference to fixed income
securities whose prices are more readily obtainable and whose du-
rations are comparable to the securities being valued. Short-term
investments having a maturity of 60 days or less are valued at am-
ortized cost, when the Board of Trustees determines that amortized
cost is their fair value. Exchange-traded options, futures and op-
tions on futures are valued at the settlement price as determined
by the appropriate clearing corporation. All other securities and
assets are valued at their fair value as determined in good faith
by the Trustees or by persons acting at their direction.
Quotations of foreign securities in foreign currency are con-
verted to U.S. dollar equivalents using foreign exchange quota-
tions received from independent dealers. The calculation of the
net asset value of the International Developed, International,
Emerging Markets and Precious Metals Funds may not take place con-
temporaneously with the determination of the prices of certain
portfolio securities of foreign issuers used in such calculation.
Further, under the
January 14, 1997 Prospectus 61
<PAGE>
Trust's procedures, the prices of foreign securities are deter-
mined using information derived from pricing services and other
sources. 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 ear-
lier 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 calcula-
tion 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 Adviser or a
Portfolio Manager and approved in good faith by the Board of
Trustees.
Each Fund's liabilities are allocated among its classes. The
total of such liabilities allocated to a class plus that class's
distribution and/or servicing fees and any other expenses spe-
cially allocated to that class are then deducted from the class's
proportionate interest in the Fund's assets, and the resulting
amount for each class is divided by the number of shares of that
class outstanding to produce the class's "net asset value" per
share. Under certain circumstances, the per share net asset value
of the Class B and Class C shares of the Funds that do not declare
regular income dividends on a daily basis may be lower than the
per share net asset value of the Class A shares as a result of the
daily expense accruals of the distribution fee applicable to the
Class B and Class C shares. Generally, for Funds that pay income
dividends, those dividends are expected to differ over time by ap-
proximately the amount of the expense accrual differential between
the classes.
Distributions
Shares begin earning dividends on the effective date of purchase,
which is the date that funds are received by the Trust for the
purchase of Class A, Class B and Class C shares. Net investment
income from interest and dividends, if any, will be declared daily
and paid monthly to shareholders of record of the Tax Exempt Fund
and declared and paid quarterly to shareholders of record by the
Equity Income, Renaissance, Value and Balanced Funds. Net invest-
ment income from interest and dividends, if any, will be declared
and paid at least annually to shareholders of record by the En-
hanced Equity, Capital Appreciation, Growth, Mid Cap Growth, Tar-
get, Small Cap Value, Small Cap Growth, Opportunity, Micro Cap
Growth, International Developed, International, Emerging Markets,
Innovation and Precious Metals Funds. Any net realized capital
gains from the sale of portfolio securities will be distributed no
less frequently than once annually. Net realized short-term capi-
tal gains may be paid more frequently.
All dividends and/or distributions will be paid in the form of
additional shares of the class of shares of the Fund to which the
dividends and/or distributions relate or, at the election of the
shareholder, of another Fund of the Trust as described below, at
net asset value of such Fund, unless the shareholder elects to re-
ceive cash (either paid to shareholders directly or credited to
their account with their participating broker). Dividends paid by
each Fund with respect to each class of shares are calculated in
the same manner and at the same time, but dividends on Class B and
Class C shares are expected to be lower than dividends on Class A
shares as a result of the distribution fee applicable to Class B
and Class C shares. There are no sales charges on reinvested divi-
dends.
Class A, Class B and Class C shareholders of the Trust may
elect to invest dividends and/or distributions paid by any Fund in
shares of the same class of any other Fund of the Trust or series
of PIMCO Funds: Pacific Investment Management Series which offers
such class of shares at net asset value. The shareholder must have
an account existing in the Fund or series selected for investment
with the identical registered name and address and must elect this
option on the Account Application, on a form provided for that
purpose or by a telephone request to the Transfer Agent at 800-
852-8457. For further information on this option, contact your
broker or call the Distributor at 800-426-0107.
62 PIMCO Funds: Multi-Manager Series
<PAGE>
Taxes
Each Fund intends to qualify as a regulated investment company an-
nually and to elect to be treated as a regulated investment com-
pany under the Internal Revenue Code of 1986, as amended (the
"Code"). 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.
Shareholders subject to U.S. federal income tax will be subject
to tax on dividends received from a Fund, regardless of whether
received in cash or reinvested in additional shares. Distributions
received by tax-exempt shareholders will not be subject to federal
income tax to the extent permitted under applicable tax law. All
shareholders must treat dividends, other than capital gain divi-
dends, exempt-interest dividends and dividends that represent a
return of capital to shareholders, as ordinary income. In particu-
lar, distributions derived from short-term gains will be treated
as ordinary income. Dividends designated by a Fund as capital gain
dividends derived from the Fund's net capital gains (that is, the
excess of its net long-term capital gains over its net short-term
capital losses) are taxable to shareholders as long-term capital
gain except as provided by an applicable tax exemption. Any dis-
tributions that are not from a Fund's net investment income or net
capital gain may be characterized as a return of capital to share-
holders or, in some cases, as capital gain. Certain dividends de-
clared in October, November or December of a calendar year are
taxable to shareholders (who otherwise are subject to tax on divi-
dends) 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.
Dividends paid to shareholders by the Tax Exempt Fund which are
derived from interest on Tax Exempt Bonds are expected to be des-
ignated by the Fund as "exempt-interest dividends," and sharehold-
ers may exclude such dividends from gross income for federal in-
come tax purposes. However, if a shareholder receives social secu-
rity or railroad retirement benefits, the shareholder may be taxed
on a portion of those benefits as a result of receiving tax-exempt
income. In addition, certain exempt-interest dividends could, as
discussed below, cause certain shareholders to become subject to
the alternative minimum tax and may increase the alternative mini-
mum tax liability of shareholders already subject to this tax.
Other distributions from the Tax Exempt Fund may constitute tax-
able income, and any gain realized on a redemption of shares will
be taxable gain, subject to any applicable tax exemption for which
an investor may qualify.
Dividends derived from interest on certain U.S. Government se-
curities may be exempt from state and local taxes, although inter-
est on mortgage-backed U.S. Government securities may not be so
exempt. The distributions of "exempt-interest dividends" paid by
the Tax Exempt Fund may be exempt from state and local taxation
when received by a shareholder to the extent that they are derived
from interest on Tax Exempt Bonds issued by the state or political
subdivision in which such shareholder resides. The federal exemp-
tion for "exempt-interest dividends" attributable to Tax Exempt
Bonds does not necessarily result in exemption of such dividends
from income for the purpose of state and local taxes. The Trust
will report annually on a state-by-state basis the source of in-
come the Tax Exempt Fund receives on Tax Exempt Bonds that was
paid out as dividends during the preceding year.
The Code also provides that exempt-interest dividends allocable
to interest received from "private activity bonds" issued after
August 7, 1986 are an item of tax preference for individual and
corporate alternative minimum tax at the applicable rate for indi-
viduals and corporations. Therefore, if the Tax Exempt Fund in-
vests in such private activity bonds, certain of its shareholders
may become subject to the alternative minimum tax on that part of
its distributions to them that are derived from interest income on
such bonds, and certain shareholders already subject to such tax
may have increased liability therefor. However, it is the present
policy of the Tax Exempt Fund to invest no more than 20% of its
assets in such bonds. Other provisions of the Code affect the tax
treatment of distributions from the Tax Exempt Fund for corpora-
tions, casualty insurance companies, and financial institutions.
In particular, under the Code, for corporations, alternative mini-
mum taxable income will be increased by a percentage of the amount
by which the
January 14, 1997 Prospectus 63
<PAGE>
corporation's "adjusted current earnings" (which includes various
items of tax exempt income) exceeds the amount otherwise deter-
mined to be alternative minimum taxable income. Accordingly, an
investment in the Tax Exempt Fund may cause shareholders to be
subject to (or result in an increased liability under) the alter-
native minimum tax.
Current federal tax law requires the holder of a U.S. Treasury
or other fixed income zero-coupon security to accrue as income
each year a portion of the discount at which the security was pur-
chased, even though the holder receives no interest payment in
cash on the security during the year. In addition, pay-in-kind se-
curities will give rise to income which is required to be distrib-
uted and is taxable even though the Fund holding the security re-
ceives no interest payment in cash on the security during the
year. Also, a portion of the yield on certain high yield securi-
ties (including certain pay-in-kind securities) issued after July
10, 1987 may be treated as dividends. Accordingly, each Fund that
holds the foregoing kinds of securities may be required to pay out
as an income distribution each year an amount which is greater
than the total amount of cash interest the Fund actually received.
Such distributions may be made from the cash assets of the Fund or
by liquidation of portfolio securities, if necessary. The Fund may
realize gains or losses from such liquidations. In the event the
Fund realizes net capital gains from such transactions, its share-
holders may receive a larger capital gain distribution, if any,
than they would in the absence of such transactions.
Taxable shareholders should note that the timing of their in-
vestment or redemptions could have undesirable tax consequences.
If shares are purchased on or just before the record date of a
dividend, taxable shareholders will pay full price for the shares
and may receive a portion of their investment back as a taxable
distribution. If shares are redeemed before payment of an exempt-
interest dividend, shareholders may realize a taxable capital
gain, whereas by waiting and receiving the exempt-interest divi-
dend, a portion of their share value would have been received in
the form of tax-free income.
The preceding discussion relates only to federal income tax;
the consequences under other tax laws may differ. Shareholders
should consult their tax advisers as to the possible application
of state and local income tax laws to Trust dividends and capital
gain distributions. For additional information relating to the tax
aspects of investing in a Fund, see the Statement of Additional
Information.
Management of the Trust
The business affairs of the Trust are managed under the direction
of the Board of Trustees. Information about the Trustees and the
Trust's executive officers may be found in the Statement of Addi-
tional Information under the heading "Management of the Trust."
INVESTMENT PIMCO ADVISORS serves as investment adviser to the Funds pursuant
ADVISOR to an investment advisory agreement with the Trust. PIMCO Advisors
is a Delaware limited partnership organized in 1987. PIMCO Advi-
sors provides investment management and advisory services to pri-
vate accounts of institutional and individual clients and to mu-
tual funds. Total assets under management by PIMCO Advisors and
its subsidiary partnerships as of November 30, 1996 were approxi-
mately $111 billion. A portion of the units of the limited partner
interest in PIMCO Advisors is traded publicly on the Exchange. The
general partner of PIMCO Advisors is PIMCO Partners, G.P. Pacific
Mutual Life Insurance Company and its affiliates hold a substan-
tial interest in PIMCO Advisors through direct or indirect owner-
ship of units of PIMCO Advisors, and indirectly hold a majority
interest in PIMCO Partners, G.P., with the remainder held indi-
rectly by a group composed of the Managing Directors of Pacific
Investment Management. PIMCO Advisors is governed by an Operating
Board and an Equity Board, which exercise substantially all of the
governance powers of the general partner and serve as the func-
tional equivalent of a board of directors. PIMCO Advisors' address
is 800 Newport Center
64 PIMCO Funds: Multi-Manager Series
<PAGE>
Drive, Suite 100, Newport Beach, California 92660. PIMCO Advisors
is registered as an investment adviser with the Securities and Ex-
change Commission. PIMCO Advisors currently has six subsidiary
partnerships: Blairlogie, Cadence, Columbus Circle, NFJ, Pacific
Investment Management and Parametric.
Under the investment advisory agreement, PIMCO Advisors, sub-
ject 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
Advisor, the investment of the Funds. PIMCO Advisors also fur-
nishes to the Board of Trustees periodic reports on the investment
performance of each Fund.
PORTFOLIO
MANAGERS Pursuant to portfolio management agreements, PIMCO Advisors em-
ploys Portfolio Managers to provide investment advisory services
to all of the Funds. With the exception of Van Eck (which manages
the Precious Metals Fund), each Portfolio Manager is an affiliate
of PIMCO Advisors. PIMCO Advisors compensates the Portfolio Manag-
ers from its advisory fee (not from the Trust). Under these agree-
ments, 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 por-
tion 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.
COLUMBUS CIRCLE manages the Renaissance Fund, the Growth Fund, the
Target Fund, the Opportunity Fund, the Innovation Fund and the Tax
Exempt Fund (the "Columbus Circle Funds"). Columbus Circle is an
investment management firm organized as a general partnership. Co-
lumbus 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. Accounts managed by
Columbus Circle had combined assets as of November 30, 1996 of ap-
proximately $14 billion. Columbus Circle's address is Metro Cen-
ter, One Station Place, 8th Floor, Stamford, Connecticut 06902.
Columbus Circle is registered as an investment adviser with the
Securities and Exchange Commission.
At the center of Columbus Circle's equity investment strategy
is its theory of Positive Momentum & Positive Surprise. This the-
ory asserts that a good company doing better than generally ex-
pected will experience a rise in its stock price, and conversely,
a company falling short of expectations will experience a drop in
its stock price. Based on this theory, Columbus Circle attempts to
manage the Columbus Circle Funds (except the Tax Exempt Fund) with
a view to investing in growing companies that are surprising the
market with business results that are better than anticipated. The
Trust has been informed that 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 man-
ager. No person is primarily responsible for making recommenda-
tions to that committee.
CADENCE manages the Capital Appreciation Fund, the Mid Cap Growth
Fund, the Small Cap Growth Fund, the Micro Cap Growth Fund, and a
portion of the Common Stock Segment of the Balanced Fund (the "Ca-
dence 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 opera-
tions in 1988. Accounts managed by Cadence had combined assets as
of November 30, 1996 of approximately $3.3 billion. Cadence's ad-
dress is Exchange Place, 53 State Street, Boston, Massachusetts
02109. Cadence is registered as an investment adviser with the Se-
curities and Exchange Commission.
David B. Breed, William B. Bannick, Katherine A. Burdon, Eric
M. Wetlaufer and Peter B. McManus are primarily responsible for
the day-to-day management of the Cadence Funds. Mr. Breed is a
Managing Director, the
January 14, 1997 Prospectus 65
<PAGE>
Chief Executive Officer, and a 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 Uni-
versity 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 Ca-
dence and has 11 years' investment management experience. He pre-
viously served as Executive Vice President of George D. Bjurman &
Associates and as Supervising Portfolio Manager of Trinity Invest-
ment Management Corporation. Mr. Bannick joined the predecessor of
Cadence in 1992. He graduated from the University of Massachusetts
and received his MBA from Boston University. Mr. Bannick is a
Chartered Financial Analyst. Ms. Burdon is a Managing Director and
Portfolio Manager of Cadence and has nine years' investment man-
agement experience. She previously served as a Vice President and
Portfolio Manager of The Boston Company. Ms. Burdon joined the
predecessor of Cadence in 1993. She graduated from Stanford Uni-
versity and received a Master of Science degree from Northeastern
University. Ms. Burdon is a Chartered Financial Analyst and Certi-
fied Public Accountant. Mr. Wetlaufer is a Managing Director and
Portfolio Manager of Cadence and has 11 years' investment manage-
ment experience. He previously served as Vice President of North-
field Information Services. Mr. Wetlaufer joined the predecessor
of Cadence in 1991. He graduated from Wesleyan University and is a
Chartered Financial Analyst. Mr. McManus is Director of Fund Man-
agement of Cadence and has 19 years' investment management experi-
ence. He previously served as a Vice President of Bank of Boston.
Mr. McManus joined Cadence in 1994. He graduated from the Univer-
sity of Massachusetts, and is certified as a Financial Planner.
NFJ manages the Equity Income Fund, the Value Fund, the Small Cap
Value Fund, and a portion of the Common Stock Segment of the Bal-
anced 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 November 30, 1996 of approximately
$1.8 billion. NFJ's address is 2121 San Jacinto, Suite 1840, Dal-
las, Texas 75201. NFJ is registered as an investment adviser with
the Securities and Exchange Commission.
Chris Najork is responsible for the day-to-day management of
the Equity Income Fund, the Value 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 portfo-
lio 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 Small Cap Value Fund. Mr.
Magnuson, a research analyst at NFJ, has 11 years' experience in
equity research and portfolio management. He received his bache-
lor's degree in Finance from the University of Nebraska-Lincoln.
BLAIRLOGIE manages the International Developed Fund, the Interna-
tional Fund, and the Emerging Markets Fund (the "Blairlogie
Funds"). Blairlogie is an investment management firm, organized as
a limited partnership under the laws of Scotland, United Kingdom,
with two general partners and one limited partner. The general
partners are PIMCO Advisors, which serves as the supervisory part-
ner, and Blairlogie Holdings Limited, a wholly owned corporate
subsidiary of PIMCO Advisors, which serves as the managing part-
ner. The limited partner is Blairlogie Partners L.P., a limited
partnership, the general partner of which is Pacific Financial As-
set Management Corporation (a subsidiary of Pacific Mutual Life
Insurance Company), and the limited partners of which are the
principal executive officers of Blairlogie Capital Management.
Blairlogie Partners L.P. has agreed with PIMCO Advisors that PIMCO
Advisors will acquire its 25% interest in four annual installments
of 10%, 5%, 5% and 5%, respectively, beginning December 31, 1998.
66 PIMCO Funds: Multi-Manager Series
<PAGE>
Blairlogie Capital Management Ltd., the predecessor investment ad-
viser to Blairlogie, commenced operations in 1992. Accounts man-
aged by Blairlogie had combined assets as of November 30, 1996 of
approximately $.7 billion. Blairlogie's address is 4th Floor, 125
Princes Street, Edinburgh EH2 4AD, Scotland. Blairlogie is regis-
tered as an investment adviser with the Securities and Exchange
Commission in the United States and with the Investment Management
Regulatory Organisation in the United Kingdom.
James Smith is primarily responsible for the day-to-day manage-
ment of the Blairlogie Funds. Mr. Smith is a Managing Director and
the 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, and the
Americas, and in currency and derivatives. He previously served as
a Senior Portfolio Manager at Murray Johnstone in Glasgow, Scot-
land, 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.
PARAMETRIC manages the Enhanced Equity Fund. Parametric is an in-
vestment management firm organized as a general partnership. Para-
metric has two partners: PIMCO Advisors as the supervisory part-
ner, and Parametric Management, Inc. as the managing partner. Par-
ametric Portfolio Associates, Inc., the predecessor investment ad-
viser to Parametric, commenced operations in 1987. Accounts man-
aged by Parametric had combined assets as of November 30, 1996 of
approximately $2 billion. Parametric's address is 7310 Columbia
Center, 701 Fifth Avenue, Seattle, Washington 98104-7090. Paramet-
ric is registered as an investment adviser with the Securities and
Exchange Commission and as a commodity trading advisor with the
CFTC.
David Stein, Linda Mauzy, and Cliff Quisenberry are primarily
responsible for the day-to-day management of the Enhanced Equity
Fund. Mr. Stein is a Managing Director of Parametric and has been
associated with Parametric since June, 1996. He also directs re-
search 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 or
its predecessor since 1988. Ms. Mauzy graduated from the Califor-
nia State University with a bachelor's degree in Chemistry, and
from the University of California with a master's degree in Eco-
nomics. 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 Se-
curity Analyst and Portfolio Manager at Fred Alger Management. Mr.
Quisenberry graduated from Yale University with a bachelor's de-
gree in Economics. He is a Chartered Financial Analyst.
PACIFIC INVESTMENT MANAGEMENT manages the Fixed Income Securities
Segment of the Balanced Fund. Pacific Investment Management is an
investment management firm organized as a general partnership. Pa-
cific Investment Management has two partners: PIMCO Advisors as
the supervisory partner, and PIMCO Management, Inc. as the manag-
ing partner. Pacific Investment Management Company, the predeces-
sor investment adviser to Pacific Investment Management, commenced
operations in 1971. Pacific Investment Management had approxi-
mately $88 billion of assets under management as of November 30,
1996. Pacific Investment Management's address is 840 Newport Cen-
ter Drive, Suite 360, Newport Beach, California 92660. Pacific In-
vestment Management is registered as an investment adviser with
the Securities and Exchange Commission and as a commodity trading
advisor with the CFTC.
January 14, 1997 Prospectus 67
<PAGE>
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 a Managing Director of Pacific Investment
Management and has been associated with Pacific Investment Manage-
ment or its predecessor for 25 years. He has extensive investment
experience in both credit research and fixed income portfolio man-
agement. 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 Soci-
ety of Financial Analysts.
VAN ECK is an unaffiliated investment adviser that manages the
Precious Metals Fund. Van Eck is a Delaware corporation which, to-
gether with its affiliates, provides investment advisory services
to other mutual funds and to private accounts. Van Eck is con-
trolled by John C. Van Eck who, along with members of his immedi-
ate family, owns 100% of the stock of Van Eck. Accounts managed by
Van Eck had combined assets as of November 30, 1996 of approxi-
mately $1.7 billion. Van Eck's address is 99 Park Avenue, New
York, NY 10001. Van Eck is registered as an investment adviser
with the Securities and Exchange Commission.
Henry J. Bingham, Executive Managing Director of Van Eck and
President of the International Investors series of Van Eck Funds,
has served as the Portfolio Manager of the Precious Metals Fund
since the Fund commenced operations.
PIMCO Advisors determines the allocation of the Balanced Fund's
assets among various asset classes and manages directly the Money
Market Segment of that Fund.
Registration as an investment adviser with the Securities and Ex-
change Commission does not involve supervision by the Securities
and Exchange Commission over investment advice, and registration
with the CFTC as a commodity trading advisor does not involve su-
pervision by the CFTC over commodities trading. The portfolio man-
agement agreements are not exclusive, and Columbus Circle, Ca-
dence, NFJ, Blairlogie, Parametric, Pacific Investment Management
and Van Eck may provide, and currently are providing, investment
management services to other clients, including other investment
companies.
FUND
ADMINISTRATOR
PIMCO Advisors also serves as administrator (the "Administrator")
to the Funds pursuant to an administration agreement with the
Trust. The Administrator provides or procures administrative serv-
ices for the Funds, which include clerical help and accounting,
bookkeeping, internal audit services and certain other services
required by the Funds, and preparation of reports to the Funds'
shareholders and regulatory filings. The Administrator has re-
tained Pacific Investment Management to provide such services as
sub-administrator. The Administrator and/or the sub-administrator
may also retain other affiliates to provide certain of these serv-
ices. In addition, the Administrator, at its own expense, arranges
for the provision of legal, audit, custody, transfer agency (in-
cluding sub-transfer agency and other administrative services) and
other services necessary for the ordinary operation of 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 Funds (and not the Administrator) are 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, Pacific
Investment Management, or their subsidiaries or affiliates; (ii)
taxes and governmental fees; (iii) brokerage fees and commissions
and other portfolio transaction expenses; (iv) the costs of bor-
rowing money, including interest expenses; (v) fees and expenses
of the Trustees who are not "interested persons" of the Advisor,
any Portfolio Manager, or the Trust, and any counsel retained ex-
clusively for their benefit; (vi) extraordinary expenses, includ-
ing costs of litigation and indemnification expenses; (vii) ex-
penses which are capitalized in accordance with
68 PIMCO Funds: Multi-Manager Series
<PAGE>
generally accepted accounting principles; and (viii) any expenses
allocated or allocable to a specific class of shares, which in-
clude distribution and/or service fees payable with respect to
Class A, Class B and Class C shares, and may include certain other
expenses as permitted by the Trust's Multiple Class Plan adopted
pursuant to Rule 18f-3 under the 1940 Act, subject to review and
approval by the Trustees.
ADVISORY
AND
ADMINISTRATIVE
FEES
The Funds feature fixed advisory and administrative fees. For pro-
viding or arranging for the provision of investment advisory serv-
ices to the Funds as described above, the Advisor 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>
Tax Exempt Fund .30%
------------------------------
Equity Income, Value,
Enhanced Equity, Capi-
tal Appreciation, Mid
Cap Growth and Bal-
anced Funds .45%
------------------------------
Growth Fund .50%
------------------------------
Target and Interna-
tional Funds .55%
------------------------------
Renaissance, Small Cap
Value, International
Developed and Precious
Metals Funds .60%
------------------------------
Opportunity and Innova-
tion Funds .65%
------------------------------
Emerging Markets Fund .85%
------------------------------
Small Cap Growth Fund 1.00%
------------------------------
Micro Cap Growth Fund 1.25%
</TABLE>
For providing or procuring administrative services to the Funds
as described above, the Administrator receives monthly fees from
each Fund at an annual rate based on the average daily net assets
attributable in the aggregate to the Fund's Class A, Class B and
Class C shares as follows:
<TABLE>
<CAPTION>
ADMINISTRATIVE
FUND FEE RATE
----------------------------------------------------------------
<S> <C>
Precious Metals Fund .45% of first $2.5 billion
.40% of amounts in excess of $2.5 billion
----------------------------------------------------------------
International Developed,
International and
Emerging Markets Funds .65% of first $2.5 billion
.60% of amounts in excess of $2.5 billion
----------------------------------------------------------------
All Other Funds .40% of first $2.5 billion
.35% of amounts in excess of $2.5 billion
</TABLE>
The investment advisory, administration and sub-administration
agreements for the Funds may be terminated by the Trustees, or by
PIMCO Advisors or Pacific Investment Management (as the case may
be) on 60 days' written notice. In addition, these agreements may
be terminated with regard to the Renaissance Fund, Growth Fund,
Target Fund, Opportunity Fund, International Fund, Innovation
Fund, Precious Metals Fund, and Tax Exempt Fund by a majority of
the Trustees that are not interested persons of the Trust, PIMCO
Advisors, or Pacific Investment Management (as the case may be) on
60 days' written notice. Following their initial terms, the agree-
ments will continue from year to year if approved by the Trustees.
January 14, 1997 Prospectus 69
<PAGE>
Pursuant to the portfolio management agreements between the Ad-
visor 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: Columbus Cir-
cle--.38% for the Renaissance Fund, .34% for the Growth Fund, .36%
for the Target Fund, .48% for the Opportunity Fund, .38% for the
Innovation Fund and .30% for the Tax Exempt Fund; Cadence--.35%
for the Capital Appreciation Fund, .35% for the Mid Cap Growth
Fund, .90% for the Small Cap Growth Fund, 1.15% for the Micro Cap
Growth Fund and .35% for the portion of the Common Stock Segment
of the Balanced Fund allocated to Cadence; NFJ--.35% for the Eq-
uity Income Fund, .35% for the Value Fund, .50% for the Small Cap
Value Fund and .35% for the portion of the Common Stock Segment of
the Balanced Fund allocated to NFJ; Blairlogie--.50% for the In-
ternational Developed Fund, .40% for the International Developed
Fund and .75% for the Emerging Markets Fund; Parametric--.35% for
the Enhanced Equity Fund; Pacific Investment Management--.25% for
the Fixed Income Securities Segment of the Balanced Fund; and Van
Eck--.35% for the Precious Metals Fund.
Pursuant to the portfolio management agreements, a Portfolio Man-
PORTFOLIO ager places orders for the purchase and sale of portfolio invest-
TRANSACTIONSments for a Fund's accounts with brokers or dealers selected by it
in its discretion. In effecting purchases and sales of portfolio
securities for the accounts of the Funds, the Portfolio Managers
will seek the best price and execution of the Fund's 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
Managers also may consider sales of shares of the Trust as a fac-
tor in the selection of broker-dealers to execute portfolio trans-
actions for the Trust.
Some securities considered for investment by the Funds may also
be appropriate for other clients served by the Portfolio Managers.
If a purchase or sale of securities consistent with the investment
policies of a Fund and one or more of these clients served by a
Portfolio Manager is considered at or about the same time, trans-
actions in such securities will be allocated among the Fund and
clients in a manner deemed fair and reasonable by the Portfolio
Manager.
Description of the Trust
CAPITALIZATION
The Trust was organized as a Massachusetts business trust on Au-
gust 24, 1990, and currently consists of twenty-two portfolios
that are operational, nineteen of which are described in this Pro-
spectus. Other portfolios may be offered by means of a separate
prospectus. The Board of Trustees may establish additional portfo-
lios in the future. The capitalization of the Trust consists of an
unlimited number of shares of beneficial interest. When issued,
shares of the Trust are fully paid, non-assessable and freely
transferable.
Under Massachusetts law, shareholders could, under certain cir-
cumstances, be held liable for the obligations of the Trust. How-
ever, the Second Amended and Restated Agreement and Declaration of
Trust (the "Declaration of Trust") of the Trust disclaims share-
holder liability for acts or obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obliga-
tion or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust also provides for indemnifica-
tion out of a Fund's property for all loss and expense of any
shareholder of that Fund held liable on account of being or having
been a shareholder. Thus, the risk of a shareholder incurring fi-
nancial loss on account of shareholder liability is limited to
circumstances in which such disclaimer is inoperative or the Fund
of which he or she is or was a shareholder is unable to meet its
obligations, and thus should be considered remote.
70 PIMCO Funds: Multi-Manager Series
<PAGE>
In addition to Class A shares, Class B shares and Class C shares,
certain Funds also offer Institutional and Administrative Class
MULTIPLE shares through a separate prospectus, as described under "Alterna-
CLASSESOF tive Purchase Arrangements." This Prospectus relates only to Class
SHARES A shares, Class B shares and Class C shares of the Funds.
Class A, Class B and Class C shares of each Fund represent in-
terests in the assets of that Fund and have identical dividend,
liquidation and other rights and the same terms and conditions ex-
cept that expenses related to the distribution and shareholder
servicing of Class A, Class B and Class C shares are borne solely
by such class and each class may, at the Trustees' discretion,
also pay a different share of other expenses, not including advi-
sory or custodial fees or other expenses related to the management
of the Trust's assets, if these expenses are actually incurred in
a different amount by that class, or if the class receives serv-
ices of a different kind or to a different degree than the other
classes. All other expenses are allocated to each class on the ba-
sis of the net asset value of that class in relation to the net
asset value of the particular Fund.
VOTING Each class of shares of each Fund has identical voting rights ex-
cept that each class of shares has exclusive voting rights on any
matter submitted to shareholders that relates solely to that
class, and 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. Each class of shares has exclusive
voting rights with respect to matters pertaining to any Distribu-
tion and Servicing Plan applicable to that class. These shares are
entitled to vote at meetings of shareholders. Matters submitted to
shareholder vote must be approved by each Fund separately except
(i) when required by the 1940 Act shares shall be voted together
and (ii) when the Trustees have determined that the matter does
not affect all Funds, then only shareholders of the Fund or Funds
affected shall be entitled to vote on the matter. All classes of
shares of a Fund will vote together, except with respect to a Dis-
tribution and Servicing Plan applicable to a class of shares or
when a class vote is required as specified above or otherwise by
the 1940 Act. Shares are freely transferable, are entitled to div-
idends as declared by the Trustees and, in liquidation of the
Trust, are entitled to receive the net assets of their Fund, but
not of the other Funds. The Trust does not generally hold annual
meetings of shareholders and will do so only when required by law.
Shareholders may remove Trustees from office by votes cast in per-
son or by proxy at a meeting of shareholders or by written con-
sent. Such a meeting will be called at the written request of the
holders of 10% of the Trust's outstanding shares.
Shares entitle their holders to one vote per share (with pro-
portionate voting for fractional shares). As of December 17, 1996,
the following were shareholders of record of at least 25% of the
outstanding voting securities of the indicated Fund(s): Pacific
Mutual Life Insurance Company (Newport Beach, California) with re-
spect to the Diversified Low P/E Fund (the predecessor of the
Value Fund); the Jewish Federation of Metropolitan Chicago (Chica-
go, Illinois) with respect to the Small Cap Growth Fund; First In-
terstate Bank of California (Calabasas, California) with respect
to the Enhanced Equity Fund; and Charles Schwab & Co., Inc. (San
Francisco, California) with respect to the Emerging Markets Fund.
To the extent such shareholders are also the beneficial owners of
those shares, they may be deemed to control (as that term is de-
fined in the 1940 Act) the relevant Fund.
Mailings to Shareholders
To reduce the volume of mail shareholders receive, it is antici-
pated that only one copy of most Trust reports, such as the
Trust's annual report, will be mailed to a shareholder's household
(same surname, same address). A shareholder may call 800-227-7337
if additional shareholder reports are desired.
January 14, 1997 Prospectus 71
<PAGE>
---------------------------------------------------------------
PIMCO Funds INVESTMENT ADVISOR AND ADMINISTRATOR
Multi-Manager
Series PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach,
CA 92660
---------------------------------------------------------------
PORTFOLIO MANAGERS
Columbia Circle Investors, Cadence Capital Management, NFJ
Investment Group, Blairlogie Capital Management, Parametric
Portfolio Associates, Pacific Investment Management Company, Van
Eck Associates Corporation
---------------------------------------------------------------
DISTRIBUTOR
PIMCO Funds Distribution Company, 2187 Atlantic Street,
Stamford, Connecticut 06902
---------------------------------------------------------------
CUSTODIAN
Investors Fiduciary Trust Company, 127 West 10th Street,
Kansas City, MO 64105
---------------------------------------------------------------
SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
Shareholder Services, Inc., P.O. Box 5866, Denver, CO 80217
---------------------------------------------------------------
For further information about the Trust, call 1-800-426-0107
[LOGO OF PIMCO APPEARS HERE]
<PAGE>
[LOGO OF PIMCO APPEARS HERE]
PIMCO FUNDS
Multi-Manager Series
BLAIRLOGIE CAPITAL MANAGEMENT
PIMCO Emerging Markets Fund
PIMCO International Developed Fund
PIMCO International Fund
CADENCE CAPITAL MANAGEMENT
PIMCO Capital Appreciation Fund
PIMCO Mid Cap Growth Fund
PIMCO Micro Cap Growth Fund
PIMCO Small Cap Growth Fund
COLUMBUS CIRCLE INVESTORS
PIMCO Renaissance Fund
PIMCO Core Equity Fund
PIMCO Mid Cap Equity Fund
PIMCO Opportunity Fund
PIMCO Innovation Fund
PIMCO Tax Exempt Fund
NFJ INVESTMENT GROUP
PIMCO Equity Income Fund
PIMCO Value Fund
PIMCO Small Cap Value Fund
PARAMETRIC PORTFOLIO ASSOCIATES
PIMCO Enhanced Equity Fund
PIMCO Structured Emerging Markets Fund
VAN ECK ASSOCIATES CORPORATION
PIMCO Precious Metals Fund
MULTIPLE MANAGERS
PIMCO Balanced Fund
PROSPECTUS
- --------------------------------------------------------------------------------
January 14, 1997
<PAGE>
PIMCO Funds: Multi-Manager Series
Prospectus
January 14, 1997
PIMCO Funds: Multi-Manager Series (the "Trust"), formerly PIMCO Funds: Equity
Advisors Series, is an open-end management investment company ("mutual fund").
This Prospectus offers twenty separate diversified investment portfolios (the
"Funds") of the Trust. 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 the Funds' Portfolio Managers.
This Prospectus describes two classes of shares offered by each Fund: the
"Institutional Class" and the "Administrative Class." Through a separate
prospectus, certain Funds offer up to three additional classes of shares,
Class A shares, Class B shares and Class C shares. See "Other Information--
Multiple Classes of Shares." 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,
and high net worth individuals (Institutional Class shares may also be offered
through certain financial intermediaries that charge their customers
transaction or other fees with respect to the customers' investments in the
Funds). Shares of the Administrative Class are offered primarily through
employee benefit plan alliances, broker-dealers and other intermediaries, and
each Fund's Administrative Class shares are subject to service and/or
distribution fees paid to such entities for services they provide to
shareholders of that class. Administrative Class shares of certain Funds are
not currently available for investment. Institutional Class and Administrative
Class shares of the Funds are offered for sale at the relevant next determined
net asset value for each 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.
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
will vary.
A Statement of Additional Information, dated January 14, 1997, as amended or
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)
(800) 987-4626 (PIMCO Infolink Audio Response
Network)
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.
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.
January 14, 1997 Prospectus 1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................................................... 3
Expense Information..................................................... 8
Financial Highlights.................................................... 10
Investment Objectives and Policies...................................... 14
Investment Restrictions................................................. 27
Characteristics and Risks of Securities and Investment Techniques....... 29
Management of the Trust................................................. 42
Purchase of Shares...................................................... 48
Redemption of Shares.................................................... 51
Portfolio Transactions.................................................. 53
Net Asset Value......................................................... 53
Dividends, Distributions and Taxes...................................... 54
Other Information....................................................... 56
</TABLE>
2 PIMCO Funds: Multi-Manager Series
<PAGE>
PROSPECTUS SUMMARY
PIMCO Funds: Multi-Manager Series (the "Trust") is an open-end management
investment company ("mutual fund") organized as a Massachusetts business trust
on August 24, 1990. This Prospectus describes twenty separate diversified
investment portfolios (the "Funds") offered by the Trust.
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>
PORTFOLIO MANAGER
AND FUND
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS
- --------------------------------------------------------------------------------
BLAIRLOGIE CAPITAL
MANAGEMENT
<S> <C>
Emerging Markets
Seeks long-term growth of capital; invests primarily in
common stocks of companies located in emerging market
countries.
- --------------------------------------------------------------------------------
International Seeks long-term growth of capital; invests primarily in
Developed a diversified portfolio of international equity
securities.
- --------------------------------------------------------------------------------
International Seeks capital appreciation, income is incidental;
invests primarily in common stocks of non-U.S. issuers.
- --------------------------------------------------------------------------------
CADENCE CAPITAL
MANAGEMENT
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.
- --------------------------------------------------------------------------------
Mid Cap Growth Seeks growth of capital; invests primarily in common
stocks of companies with market capitalizations in
excess of $500 million that have improving fundamentals
and whose stock is reasonably valued by the market.
- --------------------------------------------------------------------------------
Micro Cap Growth Seeks long-term growth of capital; invests primarily in
common stocks of companies with market capitalizations
of less than $100 million that have improving
fundamentals and whose stock is reasonably valued by the
market.
- --------------------------------------------------------------------------------
Small Cap Growth Seeks growth of capital; invests primarily in common
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
INVESTORS
Renaissance Seeks long-term growth of capital and income; invests
primarily in income-producing stocks and convertibles.
- --------------------------------------------------------------------------------
Core Equity Seeks long-term growth of capital, with income as a
secondary objective; invests primarily in common stocks
of companies with market capitalizations in excess of $3
billion.
- --------------------------------------------------------------------------------
Mid Cap Equity Seeks long-term growth of capital; invests primarily in
common stocks of companies with market capitalizations
between $800 million and $3 billion.
- --------------------------------------------------------------------------------
Opportunity Seeks capital appreciation; invests primarily in common
stocks of companies with market capitalizations of less
than $1 billion.
- --------------------------------------------------------------------------------
Innovation Seeks capital appreciation; invests primarily in common
stocks of technology-related companies.
- --------------------------------------------------------------------------------
Tax Exempt Seeks high current income exempt from federal income
tax, consistent with preservation of capital; invests
primarily in investment grade municipal securities.
- --------------------------------------------------------------------------------
</TABLE>
January 14, 1997 Prospectus 3
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO MANAGER AND FUND
INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS
- --------------------------------------------------------------------------------
NFJ INVESTMENT GROUP
<S> <C>
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.
- --------------------------------------------------------------------------------
Value Seeks long-term growth of capital and income; invests
primarily in common stocks with below-average price to
earnings ratios relative to their industry groups.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
PARAMETRIC PORTFOLIO
ASSOCIATES
Enhanced Equity
Seeks to provide a total return which equals or exceeds
the total return performance of the Standard & Poor's
500 Composite Stock Price Index; invests in common
stocks represented in that Index.
- --------------------------------------------------------------------------------
Structured Seeks long-term growth of capital; invests primarily in
Emerging Markets common stocks of companies located in emerging market
countries.
- --------------------------------------------------------------------------------
VAN ECK ASSOCIATES
CORPORATION
Precious Metals Seeks capital appreciation; invests in common stocks of
companies that are engaged in precious metals-related
activities.
- --------------------------------------------------------------------------------
MULTIPLE MANAGERS
Balanced
Seeks total return consistent with prudent investment
management; invests in common stocks, fixed income
securities and money market instruments.
- --------------------------------------------------------------------------------
</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
this 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. Except for the Tax
Exempt Fund and the Balanced Fund, all of the Funds invest primarily in common
stock or other types of equity securities (the "Equity Funds"). While each of
the Renaissance, Opportunity, Innovation, International, and Precious Metals
Funds may invest up to 100% of its assets in money market instruments for
temporary defensive purposes, it is the policy of the other Equity Funds to be
as fully invested as practicable in common stock. These Equity Funds may not
invest in debt securities as a defensive investment posture (although they may
invest in such securities to provide for payment of expenses and to meet
redemption requests), and, therefore, may be more vulnerable to general
declines in stock prices. For further information, see "Investment Objectives
and Policies--Equity Funds."
Certain of the Funds may invest in debt securities rated lower than Baa by
Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Corporation ("S&P"). Such securities carry a high degree of credit risk and are
considered speculative by the major rating agencies. Certain Funds may invest
in securities of foreign issuers, which may be subject to additional risk
factors, including foreign currency and political risks, not applicable to
securities of U.S. issuers. Investments by certain Funds in securities of
issuers based in countries with developing economies may pose
4 PIMCO Funds: Multi-Manager Series
<PAGE>
political, currency, and market risks greater than, or in addition to, risks of
investing in foreign developed countries. Certain of the Funds' investment
techniques may involve a form of borrowing, which may tend to exaggerate the
effect on net asset value of any increase or decrease in the market value of a
Fund's portfolio and may require liquidation of portfolio positions when it is
not advantageous to do so.
Certain Funds may use derivative instruments, including 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.
The Funds offer their shares to both retail and institutional investors.
Institutional shareholders, some of whom also may be investment advisory
clients of PIMCO Advisors L.P. or its affiliates, may hold large positions in
certain of the Funds. Such shareholders may on occasion make large redemptions
of their holdings in the Funds to meet their liquidity needs, in connection
with strategic adjustments to their overall portfolio of investments, or for
other purposes. Large redemptions from some Funds could require liquidation of
portfolio positions when it is not most desirable to do so. Liquidation of
portfolio holdings also may cause a Fund to realize taxable capital gains.
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
PIMCO Advisors L.P. ("PIMCO Advisors" or the "Adviser") serves as investment
adviser to the Trust. PIMCO Advisors is one of the largest investment
management firms in the U.S. As of November 30, 1996, PIMCO Advisors and its
subsidiary partnerships had over $111.2 billion in assets under management.
Subject to the supervision of the Board of Trustees of the Trust, the Adviser
is responsible for the investment program for the Funds in accordance with each
Fund's investment objective, policies, and restrictions. For all of the Funds
except the Precious Metals Fund, the Adviser has engaged its affiliates to
serve as Portfolio Managers. These affiliated Portfolio Managers, each of which
is a subsidiary partnership of PIMCO Advisors, are Blairlogie Capital
Management ("Blairlogie"), Cadence Capital Management ("Cadence"), Columbus
Circle Investors ("Columbus Circle"), NFJ Investment Group ("NFJ"), Pacific
Investment Management Company ("Pacific Investment Management"), and Parametric
Portfolio Associates ("Parametric"). Van Eck Associates Corporation ("Van Eck")
is the Portfolio Manager for the Precious Metals Fund. 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. For the Balanced Fund,
PIMCO Advisors determines the allocation of the Fund's assets among common
stock and fixed income securities and manages directly 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."
PURCHASE OF SHARES
This Prospectus describes two classes of shares of each Fund: the
"Institutional Class" and the "Administrative Class." Shares of the
Institutional Class are offered primarily for direct investment by
institutional investors (Institutional Class shares may also be offered through
certain financial intermediaries that charge their customers transaction or
other
January 14, 1997 Prospectus 5
<PAGE>
fees with respect to the customers' investments in the Funds). Shares of the
Administrative Class are offered primarily through employee benefit plan
alliances, broker-dealers and other intermediaries. Each Fund pays service or
distribution fees to such entities for services they provide to such Fund's
shareholders of that class. Administrative Class shares of certain Funds are
not currently available for investment.
Shares of the Institutional Class and Administrative 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 $5 million,
subject to certain exceptions. Shares of either class may also be offered to
clients of the Adviser and its affiliates. The Micro Cap Growth Fund limits the
purchase of shares (contributed capital) by any one investor to $10 million,
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 Micro Cap Growth Fund to $100
million. 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, Institutional Class and
Administrative Class shares of the Small Cap Growth Fund, Opportunity Fund, Tax
Exempt Fund, Structured Emerging Markets Fund, International Fund, and Precious
Metals Fund are not offered as of the date of this Prospectus; however,
additional investment opportunities in these Funds may be available in the
future. These limitations may be changed or eliminated at any time at the
discretion of the Trust's Board of Trustees. See "Purchase of Shares."
REDEMPTIONS AND EXCHANGES
Institutional Class and Administrative Class shares 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.
Institutional Class and Administrative Class shares of any Fund may be
exchanged on the basis of relative net asset values for shares of the same
class of any other Fund of the Trust offered generally to the public, or for
shares of the same class of a series of PIMCO Funds: Pacific Investment
Management Series, an affiliated mutual fund family composed primarily of fixed
income portfolios managed by Pacific Investment Management. See "Redemption of
Shares."
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute dividends from net investment income at least
annually (except for the Renaissance, Equity Income, Value, and Balanced Funds,
which will distribute dividends quarterly, and the Tax Exempt Fund, which will
distribute dividends on a monthly basis), 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 and/or distribution fees by that class. See "Dividends, Distributions
and Taxes."
6 PIMCO Funds: Multi-Manager Series
<PAGE>
(This page left blank intentionally)
January 14, 1997 Prospectus 7
<PAGE>
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES (INSTITUTIONAL CLASS AND ADMINISTRATIVE
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>
Emerging Markets Fund....................... 0.85% 0.50% 1.35%
International Developed Fund................ 0.60 0.50 1.10
International Fund.......................... 0.55 0.50 1.05
Capital Appreciation Fund................... 0.45 0.25 0.70
Mid Cap Growth Fund......................... 0.45 0.25 0.70
Micro Cap Growth Fund....................... 1.25 0.25 1.50
Small Cap Growth Fund....................... 1.00 0.25 1.25
Renaissance Fund............................ 0.60 0.25 0.85
Core Equity Fund............................ 0.57 0.25 0.82
Mid Cap Equity Fund......................... 0.63 0.25 0.88
Opportunity Fund............................ 0.65 0.25 0.90
Innovation Fund............................. 0.65 0.25 0.90
Tax Exempt Fund............................. 0.30 0.25 0.55
Equity Income Fund.......................... 0.45 0.25 0.70
Value Fund.................................. 0.45 0.25 0.70
Small Cap Value Fund........................ 0.60 0.25 0.85
Enhanced Equity Fund........................ 0.45 0.25 0.70
Structured Emerging Markets Fund............ 0.45 0.50 0.95
Precious Metals Fund........................ 0.60 0.30 0.90
Balanced Fund............................... 0.45 0.25 0.70
</TABLE>
<TABLE>
<CAPTION>
SERVICE/
ADVISORY ADMINISTRATIVE 12B-1 TOTAL
ADMINISTRATIVE CLASS SHARES FEE FEE FEE EXPENSES
--------------------------- -------- -------------- -------- --------
<S> <C> <C> <C> <C>
Emerging Markets Fund............. 0.85% 0.50% 0.25% 1.60%
International Developed Fund...... 0.60 0.50 0.25 1.35
International Fund................ 0.55 0.50 0.25 1.30
Capital Appreciation Fund......... 0.45 0.25 0.25 0.95
Mid Cap Growth Fund............... 0.45 0.25 0.25 0.95
Micro Cap Growth Fund............. 1.25 0.25 0.25 1.75
Small Cap Growth Fund............. 1.00 0.25 0.25 1.50
Renaissance Fund.................. 0.60 0.25 0.25 1.10
Core Equity Fund.................. 0.57 0.25 0.25 1.07
Mid Cap Equity Fund............... 0.63 0.25 0.25 1.13
Opportunity Fund.................. 0.65 0.25 0.25 1.15
Innovation Fund................... 0.65 0.25 0.25 1.15
Tax Exempt Fund................... 0.30 0.25 0.25 0.80
Equity Income Fund ............... 0.45 0.25 0.25 0.95
Value Fund........................ 0.45 0.25 0.25 0.95
Small Cap Value Fund.............. 0.60 0.25 0.25 1.10
Enhanced Equity Fund.............. 0.45 0.25 0.25 0.95
Structured Emerging Markets Fund.. 0.45 0.50 0.25 1.20
Precious Metals Fund.............. 0.60 0.30 0.25 1.15
Balanced Fund..................... 0.45 0.25 0.25 0.95
</TABLE>
For a more detailed discussion of the Funds' fees and expenses, see "Fund
Administrator," "Advisory and Administrative Fees," and "Service Fees" under
the caption "Management of the Trust."
8 PIMCO Funds: Multi-Manager Series
<PAGE>
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>
Emerging Markets Fund........................ $14 $43 $74 $162
International Developed Fund................. 11 35 61 134
International Fund........................... 11 33 58 128
Capital Appreciation Fund.................... 7 22 39 87
Mid Cap Growth Fund.......................... 7 22 39 87
Micro Cap Growth Fund........................ 15 47 82 179
Small Cap Growth Fund........................ 13 40 69 151
Renaissance Fund............................. 9 27 47 105
Core Equity Fund............................. 8 26 46 101
Mid Cap Equity Fund.......................... 9 28 49 108
Opportunity Fund............................. 9 29 50 111
Innovation Fund.............................. 9 29 50 111
Tax Exempt Fund.............................. 6 18 31 69
Equity Income Fund........................... 7 22 39 87
Value Fund................................... 7 22 39 87
Small Cap Value Fund......................... 9 27 47 105
Enhanced Equity Fund......................... 7 22 39 87
Structured Emerging Markets Fund............. 10 30 53 117
Precious Metals Fund......................... 9 29 50 111
Balanced Fund................................ 7 22 39 87
<CAPTION>
ADMINISTRATIVE CLASS SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Emerging Markets Fund........................ $16 $50 $87 $190
International Developed Fund................. 14 43 74 163
International Fund........................... 13 41 71 157
Capital Appreciation Fund.................... 10 30 53 117
Mid Cap Growth Fund.......................... 10 30 53 117
Micro Cap Growth Fund........................ 18 55 95 206
Small Cap Growth Fund........................ 15 47 82 179
Renaissance Fund............................. 11 35 61 134
Core Equity Fund............................. 11 34 59 131
Mid Cap Equity Fund ......................... 12 36 62 137
Opportunity Fund............................. 12 37 63 140
Innovation Fund.............................. 12 37 63 140
Tax Exempt Fund.............................. 8 26 44 99
Equity Income Fund........................... 10 30 53 117
Value Fund................................... 10 30 53 117
Small Cap Value Fund......................... 11 35 61 134
Enhanced Equity Fund......................... 10 30 53 117
Structured Emerging Markets Fund............. 12 38 66 145
Precious Metals Fund......................... 12 37 63 140
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.
January 14, 1997 Prospectus 9
<PAGE>
FINANCIAL HIGHLIGHTS
The following information regarding selected per share data and ratios for
shares of certain of the Funds 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 of the
Trust which had investment operations and offered Institutional and
Administrative Class shares during the reporting periods. The Renaissance,
Opportunity, Innovation, Tax Exempt, International, and Precious Metals Funds
did not offer Institutional or Administrative Class shares 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>
EMERGING MARKETS FUND
Institutional Class
6/30/96 $11.27 $ 0.03 $ 1.40 $ 1.43 $(0.04) $ 0.00 $ 0.00
10/31/95 16.53 0.07 (4.55) (4.48) (0.06) (0.72) 0.00
10/31/94 12.27 (0.01) 4.45 4.44 0.00 (0.18) 0.00
10/31/93(a) 10.00 0.03 2.52 2.55 (0.02) (0.26) 0.00
Administrative Class
6/30/96 11.24 0.02+ 1.40+ 1.42 (0.03) 0.00 0.00
10/31/95 16.95 0.00 (4.95) (4.95) (0.05) (0.71) 0.00
INTERNATIONAL DEVELOPED FUND#
Institutional Class
6/30/96 $11.74 $ 0.72 $ 0.72 $ 1.44 $(0.43)+ $(0.21) $ 0.00
10/31/95 11.86 0.10 0.30 0.40 (0.09) (0.43) 0.00
10/31/94 10.69 0.09 1.15 1.24 (0.03) (0.04) 0.00
10/31/93(b) 10.00 0.05 0.69 0.74 (0.04) (0.01) 0.00
Administrative Class
6/30/96 11.73 0.69+ 0.72+ 1.41 (0.42)++ (0.21) 0.00
10/31/95(c) 11.21 0.02 1.01 1.03 (0.08) (0.43) 0.00
CAPITAL APPRECIATION FUND
Institutional Class
6/30/96 $16.94 $ 0.35 $ 1.99 $ 2.34 $(0.15) $(1.03) $ 0.00
10/31/95 13.34 0.18 3.60 3.78 (0.18) 0.00 0.00
10/31/94 13.50 0.14 (0.12) 0.02 (0.14) (0.04) 0.00
10/31/93 11.27 0.11 2.73 2.84 (0.11) (0.50) 0.00
10/31/92 11.02 0.14 1.05 1.19 (0.14) (0.72) (0.08)
10/31/91(d) 10.00 0.09 1.02 1.11 (0.09) 0.00 0.00
MID CAP GROWTH FUND
Institutional Class
6/30/96 $18.16 $ 0.32 $ 1.53 $ 1.85 $(0.14) $(0.43) $ 0.00
10/31/95 13.97 0.07 4.19 4.26 (0.07) 0.00 0.00
10/31/94 13.97 0.06 0.01 0.07 (0.06) (0.01) 0.00
10/31/93 11.29 0.07 2.70 2.77 (0.07) (0.02) 0.00
10/31/92 10.28 0.10 1.03 1.13 (0.10) 0.00 (0.02)
10/31/91(e) 10.00 0.02 0.27 0.29 (0.01) 0.00 0.00
Administrative Class
6/30/96 18.17 0.28 1.53 1.81 (0.11) (0.43) 0.00
10/31/95(c) 13.31 0.03 4.85 4.88 (0.02) 0.00 0.00
MICRO CAP GROWTH FUND
Institutional Class
6/30/96 $15.38 $ 0.00 $ 3.43 $ 3.43 $ 0.00 $(0.34) $ 0.00
10/31/95 11.87 (0.04) 3.55 3.51 0.00 0.00 0.00
10/31/94 11.06 (0.03) 0.84 0.81 0.00 0.00 0.00
10/31/93(f) 10.00 0.00 1.07 1.07 0.00 0.00 0.00
Administrative Class
6/30/96(g) 16.73 0.03 1.70 1.73 0.00 0.00 0.00
SMALL CAP GROWTH FUND
Institutional Class
6/30/96 $21.02 $ 2.02 $(0.61) $ 1.41 $ 0.00 $(1.60) $ 0.00
10/31/95 19.38 (0.05) 3.12 3.07 0.00 (1.43) 0.00
10/31/94 19.15 (0.02) 0.89 0.87 0.00 (0.64) 0.00
10/31/93 15.80 (0.06) 6.19 6.13 0.00 (2.78) 0.00
10/31/92 14.87 0.01 1.50 1.51 (0.01) (0.57) 0.00
10/31/91(h) 10.00 0.02 5.03 5.05 (0.02) (0.16) 0.00
</TABLE>
- --------
(a) From commencement of operations, June 1, 1993.
(h) From commencement of operations,
January 7, 1991.
(b) From commencement of operations, June 8, 1993.
+ Per share amounts based on average
number of shares outstanding during
the period.
(c) From commencement of operations, November 30, 1994.
(d) From commencement of operations, March 8, 1991.
(e) From commencement of operations, August 26, 1991.
+ Including dividend in excess of
$0.36 of net investment income.
(f) From commencement of operations, June 25, 1993.
(g) From commencement of operations, April 1, 1996.
++ Including dividend in excess of
$0.35 of net investment income.
# Formerly the Blairlogie
International Active Fund.
* Annualized.
10 PIMCO Funds: Multi-Manager Series
<PAGE>
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 $(0.04) $12.66 12.70% $ 80,545 1.35%* 0.84%* 74.04% $0.01
0.00 (0.78) 11.27 (27.70) 73,539 1.35 0.57 118.18 0.03
0.00 (0.18) 16.53 36.31 79,620 1.35 (0.06) 79.04
0.00 (0.28) 12.27 25.55 14,625 1.34* 0.64* 36.51
0.00 (0.03) 12.63 12.70 368 1.61* 0.18* 74.04 0.01
0.00 (0.76) 11.24 (27.96) 830 1.62 0.02 118.18 N/A
$0.00 $(0.64) $12.54 12.54% $ 70,207 1.10%* 0.81%* 59.56% $0.02
0.00 (0.52) 11.74 3.83 63,607 1.10 1.10 63.12 0.03
0.00 (0.07) 11.86 11.68 22,569 1.10 1.12 88.55
0.00 (0.05) 10.69 7.39 8,299 1.10* 0.91* 19.61
0.00 (0.63) 12.51 12.33 5,624 1.35* 1.04* 59.56 0.02
0.00 (0.51) 11.73 9.61 675 1.34* 0.50* 58.07 N/A
$ 0.00 $(1.18) $18.10 14.65% $348,728 0.70%* 1.33%* 73.48% $0.04
0.00 (0.18) 16.94 28.47 236,220 0.70 1.22 82.69 0.05
0.00 (0.18) 13.34 0.15 165,441 0.70 1.17 76.75
0.00 (0.61) 13.50 25.30 84,990 0.70 0.94 81.15
0.00 (0.94) 11.27 10.75 36,334 0.70 1.13 134.17
0.00 (0.09) 11.02 11.19 18,813 0.75* 1.55* 40.54
$ 0.00 $(0.57) $19.44 10.37% $231,011 0.70%* 1.11%* 78.81% $0.04
0.00 (0.07) 18.16 30.54 189,320 0.70 0.43 78.29 0.04
0.00 (0.07) 13.97 0.58 121,791 0.70 0.45 60.85
0.00 (0.09) 13.97 24.57 67,625 0.70 0.56 97.87
0.00 (0.12) 11.29 10.91 21,213 0.70 0.87 65.92
0.00 (0.01) 10.28 2.98 2,748 0.82* 0.92* 13.41
0.00 (0.54) 19.44 10.17 1,071 0.95* 0.89* 78.81 0.04
0.00 (0.02) 18.17 36.64 892 0.94* 0.23* 71.73 N/A
$ 0.00 $(0.34) $18.47 22.64% $ 83,973 1.50%* (0.45)%* 53.96% $0.02
0.00 0.00 15.38 29.54 69,775 1.50 (0.37) 86.68 0.03
0.00 0.00 11.87 7.31 32,605 1.50 (0.25) 58.81
(0.01) (0.01) 11.06 10.81 10,827 1.50* (0.02)* 15.98
0.00 0.00 18.46 10.34 566 1.73* (0.74)* 53.96 0.02
$0.00 $(1.60) $20.83 7.22% $ 32,954 1.25%* (0.20)%* 59.00% $0.02
0.00 (1.43) 21.02 17.39 73,977 1.25 (0.27) 85.61 0.02
0.00 (0.64) 19.38 4.62 50,425 1.25 (0.33) 65.53
0.00 (2.78) 19.15 38.80 43,308 1.25 (0.35) 62.15
0.00 (0.58) 15.80 10.20 33,734 1.25 0.09 66.05
0.00 (0.18) 14.87 50.68 33,168 1.29* 0.11* 47.84
</TABLE>
January 14, 1997 Prospectus 11
<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>
SMALL CAP GROWTH FUND
(CONTINUED)
Administrative Class
6/30/96 $21.01 $2.02+ $(0.61)+ $ 1.41 $ 0.00 $(1.60) $ 0.00
10/31/95(i) 21.90 (0.02) (0.87) (0.89) 0.00 0.00 0.00
CORE EQUITY FUND
Institutional Class
6/30/96 $12.72 $0.51 $ 0.65 $ 1.16 $(0.05)+++ $(0.28) $ 0.00
10/31/95(j) 10.00 0.07 2.71 2.78 (0.06) 0.00 0.00
Administrative Class
6/30/96 12.73 0.49 0.65 1.14 (0.03)+++ (0.28) 0.00
10/31/95(k) 11.45 0.02 1.28 1.30 (0.02) 0.00 0.00
MID CAP EQUITY FUND
Institutional Class
6/30/96 $12.92 $0.49 $ 1.62 $ 2.11 $ 0.00 $(0.37) $ 0.00
10/31/95(j) 10.00 0.02 2.92 2.94 (0.02) 0.00 0.00
EQUITY INCOME FUND
Institutional Class
6/30/96 $13.09 $0.78 $ 1.31 $ 2.09 $(0.34) $(0.48) $ 0.00
10/31/95 11.75 0.46 1.67 2.13 (0.46) (0.33) 0.00
10/31/94 11.95 0.42 (0.16) 0.26 (0.42) (0.04) 0.00
10/31/93 10.92 0.40 1.40 1.80 (0.40) (0.37) 0.00
10/31/92 10.77 0.45 0.93 1.38 (0.43) (0.57) (0.23)
10/31/91(d) 10.00 0.24 0.92 1.16 (0.24) (0.15) 0.00
Administrative Class
6/30/96 13.13 0.75 1.31 2.06 (0.36) (0.48) 0.00
10/31/95(c) 11.12 0.39 2.35 2.74 (0.40) (0.33) 0.00
VALUE FUND##
Institutional Class
6/30/96 $12.53 $0.25 $ 1.62 $ 1.87 $(0.17) $(1.77) $ 0.00
10/31/95 11.55 0.30 2.18 2.48 (0.30) (1.20) 0.00
10/31/94 11.92 0.30 (0.28) 0.02 (0.29) (0.10) 0.00
10/31/93 10.05 0.28 2.36 2.64 (0.28) (0.49) 0.00
10/31/92(l) 10.00 0.24 0.23 0.47 (0.24) (0.18) 0.00
SMALL CAP VALUE FUND
Institutional Class
6/30/96 $13.10 $0.56 $ 1.49 $ 2.05 $(0.21) $(0.74) $ 0.00
10/31/95 12.07 0.28 1.92 2.20 (0.28) (0.89) 0.00
10/31/94 12.81 0.29 (0.65) (0.36) (0.29) (0.09) 0.00
10/31/93 10.98 0.24 2.33 2.57 (0.24) (0.50) 0.00
10/31/92 10.09 0.22 1.17 1.39 (0.22) (0.24) (0.04)
10/31/91(m) 10.00 0.02 0.10 0.12 (0.03) 0.00 0.00
Administrative Class
6/30/96(n) 13.16 0.54 1.43 1.97 (0.19) (0.74) 0.00
ENHANCED EQUITY FUND
Institutional Class
6/30/96 $14.44 $0.34 $ 1.67 $ 2.01 $(0.16) $(0.38) $ 0.00
10/31/95 11.99 0.25 2.62 2.87 (0.25) (0.17) 0.00
10/31/94 12.08 0.25 (0.04) 0.21 (0.25) (0.05) 0.00
10/31/93 11.76 0.23 0.74 0.97 (0.23) (0.42) 0.00
10/31/92 10.80 0.16 1.06 1.22 (0.16) (0.04) (0.06)
10/31/91(o) 10.00 0.16 0.80 0.96 (0.16) 0.00 0.00
BALANCED FUND###
Institutional Class
6/30/96 $11.89 $0.27 $ 0.76 $ 1.03 $(0.27) $(1.01) $ 0.00
10/31/95 10.35 0.44 1.54 1.98 (0.44) 0.00 0.00
10/31/94 10.84 0.34 (0.34) 0.00 (0.34) (0.15) 0.00
10/31/93 10.42 0.35 0.68 1.03 (0.35) (0.26) 0.00
10/31/92(p) 10.00 0.12 0.52 0.64 (0.12) (0.10) 0.00
</TABLE>
- --------
(i) From commencement of operations, September 27, 1995.
+ Per share amounts based on average
number of shares outstanding during
the period.
(j) From commencement of operations, December 28, 1994.
(k) From commencement of operations, May 31, 1995.
+++ Including dividend in excess of
$0.01 of net investment income.
(l) From commencement of operations, December 30, 1991.
(m) From commencement of operations, October 1, 1991.
(n) From commencement of operations, November 1, 1995.
## Formerly the NFJ Diversified Low
P/E Fund.
(o) From commencement of operations, February 11, 1991.
(p) From commencement of operations, June 25, 1992.
### NFJ and Cadence began serving as
Portfolio Managers of the portion
of the Balanced Fund allocated
for investment in common stock on
August 1, 1996. Prior to August
1, 1996, a different firm served
as Portfolio Manager.
* Annualized.
12 PIMCO Funds: Multi-Manager Series
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
DISTRIBUTIONS VALUE END EXPENSES TO INCOME TO PORTFOLIO AVERAGE
FROM RETURN TOTAL END TOTAL OF PERIOD AVERAGE AVERAGE TURNOVER COMMISSION
OF CAPITAL DISTRIBUTIONS OF PERIOD RETURN (000'S) NET ASSETS NET ASSETS RATE RATE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $(1.60) $20.82 7.18% $ 112 1.50%* (0.41)%* 59.00% $0.02
0.00 0.00 21.01 (5.34) 544 1.60* (0.82)* 8.80 N/A
$0.00 $(0.33) $13.55 9.41% $ 10,452 0.82%* 0.53%* 73.16% $0.04
0.00 (0.06) 12.72 27.86 7,791 0.82* 0.79* 122.88 0.03
0.00 (0.31) 13.56 9.23 33,575 1.07* 0.28* 73.16 0.04
0.00 (0.02) 12.73 11.34 24,645 1.06* 0.34* 57.96 N/A
$0.00 $(0.37) $14.66 16.72% $ 8,378 0.88%* (0.32)%* 96.62% $0.03
0.00 (0.02) 12.92 29.34 8,357 0.88* 0.24* 131.58 0.04
$0.00 $(0.82) $14.36 16.35% $116,714 0.70%* 3.41%* 52.30% $0.06
0.00 (0.79) 13.09 19.36 118,015 0.70 3.83 46.49 0.06
0.00 (0.46) 11.75 2.25 92,365 0.70 3.77 35.56
0.00 (0.77) 11.95 16.65 67,854 0.70 3.55 38.60
0.00 (1.23) 10.92 12.89 30,506 0.70 3.83 46.74
0.00 (0.39) 10.77 11.81 15,628 0.74* 4.18* 61.51
0.00 (0.84) 14.35 16.08 6,097 0.95* 3.19* 52.30 0.06
0.00 (0.73) 13.13 25.69 140 0.95* 3.43* 43.27 N/A
$0.00 $(1.94) $12.46 16.24% $ 52,727 0.70%* 2.40%* 28.53% $0.06
0.00 (1.50) 12.53 24.98 14,443 0.70 2.50 71.02 0.06
0.00 (0.39) 11.55 0.15 15,442 0.70 2.34 43.70
0.00 (0.77) 11.92 26.35 22,930 0.70 2.43 28.19
0.00 (0.42) 10.05 4.68 18,083 0.70* 2.57* 72.77
$0.00 $(0.95) $14.20 16.35% 29,017 0.85%* 2.12%* 35.21% $0.04
0.00 (1.17) 13.10 19.88 35,093 0.85 2.25 49.57 0.04
0.00 (0.38) 12.07 (2.89) 31,236 0.85 2.23 48.12
0.00 (0.74) 12.81 23.60 46,523 0.85 2.05 41.80
0.00 (0.50) 10.98 13.75 18,261 0.85 2.16 26.77
0.00 (0.03) 10.09 1.19 5,060 1.09* 3.06* 0.00
0.00 (0.93) 14.20 15.64 4,433 1.10* 1.86* 35.21 0.04
$0.00 $(0.54) $15.91 14.21% $ 83,425 0.70%* 1.58%* 52.83% $0.05
0.00 (0.42) 14.44 24.46 73,999 0.70 1.91 20.59 0.05
0.00 (0.30) 11.99 1.83 65,915 0.70 2.20 43.58
0.00 (0.65) 12.08 8.20 46,724 0.70 1.89 15.02
0.00 (0.26) 11.76 11.46 36,515 0.70 1.81 16.85
0.00 (0.16) 10.80 9.59 4,451 0.73* 2.14* 0.15
$0.00 $(1.28) $11.64 9.07% $ 82,562 0.70%* 3.46%* 139.59% $0.05
0.00 (0.44) 11.89 19.47 72,638 0.70 3.73 43.10 0.04
0.00 (0.49) 10.35 0.08 130,694 0.70 3.25 46.72
0.00 (0.61) 10.84 10.06 126,410 0.70 3.10 19.32
0.00 (0.22) 10.42 6.40 99,198 0.70* 3.36* 38.51
</TABLE>
January 14, 1997 Prospectus 13
<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.
EMERGING MARKETS FUND seeks long-term growth of capital. The Fund invests
primarily in common stocks of companies located in countries identified as
emerging market countries. The Morgan Stanley Capital International Emerging
Markets Free Index ("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 (this list
is not exclusive):
<TABLE>
<S> <C> <C> <C>
Argentina Hong Kong Mexico South Korea
Brazil Hungary Pakistan Sri Lanka
Chile India Peru
China Indonesia Philippines Taiwan
Colombia Israel Poland
Thailand
Czech Republic Jordan Portugal
Turkey
Greece Malaysia South Africa Venezuela
Zimbabwe
</TABLE>
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, foreign exchange futures
contracts, and options thereon, currency exchange transactions on a spot
(i.e., cash) basis, and put and call options on foreign currencies. Up to 10%
of the Fund's assets may be invested in the securities of other investment
companies. The Fund may invest in stock index 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 this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio Manager for
the Emerging Markets Fund is Blairlogie.
14 PIMCO Funds: Multi-Manager Series
<PAGE>
INTERNATIONAL DEVELOPED FUND seeks long-term growth of capital. 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. Under normal market
conditions, the Fund will invest no more than 35% of its assets in securities
issued by companies located in countries that the Portfolio Manager
determines, on the basis of market capitalization, liquidity, and other
considerations, to have underdeveloped securities markets. 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 and also 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 international equity securities in which the Fund invests will
be traded 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, foreign exchange futures contracts, and
options thereon, currency exchange transactions on a spot (i.e., cash) basis,
and put and call options on foreign currencies. Up to 10% of the Fund's assets
may be invested in the securities of other investment companies. The Fund may
invest in stock index 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 this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices and related risks. The Portfolio Manager for the
International Developed Fund is Blairlogie.
INTERNATIONAL FUND seeks capital appreciation through investments in an
international portfolio. Income is an incidental consideration. Under normal
market conditions, at least 65% of the International Fund's total assets will
be invested in common stocks, which may or may not pay dividends, as well as
convertible bonds, convertible preferred stocks, warrants, rights or other
equity securities, for a combination of capital appreciation and income.
Convertible securities may include securities convertible only by certain
classes of investors (which may not include the Fund). The Fund may not invest
in convertible securities which are of less than investment grade quality at
the time of purchase.
The Fund will normally invest in securities traded in developed foreign
securities markets. Particular consideration is given to investments
principally traded in developed North American (other than United States),
Japanese, European, Pacific and Australian securities markets, and in
securities of foreign issuers traded on United States securities markets.
January 14, 1997 Prospectus 15
<PAGE>
The Fund will also invest in emerging markets, where markets may not yet fully
reflect the potential of the developing economy. There are no prescribed
limits on geographic asset distribution and the Fund has the authority to
invest in securities traded in securities markets of any country in the world.
In allocating the Fund's assets among the various securities markets of any
country in the world, the Portfolio Manager will consider such factors as the
condition and growth potential of the various economies and securities
markets, currency and taxation considerations and other pertinent financial,
social, national and political factors. Under certain adverse investment
conditions, the Fund may restrict the number of securities markets in which
its assets will be invested, although under normal market circumstances the
Fund's investments will include securities principally traded in at least
three different countries. The Fund will not limit its investments to any
particular type or size of company.
The Fund may invest up to 10% of its assets in securities of other
investment companies, such as closed-end management investment companies which
invest in foreign markets. 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, including futures
contracts on stock indexes and foreign currencies; buy or sell foreign
currencies; and enter into forward foreign currency contracts.
The Fund will not normally invest in securities of U.S. issuers traded on
U.S. securities markets. However, when the Portfolio Manager believes that
conditions in international securities markets warrant a defensive investment
strategy, the Fund may invest up to 100% of its assets in domestic debt,
foreign debt and equity securities principally traded in the U.S., including
money market instruments, obligations issued or guaranteed by the U.S. or a
foreign government or their respective agencies, authorities or
instrumentalities, or corporate bonds and sponsored American Depository
Receipts.
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 this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices and related risks. The Portfolio Manager for the
International Fund is Blairlogie.
CAPITAL APPRECIATION FUND seeks growth of capital. 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 selected from a universe of the
approximately 1,000 largest market capitalization stocks, all of which are
those of 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. 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 this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices and related risks. The Portfolio Manager for the Capital
Appreciation Fund is Cadence.
16 PIMCO Funds: Multi-Manager Series
<PAGE>
MID CAP GROWTH FUND seeks growth of capital. 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 this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices and related risks. The Portfolio Manager for the Mid Cap
Growth Fund is Cadence.
MICRO CAP GROWTH FUND seeks long-term growth of capital. 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. The Fund
is intended for aggressive investors seeking above-average gains and willing
to accept the greater risks associated therewith. For information on other
investment policies, see "Investment Objectives and Policies--Equity Funds."
See "Characteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Micro Cap Growth Fund is Cadence.
SMALL CAP GROWTH FUND seeks growth of capital. 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. The Fund is intended for aggressive
investors seeking above-average gains and willing to accept the greater risks
associated therewith. For information on other investment policies, see
"Investment Objectives and Policies--Equity Funds." See "Characteristics and
Risks of Securities and Investment Techniques" in this Prospectus and
"Investment Objectives and Policies" in the Statement of Additional
Information for more details on investment practices and related risks. The
Portfolio Manager for the Small Cap Growth Fund is Cadence.
January 14, 1997 Prospectus 17
<PAGE>
RENAISSANCE FUND seeks long-term growth of capital and income. The Fund
invests primarily in a variety of income-producing equity securities. Income-
producing equity securities include common stocks that pay dividends,
preferred stocks and securities (including debt securities) that are
convertible into common stocks ("convertible securities").
The Fund may invest a portion of its assets in preferred stocks and
convertible securities rated at least B by Moody's or S&P (or similarly rated
by another Nationally Recognized Statistical Rating Organization ("NRSRO"), or
unrated but determined by the Portfolio Manager to be of comparable quality),
and may invest up to 10% of its total assets in convertible securities rated
below B by Moody's or S&P (or similarly rated by another NRSRO, or unrated but
determined by the Portfolio Manager to be of comparable quality). Securities
rated Ba or below by Moody's or BB or below by S&P (or similar quality) are
not considered to be of "investment grade" quality. These lesser rated debt
securities may involve special risks. See "Characteristics and Risks of
Securities and Investment Techniques--High Yield Securities ("Junk Bonds")."
Although the Fund may invest in such securities, it neither invests nor has
the present intention of investing 35% or more of its net assets in securities
that are not considered to be of "investment grade" quality. The Fund will not
invest in convertible securities that are in default at the time of
acquisition.
The non-convertible debt securities in which the Fund may invest include
corporate or government debt securities of any maturity, including zero coupon
securities. These non-convertible debt securities may be rated B or higher by
Moody's or S&P (or similarly rated by another NRSRO, or unrated and determined
by the Portfolio Manager to be of comparable quality). The Fund may invest a
portion of its assets in securities of foreign issuers traded in foreign
securities markets (not including Eurodollar certificates of deposit), which
will not exceed 15% of the Fund's 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 and securities indexes;
enter into futures contracts and use options on futures contracts; buy or sell
foreign currencies; and enter into 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 this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more details on
investment practices and related risks. The Portfolio Manager for the
Renaissance Fund is Columbus Circle.
CORE EQUITY FUND seeks long-term growth of capital, with income as a
secondary objective. The Fund attempts to exceed the total return performance
of the Standard & Poor's 500 Composite Stock Price Index ("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 enter
into forward foreign currency contracts. For information on other investment
policies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of
18 PIMCO Funds: Multi-Manager Series
<PAGE>
Securities and Investment Techniques" in this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio Manager for
the Core Equity Fund is Columbus Circle.
MID CAP EQUITY FUND seeks long-term growth of capital. 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 enter
into 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 this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Mid Cap Equity Fund is Columbus Circle.
OPPORTUNITY FUND seeks capital appreciation. No consideration is given to
income. The Fund invests primarily in common stocks of companies with market
capitalizations of less than $1 billion. The Fund is intended for aggressive
investors seeking-above average gains and willing to accept the greater risks
associated therewith.
The Fund may invest a portion of its assets in securities of foreign issuers
traded in foreign securities markets (not including Eurodollar certificates of
deposit), which will not exceed 15% of the Fund's 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 and securities indexes; enter into futures contracts and use
options on futures contracts; buy or sell foreign currencies; and enter into
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 this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Opportunity Fund is Columbus Circle.
INNOVATION FUND seeks capital appreciation. No consideration is given to
income. The Fund invests primarily (i.e., at least 65% of its assets) in
common stocks of companies which utilize innovative technologies to gain a
strategic competitive advantage in their industry as well as companies that
provide and service those technologies. Securities will be selected with
minimal emphasis on more traditional factors such as growth potential or value
relative to intrinsic worth. Instead, the Fund will be guided by the theory of
Positive Momentum & Positive Surprise (see "Management of the Trust--Portfolio
Managers--Columbus Circle"), with special emphasis on common stocks of
companies whose perceived strength lies in their use of innovative
technologies in new products, enhanced distribution systems and improved
management techniques. Although the Fund emphasizes the utilization of
technologies, it is not restricted to investment in companies in a particular
business sector or industry.
January 14, 1997 Prospectus 19
<PAGE>
The Fund may invest a portion of its assets in securities of foreign issuers
traded in foreign securities markets (not including Eurodollar certificates of
deposit), which will not exceed 15% of the Fund's 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 and securities indexes; enter into futures contracts and use
options on futures contracts; buy or sell foreign currencies; and enter into
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 this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Innovation Fund is Columbus Circle.
TAX EXEMPT FUND seeks high current income exempt from federal income tax,
consistent with preservation of capital, by investing in debt securities whose
interest is, in the opinion of bond counsel for the issuer at the time of
issuance, exempt from federal income tax ("Tax Exempt Bonds"). Tax Exempt
Bonds generally are issued by states and local governments and their agencies,
authorities and other instrumentalities. It is a policy of the Fund that,
under normal market conditions, at least 80% of its net assets will be
invested in Tax Exempt Bonds rated Baa or higher by Moody's or BBB or higher
by S&P, or which are similarly rated by another NRSRO or, if unrated,
determined by the Portfolio Manager to be of quality comparable to obligations
so rated. Tax Exempt Bonds rated in the fourth highest rating category (e.g.,
Baa by Moody's) may be considered to possess some speculative characteristics
by certain NRSROs.
The Fund may invest up to 20% of its net assets, under normal market
conditions, in any combination of (1) Tax Exempt Bonds which are rated at
least Ba by Moody's or BB by S&P (or similarly rated by another NRSRO or, if
unrated, determined by the Portfolio Manager to be of comparable quality) and
(2) U.S. Government securities, money market instruments or "private activity"
bonds. Securities rated below investment grade and comparable unrated
securities are subject to greater risks than higher quality fixed income
securities. See "Characteristics and Risks of Securities and Investment
Techniques--High Yield Securities ("Junk Bonds")." For temporary defensive
purposes, the Fund may invest all or a portion of its assets in U.S.
Government securities and money market instruments. The Fund may purchase put
or call options on U.S. Government securities, Tax Exempt Bonds and Tax Exempt
Bond indexes, purchase and sell futures contracts on U.S. Government
securities, Tax Exempt Bonds and Tax Exempt Bond indexes, and purchase put and
call options on such futures contracts. The Fund may enter into repurchase
agreements with banks and broker-dealers; make short sales of securities held
in the Fund's portfolio or which the Fund has the right to acquire without the
payment of further consideration; and purchase and sell securities on a when-
issued or delayed delivery basis and enter into forward commitments to
purchase securities. The Fund may also invest a portion or, for temporary
defensive purposes, up to 100% of its assets in money market instruments.
Dividends to Fund shareholders derived from money market instruments and
U.S. Government securities are taxable as ordinary income. The Fund may seek
to reduce fluctuations in its net asset value by engaging in portfolio
strategies involving options on securities, futures contracts, and options on
futures contracts. Any gain derived by the Fund from the use of such
instruments will be treated as a combination of short-term and long-term
capital gain and, if not offset by realized capital losses incurred by the
Fund, will be distributed to shareholders and will be taxable to shareholders
as a combination of ordinary income and long-term capital gain. See
"Characteristics and Risks of Securities and Investment Techniques" in this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Tax Exempt Fund is Columbus Circle.
EQUITY INCOME FUND seeks current income as a primary investment objective,
and long-term growth of capital as a secondary objective. The Fund invests
primarily in common stocks characterized by having below-average price to
20 PIMCO Funds: Multi-Manager Series
<PAGE>
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 this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio Manager for
the Equity Income Fund is NFJ.
VALUE FUND seeks long-term growth of capital and income. 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 this Prospectus and
"Investment Objectives and Policies" in the Statement of Additional
Information for more details on investment practices and related risks. The
Portfolio Manager for the Value Fund is NFJ.
SMALL CAP VALUE FUND seeks long-term growth of capital and income. The Fund
invests primarily in common stocks of 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 S&P 500's 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. The Fund is
intended for aggressive investors seeking above-average gains and willing to
accept the greater risks associated therewith. For information on other
investment policies, see "Investment Objectives and Policies--Equity Funds."
See "Characteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Small Cap Value Fund is NFJ.
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. The Fund currently 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
January 14, 1997 Prospectus 21
<PAGE>
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
meet simultaneously 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
without shareholder approval the index whose total return the Fund will
attempt to equal or exceed, although it is not anticipated that such a change
would be made in the ordinary course of the Fund's operations.
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 this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio Manager for
the Enhanced Equity Fund is Parametric.
STRUCTURED EMERGING MARKETS FUND seeks long-term growth of capital. The Fund
invests primarily in equity securities of companies located in, or whose
business relates to, emerging markets. The Portfolio Manager will identify
those markets that it considers to be emerging markets, relying primarily on
those countries listed on the MSCI Free Index or the Baring Emerging Markets
Index (the "Baring Index"). However, the Portfolio Manager has discretion in
identifying other countries that qualify as emerging markets on the basis of
market capitalization and liquidity, as well as their inclusion, or
consideration for inclusion, as emerging market countries in other broad-based
market indexes. The Fund seeks to achieve its objective by following a
disciplined and systematic methodology for selecting and weighting countries,
industries, and stocks. Diversification and consistent exposure to opportunity
are emphasized over tactical timing decisions with regard to countries,
industries, or stocks. A disciplined methodology for maintaining the
allocation to countries, industries, and stocks is utilized in portfolio
composition, rather than discretionary shifting in country and industry
concentration levels. First, countries are selected based upon their level of
development and equity market institutions. GNP per capita, local economic
diversification, and freedom of investment flows are the primary
considerations in country selection decisions. Most countries are assigned an
equal weight in the Fund unless the size of their equity market is
prohibitive; countries with smaller markets (i.e., less than $5 billion of
market capitalization) are assigned one-half of the weight assigned to
countries with larger markets. Second, 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.
22 PIMCO Funds: Multi-Manager Series
<PAGE>
For purposes of implementing its investment objective, the Fund invests
primarily in some or all of the following emerging market countries (this list
is not exclusive):
Argentina Hong Kong Morocco South Africa
Brazil Hungary Pakistan South Korea
Chile India Peru Sri Lanka
China Indonesia Philippines Taiwan
Colombia Israel Poland Thailand
Czech Republic Jordan Portugal Turkey
Estonia Malaysia Slovakia Venezuela
Greece Mexico Slovenia Zimbabwe
For purposes of allocating the Fund's investments, a company is considered
to be located in the country in which the company is domiciled, and a
company's business "relates to" any emerging market country in which the
company's securities are primarily traded, from which the company derives a
significant portion of its revenues, or in which a significant portion of the
company's goods or services are produced.
Most of the foreign securities in which the Fund invests will be denominated
in foreign currencies. The Fund may engage in foreign currency transactions to
protect itself against fluctuations in currency exchange rates in relation to
the U.S. dollar or to the weighting of a particular foreign currency on the
MSCI Free Index or the Baring Index. Such foreign currency transactions may
include forward foreign currency contracts, foreign exchange futures
contracts, and options thereon, currency exchange transactions on a spot
(i.e., cash) basis, put and call options on foreign currencies. The Fund may
invest in stock index 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 this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio Manager for
the Structured Emerging Markets Fund is Parametric.
PRECIOUS METALS FUND seeks capital appreciation. No consideration is given
to income. The Fund concentrates investments in a global portfolio of common
stocks of companies principally engaged in precious metals-related activities,
which include companies principally engaged in the extraction, processing,
distribution or marketing of precious metals (the "precious metals industry").
A particular company is deemed to be "principally engaged" in the precious
metals industry if at the time of investment the Portfolio Manager considers
that at least 50% of the company's assets, revenues or profits are derived
from the precious metals industry. Normally, at least 65% of the assets of the
Fund will be invested in the precious metals industry and in securities the
value of which is linked to the price of a precious metal. See
"Characteristics and Risks of Securities and Investment Techniques--Precious
Metals."
The Fund will seek to identify securities of companies which, based upon the
Portfolio Manager's evaluation of their fundamental investment
characteristics, are undervalued in comparison to the present or anticipated
value of the precious metals relevant to them. Examples of precious metals
include gold, silver and platinum. To the extent permitted by federal tax law,
the Fund may invest directly in gold bullion and other precious metals. The
Fund has no present intention of investing directly in precious metals other
than gold.
January 14, 1997 Prospectus 23
<PAGE>
The Fund does not presently intend to invest more than 10% of its assets in
either precious metals such as gold bullion or in futures on precious metals,
such as gold futures, and options thereon. The Fund may invest up to 100% of
its assets in securities principally traded on foreign securities markets and
in securities of foreign issuers that are traded on U.S. securities markets,
and may invest up to 100% of its assets in securities of companies whose
assets, revenues or profits are derived from a single precious metal. At the
present time, the Fund has no intention of investing more than 5% of its
assets in securities the value of which is linked to the price of a single
precious metal.
The Fund may invest without limit in securities of foreign issuers traded in
foreign securities markets. 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, commodity indexes, and on foreign
currencies; enter into futures contracts and use options on futures contracts,
including futures contracts on stock indexes, foreign currencies, and precious
metals; buy or sell foreign currencies; and enter into forward foreign
currency contracts.
The Fund, because of its emphasis on one industrial sector, should be
considered as one aspect of a diversified portfolio and may not be suitable by
itself as a balanced investment program. For information on other investment
policies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of Securities and Investment Techniques" in this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks. The Portfolio Manager for the Precious Metals Fund is Van Eck.
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 Value Fund; the portion allocated to Cadence will
be managed in accordance with the investment policies of the Capital
Appreciation Fund. Allocations of the Common Stock Segment to NFJ and Cadence
will vary from time to time as determined by the Adviser.
24 PIMCO Funds: Multi-Manager Series
<PAGE>
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 Pacific Investment Management. The Fund may
invest the Fixed Income Securities Segment in the following types of
securities: securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; corporate debt securities, including
convertible securities and corporate commercial paper; mortgage-related and
other asset-backed securities, inflation-indexed bonds issued by both
governments and corporations; structured notes and loan participations; bank
certificates of deposit, fixed time deposits and bankers' acceptances;
repurchase agreements and reverse repurchase agreements; obligations of
foreign governments or their subdivisions, agencies and instrumentalities; and
obligations of international agencies or supranational entities. Fixed income
securities may have fixed, variable, or floating rates of interest.
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
rated Baa or better by Moody's, BBB or better by 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." Securities
rated below investment grade and comparable unrated securities are subject to
greater risks than higher quality fixed income securities. See
"Characteristics and Risks of Securities and Investment Techniques--High Yield
Securities ("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.
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 forward foreign
currency 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 the 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 this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information for more details on investment practices and related
risks.
EQUITY FUNDS
The Emerging Markets, International Developed, Capital Appreciation, Mid Cap
Growth, Micro Cap Growth, Small Cap Growth, Core Equity, Mid Cap Equity,
Equity Income, Value, Small Cap Value, Enhanced Equity, and Structured
Emerging Markets Funds will each invest primarily (normally at least 65% of
its assets) in common stock. Each of these Funds may
January 14, 1997 Prospectus 25
<PAGE>
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. It is the policy of these Funds to be as fully invested in common
stocks as practicable at all times. This policy precludes these Funds from
investing in debt securities as a defensive investment posture (although these
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 Funds
may also invest in convertible securities, preferred stock, and warrants,
subject to certain limitations.
The Renaissance, Opportunity, Innovation, International, and Precious Metals
Funds will each invest primarily (normally at least 65% of its assets) in
equity securities (income-producing equity securities in the case of the
Renaissance Fund), including common stocks, preferred stocks and securities
(including debt securities and warrants) convertible into or exercisable for
common stocks. Each of these Funds may invest a portion or, for temporary
defensive purposes, up to 100% of its assets in short-term U.S. Government
securities and other money market instruments.
One or more of the Equity Funds may temporarily not be invested primarily in
equity securities immediately following the commencement of operations or
after receipt of significant new monies. Any of the Equity Funds may
temporarily not contain the number of securities 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.
The Equity Funds may also lend portfolio securities; enter into repurchase
agreements and reverse repurchase agreements (subject to the Funds' investment
limitations described below); purchase and sell securities on a when-issued or
delayed delivery basis; and enter into forward commitments to purchase
securities. Each of the Equity Funds may invest in American Depository
Receipts ("ADRs"). The Emerging Markets, International Developed,
International, Core Equity, Mid Cap Equity, Structured Emerging Markets, and
Precious Metals Funds may invest in European Depository Receipts ("EDRs") and
Global Depository Receipts ("GDRs"). The Equity Funds that invest primarily in
securities of foreign issuers may invest a portion of their assets in debt
securities and money market obligations issued by U.S. and foreign issuers
that are either U.S. dollar-denominated or denominated in foreign currency.
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 Tax Exempt
Fund will vary within a three- to ten-year time frame, and 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 relevant
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 Managers for
the Tax Exempt Fund and the Fixed Income Securities Segment of the Balanced
Fund. For more information on
26 PIMCO Funds: Multi-Manager Series
<PAGE>
investments in fixed income securities, see "Characteristics and Risks of
Securities and Investment Techniques" in this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Information.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental policies of the
International, Renaissance, Opportunity, Innovation, Tax Exempt, and Precious
Metals Funds and may not be changed with respect to any such Fund without
shareholder approval by vote of a majority of the outstanding voting
securities of that Fund. The investment objective of these Funds is non-
fundamental and may be changed with respect to each such Fund by the Trustees
without shareholder approval. Under the following fundamental restrictions,
none of the above-referenced Funds may:
(1) Borrow money in excess of 10% of the value (taken at the lower of
cost or current value) of such Fund's total assets (not including the
amount borrowed) at the time the borrowing is made, and then only from
banks as a temporary measure to facilitate the meeting of redemption
requests (not for leverage) which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or emergency
purposes. Such borrowings will be repaid before any additional investments
are purchased.
(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 10% of such Fund's total assets (taken at cost) and then only to
secure borrowings permitted by Restriction 1 above. (The deposit of
securities or cash or cash equivalents in escrow in connection with the
writing of covered call or put options, respectively, is not deemed to be
pledges or other encumbrances.) (For the purpose of this restriction,
collateral arrangements with respect to the writing of options, futures
contracts, options on futures contracts, and collateral arrangements with
respect to initial and variation margin are not deemed to be a pledge of
assets and neither such arrangements nor the purchase or sale of futures or
related options are deemed to be the issuance of a senior security).
(3) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it
may be deemed to be an underwriter under federal securities laws.
(4) Purchase or sell real estate, although it may purchase securities of
issuers which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by
interests in real estate, except that the Precious Metals Fund may purchase
or sell agricultural land.
(5) Acquire more than 10% of the voting securities of any issuer, both
with respect to any such Fund and to the Funds to which this policy relates
in the aggregate.
(6) Concentrate more than 25% of the value of its total assets in any one
industry, or, in the case of the Tax Exempt Fund, in industrial development
revenue bonds based, directly or indirectly, on the credit of private
entities in any one industry; except that the Precious Metals Fund will
concentrate more than 25% of its total assets in securities of companies
principally engaged in the extraction, processing, distribution or
marketing of precious metals, and the Innovation Fund will concentrate more
than 25% of its assets in companies which use innovative technology to gain
a strategic, competitive advantage in their industry as well as companies
that provide and service those technologies. With respect to investments of
the Tax Exempt Fund in utilities, gas, electric, water and telephone
companies will be considered as being in separate industries.
The investment objective of each of the Emerging Markets, International
Developed, Capital Appreciation, Mid Cap Growth, Micro Cap Growth, Small Cap
Growth, Core Equity, Mid Cap Equity, Equity Income, Value, Small Cap Value,
Enhanced Equity, Structured Emerging Markets, and Balanced Funds, as set forth
under "Investment Objectives and Policies," together with the investment
restrictions set forth below, are fundamental policies of each such Fund and
may
January 14, 1997 Prospectus 27
<PAGE>
not be changed with respect to any such Fund without shareholder approval by
vote of a majority of the outstanding shares of that Fund. Under these
restrictions, none of the above-referenced Funds may:
(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 or swap agreements), except that any such 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 such
Fund's assets).
(8) Issue senior securities, except insofar as such 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 such 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,
28 PIMCO Funds: Multi-Manager Series
<PAGE>
(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.
(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.
Unless otherwise noted, the remaining restrictions and policies of each Fund
relating to the investment of its assets and activities are non-fundamental
and may be changed without shareholder approval. As indicated above, certain
fundamental investment restrictions do not apply to certain Funds. However,
the Trust's non-fundamental restrictions, set forth in the Statement of
Additional Information, may place comparable limitations on these Funds. See
"Investment Restrictions" in the Statement of Additional Information.
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.
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. 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.
SMALL AND MEDIUM CAPITALIZATION STOCKS
Certain of the Funds may invest in common stock of companies with market
capitalizations that are small compared to those of other publicly traded
companies. Generally, small market capitalization is considered to be less
than $1 billion and large market capitalization is considered to be more than
$5 billion. Under normal market conditions, the Small Cap Growth, Opportunity,
and Small Cap Value Funds will invest primarily in companies with market
capitalizations of $1 billion or less, and the Micro Cap Growth Fund will
invest primarily 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
January 14, 1997 Prospectus 29
<PAGE>
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.
Many of the Funds may also invest in stocks of companies with medium market
capitalizations. Whether a U.S. issuer's market capitalization is medium is
determined by reference to the capitalization for all issuers whose equity
securities are listed on a United States national securities exchange or which
are reported on NASDAQ. Issuers with market capitalizations within the range
of capitalization of companies included in the S&P Mid Cap 400 Index may be
regarded as being issuers with medium market capitalizations. Such investments
share some of the risk characteristics of investments in stocks of companies
with small market capitalizations described above, although such companies
tend to have longer operating histories, broader product lines and greater
financial resources, and their stocks tend to be more liquid and less volatile
than those of smaller capitalization issuers.
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 may for some purposes be considered borrowing
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 assets determined to be liquid by the Adviser
or a Portfolio Manager in accordance with procedures established by the Board
of Trustees 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. A Fund also may borrow money for investment purposes subject to
any policies of the Fund currently described in this Prospectus or in the
Statement of Additional Information. Such a practice will result in leveraging
of a Fund's assets. Leverage will tend to exaggerate the effect on net asset
value of any increase or decrease in the value of a Fund's portfolio and may
cause a Fund to liquidate portfolio positions when it would not be
advantageous to do so.
LOANS OF PORTFOLIO SECURITIES
For the purpose of achieving income, each Fund (with the exception of the
Tax Exempt Fund) may lend its portfolio securities to brokers, dealers, and
other financial institutions, provided: (i) the loan is secured continuously
by collateral
30 PIMCO Funds: Multi-Manager Series
<PAGE>
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 the
Fund's limitation on lending its portfolio securities. Each Fund's performance
will continue to reflect changes in the value of the securities loaned and
will also reflect the receipt of either interest, through investment of cash
collateral by the Fund in permissible investments, or a fee, if the collateral
is U.S. Government securities. Securities lending involves the risk of loss of
rights in the collateral or delay in recovery of the collateral should the
borrower fail to return the security loaned or become insolvent. The Funds may
pay lending fees to the party arranging the loan.
FOREIGN SECURITIES
The Emerging Markets, International Developed, International, and Structured
Emerging Markets 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 ADRs, EDRs, 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 Core Equity and 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, these 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 Precious Metals
Fund may invest primarily in securities of foreign issuers, securities
denominated in foreign currencies, securities principally traded on securities
markets outside of the United States and in securities of foreign issuers that
are traded on U.S. securities markets, including ADRs, EDRs, and GDRs. The
remaining Equity Funds and the Balanced Fund may also invest in ADRs. The
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. The Renaissance, Opportunity, and
Innovation 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), and may invest without limit in securities of foreign
issuers that are traded in U.S. markets.
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
January 14, 1997 Prospectus 31
<PAGE>
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.
A Fund's investments in foreign currency denominated debt obligations and
hedging activities will likely produce a difference between its book income
and its taxable income. This difference may cause a portion of the Fund's
income distributions to constitute returns of capital for tax purposes or
require the Fund to make distributions exceeding book income to qualify as a
regulated investment company for federal tax purposes.
Certain of the Funds and, in particular, the Emerging Markets and Structured
Emerging Markets Funds, may invest in the securities of issuers based in
countries with developing economies. Investing in developing (or "emerging
market") 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 emerging market
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
governmental involvement in the economy; less governmental supervision and
regulation of the securities markets and participants in those markets;
unavailability of currency hedging techniques in certain emerging market
countries; the fact that companies in emerging market countries may be newly
organized and may be smaller and less seasoned 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, or 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.
32 PIMCO Funds: Multi-Manager Series
<PAGE>
The Emerging Markets, International Developed, International, Renaissance,
Core Equity, Mid Cap Equity, Opportunity, Innovation, Structured Emerging
Markets, Precious Metals, and Balanced Funds may enter into forward foreign
currency exchange contracts to reduce the risks of adverse changes in foreign
exchange rates. In addition, the Emerging Markets, International Developed,
International, Structured Emerging Markets, Precious Metals, and Balanced
Funds may buy and sell foreign currency futures contracts and options on
foreign currencies and foreign currency futures. All of the Funds that may buy
or sell foreign currencies may 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
exchange 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. Such hedging transactions may not be successful and may eliminate
any chance for a Fund to benefit from favorable fluctuations in relevant
foreign currencies. The Emerging Markets, International Developed,
International, and Structured Emerging Markets Funds 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.
To the extent that they do so, the Emerging Markets, International Developed,
International, and Structured Emerging Markets Funds will be subject to the
additional risk that the relative value of currencies will be different than
anticipated by the particular Fund's Portfolio Manager. These Funds 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. Each Fund will segregate
assets determined to be liquid by the Adviser or a Portfolio Manager in
accordance with procedures established by the Board of Trustees in a
segregated account to cover its obligations under forward foreign currency
exchange contracts entered into for non-hedging purposes.
HIGH YIELD SECURITIES ("JUNK BONDS")
The Renaissance, Tax Exempt, and Balanced Funds may invest a portion of
their assets 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 these Funds.
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 a 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
January 14, 1997 Prospectus 33
<PAGE>
securities. High yield securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than higher grade
securities.
The following chart provides information on the weighted average percentage
of rated and unrated debt or fixed income securities in the portfolios of each
Fund that invested at least 5% of its average assets in high yield securities
during the Fund's most recent fiscal year. The numerical rating designations
correspond to the associated rating categories. The designation "1st"
corresponds to the top rating category (i.e., Aaa by Moody's and/or AAA by
S&P), "2nd" corresponds to the second highest rating category (i.e., Aa by
Moody's and/or AA by S&P), etc. For a description of these rating categories,
see the Appendix to the Statement of Additional Information. The columns
related to unrated securities present the percentage of a Fund's total net
assets invested during such fiscal year (1) in unrated high yield securities
believed by the Adviser or the relevant Portfolio Manager to be equivalent in
quality to fixed income securities of the indicated rating and (2) in all
unrated fixed income securities.
<TABLE>
<CAPTION>
RATED
-------------------------------------------
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH
---- --- --- --- ---- ---- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Renaissance*........................ 5.06 -- -- -- 2.94 4.16 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
UNRATED BUT CONSIDERED EQUIVALENT TO
-------------------------------------------------
TOTAL
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH UNRATED
--- --- --- --- --- ---- --- --- --- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Renaissance*.................. -- -- -- -- -- 1.58 -- -- -- -- 1.58
</TABLE>
- --------
* Represents holdings of the PIMCO Advisors Equity Income Fund for its fiscal
year ended September 30, 1996, which reorganized as the Renaissance Fund of
the Trust on January 17, 1997.
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 Emerging Markets, International Developed,
International, Renaissance, Core Equity, Mid Cap Equity, Opportunity,
Innovation, Structured Emerging Markets, Precious Metals, and Balanced Funds
may engage in the purchase and writing of call and put options on securities;
each of these Funds, along with the Enhanced Equity Fund, may engage in the
purchase and writing of options on securities indexes. The Tax Exempt Fund may
purchase call or put options on U.S. Government securities, Tax Exempt Bonds,
and Tax Exempt Bond indexes. The Precious Metals Fund may purchase and write
options on commodity indexes. The Funds that may invest in foreign currency
denominated securities may engage in the purchase and writing of call and put
options on foreign currencies. The Emerging Markets, International Developed,
Structured Emerging Markets, 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; and for the
Emerging Markets, International Developed, International, and Structured
Emerging Markets Funds, 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 a
segregated account consisting of assets determined to be liquid by the Adviser
or a Portfolio Manager in accordance with procedures
34 PIMCO Funds: Multi-Manager Series
<PAGE>
established by the Board of Trustees (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.
For these purposes, derivative instruments are deemed 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-related or asset-backed securities. See
"Mortgage-Related and Other 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.
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, Commodity 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 security 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 security 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
January 14, 1997 Prospectus 35
<PAGE>
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.
For each of the International, Renaissance, Opportunity, Innovation, and
Precious Metals Funds, in the case of a written call option on a securities
index, the Fund will own corresponding securities whose historic volatility
correlates with that of the index.
The Emerging Markets, International Developed, International, Core Equity,
Mid Cap Equity, Structured Emerging Markets, Precious Metals, 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 Emerging Markets, International Developed, and
Structured Emerging Markets 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 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 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 assets determined to be liquid by the
Portfolio Manager in accordance with procedures established by the Board of
Trustees to limit 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 a Fund's 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
36 PIMCO Funds: Multi-Manager Series
<PAGE>
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 Precious
Metals Fund may purchase and sell futures contracts on precious metals (such
as gold), and purchase and write options on precious metals futures contracts.
The Emerging Markets, International Developed, International, Core Equity, Mid
Cap Equity, Enhanced Equity, Structured Emerging Markets, Precious Metals, and
Balanced Funds may invest in stock index futures contracts and options
thereon. The Emerging Markets, International Developed, International, Core
Equity, Mid Cap Equity, Structured Emerging Markets, Precious Metals, 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.
The Tax Exempt Fund may purchase and sell futures contracts on U.S. Government
securities and Tax Exempt Bonds, as well as purchase put and call options on
such futures contracts. 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.
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.
SHORT SALES
Each Fund may from time to time make short sales involving securities held
in the Fund's portfolio or which the Fund has the right to acquire without the
payment of further consideration. Short sales expose the Fund to the risk that
it will be required to purchase securities to cover its short position at a
time when the securities have appreciated in value, thus relating in a loss to
the Fund.
January 14, 1997 Prospectus 37
<PAGE>
FORWARD COMMITMENTS, WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
Each Fund may purchase securities which it is eligible to purchase on a
when-issued basis, may purchase and sell such securities for delayed delivery
and may make contracts to purchase securities for a fixed price at a future
date beyond normal settlement time (forward commitments). When-issued
transactions, delayed delivery purchases and forward commitments involve a
risk of loss if the value of the securities declines prior to the settlement
date, which risk is in addition to the risk of decline in the value of the
Fund's other assets. No income accrues to the purchaser of such securities
prior to delivery.
MORTGAGE-RELATED AND OTHER 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. The rate of prepayments on underlying
mortgages will affect the price and volatility of a mortgage-related security,
and may have the effect of shortening or extending the effective maturity of
the security beyond what was anticipated at the time of purchase. To the
extent that unanticipated rates of prepayment on underlying mortgages increase
the effective maturity of a mortgage-related security, the volatility of such
security can be expected to increase.
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,
38 PIMCO Funds: Multi-Manager Series
<PAGE>
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 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-related 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 interest-only,
or "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.
TAX EXEMPT BONDS
The Tax Exempt Fund invests in Tax Exempt Bonds which are generally issued
by states and local governments and their agencies, authorities and other
instrumentalities. Tax Exempt Bonds are subject to credit and market risk.
Credit risk relates to the ability of the issuer to make payments of principal
and interest. The issuer of a Tax Exempt Bond may make such payments from
money raised through a variety of sources, including (1) the issuer's general
taxing power, (2) a specific type of tax, or (3) a particular facility or
project. The ability of an issuer to make such payments could be affected by
litigation, legislation or other political events or the bankruptcy of the
issuer. Market risk relates to changes in a security's value as a result of
changes in interest rates. Lower rated Tax Exempt Bonds generally provide
higher yields but are subject to greater credit and market risk than higher
quality Tax Exempt Bonds.
CONVERTIBLE SECURITIES
Many of the Funds may invest in convertible securities. Convertible
securities are generally preferred stocks or fixed income securities that are
convertible into common stock at either a stated price or a stated rate. The
price of the
January 14, 1997 Prospectus 39
<PAGE>
convertible security will normally vary in some proportion to changes in the
price of the underlying common stock because of this conversion feature. A
convertible security will normally also provide a fixed income stream. For
this reason, the convertible security may not decline in price as rapidly as
the underlying common stock.
A Fund's Portfolio Manager will select convertible securities to be
purchased by the Fund based primarily upon its evaluation of the fundamental
investment characteristics and growth prospects of the issuer of the security.
As a fixed income security, a convertible security tends to increase in market
value when interest rates decline and to decrease in value when interest rates
rise. While convertible securities generally offer lower interest or dividend
yields than non-convertible fixed income securities of similar quality, their
value tends to increase as the market value of the underlying stock increases
and to decrease when the value of the underlying stock decreases.
The Renaissance Fund may invest in so-called "synthetic convertible
securities," which are composed of two or more different securities whose
investment characteristics, taken together, resemble those of convertible
securities. For example, the Renaissance Fund may purchase a non-convertible
debt security and a warrant or option. The synthetic convertible differs from
the true convertible security in several respects. Unlike a true convertible
security, which is a single security having a unitary market value, a
synthetic convertible comprises two or more separate securities, each with its
own market value. Therefore, the "market value" of a synthetic convertible is
the sum of the values of its fixed income component and its convertible
component. For this reason, the values of a synthetic convertible and a true
convertible security may respond differently to market fluctuations.
PRECIOUS METALS
The Precious Metals Fund will concentrate its investments in the precious
metals industry. Prices of precious metals can be expected to respond to
changes in rates of inflation and to perceptions of economic and political
instability. The values of companies engaged in precious metal-related
activities whose securities are principally traded on foreign securities
exchanges may also be affected by changes in the exchange rate between the
relevant foreign currency and the U.S. dollar. Based on historical experience,
the prices of precious metals and of securities of companies engaged in
precious metal-related activities may be subject to extreme fluctuations,
reflecting wider economic or political instability or for other reasons.
INVESTMENT IN INVESTMENT COMPANIES
The Emerging Markets, International Developed, and International Funds may
invest in securities of other investment companies, such as closed-end
management investment companies, or in pooled accounts or other investment
vehicles which invest in foreign markets. As a shareholder of an investment
company, a Fund may indirectly bear service and other fees which are in
addition to the fees the Fund pays its service providers.
CREDIT AND MARKET RISK OF FIXED INCOME SECURITIES
All fixed income securities are subject to market risk and credit risk.
Market risk relates to market-induced changes in a security's value, usually
as a result of changes in interest rates. The value of a Fund's investments in
fixed income securities will change as the general level of interest rates
fluctuate. During periods of falling interest rates, the value of a Fund's
fixed income securities generally rise. Conversely, during periods of rising
interest rates, the value of a Fund's fixed income securities generally
decline. Credit risk relates to the ability of the issuer to make payments of
principal and interest.
40 PIMCO Funds: Multi-Manager Series
<PAGE>
MONEY MARKET INSTRUMENTS
Each of the Funds may invest at least a portion of its assets in the
following kinds of money market instruments:
(1) short-term U.S. Government securities;
(2) certificates of deposit, bankers' acceptances and other bank
obligations rated in the two highest rating categories by at least two
NRSROs, or, if rated by only one NRSRO, in such agency's two highest
grades, or, if unrated, determined to be of comparable quality by the
Adviser or a Portfolio Manager. Bank obligations must be those of a bank
that has deposits in excess of $2 billion or that is a member of the
Federal Deposit Insurance Corporation. A Fund may invest in obligations of
U.S. branches or subsidiaries of foreign banks ("Yankee dollar
obligations") or foreign branches of U.S. banks ("Eurodollar obligations");
(3) commercial paper rated in the two highest rating categories by at
least two NRSROs, or, if rated by only one NRSRO, in such agency's two
highest grades, or, if unrated, determined to be of comparable quality by
the Adviser or a Portfolio Manager;
(4) corporate obligations with a remaining maturity of 397 days or less
whose issuers have outstanding short-term debt obligations rated in the
highest rating category by at least two NRSROs, or, if rated by only one
NRSRO, in such agency's highest grade, or, if unrated, determined to be of
comparable quality by the Adviser or a Portfolio Manager; and
(5) repurchase agreements with domestic commercial banks or registered
broker-dealers.
ILLIQUID SECURITIES
Each of the Capital Appreciation, Mid Cap Growth, Small Cap Growth, Equity
Income, Value, Small Cap Value, 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 the 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). Each of the Emerging Markets, International Developed,
International, Micro Cap Growth, Renaissance, Core Equity, Mid Cap Equity,
Opportunity, Innovation, Tax Exempt, Structured Emerging Markets, and Precious
Metals Funds may invest in securities that are illiquid so long as no more
than 15% of the net assets of the Fund (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A Portfolio Manager may be subject to
significant delays in disposing of illiquid securities, and transactions in
illiquid securities may entail registration expenses and other transaction
costs that are higher than transactions in liquid securities.
The term "illiquid securities" for this purpose means securities that cannot
be disposed of within seven days in the ordinary course of business at
approximately the amount at which a Fund has valued the securities. Illiquid
securities are considered to include, among other things, written over-the-
counter options, securities or other liquid assets being used as cover for
such options, repurchase agreements with maturities in excess of seven days,
certain loan participation interests, fixed time deposits which are not
subject to prepayment or provide for withdrawal penalties upon prepayment
(other than overnight deposits), securities that are subject to legal or
contractual restrictions on resale (such as privately placed debt securities),
and other securities whose disposition is restricted under the federal
securities laws (other than securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper that the Adviser or a
Portfolio Manager has determined to be liquid under procedures approved by the
Board of Trustees).
January 14, 1997 Prospectus 41
<PAGE>
"FUNDAMENTAL" POLICIES
The investment objective of each of the International, Renaissance,
Opportunity, Innovation, Tax Exempt, and Precious Metals Funds described in
this Prospectus may be changed by the Board of Trustees without shareholder
approval. The investment objective of each other Fund is fundamental and may
not be changed without shareholder approval by vote of a majority of the
outstanding shares of that Fund. If there is a change in a Fund's investment
objective, including a change approved by shareholder vote, shareholders
should consider whether the Fund remains an appropriate investment in light of
their then current financial position and needs.
MANAGEMENT OF THE TRUST
The business affairs of the Trust are managed under the direction of the
Board of Trustees. Information about the Trustees and the Trust's executive
officers may be found in the Statement of Additional Information under the
heading "Management of the Trust."
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 as of November 30, 1996 were
approximately $111.2 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
Pacific Investment Management. PIMCO Advisors is governed by an Operating
Board and an Equity Board, which exercise substantially all of the governance
powers of the general partner and serve as the functional equivalent of a
board of directors. PIMCO Advisors' address is 800 Newport Center Drive, Suite
100, Newport Beach, California 92660. PIMCO Advisors is registered as an
investment adviser with the SEC. PIMCO Advisors currently has six subsidiary
partnerships: Blairlogie, Cadence, Columbus Circle, NFJ, Pacific Investment
Management, and Parametric.
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
Portfolio Managers for all of the Funds. With the exception of Van Eck (which
manages the Precious Metals Fund), each Portfolio Manager is an affiliate of
PIMCO Advisors. PIMCO Advisors compensates the 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.
42 PIMCO Funds: Multi-Manager Series
<PAGE>
BLAIRLOGIE manages the Emerging Markets Fund, the International Developed
Fund, and the International Fund (the "Blairlogie Funds"). Blairlogie is an
investment management firm, organized as a limited partnership under the laws
of Scotland, United Kingdom, with two general partners and one limited
partner. The general partners are PIMCO Advisors, which serves as the
supervisory partner, and Blairlogie Holdings Limited, a wholly owned corporate
subsidiary of PIMCO Advisors, which serves as the managing partner. The
limited partner is Blairlogie Partners L.P., a limited partnership, the
general partner of which is Pacific Financial Asset Management Corporation (a
subsidiary of Pacific Mutual Life Insurance Company), and the limited partners
of which are the principal executive officers of Blairlogie Capital
Management. Blairlogie Partners L.P. has agreed with PIMCO Advisors that PIMCO
Advisors will acquire its 25% interest in four annual installments of 10%, 5%,
5%, and 5%, respectively, beginning December 31, 1998. Blairlogie Capital
Management Ltd., the predecessor investment adviser to Blairlogie, commenced
operations in 1992. Accounts managed by Blairlogie had combined assets as of
November 30, 1996 of approximately $.7 billion. Blairlogie's address is 4th
Floor, 125 Princes Street, Edinburgh EH2 4AD, Scotland. Blairlogie is
registered as an investment adviser with the SEC in the United States and with
the Investment Management Regulatory Organisation ("IMRO") in the United
Kingdom.
James Smith is primarily responsible for the day-to-day management of the
Blairlogie Funds. Mr. Smith is a Managing Director and the 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, and 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.
CADENCE manages the Capital Appreciation Fund, the Mid Cap Growth Fund, the
Micro Cap Growth Fund, the 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
November 30, 1996 of approximately $3.3 billion. Cadence's address is Exchange
Place, 53 State Street, Boston, Massachusetts 02109. Cadence is registered as
an investment adviser with the SEC.
David B. Breed, William B. Bannick, Katherine A. Burdon, Eric M. Wetlaufer,
and Peter B. McManus are primarily responsible for the day-to-day management
of the Cadence Funds. Mr. Breed is a Managing Director, the Chief Executive
Officer, and a 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 previously served as Executive Vice President of
George D. Bjurman & Associates and as Supervising Portfolio Manager of Trinity
Investment Management Corporation. Mr. Bannick joined the predecessor of
Cadence in 1992. He graduated from the University of Massachusetts and
received his MBA from Boston University. Mr. Bannick is a Chartered Financial
Analyst. Ms. Burdon is a Managing Director and Portfolio Manager of Cadence
and has nine years' investment management experience. She previously served as
a Vice President and Portfolio Manager of The Boston Company. Ms. Burdon
joined the predecessor of Cadence in 1993. She graduated from Stanford
University and received a Master of
January 14, 1997 Prospectus 43
<PAGE>
Science degree from Northeastern University. Ms. Burdon is a Chartered
Financial Analyst and Certified Public Accountant. Mr. Wetlaufer is a Managing
Director and Portfolio Manager of Cadence and has 11 years' investment
management experience. He previously served as Vice President of Northfield
Information Services. Mr. Wetlaufer joined the predecessor of Cadence in 1991.
He graduated from Wesleyan University and is a Chartered Financial Analyst.
Mr. McManus is Director of Fund Management of Cadence and has 19 years'
investment management experience. He previously served as a Vice President of
Bank of Boston. Mr. McManus joined Cadence in 1994. He graduated from the
University of Massachusetts, and is certified as a Financial Planner.
COLUMBUS CIRCLE manages the Renaissance Fund, the Core Equity Fund, the Mid
Cap Equity Fund, the Opportunity Fund, the Innovation Fund, and the Tax Exempt
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. Accounts managed by
Columbus Circle had combined assets as of November 30, 1996 of approximately
$14.6 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.
At the center of Columbus Circle's equity investment strategy is its theory
of Positive Momentum & Positive Surprise. This theory asserts that a good
company doing better than generally expected will experience a rise in its
stock price. And, conversely, a company falling short of expectations will
experience a drop in its stock price. Based on this theory, Columbus Circle
attempts to manage the Columbus Circle Funds (except the Tax Exempt Fund) with
a view to investing in growing companies that are surprising the market with
business results that are better than anticipated. The Trust has been informed
that 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.
NFJ manages the Equity Income Fund, the Value Fund, the 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 November 30, 1996 of approximately $1.8 billion.
NFJ's address is 2121 San Jacinto, Suite 1840, 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 Equity
Income Fund, the Value 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 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.
PACIFIC INVESTMENT MANAGEMENT manages the Fixed Income Securities Segment of
the Balanced Fund. Pacific Investment Management is an investment management
firm organized as a general partnership. Pacific Investment Management 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 Pacific Investment
44 PIMCO Funds: Multi-Manager Series
<PAGE>
Management, commenced operations in 1971. Pacific Investment Management had
approximately $88.8 billion of assets under management as of November 30,
1996. Pacific Investment Management's address is 840 Newport Center Drive,
Suite 360, Newport Beach, California 92660. Pacific Investment Management is
registered as an investment adviser with the SEC and as a commodity trading
advisor 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 a
Managing Director of Pacific Investment Management and has been associated
with Pacific Investment Management or its predecessor for 25 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 Enhanced Equity Fund and the 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 November 30, 1996 of
approximately $2.0 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 advisor with the
CFTC.
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 or
its predecessor since 1988. Ms. Mauzy graduated from the California State
University with a bachelor's degree in Chemistry, and from the University of
California with a master's degree in Economics. She is a Chartered Financial
Analyst. Mr. Quisenberry is a Senior Investment Manager and Research Manager
of Parametric and has been with Parametric since 1994. He previously served as
a Vice President and Portfolio Manager at Cutler & Co., and as a Security
Analyst and Portfolio Manager at Fred Alger Management. Mr. Quisenberry
graduated from Yale University with a bachelor's degree in Economics. He is a
Chartered Financial Analyst.
VAN ECK is an unaffiliated investment adviser that manages the Precious
Metals Fund. Van Eck is a Delaware corporation which, together with its
affiliates, provides investment advisory services to other mutual funds and to
private accounts. Van Eck is controlled by John C. Van Eck who, along with
members of his immediate family, owns 100% of the stock of Van Eck. Accounts
managed by Van Eck had combined assets as of November 30, 1996 of
approximately $1.7 billion. Van Eck's address is 99 Park Avenue, New York, New
York 10001. Van Eck is registered as an investment adviser with the SEC.
Henry J. Bingham, Executive Managing Director of Van Eck and President of
the International Investors series of Van Eck Funds, has served as the
Portfolio Manager of the Precious Metals Fund since the Fund commenced
operations.
PIMCO ADVISORS determines the allocation of the Balanced Fund's assets among
various asset classes and manages directly the Money Market Segment of that
Fund.
January 14, 1997 Prospectus 45
<PAGE>
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 advisor does not involve supervision by the CFTC over
commodities trading. The portfolio management agreements are not exclusive,
and Blairlogie, Cadence, Columbus Circle, NFJ, Parametric, Pacific Investment
Management, and Van Eck may provide, and currently are providing, investment
management services to other clients, including other investment companies.
FUND ADMINISTRATOR
PIMCO Advisors also serves as administrator (the "Administrator") to the
Funds pursuant to an administration agreement with the Trust. The
Administrator provides or procures administrative services for the Funds,
which include clerical help and accounting, bookkeeping, internal audit
services and certain other services required by the Funds, and preparation of
reports to the Funds' shareholders and regulatory filings. The Administrator
has retained Pacific Investment Management to provide such services as sub-
administrator. The Administrator and/or the sub-administrator may also retain
other affiliates to provide certain of these services. In addition, the
Administrator, at its own expense, arranges for the provision of legal, audit,
custody, transfer agency (including sub-transfer agency and other
administrative services) and other services necessary for the ordinary
operation of 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 Funds (and not the Administrator) are 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, Pacific Investment Management, 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, any Portfolio
Manager, 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"), subject to review
and approval by the Trustees.
46 PIMCO Funds: Multi-Manager Series
<PAGE>
ADVISORY AND ADMINISTRATIVE FEES
The Funds feature fixed advisory and administrative fees. For providing or
arranging for the provision of investment advisory services to the Funds as
described above, 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>
Tax Exempt Fund.................................................... .30%
Capital Appreciation, Mid Cap Growth, Equity Income, Value,
Enhanced Equity, Structured Emerging Markets, and Balanced Funds.. .45%
International Fund................................................. .55%
Core Equity Fund................................................... .57%
International Developed, Small Cap Value, Renaissance, and Precious
Metals Funds...................................................... .60%
Mid Cap Equity Fund................................................ .63%
Opportunity and Innovation Funds................................... .65%
Emerging Markets Fund.............................................. .85%
Small Cap Growth Fund.............................................. 1.00%
Micro Cap Growth Fund.............................................. 1.25%
</TABLE>
For providing or procuring administrative services for the Funds as
described above, the Administrator receives monthly fees from each Fund at an
annual rate based on the average daily net assets attributable in the
aggregate to the Fund's Institutional Class and Administrative Class shares as
follows:
<TABLE>
<CAPTION>
ADMINISTRATIVE
FUND FEE RATE
---- --------------
<S> <C>
Emerging Markets, International Developed, International and
Structured Emerging Markets Funds........................... .50%
Precious Metals Fund......................................... .30%
All Other Funds.............................................. .25%
</TABLE>
The investment advisory, administration, and sub-administration agreements
for the Funds may be terminated by the Trustees, PIMCO Advisors or Pacific
Investment Management (as the case may be) on 60 days' written notice. In
addition, these agreements may be terminated with regard to the International
Fund, Renaissance Fund, Opportunity Fund, Innovation Fund, Tax Exempt Fund,
and Precious Metals Fund by a majority of the Trustees that are not interested
persons of the Trust, PIMCO Advisors, or Pacific Investment Management (as the
case may be), on 60 days' written notice. Following their initial 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: Blairlogie--.40% for the International Fund, .50% for the
International Developed Fund, and .75% for the Emerging Markets Fund;
Cadence--.35% for the Capital Appreciation Fund, .35% for the Mid Cap Growth
Fund, .35% for the portion of the Common Stock Segment of the Balanced Fund
allocated to Cadence, .90% for the Small Cap Growth Fund, and 1.15% for the
Micro Cap Growth Fund; Columbus Circle--.30% for the Tax Exempt Fund, .38% for
the Renaissance Fund, .38% for the Innovation Fund, .47% for the Core Equity
Fund, .48% for the Opportunity Fund, and .53% for the Mid Cap Equity Fund;
NFJ--.35% for the Equity Income Fund, .35% for the Value Fund, .35% for the
portion of the Common Stock Segment of the Balanced Fund allocated to NFJ, and
.50% for the Small Cap Value Fund; Pacific Investment Management--.25% for the
Fixed Income Securities Segment of the Balanced Fund; Parametric--.35% for the
Enhanced Equity Fund and .35% for the Structured Emerging Markets Fund; and
Van Eck--.35% for the Precious Metals Fund.
January 14, 1997 Prospectus 47
<PAGE>
SERVICE AND DISTRIBUTION FEES
The Trust has adopted an Administrative Services Plan and a Distribution
Plan (the "Plans") with respect to the Administrative Class shares of each
Fund except for the Emerging Markets, Capital Appreciation, and Small Cap
Growth Funds, for which the Trust has adopted only an Administrative Services
Plan. Under the terms of each Plan, the Trust is permitted to reimburse, out
of the Administrative Class assets of each Fund, in an amount up to .25% on an
annual basis of the average daily net assets of that class, financial
intermediaries that provide services in connection with the distribution of
shares or administration of plans or programs that use Fund shares as their
funding medium, and to reimburse certain other distribution-related expenses.
Total reimbursements under the Plans may be paid in an amount up to .25% on an
annual basis of the average daily net assets attributable to the
Administrative Class shares of each Fund. The same entity may not receive both
distribution and administrative services fees with respect to the same assets
but may with respect to separate assets receive fees under each Plan. Fees
paid pursuant to either Plan may be paid for shareholder services and the
maintenance of accounts, and therefore may constitute "service fees" for
purposes of applicable rules of the National Association of Securities
Dealers, Inc. Each Plan has been adopted in accordance with the requirements
of Rule 12b-1 under the 1940 Act and will be administered in accordance with
the provisions of that rule, except that shareholders will not have the voting
rights set forth in Rule 12b-1 with respect to the Administrative Services
Plan that they will have with respect to the Distribution Plan. For more
complete disclosure regarding the Plans and their 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
Fund shares by their customers and may charge their customers transaction or
other account fees on the purchase and redemption of Fund 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 Funds Distribution Company
(the "Distributor"), a 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
Except for the Core Equity, Mid Cap Equity, and Opportunity Funds, each Fund
may offer its shares in up to five classes: "Institutional Class,"
"Administrative Class," "Class A," "Class B," and "Class C." This Prospectus
relates only to the Institutional Class shares and Administrative Class shares
of the Funds. For information regarding Class A, Class B, and Class C shares,
see "Other Information--Multiple Classes of Shares" below.
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, and high net worth
individuals (Institutional Class shares may also be offered through certain
financial intermediaries that charge their customers transaction or other fees
with respect to their customers' investments in the Funds). Shares of the
Administrative Class are offered primarily through employee benefit plan
alliances, broker-dealers, and other intermediaries, and each Fund pays
service and/or distribution fees to such entities for services they provide to
shareholders of that class.
48 PIMCO Funds: Multi-Manager Series
<PAGE>
Shares of either the Institutional Class or the Administrative 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 $5
million. Shares may also be offered to clients of Blairlogie, Cadence,
Columbus Circle, NFJ, Pacific Investment Management, Parametric, and their
affiliates. In addition, the minimum initial investment does not apply to
shares of the Institutional Class offered through fee-based programs sponsored
and maintained by a registered broker-dealer and approved by the Distributor
pursuant to which each investor pays an asset based fee at an annual rate of
at least .50% of the assets in the account to a financial intermediary for
investment advisory and/or administrative services.
Pension and profit-sharing plans, employee benefit trusts and employee
benefit plan alliances and "wrap account" programs established with broker-
dealers or financial intermediaries may purchase shares of either class only
if the plan or program for which the shares are being acquired will maintain
an omnibus or pooled account for each Fund and will not require a Fund to pay
any type of administrative payment per participant account to any third party.
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 Institutional Class and
Administrative Class shares can only be made by wiring federal funds to
Investors Fiduciary Trust Company (the "Transfer Agent"), 127 West 10th
Street, Kansas City, Missouri 64105. Before wiring federal funds, the investor
must first telephone the Trust at (800) 927-4648 to receive instructions for
wire transfer, and the following information will be requested: name of
authorized person; shareholder name; shareholder account number; name of Fund
and share class; amount being wired; and wiring bank name.
Shares may be purchased without first wiring federal funds if the proceeds
of the investment are derived from an advisory account maintained by the
investor with PIMCO Advisors or one of its affiliates; from surrender or other
payment from an annuity, insurance, or other contract held by Pacific Mutual
Life Insurance Company; or from an investment by broker-dealers, institutional
clients or other financial intermediaries which have established a shareholder
servicing relationship with the Trust on behalf of their customers.
A purchase order, together with payment in proper form, received by the
Transfer Agent prior to the close of business (ordinarily 4:00 p.m., Eastern
time) on a day the Trust is open for business will be effected at that day's
net asset value. An order received after the close of business will be
effected at the net asset value determined on the next business day. However,
orders received by certain retirement plans and other financial intermediaries
by the close of business and communicated to the Transfer Agent prior to 9:00
a.m., Eastern time, on the following business day will be effected at the net
asset value determined on the prior business day. The Trust is "open for
business" on each day the New York Stock Exchange (the "Exchange") is open for
trading (a "Business Day"), 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
Business Days.
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.
January 14, 1997 Prospectus 49
<PAGE>
OTHER PURCHASE INFORMATION
Purchases of a Fund's Institutional Class and Administrative Class 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.
Institutional Class and Administrative Class 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 Micro Cap Growth Fund limits the purchase of shares (contributed
capital) by any one investor to $10 million, 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
all classes of the Fund to $100 million. 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 International Fund, Small Cap Growth Fund,
Opportunity Fund, Tax Exempt Fund, Structured Emerging Markets Fund, and
Precious Metals Fund are not offered as of the date of this Prospectus;
however, investment opportunities in these Funds may be available in the
future. These limitations may be changed or eliminated at any time at the
discretion of the Trust's Board of Trustees.
RETIREMENT PLANS
The Funds are available as an investment option for participants in
retirement and savings plans, including Keogh plans, 401(k) plans, 403(b)
plans, and Individual Retirement Accounts. The administrator of a plan or
employee benefits office can provide participants or employees with detailed
information on how to participate in the plan and how to elect a Fund as an
investment option. Participants in a retirement or savings plan may be
permitted to elect different
50 PIMCO Funds: Multi-Manager Series
<PAGE>
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 an order with the plan administrator and the time the
order is forwarded to the Transfer Agent for execution.
REDEMPTION OF SHARES
REDEMPTIONS BY MAIL
Institutional Class and Administrative Class 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 million 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 Pacific
Investment Management and the Transfer Agent to act on telephone instructions
from any person representing himself to be the investor, and reasonably
believed by Pacific Investment Management and the Transfer Agent to be
genuine. Neither the Trust nor its Transfer Agent may 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 also 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 Pacific Investment Management or the Transfer Agent may request
certain information in order to verify that the person giving instructions is
authorized to do so. If the Trust or Transfer Agent fails to employ reasonable
procedures to confirm that instructions communicated by telephone are genuine,
it may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All redemptions, whether initiated by letter or telephone, will
be processed in a timely manner, and proceeds will be forwarded by wire in
accordance with the redemption policies of the Trust detailed below. See
"Redemption of Shares--Other Redemption Information."
Shareholders may decline telephone exchange or redemption privileges after
an account is opened by instructing the Transfer Agent in writing at least
seven business days prior to the date the instruction is to be effective.
Shareholders
January 14, 1997 Prospectus 51
<PAGE>
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 within three business days after the redemption 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
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 Institutional Class and Administrative Class
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 PIMCO Funds: Pacific
Investment Management Series, an affiliated mutual fund family composed
primarily of fixed income portfolios managed by Pacific Investment Management.
Shareholders interested in such an exchange may request a prospectus for these
funds by contacting PIMCO Funds: Pacific Investment Management Series at the
same address and telephone number as the Trust.
52 PIMCO Funds: Multi-Manager Series
<PAGE>
Exchanges may be made only with respect to Funds or series of PIMCO Funds:
Pacific Investment Management 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 for tax purposes as a redemption followed by a
purchase and may result in a capital gain or loss, 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 a Fund's
accounts with brokers or dealers selected by it in its discretion. In
effecting purchases and sales of portfolio securities for the accounts of the
Funds, the Portfolio Managers 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 Managers 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.
The portfolio turnover rate for each Fund for which financial highlights are
provided in this Prospectus is set forth under "Financial Highlights."
Portfolio turnover for the remaining Funds is incorporated by reference in the
Statement of Additional Information.
Some securities considered for investment by the Funds may also be
appropriate for other clients served by the Portfolio Managers. If a purchase
or sale of securities consistent with the investment policies of a Fund and
one or more of these clients served by a 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 values of Institutional and Administrative Class shares of
each Fund will be determined once on each Business Day as of the close of
regular trading on the Exchange. Portfolio securities for which market
quotations are readily available are valued at market value. Fixed income
securities generally are 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. 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. Short-term investments having a
maturity of 60 days or less are valued at amortized cost, when the Board of
Trustees determines that amortized
January 14, 1997 Prospectus 53
<PAGE>
cost is their fair value. Exchange-traded options, futures and options on
futures are valued at the settlement price as determined by the appropriate
clearing corporation. All other securities and assets are valued at their fair
value as determined in good faith by the Trustees or by persons acting at
their direction.
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 Emerging Markets,
International Developed, International, Structured Emerging Markets, and
Precious Metals Funds may not 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. 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 Adviser or a Portfolio Manager and approved
in good faith by the Board of Trustees.
Each Fund's liabilities are allocated among its classes. The total of such
liabilities allocated to a class plus that class' distribution and/or
servicing fees and any other expenses specially allocated to that class are
then deducted from the class's proportionate interest in the Fund's assets,
and the resulting amount for each class is divided by the number of shares of
that class outstanding to produce the class's "net asset value" per share.
Under certain circumstances, the per share net asset value of the
Administrative Class shares of the Funds that do not declare regular income
dividends on a daily basis may be lower than the per share net asset value of
the Institutional Class shares as a result of the daily expense accruals of
the service and distribution fees applicable to the Administrative Class
shares. Generally, for Funds that pay income dividends, those dividends are
expected to differ over time by approximately the amount of the expense
accrual differential between the classes.
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 daily and paid
monthly to shareholders of record of the Tax Exempt Fund and declared and paid
quarterly to shareholders of record by the Renaissance, Equity Income, Value,
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
Emerging Markets, International Developed, International, Capital
Appreciation, Mid Cap Growth, Micro Cap Growth, Small Cap Growth, Core Equity,
Mid Cap Equity, Opportunity, Innovation, Small Cap Value, Enhanced Equity,
Structured Emerging Markets, and Precious Metals Funds. Any net realized
capital gains from the sale of portfolio securities will be distributed no
less frequently than once annually. 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 and
distribution 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 (the "Code"). As such, a Fund generally
54 PIMCO Funds: Multi-Manager Series
<PAGE>
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, exempt-
interest dividends, and dividends that represent a return of capital to
shareholders, as ordinary income. In particular, distributions derived from
short-term gains will be treated as ordinary income. Dividends designated by a
Fund as capital gain dividends derived from the Fund's net capital gains (that
is, the excess of its net long-term capital gains over its net short-term
capital losses) 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.
Dividends paid to shareholders by the Tax Exempt Fund which are derived from
interest on Tax Exempt Bonds are expected to be designated by the Fund as
"exempt-interest dividends," and shareholders may exclude such dividends from
gross income for federal income tax purposes. However, if a shareholder
receives social security or railroad retirement benefits, the shareholder may
be taxed on a portion of those benefits as a result of receiving tax-exempt
income. In addition, certain exempt-interest dividends could, as discussed
below, cause certain shareholders to become subject to the alternative minimum
tax and may increase the alternative minimum tax liability of shareholders
already subject to this tax. Other distributions from the Tax Exempt Fund may
constitute taxable income, and any gain realized on a redemption of shares
will be taxable gain, subject to any applicable tax exemption for which an
investor may qualify.
Dividends derived from interest on certain U.S. Government securities may be
exempt from state and local taxes, although interest on mortgage-backed U.S.
Government securities may not be so exempt. The distributions of "exempt-
interest dividends" paid by the Tax Exempt Fund may be exempt from state and
local taxation when received by a shareholder to the extent that they are
derived from interest on Tax Exempt Bonds issued by the state or political
subdivision in which such shareholder resides. The federal exemption for
"exempt-interest dividends" attributable to Tax Exempt Bonds does not
necessarily result in exemption of such dividends from income for the purpose
of state and local taxes. The Trust will report annually on a state-by-state
basis the source of income the Tax Exempt Fund receives on Tax Exempt Bonds
that was paid out as dividends during the preceding year.
The Code also provides that exempt-interest dividends allocable to interest
received from "private activity bonds" issued after August 7, 1986 are an item
of tax preference for individual and corporate alternative minimum tax at the
applicable rate for individuals and corporations. Therefore, if the Tax Exempt
Fund invests in such private activity bonds, certain of its shareholders may
become subject to the alternative minimum tax on that part of its
distributions to them that are derived from interest income on such bonds, and
certain shareholders already subject to such tax may have increased liability
therefor. However, it is the present policy of the Tax Exempt Fund to invest
no more than 20% of its assets in such bonds. Other provisions of the Code
affect the tax treatment of distributions from the Tax Exempt Fund for
corporations, casualty insurance companies, and financial institutions. In
particular, under the Code, for corporations, alternative minimum taxable
income will be increased by a percentage of the amount by which the
corporation's "adjusted current earnings" (which includes various items of tax
exempt income) exceeds the amount otherwise
January 14, 1997 Prospectus 55
<PAGE>
determined to be alternative minimum taxable income. Accordingly, an
investment in the Tax Exempt Fund may cause shareholders to be subject to (or
result in an increased liability under) the alternative minimum tax.
Current federal tax law requires the holder of a U.S. Treasury or other
fixed income zero coupon security to accrue as income each year a portion of
the discount at which the security was purchased, even though the holder
receives no interest payment in cash on the security during the year. In
addition, pay-in-kind securities will give rise to income which is required to
be distributed and is taxable even though the Fund holding the security
receives no interest payment in cash on the security during the year. Also, a
portion of the yield on certain high yield securities (including certain pay-
in-kind securities) issued after July 10, 1987 may be treated as dividends.
Accordingly, each Fund that holds the foregoing kinds of securities may be
required to pay out as an income distribution each year an amount which is
greater than the total amount of cash interest the Fund actually received.
Such distributions may be made from the cash assets of the Fund or by
liquidation of portfolio securities, if necessary. The Fund may realize gains
or losses from such liquidations. In the event the Fund realizes net capital
gains from such transactions, its shareholders may receive a larger capital
gain distribution, if any, than they would in the absence of such
transactions.
Taxable shareholders should note that the timing of their investment or
redemptions could have undesirable tax consequences. If shares are purchased
on or just before the record date of a dividend, taxable shareholders will pay
full price for the shares and may receive a portion of their investment back
as a taxable distribution. If shares are redeemed before payment of an exempt-
interest dividend, shareholders may realize a taxable capital gain, whereas by
waiting and receiving the exempt-interest dividend, a portion of their share
value would have been received in the form of tax-free income.
The preceding discussion relates only to federal income tax; the
consequences under other tax laws may differ. Shareholders should consult
their tax advisers as to the possible application of state and local income
tax laws to Trust dividends and capital gain distributions. 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, and currently consists of twenty-two portfolios that are operational,
twenty of which are described in this Prospectus. Other portfolios may be
offered by means of a separate prospectus. The Board of Trustees may establish
additional portfolios in the future. The capitalization of the Trust consists
of an unlimited number of shares of beneficial interest. When issued, shares
of the Trust are fully paid, non-assessable and freely transferable.
Under Massachusetts law, shareholders could, under certain circumstances, be
held liable for the obligations of the Trust. However, the Second Amended and
Restated Agreement and Declaration of Trust (the "Declaration of Trust") of
the Trust disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust also provides for indemnification out of a
Fund's property for all loss and expense of any shareholder of that Fund held
liable on account of being or having been a shareholder. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which such disclaimer is inoperative or the Fund
of which he or she is a shareholder would be unable to meet its obligations,
and thus should be considered remote.
56 PIMCO Funds: Multi-Manager Series
<PAGE>
MULTIPLE CLASSES OF SHARES
In addition to Institutional Class shares and Administrative Class shares,
certain Funds also offer Class A shares, Class B shares, and Class C shares
through a separate prospectus. These other classes of the Funds have different
sales charges and expense levels, which will affect performance. Investors may
contact the Distributor at (800) 426-0107 for more information concerning
other classes of shares of the Funds. This Prospectus relates only to the
Institutional Class shares and Administrative Class shares of the Funds.
Institutional and Administrative Class shares of each Fund represent
interests in the assets of that Fund, and each class has identical dividend,
liquidation and other rights and the same terms and conditions, except that
expenses related to the distribution and shareholder services of
Administrative Class shares are borne solely by such class, and each class
may, at the Trustees' discretion, also pay a different share of other
expenses, not including advisory or custodial fees or other expenses related
to the management of the Trust's assets, if these expenses are actually
incurred in a different amount by that class, or if the class receives
services of a different kind or to a different degree than the other classes.
All other expenses are allocated to each class on the basis of the net asset
value of that class in relation to the net asset value of the particular Fund.
VOTING
Each class of shares of each Fund has identical voting rights except that
each class of shares has exclusive voting rights on any matter submitted to
shareholders that relates solely to that class, and 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. The Administrative Class shares
have exclusive voting rights with respect to matters pertaining to any
Distribution Plan applicable to that class. These shares are entitled to vote
at meetings of shareholders. Matters submitted to shareholder vote must be
approved by each Fund separately except (i) when required by the 1940 Act,
shares shall be voted together, and (ii) when the Trustees have determined
that the matter does not affect all Funds, then only shareholders of the Fund
or Funds affected shall be entitled to vote on the matter. All classes of
shares of a Fund will vote together, except with respect to a Distribution
Plan applicable to a class of shares or when a class vote is required as
specified above or otherwise by the 1940 Act. Shares are freely transferable,
are entitled to dividends as declared by the Trustees and, in liquidation of
the Trust, are entitled to receive the net assets of their Fund, but not of
the other Funds. The Trust does not generally hold annual meetings of
shareholders and will do so only when required by law. Shareholders may remove
Trustees from office by votes cast in person or by proxy at a meeting of
shareholders or by written consent. Such a meeting will be called at the
written request of the holders of 10% of the Trust's outstanding shares.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As of December 17, 1996, the following were
shareholders of record of at least 25% of the outstanding voting securities of
the indicated Funds: Pacific Mutual Life Insurance Company (Newport Beach,
California) with respect to the Diversified Low P/E Fund (the predecessor of
the Value Fund) and the Mid Cap Equity Fund; the Jewish Federation of
Metropolitan Chicago (Chicago, Illinois) with respect to the Small Cap Growth
Fund; First Interstate Bank of California (Calabasas, California) with respect
to the Enhanced Equity Fund; Melville Corporation (Rye, New York) with respect
to the Core Equity Fund; and Charles Schwab & Co., Inc. (San Francisco,
California) with respect to the Emerging Markets Fund. To the extent such
shareholders are the beneficial owners of such securities, they may be deemed
to control (as that term is defined in the 1940 Act) the relevant 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).
January 14, 1997 Prospectus 57
<PAGE>
PERFORMANCE INFORMATION
From time to time the Trust may make available certain information about the
performance of the Institutional Class and Administrative Class shares of some
or all of the Funds. Information about a Fund's performance is based on that
Fund's (or its predecessor's) record to a recent date and is not intended to
indicate future performance. Performance information is computed separately
for each Fund's Institutional Class and Administrative Class shares in
accordance with the formulas described below. Because Administrative Class
shares bear the expense of service and/or distribution fees, it is expected
that, under normal circumstances, the level of performance of a Fund's
Administrative Class shares will be lower than that of the Fund's
Institutional Class shares.
All Funds may include the total return of Institutional Class and
Administrative Class shares in advertisements or other written material. When
a Fund advertises its total return with respect to its Institutional Class and
Administrative Class shares, it will be calculated for the past year, the past
five years, and the past ten years (or if the Fund has been offered for a
period shorter than one, five or ten years, that period will be substituted)
since the establishment of the Fund or its predecessor series of PIMCO
Advisors Funds, as more fully described in the Statement of Additional
Information. Consistent with SEC rules and informal guidance, for periods
prior to the initial offering date of a particular class, total return
presentations for the class may be based on the historical performance of an
older class of the Fund (the older class to be used in each case is set forth
in the Statement of Additional Information) restated to reflect current sales
charges or redemption fees (if any) of the newer class, but not reflecting
different operating expenses (such as service or distribution fees and
administrative fee charges) associated with the newer class. All other things
being equal, such higher expenses would have adversely affected (i.e.,
reduced) total return for a newer class (i.e., if the newer class had been
issued since the inception of the Fund) by the amount of such higher expenses,
compounded over the relevant period. Total return for each class is measured
by comparing the value of an investment in the Fund at the beginning of the
relevant period to the redemption value of the investment in the Fund at the
end of the period (assuming immediate reinvestment of any dividends or capital
gains distributions at net asset value). The Funds may advertise total return
using alternative methods that reflect all elements of return, but that may be
adjusted to reflect the cumulative impact of alternative fee and expense
structures, such as the currently effective advisory and administrative fees
for the Funds.
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. The Tax Exempt Fund also may advertise tax equivalent
yield, which is calculated like yield except that, for any given tax bracket,
net investment income will be calculated as the sum of (i) taxable income of
the class plus (ii) the tax exempt income of the class divided by the
difference between 1 and the effective federal income tax rates for taxpayers
in that tax bracket.
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.
58 PIMCO Funds: Multi-Manager Series
<PAGE>
The Adviser and each Portfolio Manager may also report to shareholders or to
the public in advertisements concerning its performance as adviser to clients
other than the Funds, and on its comparative performance or standing 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.
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).
January 14, 1997 Prospectus 59
<PAGE>
(This page left blank intentionally)
<PAGE>
[LOGO OF PIMCO APPEARS HERE]
PIMCO FUNDS
Multi-Manager Series
INVESTMENT ADVISER
PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, CA 92660
ADMINISTRATOR
PIMCO Advisors L.P.
800 Newport Center Drive
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
PROSPECTUS
- --------------------------------------------------------------------------------
January 14, 1997
<PAGE>
PIMCO Funds:
Multi-Manager Series
STATEMENT OF ADDITIONAL INFORMATION
January 14, 1997
PIMCO Funds: Multi-Manager Series (the "Trust"), formerly PIMCO
Funds: Equity Advisors Series, PIMCO Advisors Institutional Funds, PFAMCo Funds,
and PFAMCo Fund, is an open-end management investment company ("mutual fund")
currently offering twenty-two separate investment portfolios (the "Funds"): the
Equity Income Fund, the Value Fund, the Renaissance Fund, the Enhanced Equity
Fund, the Growth Fund, the Capital Appreciation Fund, the Mid Cap Growth Fund,
the Core Equity Fund, the Mid Cap Equity Fund, the Target Fund, the Small Cap
Value Fund, the Small Cap Growth Fund, the Opportunity Fund, the Micro Cap
Growth Fund, the Innovation Fund, the International Fund, the International
Developed Fund, the Emerging Markets Fund, the Structured Emerging Markets Fund,
the Precious Metals Fund, the Balanced Fund and the Tax Exempt Fund.
The Trust's investment adviser is PIMCO Advisors L.P. ("PIMCO
Advisors" or the "Adviser"), 800 Newport Center Drive, Suite 100, Newport Beach,
California 92660.
This Statement of Additional Information is not a Prospectus, and
should be used in conjunction with the Prospectuses for the Trust dated January
14, 1997, as supplemented from time to time. The Trust offers up to five classes
of shares of each of its Funds through two Prospectuses. Class A, Class B and
Class C shares are offered through the "Retail Prospectus," and Institutional
and Administrative Class shares are offered through the "Institutional
Prospectus" (collectively with the Retail Prospectus, the "Prospectuses"). A
copy of the applicable Prospectus may be obtained free of charge at the address
and telephone number listed below.
Institutional Prospectus: Retail Prospectus:
------------------------ -----------------
PIMCO Funds PIMCO Funds Distribution Company
840 Newport Center Drive 2187 Atlantic Street
Suite 360 Stamford, Connecticut 06902
Newport Beach, California 92660 Telephone: (800) 426-0107
Telephone: (800) 927-4648 (Current Shareholders)
(800) 800-0952 (New Accounts)
(800) 987-4620 (PIMCO Infolink Audio
Response Network)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
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<S> <C>
INVESTMENT OBJECTIVES AND POLICIES............................................................. 3
U.S. Government Securities............................................................... 3
Borrowing................................................................................ 3
Preferred Stock.......................................................................... 4
Corporate Debt Securities................................................................ 4
High Yield Securities ("Junk Bonds")..................................................... 4
Participation on Creditors Committees.................................................... 6
Variable and Floating Rate Securities.................................................... 6
Mortgage-Related and Asset-Backed Securities............................................. 7
Foreign Securities....................................................................... 10
Bank Obligations......................................................................... 12
Commercial Paper......................................................................... 13
Derivative Instruments................................................................... 13
Forward Commitments, When-Issued and Delayed Delivery Transactions....................... 19
Warrants to Purchase Securities.......................................................... 20
Tax Exempt Bonds......................................................................... 20
Metal-Indexed Notes and Precious Metals.................................................. 21
Repurchase Agreements.................................................................... 22
Securities Loans......................................................................... 22
INVESTMENT RESTRICTIONS........................................................................ 23
Fundamental Investment Restrictions...................................................... 23
Non-Fundamental Investment Restrictions.................................................. 25
MANAGEMENT OF THE TRUST........................................................................ 29
Trustees................................................................................. 29
Officers................................................................................. 31
Trustees' Compensation................................................................... 32
Investment Adviser....................................................................... 33
Portfolio Management Agreements.......................................................... 35
Fund Administrator....................................................................... 39
DISTRIBUTION OF TRUST SHARES................................................................... 41
Distributor and Multi-Class Plan......................................................... 41
Contingent Deferred Sales Charge and Initial Sales Charge................................ 42
Distribution and Servicing Plans for Class A, Class B and Class C Shares................. 43
Distribution and Administrative Services Plans for Administrative Class Shares........... 46
Purchases, Exchanges and Redemptions..................................................... 48
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................................... 49
Investment Decisions..................................................................... 49
Brokerage and Research Services.......................................................... 49
Portfolio Turnover....................................................................... 51
NET ASSET VALUE................................................................................ 52
TAXATION....................................................................................... 52
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Distributions............................................................................ 53
Sales of Shares.......................................................................... 54
Backup Withholding....................................................................... 54
Options, Futures, Forward Contracts and Swap Agreements.................................. 55
Passive Foreign Investment Companies..................................................... 55
Foreign Currency Transactions............................................................ 56
Foreign Taxation......................................................................... 56
Original Issue Discount.................................................................. 57
Other Taxation........................................................................... 57
OTHER INFORMATION.............................................................................. 58
Capitalization........................................................................... 58
Performance Information.................................................................. 58
Calculation of Yield..................................................................... 59
Calculation of Total Return.............................................................. 60
Voting Rights............................................................................ 73
Certain Ownership of Trust Shares........................................................ 73
Custodian................................................................................ 85
Independent Accountants.................................................................. 86
Registration Statement................................................................... 86
Financial Statements..................................................................... 86
APPENDIX.......................................................................................A-1
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and general investment policies of each
Fund are described in the Prospectuses. 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
(e.g., STRIPs and CUBEs) are direct obligations of the U.S. Government.
Borrowing
Subject to the limitations described under "Investment Restrictions"
below, a Fund may be permitted to borrow for temporary purposes and/or for
investment purposes. Such a practice will result in leveraging of a Fund's
assets and may cause a Fund to liquidate portfolio positions when it would not
be advantageous to do so. 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. As noted under "Investment Restrictions,"
certain Funds are subject to limitations on borrowings which are more strict
than those imposed by the 1940 Act. 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 if permitted to do so under its specific
limitations on borrowings. 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 assets determined to be
liquid by the Adviser the Fund's sub-adviser (the Funds' sub-advisers are
referred to herein as "Portfolio Managers") in accordance with procedures
established by the Board of Trustees equal (on a daily mark-to-market basis) to
its
3
<PAGE>
obligations under reverse repurchase agreements with broker-dealers (but not
banks). However, reverse 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 as
specified under "Investment Restrictions" below.
Preferred Stock
All Funds may invest in preferred stock. Preferred stock is a form of
equity ownership in a corporation. The dividend on a preferred stock is a fixed
payment which the corporation is not legally bound to pay. Certain classes of
preferred stock are convertible, meaning the preferred stock is convertible into
shares of common stock of the issuer. 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 Equity Income,
Value, Capital Appreciation, Mid Cap Growth, Micro Cap Growth, Small Cap Value,
Small Cap Growth, Core Equity, Mid Cap Equity, Enhanced Equity, Emerging
Markets, Structured Emerging Markets and International Developed 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 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 debt securities in which the Funds may invest are
convertible securities. A convertible debt 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
non-convertible 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.
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.
High Yield Securities ("Junk Bonds")
Certain of the Funds may invest in debt/fixed income securities of
domestic or foreign issuers that meet minimum ratings criteria set forth for a
Fund, or if unrated, are of comparable quality in the opinion of the Fund's
4
<PAGE>
Portfolio Manager. A description of the ratings categories used is set forth in
the Appendix to this Statement of Additional Information.
A security is considered to be below "investment grade" quality if it
is either (1) not rated in one of the four highest rating categories by one of
the Nationally Recognized Statistical Rating Organizations ("NRSROs") (i.e.,
rated Ba or below by Moody's Investors Services, Inc. ("Moody's") or BB or below
by Standard & Poor's Corporation ("S&P")) or (2) if unrated, determined by the
Adviser or relevant Portfolio Manager to be of comparable quality to obligations
so rated.
The Renaissance, Balanced and Tax Exempt Funds may purchase high
yield securities (as defined in the Prospectuses) rated in either the fifth or
(except for the Tax Exempt Fund) sixth highest rating categories by any NRSRO or
comparable unrated securities, and the Renaissance Fund may invest up to 10% of
its total assets in high yield securities rated below the sixth highest rating
category by an NRSRO or comparable unrated securities (but will not purchase any
security in default on the date of acquisition). Investment in high yield
securities generally provides greater income and increased opportunity for
capital appreciation than investments in higher quality securities, but it also
typically entails greater price volatility and principal and income risk. High
yield securities are regarded as predominantly speculative with respect to the
issuer's continuing ability to meet principal and interest payments. The market
for these securities is relatively new, and many of the outstanding high yield
securities have not endured a major business recession. A long-term track record
on default rates, such as that for investment grade corporate bonds, does not
exist for this market. Analysis of the creditworthiness of issuers of high yield
securities may be more complex than for issuers of higher quality debt/fixed
income securities. Each Fund of the Trust that may purchase high yield
securities may continue to hold such securities following a decline in their
rating if in the opinion of the Adviser or the Portfolio Manager, as the case
may be, it would be advantageous to do so. Investments in high yield securities
that are eligible for purchase by certain of the Funds are described as
"speculative" by both Moody's and S&P.
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 a 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 investment grade
securities. The prices of high yield securities are likely to be sensitive to
adverse economic downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for example, could
cause a decline in high yield security prices because the advent of a recession
could lessen the ability of a highly leveraged company to make principal and
interest payments on its debt/fixed income securities. If an issuer of high
yield securities defaults, in addition to risking payment of all or a portion of
interest and principal, the Funds investing in such securities may incur
additional expenses to seek recovery. In the case of high yield securities
structured as zero-coupon or pay-in-kind securities, their market prices are
affected to a greater extent by interest rate changes, and therefore tend to be
more volatile than securities which pay interest periodically and in cash.
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
secondary market on which high yield securities are traded may be less liquid
than the market for higher grade securities. Less liquidity in the secondary
trading market could adversely affect the price at which the Funds could sell a
high yield security, and could adversely affect the daily net asset value of the
shares. Lower liquidity in secondary
5
<PAGE>
markets could adversely affect the value of high yield/high risk securities held
by the Renaissance, Tax Exempt and Balanced Funds. While lower rated securities
typically are less sensitive to interest rate changes than higher rated
securities, the market prices of high yield/high risk securities structured as
"zero coupon" or "pay-in-kind" securities may be affected to a greater extent by
interest rate changes. See Appendix A to this Statement of Additional
Information for further information regarding high yield/high risk securities.
For instance, adverse publicity and investor perceptions, whether or not based
on fundamental analysis, may decrease the values and liquidity of high yield
securities, especially in a thinly traded market. When secondary markets for
high yield securities are less liquid than the market for higher grade
securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater
role in the valuation because there is less reliable, objective data available.
Debt securities are purchased and sold principally in response to
current assessments of future changes in business conditions and the levels of
interest rates on debt/fixed income securities of varying maturities, the
availability of new investment opportunities at higher relative yields, and
current evaluations of an issuer's continuing ability to meet its obligations in
the future. The average maturity or duration of the debt/fixed income securities
in a Fund's portfolio may be varied in response to anticipated changes in
interest rates and to other economic factors. Securities may be bought and sold
in anticipation of a decline or a rise in market interest rates. In addition, a
security may be sold and another of comparable quality and maturity (usually,
but not always, of a different issuer) purchased at approximately the same time
to take advantage of what are believed to be short-term differentials in values
or yields.
Participation on Creditors Committees
A Fund may from time to time participate on committees formed by
creditors to negotiate with the management of financially troubled issuers of
securities held by the Fund. Such participation may subject a Fund to expenses
such as legal fees and may make the Fund an "insider" of the issuer for purposes
of the federal securities laws, and therefore may restrict the Fund's ability to
trade in or acquire additional positions in a particular security when it might
otherwise desire to do so. Participation by a Fund on such committees also may
expose the Fund to potential liabilities under the federal bankruptcy laws or
other laws governing the rights of creditors and debtors. A Fund would
participate on such committees only when the Adviser and the relevant Portfolio
Manager believe that such participation is necessary or desirable to enforce the
Fund's rights as a creditor or to protect the value of securities held by the
Fund.
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.
Certain of the Funds 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 U.S. Treasury bill rate.
The interest rate on a floater resets periodically, typically every six months.
Because of the interest rate reset feature, floaters provide a Fund with a
certain degree of protection against rises in interest rates. However, the Fund
would generally participate less in appreciation resulting from any general
decline in interest rates.
Certain Funds 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 will generally 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" below for a discussion of IOs and POs.
6
<PAGE>
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" below). The Balanced Fund may also invest in debt securities which
are secured with collateral consisting of mortgage-related securities (see
"Collateralized Mortgage Obligations" below) 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.
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/services 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
7
<PAGE>
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 Fund'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 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
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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.
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 a Fund may fail to recoup some or all of 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
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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 a 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.
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 a Fund's yield
to maturity from these securities. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Fund may fail to recoup
some or all of 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 Emerging Markets, Structured Emerging Markets, International
Developed and International 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. Each of the Funds except for the Tax Exempt Fund may
invest in American Depository Receipts ("ADRs").
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The Emerging Markets, Structured Emerging Markets, International Developed,
International and Precious Metals Funds may also invest in common stocks issued
by foreign companies or in securities represented by 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 financial information from an issuer that has participated in the
creation of a sponsored program. The Precious Metals Fund may invest primarily
in securities of foreign issuers, securities denominated in foreign currencies,
securities principally traded on securities markets outside of the United States
and in securities of foreign issuers that are traded on U.S. securities markets.
The Renaissance, Core Equity, Mid Cap Equity, Growth, Target, Opportunity and
Innovation 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), and (except for the Core Equity and Mid Cap Equity Funds) may
invest without limit in securities of foreign issuers that are traded in U.S.
securities markets. The 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 risks of investing in foreign securities are particularly high
when securities of issuers based in emerging market countries are involved.
Investing in emerging market 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 emerging market countries; the fact that
companies in emerging market 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 Renaissance, Growth, Target, Opportunity, Innovation,
International, International Developed, Emerging Markets, Structured Emerging
Markets, Precious Metals and Balanced Funds may enter into forward foreign
currency exchange contracts to reduce the risks of adverse changes in foreign
exchange rates. In addition, the Emerging Markets,
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Structured Emerging Markets, International Developed, International, Balanced
and Precious Metals Funds may buy and sell foreign currency futures contracts
and options on foreign currencies and foreign currency futures.
All of the Funds that may buy or sell foreign currencies may 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 exchange 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. Contracts to sell
foreign currencies 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 risks arising from
the Funds' investment or anticipated investment in securities denominated in
foreign currencies. Such hedging transactions may not be successful and may
eliminate any chance for a Fund to benefit from favorable fluctuations in
relevant foreign currencies.
The International, International Developed, Emerging Markets and
Structured Emerging Markets Funds may also enter into forward foreign currency
exchange contracts for purposes of increasing exposure to a foreign currency or
to shift exposure to foreign currency fluctuations from one currency to another.
To the extent that they do so, the International, International Developed,
Emerging Markets and Structured Emerging Markets Funds will be subject to the
additional risk that the relative value of currencies will be different than
anticipated by the particular Fund's Portfolio Manager. 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
assets determined to be liquid by the Portfolio Manager in accordance with
procedures established by the Board of Trustees in a segregated account to cover
forward currency contracts entered into for non-hedging purposes. The Funds may
also use foreign currency futures contracts and related options on currencies
for the same reasons for which forward foreign currency exchange contracts are
used.
Bank Obligations
Bank obligations in which the Funds may 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 Equity Income, Value, Enhanced Equity, Capital Appreciation, Mid Cap
Growth, Small Cap Value, Small Cap Growth and Balanced Funds), or 15% (in the
case of the Renaissance, Growth, Mid Cap Equity, Core Equity, Target,
Opportunity, Micro Cap Growth, Innovation, International, Emerging Markets,
Structured Emerging Markets, International Developed, Precious Metals and Tax
Exempt 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
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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 Renaissance, Growth, Target, Core Equity, Mid Cap Equity,
Opportunity, Innovation, International, Emerging Markets, Structured Emerging
Markets, International Developed, and Balanced Funds limit their investments in
foreign bank obligations to 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 limitations
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.
Obligations of foreign banks involve certain risks associated with
investing in foreign securities described under "Foreign Securities" above,
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 Renaissance, Growth, Target, Core
Equity, Mid Cap Equity, Opportunity, Innovation, Emerging Markets, Structured
Emerging Markets, International and International Developed 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 write call and put options on
securities, securities indexes and foreign currencies, and enter into futures
contracts and use options on future contracts as further described below. In
pursuit of their investment objectives, the Renaissance, Core Equity, Mid Cap
Equity, Growth, Target, Opportunity, Innovation, International, International
Developed, Emerging Markets, Structured Emerging Markets, Precious Metals and
Balanced Funds may engage in the purchase and writing of call and put options on
securities; each of these Funds, along with the Enhanced Equity Fund, may engage
in the purchase and writing of options on securities indexes. The International,
International Developed, Emerging Markets, Precious Metals and Balanced Funds
may invest in foreign exchange
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futures contracts and options thereon that are traded on a U.S. or foreign
exchange or board of trade, or similar entity, or quoted on an automatic
quotation system. The Balanced 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 Tax Exempt Fund may purchase call or put options on
U.S. Government Securities, Tax Exempt Bonds and Tax Exempt Bond indexes. The
Precious Metals Fund may purchase and write options on commodities indexes.
Options on Securities and Indexes. A Fund may, to the extent
specified for the Fund in the Prospectuses, 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 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 features 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 assets
determined to be liquid by the Portfolio Manager in accordance with procedures
established by the Board of Trustees 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 assets determined to be liquid by the Portfolio
Manager in accordance with procedures established by the Board of Trustees 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 assets determined
to be liquid by the Portfolio Manager in accordance with procedures established
by the Board of Trustees in a segregated account with its custodian. A put
option on a security or an index is "covered" if the Fund maintains assets
determined to be liquid by the Portfolio Manager in accordance with procedures
established by the Board of Trustees 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 assets determined to be liquid by the Portfolio
Manager in accordance with procedures established by the Board of Trustees in a
segregated account with its custodian.
If an option written by a Fund expires unexercised, 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 exchange traded 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
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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.
OTC Options. The Renaissance, Growth, Target, Opportunity,
Innovation, International, Precious Metals and Tax Exempt Funds will enter into
over-the-counter ("OTC") options transactions only with primary dealers in U.S.
Government securities and only pursuant to agreements that will assure that the
relevant Fund will at all times have the right to repurchase the option written
by it from the dealer at a specified formula price. The Funds will treat the
amount by which such formula price exceeds the intrinsic value of the option
(i.e., the amount, if any, by which the market price of the underlying security
exceeds the exercise price of the option) as an illiquid investment.
It is the present policy of each of the Renaissance, Growth, Target,
Opportunity, Innovation, International, Precious Metals and Tax Exempt Funds not
to enter into any OTC option transaction if, as a result, more than 15% of that
Fund's net assets would be invested in (i) OTC options purchased by the Fund,
(ii) the illiquid portion (determined under the foregoing formula) of OTC
options written by the Fund, and (iii) other illiquid investments as set forth
below under the heading "Investment Restrictions."
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. Each of the Funds that may buy or sell
foreign currencies 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.
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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 Prospectuses. 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.
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.
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 assets determined to be liquid by the Portfolio Manager in
accordance with procedures established by the Board of Trustees ("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
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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.
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) assets determined to be liquid
by the Portfolio Manager in accordance with procedures established by the Board
of Trustees, 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) assets determined to be liquid
by the Portfolio Manager in accordance with procedures established by the Board
of Trustees, 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) assets
determined to be liquid by the Portfolio Manager in accordance with procedures
established by the Board of Trustees, 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) assets determined to be
liquid by the Portfolio Manager in accordance with procedures established by the
Board of Trustees 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. Some of the
risk may be caused by an imperfect correlation between movements in the price of
the futures contract and the price of the security or other investment being
hedged. The hedge will not be fully effective where there is such imperfect
correlation. For example, if the price of the futures contract moves more than
the price of the hedged security, a Fund would experience either a loss or gain
on the future which is not completely offset by movements in the price of the
hedged securities. To
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compensate for imperfect correlations, a Fund may purchase or sell futures
contracts in a greater dollar amount than the hedged securities if the
volatility of the hedged securities is historically greater than the volatility
of the futures contracts. Conversely, a Fund may purchase or sell fewer
contracts if the volatility of the price of the hedged securities is
historically less than that of the futures contracts. The risk of imperfect
correlation generally tends to diminish as the maturity date of the futures
contract approaches.
Futures contracts on U.S. Government securities historically have
reacted to an increase or decrease in interest rates in a manner similar to that
in which the underlying U.S. Government securities reacted. To the extent,
however, that the Tax Exempt Fund enters into such futures contracts, the value
of such futures will not vary in direct proportion to the value of the Fund's
holdings of Tax Exempt Bonds. Thus, the anticipated spread between the price of
the futures contract and the hedged security may be distorted due to differences
in the nature of the markets. The spread also may be distorted by differences in
initial and variation margin requirements, the liquidity of such markets and the
participation of speculators in such markets.
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 Emerging Markets, Structured Emerging Markets
and International Developed 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. The
Balanced Fund may enter into swap agreements to hedge against changes in
interest rates, foreign 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. 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
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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 assets determined to be liquid
by the Portfolio Manager in accordance with procedures established by the Board
of Trustees, 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. 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.
Forward Commitments, When-Issued and 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, assets determined to be liquid by the
Adviser or the Portfolio Manager in accordance with procedures established by
the Board of Trustees 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. 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.
Each Fund may make contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward commitments")
if the Fund either (i) holds, and maintains until the settlement date in a
segregated account, assets determined to be liquid by the Portfolio Manager in
accordance with procedures established by the Board of Trustees in an amount
sufficient to meet the purchase price or (ii) enters into an offsetting contract
for the forward sale of securities of equal value that it owns. Certain Funds
may enter into forward commitments for the purchase or sale of
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foreign currencies. Forward commitments may be considered securities in
themselves. They involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. A Fund may dispose of a
commitment prior to settlement and may realize short-term profits or losses upon
such disposition.
Warrants to Purchase Securities
Certain 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.
Tax Exempt Bonds
As noted in the Prospectuses, it is a non-fundamental policy of the
Tax Exempt Fund to have 80% of its net assets invested in debt obligations the
interest on which, in the opinion of bond counsel to the issuer at the time of
issuance, is exempt from federal income tax ("Tax Exempt Bonds") which are rated
Baa or higher by Moody's or BBB or higher by S&P, or in one of the four highest
rating categories of any other NRSRO, or which are unrated and determined by the
Adviser or the Fund's Portfolio Manager to be of quality comparable to
obligations so rated. Under such policy, the Fund may invest up to 20% of its
net assets in Tax Exempt Bonds rated in the fifth highest rating category by any
NRSRO, or unrated obligations determined by the Portfolio Manager to be of
quality comparable to obligations so rated. A description of these ratings is
set forth in Appendix A hereto. From time to time, however, the Fund may have
less than 80% of its net assets invested in Tax Exempt Bonds for temporary
defensive purposes. The ability of the Fund to invest in securities other than
Tax Exempt Bonds is limited by a requirement of the Internal Revenue Code of
1986 that at least 50% of the Fund's total assets be invested in Tax Exempt
Bonds at the end of each calendar quarter. See "Taxes."
Tax Exempt Bonds share the attributes of debt/fixed income securities
in general, but are generally issued by states, municipalities and other
political subdivisions, agencies, authorities and instrumentalities of states
and multi-state agencies or authorities. The Tax Exempt Bonds which the Tax
Exempt Fund may purchase include general obligation bonds and limited obligation
bonds (or revenue bonds), including industrial development bonds issued pursuant
to former federal tax law. General obligation bonds are obligations involving
the credit of an issuer possessing taxing power and are payable from such
issuer's general revenues and not from any particular source. Limited obligation
bonds are payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source. Tax-exempt private activity bonds and industrial
development bonds generally are also revenue bonds and thus are not payable from
the issuer's general revenues. The credit and quality of private activity bonds
and industrial development bonds are usually related to the credit of the
corporate user of the facilities. Payment of interest on and repayment of
principal of such bonds is the responsibility of the corporate user (and/or any
guarantor).
Under the Internal Revenue Code of 1986, certain limited obligation
bonds are considered "private activity bonds" and interest paid on such bonds is
treated as an item of tax preference for purposes of calculating federal
alternative minimum tax liability.
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Tax Exempt Bonds are subject to credit and market risk. Generally,
prices of higher quality issues tend to fluctuate less with changes in market
interest rates than prices of lower quality issues and prices of longer maturity
issues tend to fluctuate more than prices of shorter maturity issues.
The Tax Exempt Fund may purchase and sell portfolio investments to
take advantage of changes or anticipated changes in yield relationships, markets
or economic conditions. The Fund may also sell Tax Exempt Bonds due to changes
in the Portfolio Manager's evaluation of the issuer or cash needs resulting from
redemption requests for Fund shares. The secondary market for Tax Exempt Bonds
typically has been less liquid than that for taxable debt/fixed income
securities, and this may affect the Fund's ability to sell particular Tax Exempt
Bonds at then-current market prices, especially in periods when other investors
are attempting to sell the same securities.
Prices and yields on Tax Exempt Bonds are dependent on a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions of the Tax Exempt Bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
A number of these factors, including the ratings of particular issues, are
subject to change from time to time. Information about the financial condition
of an issuer of Tax Exempt Bonds may not be as extensive as that which is made
available by corporations whose securities are publicly traded.
Obligations of issuers of Tax Exempt Bonds are subject to the
provisions of bankruptcy, insolvency and other laws, such as the Federal
Bankruptcy Reform Act of 1978, affecting the rights and remedies of creditors.
Congress or state legislatures may seek to extend the time for payment of
principal or interest, or both, or to impose other constraints upon enforcement
of such obligations. There is also the possibility that as a result of
litigation or other conditions, the power or ability of issuers to meet their
obligations for the payment of interest and principal on their Tax Exempt Bonds
may be materially affected or their obligations may be found to be invalid or
unenforceable. Such litigation or conditions may from time to time have the
effect of introducing uncertainties in the market for Tax Exempt Bonds or
certain segments thereof, or of materially affecting the credit risk with
respect to particular bonds. Adverse economic, business, legal or political
developments might affect all or a substantial portion of the Fund's Tax Exempt
Bonds in the same manner.
Metal-Indexed Notes and Precious Metals
The Precious Metals Fund may invest in notes, the principal amount or
redemption price of which is indexed to and thus varies directly with changes in
the market price of gold bullion or other precious metals ("Metal-Indexed
Notes"). It is expected that the value of Metal-Indexed Notes will be as
volatile as the price of the underlying metal.
The Precious Metals Fund will only purchase Metal-Indexed Notes which
are rated, or are issued by issuers that have outstanding debt obligations
rated, investment grade, commercial paper rated in the top rating category by
any NRSROs, or Metal-Indexed Notes issued by issuers that the Adviser or the
Portfolio Manager has determined to be of similar creditworthiness. Debt
obligations rated in the fourth highest rating category by an NRSRO are
considered to have some speculative characteristics. The Metal-Indexed Notes
might be backed by a bank letter of credit, performance bond or might be
otherwise secured, and any such security, which would be held by the Fund's
custodian, would be taken into account in determining the creditworthiness of
the securities. The Precious Metals Fund might purchase unsecured Metal-Indexed
Notes if the issuer thereof met the Fund's credit standards without any such
security. While the principal amount or redemption price of Metal-Indexed Notes
would vary with the price of the resource, such securities would not be secured
by a pledge of the resource or any other security interest in or claim on the
resource. In the case of Metal-Indexed Notes not backed by a performance bond,
letter of credit or similar security, it is expected that such securities
generally would not be secured by any other specific assets.
The Precious Metals Fund anticipates that if Metal-Indexed senior
securities were to be purchased, such securities would be issued by precious
metals or commodity brokers or dealers, by mining companies, by commercial banks
or by other financial institutions. Such issuers would issue notes to hedge
their inventories and reserves of the resource, or to borrow money at a
relatively low cost (which would include the nominal rate of interest paid on
Metal-
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Indexed Notes, described below, and the cost of hedging the issuer's
metals exposure). The Precious Metals Fund would not purchase a Metal-Indexed
Note issued by a broker or dealer if as a result of such purchase more than 5%
of the value of the Fund's total assets would be invested in securities of such
issuer. The Precious Metals Fund might purchase Metal-Indexed Notes from brokers
or dealers which are not also securities brokers or dealers. Precious metals or
commodity brokers or dealers are not subject to supervision or regulation by any
governmental authority or self-regulatory organization in connection with the
issuance of Metal-Indexed Notes.
Until recently, there were no Metal-Indexed Notes outstanding and
consequently there is no secondary trading market for such securities. Although
a limited secondary market might develop among institutional traders, there is
no assurance that such a market will develop. No public market is expected to
develop, since the Precious Metals Fund expects that Metal-Indexed Notes will
not be registered under the 1933 Act, and therefore disposition of such
securities, other than to the issuer thereof (as described below), would be
dependent upon the availability of an exemption from such registration.
Any Metal-Indexed Notes which the Precious Metals Fund might purchase
generally will have maturities of one year or less. Such notes, however, will be
subject to being called for redemption by the issuer on relatively short notice.
In addition, it is expected that the Metal-Indexed Notes will be subject to
being put by the Precious Metals Fund to the issuer or to a stand-by broker
meeting the credit standards set forth above, with payments being received by
the Precious Metals Fund on no more than seven days' notice. A stand-by broker
might be a securities broker-dealer, in which case the Precious Metals Fund's
investment will be limited by applicable regulations of the Securities and
Exchange Commission (the "SEC"). The put feature of the Metal-Indexed Notes will
ensure liquidity even in the absence of a secondary trading market. The
securities will be repurchased upon exercise of the holder's put at the
specified exercise price, less repurchase fees, if any, which are not expected
to exceed 1% of the redemption or repurchase proceeds. Depending upon the terms
of particular Metal-Indexed Notes, there might be a period as long as five days
between the date upon which the Precious Metals Fund notifies the issuer of the
exercise of the put and determination of the sale price.
It is expected that any Metal-Indexed Notes which the Precious Metals
Fund might purchase will bear interest or pay preferred dividends at relatively
nominal rates under 2% per annum. The Precious Metals Fund's holdings of such
senior securities therefore would not generate appreciable current income, and
the return from such senior securities would be primarily from any profit on the
sale or maturity thereof at a time when the price of the relevant precious metal
is higher than it was when the senior securities were purchased. The Precious
Metals Fund will not invest in Metal-Indexed Notes that are not publicly traded
until it is certain of how the Internal Revenue Service would characterize
income derived from such notes.
Repurchase Agreements
Each of the Funds may enter into repurchase agreements with domestic
commercial banks or registered broker/dealers. A repurchase agreement is a
contract under which a Fund would acquire a security for a relatively short
period (usually not more than one week) subject to the obligation of the seller
to repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). In the case of repurchase
agreements with broker-dealers, the value of the underlying securities (or
collateral) will be at least equal at all times to the total amount of the
repurchase obligation, including the interest factor. The Fund bears a risk of
loss in the event that the other party to a repurchase agreement defaults on its
obligations and the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities. The Adviser and the Portfolio Managers, as
appropriate, will monitor the creditworthiness of the counterparties.
Securities Loans
Each of the Equity Income, Value, Enhanced Equity, Capital
Appreciation, Mid Cap Growth, Small Cap Value, Small Cap Growth, Core Equity,
Mid Cap Equity, Target, Micro Cap Growth, International Developed, Emerging
22
<PAGE>
Markets, Structured Emerging Markets and Balanced Funds may make secured loans
of its portfolio securities amounting to no more than 33 % of its total assets.
Each of the Renaissance, Growth, Opportunity, Innovation, International, Tax
Exempt and Precious Metals Funds may make such loans amounting to no more than
25% of their total assets. The risks in lending portfolio securities, as with
other extensions of credit, consist of possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. However, such loans will be made only to broker-dealers that are
believed by the Adviser or the Portfolio Manager to be of relatively high credit
standing. Securities loans are made to broker-dealers pursuant to agreements
requiring that loans be continuously secured by collateral at least equal at all
times to the market value of the securities lent. The borrower pays to the
lending Fund an amount equal to any dividends or interest received on the
securities lent. The Fund may invest only the cash collateral received in
interest-bearing, short-term securities or receive a fee from the borrower. In
the case of cash collateral, the Fund typically pays a rebate to the lender.
Although voting rights or rights to consent with respect to the loaned
securities pass to the borrower, the Fund retains the right to call the loans at
any time on reasonable notice, and it will do so in order that the securities
may be voted by the Fund if the holders of such securities are asked to vote
upon or consent to matters materially affecting the investment. The Fund may
also call such loans in order to sell the securities involved.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The investment restrictions set forth below are fundamental policies
of the Renaissance, Growth, Target, Opportunity, Innovation, International,
Precious Metals and Tax Exempt Funds and may not be changed with respect to any
such Fund without shareholder approval by vote of a majority of the outstanding
voting securities of that Fund. Under these restrictions, none of the
above-mentioned Funds may:
(1) borrow money in excess of 10% of the value (taken at the lower of
cost or current value) of such Fund's total assets (not including the amount
borrowed) at the time the borrowing is made, and then only from banks as a
temporary measure to facilitate the meeting of redemption requests (not for
leverage) which might otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such borrowings will be
repaid before any additional investments are purchased;
(2) pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 10% of such Fund's total assets (taken at cost) and then only to
secure borrowings permitted by Restriction 1 above. (The deposit of securities
or cash or cash equivalents in escrow in connection with the writing of covered
call or put options, respectively, is not deemed to be pledges or other
encumbrances.) (For the purpose of this restriction, collateral arrangements
with respect to the writing of options, futures contracts, options on futures
contracts, and collateral arrangements with respect to initial and variation
margin are not deemed to be a pledge of assets and neither such arrangements nor
the purchase or sale of futures or related options are deemed to be the issuance
of a senior security.);
(3) underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio investments, it
may be deemed to be an underwriter under federal securities laws;
(4) purchase or sell real estate, although it may purchase securities
of issuers which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by interests in
real estate, except that the Precious Metals Fund may purchase or sell
agricultural land;
(5) acquire more than 10% of the voting securities of any issuer,
both with respect to any such Fund and to the Funds to which this policy
relates, in the aggregate; or
(6) concentrate more than 25% of the value of its total assets in any
one industry, or, in the case of the Tax Exempt Fund, in industrial development
revenue bonds based, directly or indirectly, on the credit of private entities
in
23
<PAGE>
any one industry; except that the Precious Metals Fund will concentrate more
than 25% of its total assets in securities of companies principally engaged in
the extraction, processing, distribution or marketing of precious metals, and
the Innovation Fund will concentrate more than 25% of its assets in companies
which use innovative technology to gain a strategic, competitive advantage in
their industry as well as companies that provide and service those technologies.
With respect to investments of the Tax Exempt Fund in utilities, gas, electric,
water and telephone companies will be considered as being in separate
industries.
The investment objective of each of the above-referenced Funds is
non-fundamental and may be changed with respect to each such Fund by the
Trustees without shareholder approval.
The investment objective of each of the Equity Income, Value,
Enhanced Equity, Capital Appreciation, Mid Cap Growth, Small Cap Value, Small
Cap Growth, Core Equity, Mid Cap Equity, Micro Cap Growth, International
Developed, Emerging Markets, Structured Emerging Markets and Balanced Funds, as
set forth in the Prospectuses under "Investment Objectives and Policies,"
together with the investment restrictions set forth below, are fundamental
policies of each such Fund and may not be changed with respect to any such Fund
without shareholder approval by vote of a majority of the outstanding shares of
that Fund. Under these restrictions, none of the above-mentioned Funds may:
(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 or swap agreements), except that any such 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 Prospectuses
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
24
<PAGE>
margin deposits for futures contracts, options on futures contracts, and forward
foreign currency contracts will not be deemed to be pledges of such Fund's
assets);
(8) issue senior securities, except insofar as such 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 such 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 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.
Notwithstanding 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).
Non-Fundamental Investment Restrictions
The Renaissance, Growth, Target, Opportunity, Innovation,
International, Precious Metals and Tax Exempt Funds are also subject to the
following non-fundamental restrictions and policies (which may be changed
without shareholder approval) and, unless otherwise indicated, may not:
(1) invest in (a) securities which at the time of such investment are
not readily marketable, (b) securities the disposition of which is restricted
under federal securities laws, (c) repurchase agreements maturing in more than
seven days (d) OTC options (to the extent described above under "Derivative
Instruments -- OTC Options"), and (e) IO/PO SMBS (as described above under
"Mortgage-Related and Asset-Backed Securities -- Stripped Mortgage -Backed
Securities") if, as a result, more than 15% of a Fund's net assets, taken at
current value, would then be invested in securities described in (a), (b), (c),
(d) and (e) above. For the purpose of this restriction securities subject to a
7-day put option or convertible into readily saleable securities or commodities
are not included with subsections (a) or (b);
(2) with respect to the Tax Exempt Fund, invest less than 80% of such
Fund's net assets in Tax Exempt Bonds rated Baa or higher by Moody's or BBB or
higher by S&P or which are unrated and determined by such Fund's Portfolio
Manager to be of comparable quality;
(3) purchase securities on margin, except such short-term credits as
may be necessary for the clearance of purchases and sales of securities. (For
this purpose, the deposit or payment by a Fund of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.);
(4) make short sales of securities or maintain a short position for
the account of a Fund unless at all times when a short position is open such
Fund owns an equal amount of such securities or owns securities which, without
payment of any further consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the securities sold
short;
25
<PAGE>
(5) purchase or sell commodities or commodity contracts except that
such Funds may purchase and sell financial futures contracts and related options
and the Precious Metals Fund may purchase and sell precious metals and other
commodities and futures thereon;
(6) make loans, except by purchase of debt obligations or by entering
into repurchase agreements (in the case of the Tax Exempt Fund, with respect to
not more than 20% of its total assets) or through the lending of the Fund's
portfolio securities with respect to not more than 25% of its total assets (33
1/3% in the case of the Target Fund);
(7) invest in securities of any issuer if, to the knowledge of the
Trust, any officers and Trustees of the Trust and officers and directors of the
Adviser or the Portfolio Manager of the Fund who individually own beneficially
more than 1/2 of 1% of the securities of that issuer, own beneficially in the
aggregate more than 5% of the securities of such issuer;
(8) invest in securities of any issuer if, immediately after such
investment, more than 5% of the total assets of such Fund (taken at current
value) would be invested in the securities of such issuer, except that up to 25%
of the International Fund's and Target Fund's total assets taken at current
value may be invested (without regard to such 5% limitation) in the securities
of an issuer; and provided that this limitation does not apply to bank
certificates of deposit or to obligations issued or guaranteed as to interest
and principal by the U.S. government or its agencies or instrumentalities. For
the purpose of this restriction, each state and each separate political
subdivision, agency, authority or instrumentality of such state, each
multi-state agency or authority, and each guarantor, if any, are treated as
separate issuers of Tax Exempt Bonds;
(9) invest in securities of other investment companies, except by
purchase in the open market involving only customary brokers' commissions except
for the International Fund, which may invest up to 10% of its assets in
securities of other investment companies without regard to this restriction. For
purposes of this restriction, foreign banks and foreign insurance companies or
their respective agents or subsidiaries are not considered investment companies.
(Under the 1940 Act no registered investment company may (a) invest more than
10% of its total assets (taken at current value) in securities of other
investment companies, (b) own securities of any one investment company having a
value in excess of 5% of its total assets (taken at current value), or (c) own
more than 3% of the outstanding voting stock of any one investment company.);
(10) purchase securities the disposition of which is restricted under
the federal securities laws (excluding for purposes of this restriction
securities offered and sold pursuant to Rule 144A of the 1933 Act and Section
4(2) commercial paper) if, as a result, such investments would exceed 10% of the
value of the net assets of the relevant Fund; provided, however, that so long as
a similar restriction applies under the Ohio Administrative Code, no Fund will
invest more than 15% of its total assets in the securities of issuers which
together with any predecessors have a record of less than three years continuous
operation or securities of issuers which are restricted as to disposition
(including Rule 144A securities and Section 4(2) commercial paper);
(11) invest in warrants or rights excluding options (other than
warrants or rights acquired by such Fund as a part of a unit or attached to
securities at the time of purchase) if as a result such investments (valued at
the lower of cost or market) would exceed 5% of the value of such Fund's net
assets; provided that not more than 2% of the Fund's net assets may be invested
in warrants not listed on the New York or American Stock Exchanges;
(12) invest in securities of an issuer, which, together with any
predecessors or controlling persons, has been in operation for less than three
consecutive years and in equity securities for which market quotations are not
readily available (excluding restricted securities) if, as a result, the
aggregate of such investments would exceed 5% of the value of the Fund's net
assets; provided, however, that this restriction shall not apply to any
obligation of the U.S. Government or its instrumentalities or agencies. (Debt
securities having equity features are not considered "equity securities" for
purposes of this restriction.);
26
<PAGE>
(13) write (sell) or purchase options except that (i) each such Fund
other than the Tax Exempt Fund may (a) write covered call options or covered put
options on securities that it is eligible to purchase (and, with respect to the
Renaissance, Growth, Opportunity, Target, Innovation, International, and
Precious Metals Funds, on stock indexes) and enter into closing purchase
transactions with respect to such options, and (b) in combination therewith, or
separately, purchase put and call options on securities it is eligible to
purchase, and (ii) the Tax Exempt Fund may purchase put options with respect to
all or any part of its portfolio securities and call options with respect to
securities that it is eligible to purchase; provided that the premiums paid by
each such Fund on all outstanding options it has purchased do not exceed 5% of
its total assets. Each such Fund may enter into closing sale transactions with
respect to options it has purchased;
(14) buy or sell oil, gas or other mineral leases, rights or royalty
contracts, except that the Precious Metals Fund may purchase and sell interests
in oil, gas and other natural resources (other than oil, gas or other mineral
leases);
(15) make investments for the purpose of gaining control of a
company's management;
(16) invest in certificates of deposit of any bank if, immediately
after such investment, more than 5% of the total assets of such Fund (taken at
current value) would be invested in the securities (including certificates of
deposit) of that bank, except that (i) each diversified Fund may invest up to
25% of its total assets without regard to this restriction and (ii) each
non-diversified Fund shall not be subject to this restriction;
(17) purchase or sell real estate, including investments in limited
partnerships that invest directly in real estate; provided, however, that these
Funds may invest in readily marketable interests in real estate investment
trusts or readily marketable securities of companies that invest in real estate;
(18) with respect to the Target Fund, invest in commodities or
commodity futures contracts; or
(19) engage in short-term trading as a matter of policy; provided,
however, that in pursuing such Fund's investment objective, the Fund's Portfolio
Manager will continue to monitor all securities positions of the Fund and will
seek to dispose of any position that it believes is no longer consistent with
achieving optimum performance.
Each of each of the Equity Income, Value, Enhanced Equity, Capital
Appreciation, Mid Cap Growth, Small Cap Value, Small Cap Growth, Core Equity,
Mid Cap Equity, Micro Cap Growth, International Developed, Emerging Markets,
Structured Emerging Markets and Balanced Funds 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, none of the above-mentioned Funds may:
(1) invest for the purpose of exercising control or management;
(2) invest in securities of another open-end investment company,
except that each of the International Developed and Emerging Markets Funds may
invest up to 10% of its total assets in the securities of other investment
companies;
(3) (a) for the Equity Income, Value, Enhanced Equity, Capital
Appreciation, Mid Cap Growth, Small Cap Growth, Small Cap Value, 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 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;
27
<PAGE>
(b) for the Micro Cap Growth, Core Equity, Mid Cap Equity,
International Developed, Emerging Markets, and Structured Emerging Markets
Funds: invest more than 15% of the net assets of such 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;
(4) 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;
(5) 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;
(6) 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;
(7) 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;
(8) invest more than 5% of the assets of such Fund (taken at market
value at the time of investment) in any combination of interest only, principal
only, or inverse floating rate securities;
(9) borrow money (excluding reverse repurchase agreements which are
subject to such Fund's fundamental borrowing restriction), except for temporary
administrative purposes;
(10) sell securities or property short, except short sales against
the box;
(11) 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 such 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;
(12) 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;
(13) 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
(14) 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
28
<PAGE>
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.
The phrase "shareholder approval," as used in the Prospectuses, and
the phrase a "vote of a majority of the outstanding voting securities," as used
herein, means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund or the Trust, as the case may be, or (2) 67% or
more of the shares of the Fund or the Trust, as the case may be, present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
MANAGEMENT OF THE TRUST
Trustees
The Trustees of the Trust, their ages, and a description of their
principal occupations during the past five years are listed below. Messrs.
Cannon, Carter, Childress, Light, Prindiville, Segall, Stooks and Thorne, each
formerly a Trustee of PIMCO Advisors Funds ("PAF"), were elected to the Board of
Trustees of the Trust at a Shareholders' meeting held on December 20, 1996.
These persons were elected in connection with the reorganization of certain
series of PAF with Funds of the Trust in a transaction which took place on
January 17, 1997. Except as shown, each Trustee's principal occupation and
business experience for the last five years have been with the employer(s)
indicated, although in some cases the Trustee may have held different positions
with such employer(s).
<TABLE>
<CAPTION>
- ------------------------------------- --------------------------------------------------------------------------------------------
Name, Address and Age Principal Occupation(s) During the Past Five Years
- ------------------------------------- --------------------------------------------------------------------------------------------
<S> <C>
E. Philip Cannon Trustee, PAF and Cash Accumulation Trust ("CAT"); Headmaster, St. John's School, Houston,
2401 Claremont Texas. Formerly, General Partner, J.B. Poindexter & Co., Houston, Texas (private
Houston, TX 77019 partnership), and Partner, Iberia Petroleum Company (oil and gas production). Mr. Cannon
Age 56 was a director of WNS Inc., a retailing company which filed a petition in bankruptcy
within the last five years.
- ------------------------------------- --------------------------------------------------------------------------------------------
Donald P. Carter Trustee, PAF and CAT; Formerly, Chairman, Executive Vice President and Director
434 Stable Lane Director, Cunningham & Walsh, Inc., Chicago (advertising agency).
Lake Forest, IL 60045
Age 69
- --------------------------------------- --------------------------------------------------------------------------------------------
Gary A. Childress Trustee, PAF and CAT; Chairman and Director, Bellefonte Lime Company, Inc.; Chief
11 Longview Terrace Executive Officer, Woodings & Verona Toolworks Inc. Mr. Childress is a partner in
Madison, CT 06443 GenLime, L.P., a private limited partnership, which has filed a petition in bankruptcy
Age 62 within the last five years.
- --------------------------------------- --------------------------------------------------------------------------------------------
(*) William D. Cvengros Trustee, PAF and CAT; Chairman of the Board of the Trust; Chief Executive Officer,
800 Newport Center Drive President, and member of the Operating Board, Operating Committee, and Equity Board, PIMCO
Newport Beach, CA 92660 Advisors; Director, PIMCO Funds Distribution Company ("PFDCO"). Formerly, President of
Age 48 the Trust, and Director, Vice Chairman, and Chief Investment Officer, Pacific Mutual Life
Insurance Company ("Pacific Mutual")
- --------------------------------------- --------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------- --------------------------------------------------------------------------------------------
<S> <C>
Gary L. Light Trustee, PAF and CAT; Partner, E.V.A. Investors Inc. (private investments); Consultant to
12220 N. Meridian Street, #145 and, prior to March, 1987, Executive Vice President, Mayflower Corporation (trucking and
Carmel, IN 46032 transportation); Vice Chairman and Chief Executive Officer, Sofamor Danek (medical
Age 59 devices).
- --------------------------------------- --------------------------------------------------------------------------------------------
Richard L. Nelson President, Nelson Financial Consultants; Director, Wynn's International, Inc.; Trustee,
8 Cherry Hills Lane Pacific Select Fund. Formerly, Partner, Ernst & Young.
Newport Beach, CA 92660
Age 66
- --------------------------------------- --------------------------------------------------------------------------------------------
Lyman W. Porter Professor of Management at the University of California, Irvine; Trustee, Pacific Select
2639 Bamboo Street Fund.
Newport Beach, CA 92660
Age 66
- --------------------------------------- --------------------------------------------------------------------------------------------
(*) Robert A. Prindiville Trustee, PAF and CAT; Vice President, PIMCO Advisors. Formerly, President and Director,
2187 Atlantic Street Thomson Advisory Group, Inc.; Director and Chairman, PFDCO; Executive Vice President,
Stamford, CT 06903 PIMCO Advisors.
Age 61
- --------------------------------------- --------------------------------------------------------------------------------------------
Alan Richards President, Alan Richards Consulting, Inc.; Trustee, Pacific Select Fund; Director, Western
P.O. Box 675760 National Corporation. Formerly, President, Chief Executive Officer and Director, E.F.
18132 Camino de Estrellas Hutton Insurance Group, Inc.; Chairman of the Board, Chief Executive Officer and
Rancho Santa Fe, CA 92067 President, E.F. Hutton Life Insurance Company; Director, E.F. Hutton & Company, Inc.
Age 66
- --------------------------------------- --------------------------------------------------------------------------------------------
Joel Segall Trustee, PAF and CAT; Formerly, President and University Professor, Bernard M. Baruch
11 Linden Shores College, The City University of New York; Deputy Under Secretary for International
Branford, CT 06405 Affairs, United States Department of Labor; Professor of Finance, University of Chicago;
Age 73 Board of Managers, Coffee, Sugar and Cocoa Exchange.
- --------------------------------------- --------------------------------------------------------------------------------------------
W. Bryant Stooks Trustee, PAF and CAT; President, Bryant Investments, Ltd. Formerly, President, Senior
1530 E. Montebello Vice President, Director and Chief Executive Officer, Archirodon Group Inc.; Partner,
Phoenix, AZ 85014 Arthur Andersen & Co.
Age 56
- --------------------------------------- --------------------------------------------------------------------------------------------
Gerald M. Thorne Trustee, PAF and CAT; Formerly, President and Director, Firstar National Bank of
5 Leatherwood Lane Milwaukee; Chairman, President and Director, Firstar National Bank of Sheboygan;
Savannah, GA 31414 Director, Bando-McGlocklin.
Age 58
- --------------------------------------- --------------------------------------------------------------------------------------------
</TABLE>
* Trustee is an "interested person" of the Trust (as defined in Section
2(a)(19) of the 1940 Act).
Officers
The chart below sets forth the name, address, age, position with the
Trust, and principal occupation during the past five years of each officer of
the Trust. Unless otherwise indicated, the business address of all persons
listed below is 840 Newport Center Drive, Suite 360, Newport Beach, California
92660:
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------------- -------------------------------------------------------
Name, Address and Age Position(s) with the Trust Principal Occupation(s) During the Past Five Years
- ------------------------------------------- -------------------------------- -------------------------------------------------------
<S> <C> <C>
</TABLE>
30
<PAGE>
<TABLE>
<S> <C> <C>
- ------------------------------------------- -------------------------------- -------------------------------------------------------
Stephen J. Treadway President and Chief Executive President, CAT; Executive Vice President, PIMCO
2187 Atlantic Street Officer Advisors; Director and Chairman, PFDCO. Formerly,
Stamford, CT 06902 Executive Vice President, Smith Barney Inc.
Age 49
- ------------------------------------------- -------------------------------- -------------------------------------------------------
R. Wesley Burns Executive Vice President Vice President of PAF and CAT; President, PIMCO
Age 37 Funds: Pacific Investment Management Series;
Executive Vice President, Pacific Investment
Management Company ("Pacific Investment
Management"). Formerly, Vice President, Pacific
Investment Management.
- ------------------------------------------- -------------------------------- -------------------------------------------------------
Newton B. Schott, Jr. Vice President and Secretary Vice President and Clerk of PAF and CAT; Senior Vice
2187 Atlantic Street President-Legal and Secretary, PIMCO Advisors;
Stamford, CT 06902 Director, Executive Vice President and Secretary,
Age 54 PFDCO. Formerly, Executive Vice President, Secretary
and General Counsel, Thomson Advisory Group and
PIMCO Advisors; Executive Vice President, Secretary,
General Counsel and Director, Thomson McKinnon Inc .
- ------------------------------------------- -------------------------------- -------------------------------------------------------
Jeffrey M. Sargent Vice President Vice President and Manager of Fund Shareholder
Age 34 Servicing, Pacific Investment Management; Vice
President of PIMCO Funds: Pacific Investment
Management Series. Formerly, Project Specialist,
Pacific Investment Management.
- ------------------------------------------- -------------------------------- -------------------------------------------------------
Teresa A. Wagner Vice President Vice President and Assistant Clerk of PAF; Assistant
Age 34 Clerk of CAT; Vice President, PIMCO Funds: Pacific
Investment Management Series; Vice President and
Manager of Fund Administration, Pacific Investment
Management. Formerly, Vice President, PIMCO Advisors
Institutional Services; Finance Director, Pacific
Financial Asset Management Company ("PFAMCO").
- ---------------------------------------------- -------------------------------- ----------------------------------------------------
Richard M. Weil Vice President Senior Vice President - Legal, PIMCO Advisors.
Age 33 Formerly, Vice President, Bankers Trust Company;
Associate, Simpson, Thatcher & Bartlett.
- ---------------------------------------------- -------------------------------- ----------------------------------------------------
John P. Hardaway Vice President and Treasurer Treasurer of PAF, CAT and PIMCO Funds: Pacific
Age 39 Investment Management Series; Vice President and
Manager of Fund Operations, Pacific Investment
Management.
- ---------------------------------------------- -------------------------------- ----------------------------------------------------
</TABLE>
31
<PAGE>
<TABLE>
<S> <C> <C>
- ------------------------------------------- -------------------------------- -------------------------------------------------------
Joseph D. Hattesohl Assistant Treasurer Manager of Fund Taxation, Pacific Investment
Age 33 Management; Assistant Treasurer of PIMCO Funds:
Pacific Investment Management Series. Formerly,
Director of Financial Reporting, Carl I. Brown &
Co.; Tax Manager, Price Waterhouse LLP.
- ---------------------------------------------- -------------------------------- ----------------------------------------------------
Garlin G. Flynn Assistant Secretary Senior Fund Administrator, Pacific Investment
Age 50 Management; Secretary of PIMCO Funds: Pacific
Investment Management Series. Formerly, Senior
Mutual Fund Analyst, PIMCO Advisors Institutional
Services; Senior Mutual Fund Analyst, PFAMCo.
- ---------------------------------------------- -------------------------------- ----------------------------------------------------
</TABLE>
Trustees' Compensation
Trustees other than those affiliated with PIMCO Advisors, a Portfolio
Manager, or Pacific Investment Management , 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 currently receive any
pension or retirement benefits from the Trust or the Fund Complex. The Trust has
adopted a deferred compensation plan for the Trustees, which went into place
during 1997, which will permit the Trustees to elect to defer their receipt of
compensation from the Trust, at their election, in accordance with the terms of
the plan. Some of the Trustees earned deferred compensation for their services
on behalf of PAF and CAT which was carried forward under the Trust's plan.
The following table sets forth information regarding compensation
received by those Trustees who are not affiliated as described above for the
fiscal period ended June 30, 1996:
<TABLE>
------------------------------ -------------------------- -------------------------
(1) (2) (3)
<S> <C> <C>
Total Compensation from
Aggregate Compensation Trust and Fund Complex1
Name of Trustee from Trust
------------------------------ -------------------------- -------------------------
E. Philip Cannon $0 $50,000
------------------------------ -------------------------- -------------------------
Donald P. Carter $0 $53,500
------------------------------ -------------------------- -------------------------
Gary A. Childress $0 $53,000
------------------------------ -------------------------- -------------------------
Gary L. Light $0 $55,000
------------------------------ -------------------------- -------------------------
Richard L. Nelson $14,333.33 $14,333.33
------------------------------ -------------------------- -------------------------
Lyman W. Porter $12,166.67 $12,166.67
------------------------------ -------------------------- -------------------------
Alan Richards $14,333.33 $14,333.33
------------------------------ -------------------------- -------------------------
</TABLE>
32
<PAGE>
<TABLE>
<S> <C> <C>
------------------------------ -------------------------- -------------------------
Joel Segall $0 $59,500
------------------------------ -------------------------- -------------------------
W. Bryant Stooks $0 $53,500
------------------------------ -------------------------- -------------------------
Gerald M. Thorne $0 $50,000
------------------------------ -------------------------- -------------------------
</TABLE>
/1/ The amounts listed in column (3) for Messrs. Cannon, Carter,
Childress, Light, Segall, Stooks and Thorne include total compensation paid for
their services as Trustees of PAF and CAT for PAF's and CAT's fiscal years ended
September 30, 1996. By virtue of having PIMCO Advisors as a common investment
adviser, the Trust, PAF and CAT are considered to be part of the same "Fund
Complex" for these purposes. The amounts listed in column (3) do not include
pension/retirement benefits earned by these Trustees for their services on
behalf of PAF through its fiscal year ended September 30, 1995 pursuant to a
Trustees' Pension Plan for PAF (the "Pension Plan"). The Trustees of PAF voted
to terminate the Pension Plan as of September 28, 1995 and received lump-sum
payments in January of 1996. Of the amounts listed in column (3), E. Philip
Cannon, Donald P. Carter, Joel Segall and Gerald M. Thorne elected to have the
payment of $50,000; $38,500; $43,000; and $50,000, respectively, deferred under
a deferred compensation plan for PAF and CAT. Aggregate deferred compensation
(including the amounts listed in the preceding sentences) earned in prior years
by Trustees under the PAF and CAT deferred compensation plan was carried forward
under a deferred compensation plan for the Trust (the "Plan") which went into
place during fiscal 1997. The compensation listed in column (3) for Messrs.
Light and Segall does not include amounts which accrued pursuant to 1987
Deferred Fee Agreements with PAF and CAT which terminated effective December 14,
1995. These benefits were distributed to Messrs. Light and Segall during 1996.
Investment Adviser
PIMCO Advisors serves as investment adviser to each of the Funds
pursuant to an investment advisory agreement ("Advisory Agreement") between
PIMCO Advisors and the Trust. PIMCO Advisors was organized as a limited
partnership under Delaware law in 1987; PIMCO Partners, G.P. ("PIMCO GP"), PIMCO
Advisors's sole general partner, is a general partnership with two partners: (i)
an indirect wholly-owned subsidiary of Pacific Mutual Life ; and (ii) PIMCO
Partners, L.L.C. ("LLC"), a limited liability company, all of the interests of
which are held directly by the Managing Directors of Pacific Investment
Management Company, who are William H. Gross, Dean S. Meiling, James F. Muzzy,
William F. Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague,
William S. Thompson, Jr., William C. Powers, David H. Edington and Benjamin L.
Trosky (collectively, the "Managing Directors"). PIMCO GP has substantially
delegated its management and control of PIMCO Advisors to an Equity Board and an
Operating Board of PIMCO Advisors. The activities of PIMCO Advisors are
controlled by its Operating Board except that certain non-routine or
extraordinary actions may not be effected by the Operating Board without the
approval of PIMCO Advisors's Equity Board. The Operating Board has in turn
delegated the authority to manage day-to-day operations and policies to an
Operating Committee. The Operating Board is composed of twelve members, of which
seven (including the chairman) are designated by Pacific Investment Management,
which is a subsidiary general partnership of PIMCO Advisors. The Equity Board is
composed of twelve members including the chief executive officer of PIMCO
Advisors, three members designated by PFAMCO, the chairman of the Operating
Board, two members designated by LLC, two members designated by holders of
Series B Preferred Stock of Thomson Advisory Group Inc., the former general
partner of PIMCO Advisors, and three independent members. Because of the ability
to designate a majority of the Members of the Operating Board, Pacific
Investment Management and the Managing Directors could be said to control PIMCO
Advisors, although the Managing Directors disclaim such control. PIMCO Advisors
and PIMCO GP are located at 800 Newport Center Drive, Suite 100, Newport Beach,
CA 92660. PIMCO Advisors and its subsidiary partnerships had approximately
$111.2 billion of assets under management as of November 30, 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
33
<PAGE>
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 except the Precious Metals Fund, PIMCO Advisors has engaged affiliates to
serve as Portfolio Managers.
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 Advisory
Agreement was last 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) and who have no direct or indirect financial interest in the Advisory
Agreement or a party thereto, at a meeting held on September 17, 1996.
The Advisory Agreement will continue in effect with respect to a Fund
for two years from its effective date, 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 Fund or by the Board of Trustees and
(ii) by a majority of the disinterested Trustees defined above. 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 to the
other party and will terminate automatically in the event of its assignment. In
addition, the Advisory Agreement may be terminated with regard to the
Renaissance, Growth, Target, Opportunity, Innovation, Tax Exempt, International
and Precious Metals Funds by vote of a majority of the Trustees who are not
interested persons of PIMCO Advisors, on 60 days' written notice to PIMCO
Advisors.
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:
Fund Advisory
- ---- Fee Rate
--------
Tax Exempt Fund............................................. .30%
Equity Income, Value, Capital Appreciation,
Mid Cap Growth, Structured Emerging Markets,
Enhanced Equity and Balanced Funds........................ .45%
Growth Fund................................................. .50%
International and Target Funds.............................. .55%
Core Equity Fund............................................ .57%
Small Cap Value, Renaissance, Precious Metals
and International Developed Funds......................... .60%
Mid Cap Equity Fund......................................... .63%
Opportunity and Innovation Funds............................ .65%
Emerging Markets Fund....................................... .85%
Small Cap Growth Fund....................................... 1.00%
Micro Cap Growth Fund....................................... 1.25%
For the fiscal years ended June 30, 1996, October 31, 1995, and October
31, 1994 (the fiscal year ended June 30, 1996 being an eight-month period) the
following Funds paid the Adviser the following amounts under the Advisory
Contract:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 6/30/96 10/31/95 10/31/94
- ---- ------- -------- --------
<S> <C> <C> <C>
Equity Income Fund $425,899 $445,739 $368,971
Value Fund 65,873 60,686 85,078
</TABLE>
34
<PAGE>
<TABLE>
<S> <C> <C> <C>
Small Cap Value Fund 156,721 203,158 214,936
Core Equity Fund 145,931 73,930 N/A
Mid Cap Equity Fund 35,315 26,276 N/A
Capital Appreciation Fund 883,498 881,358 595,724
Mid Cap Growth Fund 617,546 650,017 453,846
Micro Cap Growth Fund 669,726 609,540 251,431
Small Cap Growth Fund 426,098 594,905 456,981
Enhanced Equity Fund 274,512 319,036 267,252
Emerging Markets Fund 440,978 638,097 319,725
International Developed Fund 294,777 282,055 84,712
Balanced Fund 235,529 417,190 597,672
</TABLE>
In addition, the Renaissance, Growth, Target, Opportunity, Innovation,
International, Precious Metals and Tax Exempt Funds (each of which is a former
series of PAF which reorganized as the listed Fund of the Trust on January 17,
1997) paid the Adviser the following amounts, as series of PAF, for the fiscal
years ended September 30, 1996, 1995 and 1994 under separate management
contracts between the Adviser and PAF on behalf of each such Fund former PAF
series:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 9/30/96 9/30/95 9/30/94
- ---- ------- ------- -------
<S> <C> <C> <C>
Renaissance Fund $1,627,632 $1,371,809 $1,191,587
Growth Fund 9,987,541 8,268,603 7,699,562
Target Fund 7,295,767 5,294,008 3,685,196
Opportunity Fund 6,183,575 5,000,057 4,796,571
Innovation Fund 1,063,584 265,836 N/A
International Fund 1,872,608 2,097,974 2,160,604
Precious Metals Fund 397,969 434,323 400,895
Tax Exempt Fund 333,349 369,918 489,220
</TABLE>
The Adviser received a total of $34,021,817, $26,739,075 and
$25,174,625 (including the amounts listed above) for advisory services rendered
to PAF for the fiscal years ended September 30, 1996, 1995 and 1994,
respectively. Amounts in addition to those listed above were paid by other
series of PAF which either merged into Funds of the Trust or merged
with/reorganized as series of PIMCO Funds: Pacific Investment Management Series,
an affiliated mutual fund family in transactions which took place on January 17,
1997.
Portfolio Management Agreements
The Adviser employs Portfolio Managers to provide investment advisory
services to each Fund pursuant to portfolio management agreements (each a
"Portfolio Management Agreement") between the Adviser and the relevant Portfolio
Manager. Each Portfolio Manager is an affiliate of the Adviser except for Van
Eck Associates Corporation ("Van Eck"), which is an independent Portfolio
Manager that advises the Precious Metals Fund. The Adviser currently has six
subsidiary partnerships which manage the remaining Funds: Pacific Investment
Management, Parametric Portfolio Associates ("Parametric"), Cadence Capital
Management ("Cadence"), NFJ Investment Group ("NFJ"), Columbus Circle Investors
("Columbus Circle"), and Blairlogie Capital Management ("Blairlogie").
35
<PAGE>
Pursuant to a Portfolio Management Agreement between the Adviser and
Pacific Investment Management, Pacific Investment Management 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, the Adviser (not the Trust) pays Pacific Investment
Management a fee at an annual rate of .25% of the average daily net assets of
the portion of the Balanced Fund allocated to Pacific Investment Management for
investment in fixed income securities.
Pacific Investment Management is an investment management firm
organized as a general partnership. Pacific Investment Management 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. Pacific Investment
Management is located at 840 Newport Center Drive, Suite 360, Newport Beach,
California 92660. Pacific Investment Management 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, 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, to
PIMCO Commercial Mortgage Securities Trust, Inc. which is a closed-end
management investment company, and to managed accounts consisting of proceeds
from pension and profit sharing plans. Pacific Investment Management had
approximately $88.8 billion of assets under management as of November 30, 1996.
Pursuant to a Portfolio Management Agreement between the Adviser and
Parametric, Parametric is the Portfolio Manager and provides investment advisory
services to the Enhanced Equity and Structured Emerging Markets Funds. For the
services provided, the Adviser (not the Trust) pays Parametric a fee at an
annual rate based on a percentage of the average daily net assets of each of
these Funds as follows: .35% for the Enhanced Equity Fund and .35% for the
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 number of large accounts, such as employee benefit
plans, college endowment funds and foundations. Accounts managed by Parametric
had combined assets, as of November 30, 1996, of approximately $2 billion.
Pursuant to a Portfolio Management Agreement between the Adviser and
Cadence, Cadence is the Portfolio Manager and provides investment advisory
services to the Capital Appreciation Fund, the Mid Cap Growth Fund, the Micro
Cap Growth Fund, the Small Cap Growth Fund and a portion of the Balanced Fund
allocated by the Adviser for investment in common stocks. For the services
provided, the Adviser (not the Trust) pays Cadence a fee at an annual rate based
on a percentage of the average daily net assets of each of these Funds as
follows: .35% for the Capital Appreciation Fund, the Mid Cap Growth Fund, and
the portion of the Balanced Fund allocated to Cadence for investment in common
stock, .90% for the Small Cap Growth Fund, and 1.15% for the 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 number
of large accounts, such as employee benefit plans, college
36
<PAGE>
endowment funds and foundations. Accounts managed by Cadence had combined
assets, as of November 30, 1996, of approximately $3.3 billion.
Pursuant to a Portfolio Management Agreement between the Adviser and
NFJ, NFJ is the Portfolio Manager and provides investment advisory services to
the Equity Income Fund, the Value Fund, the Small Cap Value Fund, and a portion
of the Balanced Fund allocated by the Adviser for investment in common stocks.
For the services provided, the Adviser (not the Trust) pays NFJ a fee at an
annual rate based on a percentage of the average daily net assets of each of
these Funds as follows: .35% for the Equity Income Fund, the Value Fund, and the
portion of the Balanced Fund allocated to NFJ for investment in common stock,
and .50% for the 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 1840, Dallas,
Texas 75201. NFJ provides investment management services to a number of large
accounts, such as employee benefit plans, college endowment funds and
foundations. Accounts managed by NFJ had combined assets, as of November 30,
1996, of approximately $1.8 billion.
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 Renaissance, Growth, Target, Opportunity,
Innovation, Tax Exempt, Core Equity and Mid Cap Equity Funds. For the services
provided, the Adviser (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 these
Funds as follows: .30% for the Tax Exempt Fund, .34% for the Growth Fund, .36%
for the Target Fund, .38% for the Renaissance Fund, .38% for the Innovation
Fund, .47% for the Core Equity Fund, .48% for the Opportunity Fund and .53% for
the 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 Thomson Advisory Group L.P. ("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, Columbus Circle's ultimate predecessor, 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 the National Money Market Fund of CAT. Accounts managed by Columbus
Circle had combined assets, as of November 30, 1996, of $14.6 billion.
Pursuant to a Portfolio Management Agreement between the Adviser and
Blairlogie, Blairlogie is the Portfolio Manager and provides investment advisory
services to the International, International Developed and Emerging Markets
Funds. For the services provided, the Adviser (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: .40% for the International Fund, .50% for the
International Developed Fund and .75% for the Emerging Markets Fund.
Blairlogie is an investment management firm, organized as a limited
partnership under the laws of Scotland, United Kingdom. Blairlogie is the
successor investment adviser to Blairlogie Capital Management Ltd., an indirect
subsidiary of PFAMCo, which commenced operations in 1992. Blairlogie has two
general partners and one limited partner. The general partners are PIMCO
Advisors, which serves as the supervisory partner, and Blairlogie Holdings
Limited, a wholly owned corporate subsidiary of PIMCO Advisors, which serves as
the managing partner. The limited partner is Blairlogie Partners L.P., a limited
partnership, the general partner of which is PFAMCo, and the limited partners of
which are the principal executive officers of Blairlogie Capital Management.
Blairlogie Partners L.P. has agreed with PIMCO Advisors that PIMCO Advisors will
acquire its 25% interest in four annual installments of 10%, 5%, 5% and 5%,
respectively, beginning December 31, 1997. Blairlogie is located at 4th Floor,
125 Princes
37
<PAGE>
Street, Edinburgh EH2 4AD, Scotland. Blairlogie provides investment
management services to a number of large accounts, such as employee benefit
plans, college endowment funds and foundations. Accounts managed by Blairlogie
had combined assets, as of November 30, 1996, of approximately $.7 billion.
Pursuant to a Portfolio Management Agreement between the Adviser and
Van Eck, Van Eck is the Portfolio Manager and provides investment advisory
services to the Precious Metals Fund. For the Services provided, the Adviser
(not the Trust) pays Van Eck a fee at an annual rate of .35% of the average
daily net assets of the Precious Metals Fund.
Van Eck is a Delaware corporation registered as an investment adviser
with the SEC. Van Eck, together with its affiliates, advises other mutual funds
and private accounts. Van Eck is controlled by John C. Van Eck who, along with
members of his immediate family, owns 100% of the stock of Van Eck. Van Eck is
located at 99 Park Avenue, New York, New York 10001. Accounts managed by Van Eck
had combined assets as of November 30, 1996 of approximately $1.7 billion.
PIMCO Advisors determines the allocation of the Balanced Fund's assets
among the various asset classes and types of securities, and manages the portion
of that Fund's assets allocated for investment in money market instruments.
For the fiscal years ended June 30, 1996, October 31, 1995, and October
31, 1994 (the fiscal year ended June 30, 1996 being an eight-month period), the
amount of net portfolio management fees paid by the Adviser or its predecessor
to the applicable Portfolio Manager or its predecessor for each of the Funds
listed below was as follows:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 06/30/96 10/31/95 10/31/94
- ---- -------- -------- --------
<S> <C> <C> <C>
Equity Income Fund $425,899 $445,739 $368,971
Value Fund 65,873 60,686 85,078
Small Cap Value Fund 156,721 203,158 214,936
Core Equity Fund 136,615 62,906 N/A
Mid Cap Equity Fund 23,814 13,832 N/A
Capital Appreciation Fund 883,498 881,358 595,724
Mid Cap Growth Fund 617,546 650,017 453,846
Micro Cap Growth Fund 669,726 609,540 251,431
Small Cap Growth Fund 426,098 594,905 456,981
Enhanced Equity Fund 274,512 319,036 267,252
Emerging Markets Fund 385,438 550,590 195,258
International Developed Fund 237,138 241,135 34,947
Balanced Fund 161,345 332,255 481,304
</TABLE>
The Adviser paid the Portfolio Managers for the Renaissance, Growth,
Target, Opportunity, Innovation, International, Precious Metals and Tax Exempt
Funds (each of which is a former series of PAF which reorganized as a Fund of
the Trust on January 17, 1997) the following amounts for these former PAF
series' fiscal years ended September 30, 1996, 1995 and 1994 under separate
sub-adviser agreements between the Adviser or its predecessor and the relevant
Portfolio Manager or its predecessor on behalf of each former PAF series:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 09/30/96 09/30/95 09/30/94
- ---- -------- -------- --------
<S> <C> <C> <C>
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C> <C>
Renaissance Fund $813,816.12 $ 595,500 $ N/A
Growth Fund 4,993,770.34 $ 3,634,403 N/A
Target Fund 3,647,883.70 2,353,106 N/A
Opportunity Fund 3,091,787.59 2,205,293 N/A
Innovation Fund 531,792.22 132,918 N/A
International Fund 936,304.11 889,339 1,080,302
Precious Metals Fund 198,984.74 217,162 200,448
Tax Exempt Fund 166,674.68 159,370 N/A
</TABLE>
Until November 1, 1994, none of the former PAF series retained
sub-advisers except for the Precious Metals and International Funds.
Sub-advisory fees for the International Fund for fiscal 1994 were paid to a
former sub-adviser to that Fund.
Fund Administrator
In addition to its services as Adviser, PIMCO Advisors serves as
administrator (and is referred to in this capacity as the "Administrator") to
the Funds pursuant to an administration agreement (the "Administration
Agreement") with the Trust. The Administrator provides or procures
administrative services to the Funds, which include clerical help and
accounting, bookkeeping, internal audit services and certain other services
required by the Funds, and preparation of reports to the Funds' shareholders and
regulatory filings. PIMCO Advisors has retained Pacific Investment Management,
as sub-administrator, to provide such services pursuant to a sub-administration
agreement (the "Sub-Administration Agreement"). In addition, the Administrator
arranges at its own expense for the provision of legal, audit, custody, transfer
agency and other services necessary for the ordinary operation of 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. Under
the Administration Agreement, the Administrator has agreed to provide or procure
these services, and to bear these expenses, at the following annual rates for
each Fund (each expressed as a percentage of the Fund's average daily net assets
attributable to the indicated classes of shares on an annual basis):
<TABLE>
<CAPTION>
Administrative Fee Rate
-----------------------
Institutional and
Administrative Class A, Class B and
Fund Class Shares Class C Shares*
- ---- ------------ --------------
<S> <C> <C>
Emerging Markets, Structured .50% .65% of first $2.5 billion
Emerging Markets, International .60% of amounts in excess of $2.5 billion
Developed and International Funds
Precious Metals Fund .30% .45% of first $2.5 billion
.40% of amounts in excess of $2.5 billion
All Other Funds .25% .40% of first $2.5 billion
.35% of amounts in excess of $2.5 billion
</TABLE>
39
<PAGE>
* For Class A, Class B and Class C shares, the Administrator receives
administrative fees based on a Fund's average daily net assets attributable in
the aggregate to the three classes.
Except for the expenses paid by the Administrator, the Trust bears
all costs of its operations. 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, Pacific Investment Management, 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 PIMCO Advisors, any Portfolio
Manager, 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 distribution and/or service fees
payable with respect to the Class A, Class B, Class C or Administrative Class
shares and may include certain other expenses as permitted by the Trust's
Amended and Restated Multi-Class Plan (the "Multi-Class Plan") adopted pursuant
to Rule 18f-3 under the 1940 Act, which is subject to review and approval by the
Trustees. It is not presently anticipated that any expenses other than
distribution and/or service fees will be allocated on a class-specific basis.
The Administration Agreement and Sub-Administration Agreement may be
terminated by the Trustees, PIMCO Advisors or Pacific Investment Management (as
the case may be) at any time on 60 days' written notice. In addition, the
Administration and Sub-Administration Agreements may be terminated with regard
to the Renaissance, Growth, Target, Opportunity, Innovation, Tax Exempt,
International and Precious Metals Funds by a majority of the Trustees that are
not interested persons of PIMCO Advisors or Pacific Investment Management (as
the case may be), on 60 days' written notice. Following their initial term of
two years, the Administration and Sub-Administration Agreements would continue
from year to year if approved by the Trustees.
The Administration Agreement is subject to annual approval by the
Board of Trustees, including a majority of the disinterested Trustees defined
above. The current Administration Agreement was last approved by the Board of
Trustees, including all of the disinterested Trustees, at a meeting held on
September 17, 1996. 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) the Administrator 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.
For the fiscal years ended June 30, 1996, October 31, 1995, and
October 31, 1994 (the fiscal year ended June 30, 1996 being an eight-month
period), the aggregate amount of the administration fees paid by the Funds
listed below (none of which offered Class A, Class B or Class C shares during
these periods) was as follows:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 06/30/96 10/31/95 10/31/94
- ---- -------- -------- --------
<S> <C> <C> <C>
Equity Income Fund $236,611 $247,633 $204,984
Value Fund 36,596 33,714 47,265
Small Cap Value Fund 65,176 84,649 89,556
Core Equity Fund 63,942 32,425 N/A
Mid Cap Equity Fund 14,011 10,427 N/A
</TABLE>
40
<PAGE>
<TABLE>
<S> <C> <C> <C>
Capital Appreciation Fund 490,803 489,643 330,958
Mid Cap Growth Fund 342,880 361,121 252,137
Micro Cap Growth Fund 133,934 121,908 50,286
Small Cap Growth Fund 106,715 148,726 114,245
Enhanced Equity Fund 151,842 177,243 148,474
Emerging Markets Fund 259,300 375,351 188,073
International Developed Fund 244,350 235,046 70,593
Balanced Fund 130,017 231,772 332,040
</TABLE>
The Renaissance, Growth, Target, Opportunity, Innovation,
International, Precious Metals and Tax Exempt Funds (each of which is a former
series of PAF which reorganized as the above-listed Fund of the Trust on January
17, 1997) received administrative services during fiscal 1996, 1995 and 1994
under separate management contracts between the Adviser and PAF on behalf of
each such series. See "Investment Adviser" above for the amounts paid to the
Adviser under these management contracts during fiscal 1996, 1995 and 1994.
DISTRIBUTION OF TRUST SHARES
Distributor and Multi-Class Plan
PIMCO Funds Distribution Company (the "Distributor") serves as the
distributor of each class of the Trust's shares pursuant to a distribution
contract ("Distribution Contract") with the Trust. The Distributor is a wholly
owned subsidiary of PIMCO Advisors. The Distribution Contract is terminable with
respect to a Fund or class without penalty, at any time, by the Fund or class by
not more than 60 days' nor less than 30 days' written notice to the Distributor,
or by the Distributor upon not more than 60 days' nor less than 30 days' written
notice to the Trust. The Distributor is not obligated to sell any specific
amount of Trust shares.
The Distribution Contract will continue in effect with respect to
each Fund and each class of shares thereof for successive one-year periods,
provided that each such continuance is specifically approved (i) by the vote of
a majority of the Trustees who are not interested persons of the Trust (as
defined in the 1940 Act) and who have no direct or indirect interest financial
interest in the Distribution Contract or the Distribution and/or Servicing Plans
described below and (ii) by the vote of a majority of the entire Board of
Trustees cast in person at a meeting called for that purpose. If the
Distribution Contract is terminated (or not renewed) with respect to one or more
Funds or classes thereof, it may continue in effect with respect to any class of
any Fund as to which it has not been terminated (or has been renewed).
The Trust offers up to five classes of shares of each of the Funds:
Class A, Class B, Class C, Institutional Class and Administrative Class shares.
Class A, Class B and Class C shares of the Trust are offered through firms
("participating brokers") which are members of the National Association of
Securities Dealers, Inc. ("NASD"), and which have dealer agreements with the
Distributor, or which have agreed to act as introducing brokers for the
Distributor ("introducing brokers"). 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,
and high net worth individuals (Institutional Class shares may also be offered
through certain financial intermediaries that charge their customers transaction
or other fees with respect to the customers' investments in the Funds). Shares
of the Administrative Class are offered primarily through employee benefit plan
alliances, broker-dealers, and other intermediaries, and each Fund pays service
or distribution fees to such entities for services they provide to shareholders
of that class.
Under the Trust's Multi-Class Plan, shares of each class of each
Fund represent an equal pro rata interest in such Fund and, generally, have
identical voting, dividend, liquidation, and other rights preferences, powers,
41
<PAGE>
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; (c) each class has exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution or service arrangements; and (d) 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. In addition, each class may
have a differing sales charge structure, and differing exchange and conversion
features.
Contingent Deferred Sales Charge and Initial Sales Charge
As described in the Retail Prospectus under the caption "How to
Redeem," a contingent deferred sales charge is imposed upon certain redemptions
of Class A, Class B and Class C shares. No contingent deferred sales charge is
currently imposed upon redemptions of Institutional Class or Administrative
Class shares. Because contingent deferred sales charges are calculated on a
Fund-by-Fund basis, shareholders should consider whether to exchange shares of
one Fund for shares of another Fund prior to redeeming an investment if such an
exchange would reduce the contingent deferred sales charge applicable to such
redemption.
For the fiscal years ended September 30, 1995 and 1994, the
Distributor received $1,007,285 and $1,723,241, respectively, in contingent
deferred sales charges on Class C shares of series of PAF. During the fiscal
year ended September 30, 1996, the Distributor received the following amounts in
contingent deferred sales charges on Class C shares of the PAF series which
reorganized as Funds of the Trust on January 17, 1997: Renaissance - $12,809,
Growth - $124,264, Target - $89,334, Opportunity - $37,154, Innovation -
$29,110, International - $22,016, Precious Metals - $15,384 and Tax Exempt -
$1,596. The contingent deferred sales charge applicable to Class A and Class B
shares was not in effect through September 30, 1994 for these former series of
PAF. For the fiscal year ended September 30, 1995, the Distributor received $0
in contingent deferred sales charges on Class A shares of series of PAF. During
the fiscal year ended September 30, 1996, the Distributor received the following
amounts in contingent deferred sales charges on Class A shares of the PAF series
which reorganized as Funds of the Trust on January 17, 1997: Growth - $9,168,
Target - $14 and Opportunity - $4,190. For the fiscal year ended September 30,
1995, the Distributor received $13,125 in contingent deferred sales charges on
Class B shares of series of PAF. During the fiscal year ended September 30,
1996, the Distributor received the following amounts in contingent deferred
sales charges on Class B shares of the PAF series which reorganized as Funds of
the Trust on January 17, 1997: Renaissance - $8,722, Growth - $37,445, Target -
$31,670, Innovation -$36,477, International - $6,359, Precious Metals - $1,179
and Tax Exempt - $4,055.
In certain cases described in the Retail Prospectus, the contingent
deferred sales charge is waived on redemptions of Class A, Class B or Class C
shares for certain classes of individuals or entities on account of (i) the fact
that the Trust's sales-related expenses are lower for certain of such classes
than for classes for which the contingent deferred sales charge is not waived,
(ii) waiver of the contingent deferred sales charge with respect to certain of
such classes is consistent with certain Internal Revenue Code policies
concerning the favored tax treatment of accumulations, and (iii) with respect to
certain of such cases, considerations of fairness, and competitive and
administrative factors.
As described in the Retail Prospectus under the caption "Alternative
Purchase Arrangements--Initial Sales Charge Alternative - Class A Shares," Class
A shares of the Trust are sold pursuant to an initial sales charge, which
declines as the amount of the purchase reaches certain defined levels. For the
fiscal years ended September 30, 1995 and 1994, the Distributor received
$3,708,105 and $3,920,611, respectively, and retained $366,062 and $371,079,
respectively, in initial sales charges paid by shareholders of series of PAF.
During the fiscal year ended September 30, 1996, the Distributor received the
following amounts in initial sales charges paid by shareholders of the PAF
series which reorganized as Funds of the Trust on January 17, 1997: Renaissance
- - $205,419, Growth -549,330, Target - $852,363, Opportunity - $176,391,
Innovation - $685,093, International - $91,177, Precious Metals - $72,503 and
Tax Exempt - $37,180. Of the amounts received, the Distributor retained the
following amounts: Renaissance - $27,477, Growth - $83,657, Target - $126,693,
Opportunity - $29,605, Innovation -$114,091, International - $13,871, Precious
Metals - $7,738 and Tax Exempt - $3,140.
42
<PAGE>
Distribution and Servicing Plans for Class A, Class B and Class C Shares
As stated in the text of the Retail Prospectus under the caption
"Distributor and Distribution and Servicing Plans," Class A, Class B and Class C
shares of the Trust are continuously offered through participating brokers which
are members of the NASD and which have dealer agreements with the Distributor,
or which have agreed to act as introducing brokers.
Pursuant to separate Distribution and Servicing Plans for Class A,
Class B and Class C shares (the "Retail Plans"), as described in the Retail
Prospectus, the Distributor receives (i) in connection with the distribution of
Class B and Class C shares of the Trust, certain distribution fees from the
Trust, and (ii) in connection with personal services rendered to Class A, Class
B and Class C shareholders of the Trust and the maintenance of shareholder
accounts, certain servicing fees from the Trust. Subject to the percentage
limitations on these distribution and servicing fees set forth in the Retail
Prospectus, the distribution and servicing fees may be paid with respect to
services rendered and expenses borne in the past with respect to Class A, Class
B and Class C shares as to which no distribution and servicing fees were paid on
account of such limitations. As described in the Retail Prospectus, the
Distributor pays (i) all or a portion of the distribution fees it receives from
the Trust to participating and introducing brokers, and (ii) all or a portion of
the servicing fees it receives from the Trust to participating and introducing
brokers, certain banks and other financial intermediaries.
Each Retail Plan may be terminated with respect to any Fund to which
the Plan relates by vote of a majority of the Trustees ("disinterested
Trustees") who are not interested persons of the Trust (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of
the Plan or the Distribution Contract, or by vote of a majority of the
outstanding voting securities of the relevant class of that Fund. Any change in
any Retail Plan that would materially increase the cost to the class of shares
of any Fund to which the Plan relates requires approval by the affected class of
shareholders of that Fund. The Trustees review quarterly written reports of such
costs and the purposes for which such costs have been incurred. Each Retail Plan
may be amended by vote of the Trustees, including a majority of the
disinterested Trustees defined above, cast in person at a meeting called for the
purpose. As long as the Retail Plans are in effect, selection and nomination of
those Trustees who are not interested persons of the Trust shall be committed to
the discretion of such disinterested Trustees.
The Retail Plans will continue in effect with respect to each Fund
and each class of shares thereof for successive one-year periods, provided that
each such continuance is specifically approved (i) by the vote of a majority of
the disinterested Trustees defined above and (ii) by the vote of a majority of
the entire Board of Trustees cast in person at a meeting called for that
purpose.
If a Retail Plan is terminated (or not renewed) with respect to one
or more Funds, it may continue in effect with respect to any class of any Fund
as to which it has not been terminated (or has been renewed).
The Retail Plans went into effect for the Funds in January 1997 and
no payments were made thereunder prior to the date of this Statement of
Additional Information.
For the fiscal years ended September 30, 1996, 1995 and 1994, PAF
paid the Distributor an aggregate of $41,704,155, $34,667,013, and $33,696,037,
respectively, pursuant to a similar Distribution and Servicing Plan (the "PAF
Class C Plan") applicable to the Class C shares of PAF allocated among the
following Funds (each of which was formerly a PAF Fund which reorganized as a
series of the Trust on January 17, 1997) as follows:
43
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1994
--------------- -------------- ---------------
<S> <C> <C> <C>
Renaissance $ 1,965,449 $ 1,694,012 $ 1,475,042
Growth 13,593,775 11,397,447 10,702,536
Target 8,684,223 6,402,149 4,419,960
Opportunity 7,455,633 5,976,316 5,720,431
Innovation 899,377 229,411 N/A
International 1,858,512 2,422,761 2,493,832
Precious Metals 430,849 490,116 455,351
Tax Exempt 499,738 589,843 786,687
</TABLE>
The remainder of the total payments made under the PAF Class C Plan
for such fiscal years was allocated among other series of PAF which either
merged with Funds of the Trust or merged with/reorganized as series of PIMCO
Funds: Pacific Investment Management Series, an affiliated mutual fund family,
in transactions which took place on January 17, 1997.
During the fiscal year ended September 30, 1996, the amounts
collected pursuant to the PAF Class C Plan and the contingent deferred sales
charge imposed on Class C shares of the former PAF Funds were used as follows by
the Distributor: sales commissions and other compensation to sales personnel,
$32,453,000; preparing, printing and distributing sales material and advertising
(including preparing, printing and distributing prospectuses to
non-shareholders), and other expenses (including data processing, legal and
operations), $8,605,000. The total, if allocated among these former PAF Funds
based on the net assets attributable to their Class C shares at September 30,
1996, would have been as follows:
<TABLE>
<CAPTION>
Sales Material
and Other
Compensation Expenses Total
------------ ---------- -----
<S> <C> <C> <C>
Renaissance $1,613,000 $428,000 $2,041,000
Growth 10,170,000 2,697,000 12,867,000
Target 6,837,000 1,813,000 8,650,000
Opportunity 5,612,000 1,488,000 7,100,000
Innovation 966,000 256,000 1,222,000
International 1,427,000 379,000 1,806,000
Precious Metals 264,000 70,000 334,000
Tax Exempt 330,000 88,000 418,000
</TABLE>
During the fiscal year ended September 30, 1996, unreimbursed
expenses of PAF's principal underwriter under the PAF Class C Plan were reduced
from $4,191,000 to $2,822,000.
For the fiscal years ended September 30, 1996, 1995 and 1994, PAF
paid the Distributor an aggregate of $1,556,119, $1,064,958 and $868,789,
respectively, pursuant to a Distribution and Servicing Plan applicable to the
Class A shares of PAF (the "PAF Class A Plan"), which is similar to the Class A
Retail Plan of the Trust. The payments were allocated among the former PAF Funds
as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1994
--------------- -------------- ---------------
<S> <C> <C> <C>
Renaissance $ 38,973 $ 33,249 $ 28,435
</TABLE>
44
<PAGE>
<TABLE>
<S> <C> <C> <C>
Growth 351,506 289,263 247,275
Target 338,598 251,511 175,437
Opportunity 308,794 255,940 247,239
Innovation 88,089 28,918 N/A
International 42,411 49,788 51,731
Precious Metals 21,416 22,178 19,794
Tax Exempt 10,288 6,485 7,170
</TABLE>
The remainder of the total payments made under the PAF Class A Plan
for such fiscal years was allocated among other series of PAF which either
merged with Funds of the Trust or merged with/reorganized as series of PIMCO
Funds: Pacific Investment Management Series, an affiliated mutual fund family,
in transactions which took place on January 17, 1997.
During the fiscal year ended September 30, 1996, the amounts
collected pursuant to the PAF Class A Plan were used as follows: commissions and
other compensation to dealers, $1,786,000; preparing, printing and distributing
materials to shareholders, and other expenses (including data processing, legal
and operations), $2,483,000. The total, if allocated among these former PAF
Funds based on the net assets attributable to their Class A shares at September
30, 1996, would have been as follows:
<TABLE>
<CAPTION>
Distribution
of Materials
and Other
Compensation Expenses Total
------------ ------------ -----
<S> <C> <C> <C>
Renaissance $49,000 $68,000 $117,000
Growth 359,000 499,000 858,000
Target 370,000 515,000 885,000
Opportunity 320,000 445,000 765,000
Innovation 119,000 165,000 284,000
International 48,000 66,000 114,000
Precious Metals 15,000 21,000 36,000
Tax Exempt 14,000 19,000 33,000
</TABLE>
For the fiscal years ended September 30, 1996 and 1995, PAF paid the
Distributor an aggregate of $1,839,931 and $87,552, respectively, pursuant to a
Distribution and Servicing Plan applicable to the Class B shares of PAF (the
"PAF Class B Plan") which is similar to the Class B Retail Plan of the Trust.
The payments were allocated among the following former PAF Funds as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
Sept. 30, 1996 Sept. 30, 1995
--------------- ---------------
<S> <C> <C>
Renaissance $ 62,195 $ 2,071
Growth 211,778 12,583
Target 241,125 11,816
Opportunity N/A N/A
Innovation 166,747 9,364
International 289,719 555
Precious Metals 14,083 270
Tax Exempt 14,673 745
</TABLE>
45
<PAGE>
The remainder of the total payments made under the PAF Class B Plan
for such fiscal years was allocated among other series of PAF which either
merged with Funds of the Trust or merged with/reorganized as series of PIMCO
Funds: Pacific Investment Management Series, an affiliated mutual fund family,
in transactions which took place on January 17, 1997.
During the fiscal year ended September 30, 1996, the amounts
collected pursuant to the PAF Class B Plan and the contingent deferred sales
charge imposed on Class B shares of the former PAF Funds were used as follows by
the Distributor: sales commissions and other compensation to sales personnel,
$8,961,000; preparing, printing and distributing sales material and advertising
(including preparing, printing and distributing prospectuses to
non-shareholders), and other expenses (including data processing, legal and
operations), $2,003,000. The total, if allocated among these former PAF Funds
based on the net assets attributable to their Class B shares at September 30,
1996, would have been as follows:
<TABLE>
<CAPTION>
Sales Material
and Other
Compensation Expenses Total
------------ -------- -----
<S> <C> <C> <C>
Renaissance $488,000 $109,000 $597,000
Growth 1,158,000 259,000 1,417,000
Target 1,549,000 346,000 1,895,000
Opportunity 0 0 0
Innovation 1,050,000 235,000 1,285,000
International 183,000 41,000 224,000
Precious Metals 69,000 15,000 84,000
Tax Exempt 70,000 16,000 86,000
</TABLE>
The Trustees believe that the Retail Plans will provide benefits to the
Trust. In this regard, the Trustees believe that the Retail Plans will result in
greater sales and/or fewer redemptions of Trust shares, although it is
impossible to know for certain the level of sales and redemptions of Trust
shares that would occur in the absence of the Retail Plans or under alternative
distribution schemes. Although the Funds' expenses are essentially fixed, the
Trustees believe that the effect of the Retail Plans on sales and/or redemptions
may benefit the Trust by reducing Fund expense ratios and/or by affording
greater flexibility to Portfolio Managers. From time to time, expenses of the
Distributor incurred in connection with the sale of Class B and Class C shares
of the Funds, and in connection with the servicing of Class B and Class C
shareholders of the Funds and the maintenance of shareholder accounts, may
exceed the distribution and servicing fees collected by the Distributor. The
Trustees consider such unreimbursed amounts, among other factors, in determining
whether to cause the Funds to continue payments of distribution and servicing
fees in the future with respect to Class B and Class C shares.
Distribution and Administrative Services Plans for Administrative Class Shares
The Trust has adopted an Administrative Services Plan and a
Distribution Plan (together, the "Administrative Plans") with respect to the
Administrative Class shares of each Fund. Under the terms of each Administrative
Plan, the Trust is permitted to reimburse, out of the assets attributable to the
Administrative Class shares 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 distribution of Administrative
Class shares or administration of plans or programs that use Administrative
Class shares of the Funds as their funding medium, and to reimburse certain
other distribution related expenses. Under the terms of the Administrative Class
Distribution Plan, these services may include, but are not limited to, the
following: providing facilities to answer questions from prospective investors
about a Fund; receiving and answering correspondence, including requests for
prospectuses and statements of additional information;
46
<PAGE>
preparing, printing and delivering prospectuses and shareholder reports to
prospective shareholders; complying with federal and state securities laws
pertaining to the sale of Administrative Class shares; and assisting investors
in completing application forms and selecting dividend and other account
options.
Under the terms of the Administrative Services Plan, the services may
include, but are not limited to, the following: receiving, aggregating and
processing shareholder orders; furnishing shareholder 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 same entity may be the recipient of fees under both the
Administrative Class Distribution Plan and the Administrative Services Plan, but
may not receive fees under both plans with respect to the same assets.
Each Administrative Plan provides that it may not be amended to
materially increase the costs which Administrative Class shareholders may bear
under the Plan without the approval of a majority of the outstanding voting
securities of the Administrative Class, and by vote of a majority of both (i)
the Trustees of the Trust and (ii) those Trustees who are not "interested
persons" of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to it, cast in person at a meeting called for the purpose of voting on
the Plan and any related amendments.
Each Plan provides that it may not take effect until approved by vote
of a majority of both (i) the Trustees of the Trust and (ii) the disinterested
Trustees defined above. The Administrative Class Distribution Plan further
provides that it may not take effect unless approved by the vote of a majority
of the outstanding voting securities of the Administrative Class. The
Administrative Plans were approved by the Trustees, including the disinterested
Trustees, at a meeting held on September 17, 1996.
Each Administrative Plan provides that it shall continue in effect so
long as such continuance is specifically approved at least annually by the
Trustees and the disinterested Trustees defined above. Each Administrative Plan
provides that any person authorized to direct the disposition of monies paid or
payable by a class pursuant to the Plan or any related agreement shall provide
to the Trustees, and the Board shall review at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
Each Administrative Plan provides that expenses payable under the Plan
may be carried forward for reimbursement for up to twelve months beyond the date
in which the expense is incurred, subject to the limit that not more than 0.25%
of the average daily net assets of Administrative Class shares may be used in
any month to pay expenses under the Plan. Each Plan requires that Administrative
Class shares incur no interest or carrying charges.
Rules of the NASD limit the amount of distribution fees that may be
paid by mutual funds. "Service fees," defined to mean fees paid for providing
shareholder services or the maintenance of accounts (but not transfer agency
services) are not subject to the limits. The Trust believes that most, if not
all, of the fees paid pursuant to both Administrative Plans will qualify as
"service fees" and therefore will not be limited by NASD rules.
The Administrative Plans were not in effect prior to the date of this
Statement of Additional Information and no payments were made thereunder in
prior fiscal periods.
47
<PAGE>
Purchases, Exchanges and Redemptions
Purchases, exchanges and redemptions of Class A, Class B and Class C
shares are discussed in the Retail Prospectus under the headings "How to Buy
Shares," "Exchange Privilege," and "How to Redeem," and that information is
incorporated herein by reference. Purchases, exchanges and redemptions of
Institutional Class and Administrative Class shares are discussed in the
Institutional Prospectus under the headings "Purchase of Shares," "Redemption of
Shares," and "Net Asset Value," and that information is incorporated herein by
reference.
Certain clients of the Adviser or a Portfolio Manager 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.
One or more classes of shares of the Funds may not be qualified or
registered for sale in all States. Prospective investors should inquire as to
whether shares of a particular Fund or class 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.
As described in the Retail Prospectus under the caption "Exchange
Privilege," and in the Institutional Prospectus under the caption "Redemption of
Shares," a shareholder may exchange shares of any Fund for shares of any other
Fund of the Trust that is available for investment or any series of PIMCO Funds:
Pacific Investment Management Series, a mutual fund family advised by Pacific
Investment Management, within the same class on the basis of their respective
net asset values. The original purchase date(s) of shares exchanged for purposes
of calculating any contingent deferred sales charge will carry over to the
investment in the new Fund. For example, if a shareholder invests in the Class C
shares of one Fund and 6 months later (when the contingent deferred sales charge
upon redemption would normally be 1%) exchanges his shares for Class C shares of
another Fund, no sales charge would be imposed upon the exchange but the
investment in the other Fund would be subject to the 1% contingent deferred
sales charge until one year after the date of the shareholder's investment in
the first Fund as described in the Retail Prospectus under "Alternative Purchase
Arrangements." With respect to Class B or Class C shares, or Class A shares
subject to a contingent deferred sales charge, if less than all of an investment
is exchanged, any portion of the investment attributable to capital appreciation
and/or reinvested dividends or capital gains distributions will be exchanged
first, and thereafter any portions exchanged will be from the earliest
investment made in the Fund from which the exchange was made.
Orders for exchanges accepted prior to the close of regular trading on
the New York Stock Exchange on any day the Trust is open for business will be
executed at the respective net asset values determined as of the close of
business that day. Orders for exchanges received after the close of regular
trading on the New York Stock Exchange on any business day will be executed at
the respective net asset values determined at the close of the next business
day.
An excessive number of exchanges may be disadvantageous to the Trust.
Therefore, the Trust, in addition to its right to reject any exchange, reserves
the right to adopt a policy of terminating the exchange privilege of any
shareholder who makes more than a specified number of exchanges in a 12-month
period or in any calendar quarter. The Trust reserves the right to modify or
discontinue the exchange privilege at any time.
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.
48
<PAGE>
Due to the relatively high cost of maintaining smaller accounts, the
Trust reserves the right to redeem Institutional Class or Administrative Class
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 the 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 Agreement and Declaration of Trust, as
amended and restated (the "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.
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.
The Adviser and each Portfolio Manager places orders for the purchase
and sale of portfolio securities, options and futures contracts for the relevant
Fund and buys and sells such securities, options and futures for the Trust
through a substantial number of brokers and dealers. In so doing, the Adviser or
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 Adviser or 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.
For the fiscal years ended June 30, 1996, October 31, 1995, and October
31, 1994 (the fiscal year ended June 30, 1996 being an eight-month period), the
following amounts of brokerage commissions were paid by the Funds listed
below:
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<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 6/30/96 10/31/95 10/31/94
- ---- ------- -------- --------
<S> <C> <C> <C>
Equity Income Fund $221,694 $170,712 $172,646
Value Fund 65,062 39,801 39,671
Small Cap Value Fund 74,170 74,739 115,477
Capital Appreciation Fund 467,569 411,595 368,018
Mid Cap Growth Fund 382,764 332,045 258,765
Micro Cap Growth Fund 124,194 202,678 118,750
Small Cap Growth Fund 76,333 111,918 87,362
Enhanced Equity Fund 114,363 47,226 106,389
Emerging Markets Fund 622,328 1,061,823 618,574
International Developed Fund 306,741 301,313 150,878
Balanced Fund 95,606 32,346 108,394
Core Equity Fund 57,047 40,203 N/A
Mid Cap Equity Fund 16,961 20,084 N/A
</TABLE>
For the fiscal years ended September 30, 1996, 1995 and 1994 for the
Funds listed below (each of which was a series of PAF during such periods and
reorganized as a Fund of the Trust on January 17, 1997), the following amounts
of brokerage commissions were paid by such Funds:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
Fund 9/30/96 9/30/95 9/30/94
- ---- ------- ------- -------
<S> <C> <C> <C>
Renaissance Fund $993,617 $605,124 $420,738
Growth Fund 2,985,777 3,500,524 3,317,272
Target Fund 3,080,238 2,289,076 2,156,801
Opportunity Fund 1,757,263 1,728,282 1,130,760
Innovation Fund 228,473 84,173 N/A
International Fund 1,530,476 2,727,326 1,277,327
Precious Metals Fund 79,838 48,592 124,474
Tax Exempt Fund 0 0 0
</TABLE>
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 and Portfolio Managers receive
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research services from many broker-dealers with which the Adviser and Portfolio
Managers place 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 and Portfolio Managers in advising
various of their clients (including the Trust), although not all of these
services are necessarily useful and of value in managing the Trust. The advisory
fees paid by the Trust are not reduced because the Adviser and Portfolio
Managers 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 the NASD 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.
The Adviser or 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 Adviser or Portfolio Manager where, in the judgment of the
Adviser or Portfolio Manager, such firm will be able to obtain a price and
execution at least as favorable as other qualified broker-dealers.
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 Adviser or Portfolio Manager and the Trust expressly permitting the
affiliated broker-dealer to receive and retain such compensation.
SEC rules further require that commissions paid to such an affiliated
broker-dealer, the Adviser, 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 portfolios of the Funds
without regard generally to restrictions on portfolio turnover, except those
imposed on their 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.
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NET ASSET VALUE
As indicated in the Retail Prospectus under the heading "How Net
Asset Value is Determined" and in the Institutional Prospectus under the heading
"Net Asset Value," 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.
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 certain Funds that invest
in foreign securities may not take place contemporaneously with the
determination of the prices of portfolio securities used in such calculation. If
events materially affecting the values of portfolio securities occur between the
time their prices are determined and 4:00 p.m. (Eastern time), then these
securities will be valued at fair value as determined by the management and
approved in good faith by the Board of Trustees.
TAXATION
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 Subchapter M of 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 (including but not limited to
gains from options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies ("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, 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 (other than U.S. Government securities or
the securities of other regulated investment companies) of any one issuer or of
two or more issuers which the Fund controls and which are engaged in the same,
similar or related trades or businesses; and (d) distribute each taxable year
the sum of (i) 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) and (ii) 90% of its tax exempt interest, net of
expenses allocable thereto. Under the 30% of gross income test described above,
the Fund will be restricted from selling certain assets held (or considered
under Code rules to have been held) for less than three months, and in engaging
in certain hedging transactions (including hedging transactions in futures and
options) that in some circumstances could cause certain Fund assets to be
treated as held for less than three months. By so qualifying, each Fund will not
be subject to federal income taxes to the extent that its net investment income,
net realized short-term capital gains and net realized long-term capital gains
are distributed. In addition, the Treasury Department is authorized to
promulgate regulations
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<PAGE>
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.
The Tax Exempt Fund must have at least 50% of its total assets
invested in Tax Exempt Bonds at the end of each calendar quarter so that
dividends derived from its net interest income on Tax Exempt Bonds and so
designated by the Fund will be "exempt-interest dividends," which are exempt
from federal income tax when received by an investor. Certain exempt-interest
dividends, as described in the Retail Prospectus, may increase alternative
minimum taxable income for purposes of determining a shareholder's liability for
the alternative minimum tax. In addition, exempt-interest dividends allocable to
interest from certain "private activity bonds" will not be tax exempt for
purposes of the regular income tax to shareholders who are "substantial users"
of the facilities financed by such obligations or "related persons" of such
"substantial users." The tax-exempt portion of dividends paid for a calendar
year constituting "exempt-interest dividends" will be designated after the end
of that year and will be based upon the ratio of net tax-exempt income to total
net income earned by the Fund during the entire year. That ratio may be
substantially different than the ratio of net tax-exempt income to total net
income earned during a portion of the year. Thus, an investor who holds shares
for only a part of the year may be allocated more or less tax-exempt interest
dividends than would be the case if the allocation were based on the ratio of
net tax-exempt income to total net income actually earned by the Fund while the
investor was a shareholder. All or a portion of interest on indebtedness
incurred or continued by a shareholder to purchase or carry shares of the Tax
Exempt Fund will not be deductible by the shareholder. The portion of interest
that is not deductible is equal to the total interest paid or accrued on the
indebtedness multiplied by the percentage of the Fund's total distributions (not
including distributions of the excess of net long-term capital gains over net
short-term capital losses) paid to the shareholder that are exempt-interest
dividends. Under rules used by the Internal Revenue Service for determining when
borrowed funds are considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to have been made
with borrowed funds even though such funds are not directly traceable to the
purchase of shares.
Shareholders of the Tax Exempt Fund receiving social security or
railroad retirement benefits may be taxed on a portion of those benefits as a
result of receiving tax exempt income (including exempt-interest dividends
distributed by the Fund). The tax may be imposed on up to 50% of a recipient's
benefits in cases where the sum of the recipient's adjusted gross income (with
certain adjustments, including tax-exempt interest), exceeds a base amount. In
addition, up to 85% of a recipient's benefits may be subject to tax if the
recipient's adjusted gross income (with certain adjustments, including
tax-exempt interest), exceeds a higher base amount. Shareholders receiving
social security or railroad retirement benefits should consult with their tax
advisors.
In years when a Fund distributes amounts in excess of its earnings
and profits, such distributions may be treated in part as a return of capital. A
return of capital is not taxable to a shareholder and has the effect of reducing
the shareholder's basis in the shares. Since certain of the Tax Exempt Fund's
expenses attributable to earning tax-exempt income do not reduce such Fund's
current earnings and profits, it is possible that distributions, if any, in
excess of such Fund's net tax-exempt and taxable income will be treated as
taxable dividends to the extent of such Fund's remaining earnings and profits
(i.e., the amount of such expenses).
The proper tax treatment of income or loss realized by the Precious
Metals Fund from the retirement or sale of a Metal-Indexed Note is unclear. The
Precious Metals Fund will report such income or loss as capital or ordinary
income or loss in a manner consistent with any Internal Revenue Service position
on the subject following the publication of such a position. Gain or loss from
the sale or exchange of preferred stock indexed to the price of a natural
resource is expected to be capital gain or loss to the Precious Metals Fund.
Distributions
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,
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<PAGE>
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.
The tax status of each Fund and the distributions which it may make
are summarized in the Retail Prospectus under the captions "Distributions" and
"Taxes" and in the Institutional Prospectus under the caption "Dividends,
Distributions and Taxes." Except for exempt-interest dividends paid by the Tax
Exempt Fund, all dividends and distributions of a Fund, whether received in
shares or cash, are taxable and must be reported on each shareholder's federal
income tax return. Distributions received by tax-exempt shareholders will not be
subject to federal income tax to the extent permitted under the applicable tax
exemption. A dividend or capital gains distribution received after the purchase
of a Fund's shares reduces the net asset value of the shares by the amount of
the dividend or distribution and will be subject to federal income taxes.
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.
54
<PAGE>
Options, Futures, 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.
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 Emerging Markets, Structured Emerging Markets, International Developed
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 Trust intends 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
55
<PAGE>
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.
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 and the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, and may subject a Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders and 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
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<PAGE>
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.
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.
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
57
<PAGE>
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 Micro Cap
Growth Fund which has limitations on contributed capital with respect to
purchases of its Institutional and Administrative Class shares. 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. The Trust is organized as a Massachusetts business
trust. Under current law, so long as each Fund qualifies for the federal income
tax treatment described above, it is believed that neither the Trust nor any
Fund will be liable for any income or franchise tax imposed by Massachusetts.
Shareholders, in any event, 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 as amended and restated on January 17, 1997.
The capitalization of the Trust consists solely of an unlimited number of shares
of beneficial interest. 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.
Performance Information
Performance information is computed separately for each class of a
Fund's shares. Each Fund may from time to time include the total return of each
class of its shares in advertisements or in information furnished to present or
prospective shareholders. As noted below, in accordance with methods approved by
the Securities and Exchange Commission in various pronouncements, total return
presentations for periods prior to the inception date of a particular class of a
Fund are based on the historical performance of an older class of the Fund
(specified below) restated to reflect the current sales charges (if any) of the
newer class, but not reflecting any higher operating expenses such as 12b-1
distribution and servicing fees and administration fees associated with the
newer class. All other things being equal, such higher expenses would have
adversely affected (i.e., reduced) total return for the newer classes by the
amount of such higher expenses compounded over the relevant periods. The Tax
Exempt, Renaissance and Balanced Funds may from time to time include the yield
and total return of each class of their shares in advertisements or information
furnished to present or prospective shareholders. Each Fund may from time to
time include in advertisements the total return of each class (and yield of each
class in the case of the Tax
58
<PAGE>
Exempt and Balanced Funds) and the ranking of those performance figures relative
to such figures for groups of mutual funds categorized by Lipper Analytical
Services as having the same investment objectives. Information provided to any
newspaper or similar listing of the Fund's net asset values and public offering
prices will separately present each class of shares. 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.
Calculation of Yield
Quotations of yield for certain of 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.
For the one month period ended June 30, 1996, the yield of the Balanced
Fund was 3.0%. For the one month period ended September 30, 1996, the yield of
the Tax Exempt and Renaissance Funds (each of which was a series of PAF for such
period and reorganized as a Fund of the Trust on January 17, 1997) was 4.1% and
1.3%, respectively.
The yield of the Tax Exempt Fund will vary from time to time depending
upon market conditions, the composition of the Fund's portfolio and operating
expenses of the Trust allocated to the Fund or its classes of shares. These
factors, possible differences in the methods used in calculating yield and the
tax exempt status of distributions should be considered when comparing the Tax
Exempt Fund's yield to yields published for other investment companies and other
investment vehicles. Yield should also be considered relative to changes in the
value of the Fund's various classes of shares. These yields do not take into
account any applicable contingent deferred sales charges.
The Tax Exempt Fund may advertise a tax equivalent yield of each class
of its shares, calculated as described above except that, for any given tax
bracket, net investment income of each class will be calculated using as gross
investment income an amount equal to the sum of (i) any taxable income of each
class of the Fund plus (ii) the tax exempt income of each class of the Fund
divided by the difference between 1 and the effective federal income tax rates
for taxpayers in that tax bracket. For example, taxpayers with the marginal
federal income tax rates indicated in the following table would have to earn the
tax equivalent yields shown in order to realize an after-tax return equal to the
corresponding tax-exempt yield shown.
59
<PAGE>
<TABLE>
<CAPTION>
Filing Status Marginal tax rate* A tax-exempt yield of
Single Married filing jointly 3% 4% 5% 6% 7%
is equivalent to a taxable yield of
Taxable income
<S> <C> <C> <C> <C> <C> <C> <C>
$23,350 or less $39,000 or less 15% 3.53% 4.71% 5.88% 7.06% 8.24%
Over $23,350 but Over $39,000 but 28% 4.17% 5.56% 6.94% 8.33% 9.72 %
not over $56,550 not over $94,250
Over $56,550 but Over $94,250 but 31% 4.35% 5.80% 7.25% 8.70% 10.14%
not over $117,950 not over $143,600
Over $117,950 but Over $143,600 but 36% 4.69% 6.25% 7.81% 9.38% 10.94%
not over $256,500 not over $256,500
Over $256,500 Over $256,500 39.6% 4.97% 6.62% 8.28% 9.93% 11.59%
- -------------------
</TABLE>
* These marginal tax rates do not take into account the effect of the phaseout
of itemized deductions and personal exemptions.
As is shown in the above table, the advantage of tax-exempt investing
becomes more advantageous to an investor as his or her marginal tax rate
increases.
The Trust, in its advertisements, may refer to pending legislation from
time to time and the possible impact of such legislation on investors,
investment strategy and related matters. This would include any tax proposals
and their effect on marginal tax rates and tax-equivalent yields. At any time in
the future, yields and total return may be higher or lower than past yields and
there can be no assurance that any historical results will continue.
Calculation of Total Return
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. Except as noted below, all total return figures reflect the deduction of
a proportional share of Fund or class expenses on an annual basis, and assume
that (i) the maximum sales load (or other charges deducted from payments) is
deducted from the initial $1,000 payment and that the maximum contingent
deferred sales charge, if any, is deducted at the times, in the amounts, and
under the terms disclosed in the Prospectuses and (ii) 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 accompanied by standardized total
return information.
The table below sets forth the average annual total return of each
class of shares of the following Funds for the periods ended June 30, 1996. As
noted below, consistent with SEC rules and informal guidance, total return
presentations for periods prior to the inception date of a particular class are
based on the historical performance of Institutional Class shares restated to
reflect the current sales charges (if any) of the newer class, but not
reflecting any higher operating expenses such as 12b-1 distribution and
servicing fees, which are paid by all classes except the Institutional Class (at
a maximum rate of 1.00% per annum), and the higher administration fee charges
associated with Class A, Class B and Class C shares (a maximum differential of
.15% per annum). All other things being equal, such higher expenses would have
adversely affected (i.e., reduced) total return for the newer classes by the
amount of the higher expenses, compounded over the relevant period.
60
<PAGE>
<TABLE>
<CAPTION>
Total Return for Periods Ended June 30, 1996*
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Since Inception
of Fund Inception Inception
Fund Class** 1 Year 5 Years (Annualized) Date of Fund Date of Class
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Institutional 24.86% 15.21% 14.89% 03/08/91 03/08/91
Administrative 24.47% 15.10% 14.77% 11/30/94
Class A 17.99% 13.91% 13.67% 1/17/97
Class B 19.86% 14.98% 14.79% 1/17/97
Class C 23.86% 15.21% 14.89% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Value Institutional 26.66% N/A 15.71% 12/30/91 12/30/91
Administrative 26.66% 15.71% 1/17/97
Class A 19.69% 14.26% 1/17/97
Class B 21.66% 15.44% 1/17/97
Class C 25.66% 15.71% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Small Cap Value Institutional 21.99% N/A 14.83% 10/1/91 10/1/91
Administrative 21.25% 14.66% 11/1/95
Class A 15.28% 13.46% 1/17/97
Class B 16.99% 14.57% 1/17/97
Class C 20.99% 14.83% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Capital Appreciation Institutional 24.67% 18.20% 16.74% 3/8/91 3/8/91
Administrative 24.67% 18.20% 16.74% 1/17/97
Class A 17.81% 16.87% 15.51% 1/17/97
Class B 19.67% 17.99% 16.65% 1/17/97
Class C 23.67% 18.20% 16.74% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mid Cap Growth Institutional 21.56% N/A 16.10% 8/26/91 8/26/91
Administrative 21.25% 15.98% 11/30/94
Class A 14.88% 14.75% 1/17/97
Class B 16.56% 15.87% 1/17/97
Class C 20.56% 16.10% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Micro Cap Growth Institutional 36.19% N/A 23.52% 6/25/93 6/25/93
Administrative 21.25% 15.98% 4/1/96
Class A 28.70% 21.19% 1/17/97
Class B 31.19% 22.84% 1/17/97
Class C 35.19% 23.52% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Small Cap Growth Institutional 17.33% 18.11% 22.47% 1/7/91 1/7/91
Administrative 17.28% 18.10% 22.44% 9/27/95
Class A 10.87% 16.78% 21.20% 1/17/97
Class B 12.33% 17.90% 22.38% 1/17/97
Class C 16.33% 18.11% 22.47% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Enhanced Equity Institutional 22.72% 13.45% 12.82% 2/11/91 2/11/91
Administrative 22.72% 13.45% 12.82% 1/17/97
Class A 15.97% 12.18% 11.63% 1/17/97
Class B 17.72% 13.21% 12.69% 1/17/97
Class C 21.72% 13.45% 12.82% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Emerging Markets Institutional 7.70% N/A 11.41% 6/1/93 6/1/93
Administrative 7.53% 11.33% 11/1/94
Class A 1.78% 9.43% 1/17/97
Class B 2.70% 10.68% 1/17/97
Class C 6.70% 11.41% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
International Institutional 18.48% N/A 11.67% 6/8/93 6/8/93
Developed Administrative 18.13% 11.43% 11/30/94
Class A 11.96% 9.55% 1/17/97
Class B 13.48% 10.80% 1/17/97
Class C 17.48% 11.67% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Institutional 15.13% N/A 11.13% 6/25/92 6/25/92
Administrative 15.13% 11.13% 6/25/92
Class A 8.80% 9.57% 1/17/97
Class B 10.13% 10.76% 1/17/97
Class C 14.13% 11.13% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Core Equity Institutional 18.02% N/A 25.06% 12/28/94 12/28/94
Administrative 17.81% 24.81% 5/31/95
Class A 11.53% 20.37% 1/17/97
Class B 13.02% 22.60% 1/17/97
Class C 17.02% 25.06% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
Mid Cap Equity Institutional 29.04% N/A 31.57% 12/28/94 12/28/94
Administrative 29.04% 31.57% 01/17/97
Class A 21.94% 26.62% 1/17/97
Class B 24.04% 29.15% 1/17/97
Class C 28.04% 31.57% 1/17/97
- ---------------------- --------------------- ------------ ------------ ------------------- -------------- ---------------
</TABLE>
* Average annual total return presentations for a particular class of shares
assume payment of current maximum sales charge (if any) applicable to that
class at the time of purchase and assume that the maximum CDSC (if any) for
Class A, Class B and Class C shares was deducted at the times, in the
amounts, and under the terms discussed in the Retail Prospectus.
** For all Funds, consistent with SEC rules and informal guidance, Class A,
Class B, Class C and Administrative Class total return presentations for
periods prior to the Inception Date of a particular class reflect the prior
performance of Institutional Class shares of the Fund adjusted to reflect the
actual sales charges (none in the case of the Administrative Class) of the
newer class. The adjusted Institutional Class performance does not, however,
reflect the higher Fund operating expenses applicable to Class A, Class B,
Class C and Administrative Class shares, such as 12b-1 distribution and
servicing fees, which are paid by all classes except the Institutional Class
(at a maximum rate of 1.00% per annum), and the higher administration fee
charges associated with Class A, Class B and Class C shares (a maximum
differential of .15% per annum). All other things being equal, such higher
expenses would have adversely affected (i.e., reduced) total return for the
newer classes by the amount of the higher expenses, compounded over the
relevant period.
The table below sets forth the average annual total return of each
class of shares of the following Funds (each of which was a series of PAF prior
to its reorganization as a Fund of the Trust on January 17, 1997) for the
periods ended September 30, 1996. Consistent with SEC rules and informal
guidance, total return presentations for periods prior to the inception date of
a particular class are based on the historical performance of Class A or Class C
shares (the particular class used in each case is noted below) restated to
reflect the current sales
63
<PAGE>
charges (if any) of the newer class, but not reflecting possibly lower operating
expenses such as 12b-1 distribution and servicing fees or administration fee
charges associated with the newer class.
<TABLE>
<CAPTION>
Total Return for Periods Ended September 30, 1996*
Since Inception Inception
of Fund Inception Date Date
1
Fund Class*** Year 5 Years 10 Years (Annualized) of Fund of Class
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Renaissance** Class A 15.64% 13.57% N/A 10.68% 4/18/88 2/1/91
Class B 16.54% 13.76% 10.90% 5/22/95
Class C 20.52% 14.00% 10.90% 4/18/88
Institutional 21.52% 14.00% 10.90% 1/17/97
Administrative 21.52% 14.00% 10.90% 1/17/97
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Class A 9.73% 11.74% 13.61 16.02% 2/24/84 10/26/90
Class B 10.22% 11.92% 14.26 16.16% 5/23/95
Class C 14.22% 12.18% 14.26 16.16% 2/24/84
- -----------------------------------------------------------------------------------------------------------------------------------
Target Class A 10.08% N/A N/A 17.58% 12/17/92 12/17/92
Class B 10.58% 17.94% 5/22/95
Class C 19.66% 18.45% 12/17/92
- ------------------------------------------------------------------------------------------------------------------------------------
Opportunity Class A 11.84% 24.74% 21.08 20.14% 2/24/84 12/17/90
Class C 16.47% 25.23% 21.28 20.11% 2/24/84
- ------------------------------------------------------------------------------------------------------------------------------------
Innovation Class A 13.26% N/A N/A 33.54% 12/22/94 12/22/94
Class B 13.99% 35.03% 5/22/95
Class C 18.08% 36.89% 12/22/94
Institutional 19.86% 37.87% 1/17/97
Administrative 19.86% 37.87% 1/17/97
- ------------------------------------------------------------------------------------------------------------------------------------
International** Class A 1.01% 5.87% 6.57 6.20% 8/25/86 2/1/91
Class B 1.21% 5.97% 7.18 6.78% 5/22/95
Class C 7.12% 6.28% 7.18 6.78% 8/25/86
- -----------------------------------------------------------------------------------------------------------------------------------
Precious Metals** Class A -7.11% 8.81% N/A 1.73% 10/10/88 2/1/91
Class B -7.24% 8.99% 1.92% 6/15/95
Class C -3.33% 9.27% 1.92% 10/10/88
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tax Exempt Class A 0.48% 5.60% 5.78 7.50% 11/1/85 3/14/91
Class B -0.46% 5.45% 6.27 7.63% 5/30/95
Class C 3.46% 5.77% 6.27 7.63% 11/1/85
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Average annual total return presentations for a particular class of
shares assume payment of current maximum sales charge (if any)
applicable to that class at the time of purchase and assume that the
maximum CDSC (if any) for Class A, B and C shares was deducted at the
times, in the amounts, and under the terms discussed in the Retail
Prospectus.
** The investment objective and policies of the Renaissance Fund and
International Fund were changed effective February 1, 1992 and
September 1, 1992, respectively. The investment objective and policies
of the Precious Metals Fund were changed effective on November 15,
1994. Performance information for prior periods does not necessarily
represent results that would have been obtained had the current
investment objective and policies then been in effect.
*** With the exception of the Target Fund and Innovation Fund, Class
A, Class B, Institutional Class and Administrative Class total return
presentations for these Funds for periods prior to the Inception Date
of the particular class reflect the prior performance of Class C
shares of the former PAF Fund adjusted to reflect the actual sales
charges (or no sales charges in the case of Administrative and
Institutional Class shares) of the newer class. The adjusted
performance does not, however, reflect possibly lower operating
expenses such as 12b-1 distribution and servicing fees or
administration fee charges associated with the newer class. For the
Target and Innovation Funds, (i) Institutional and Administrative
Class total return presentations for periods prior to the Inception
Date of a particular class reflect the prior performance of Class A
shares of the former PAF Fund adjusted in the manner described above
and (ii) Class B total return presentations for periods prior to the
Inception Date of that class reflect the prior performance of Class C
shares of the former PAF Fund adjusted in the manner described above.
Note also that, prior to January 17, 1997, Class A, Class B and Class
C shares of the former PAF Funds were subject to a variable level of
expenses for such services as legal, audit, custody and transfer
agency services. As described in the Retail Prospectus, for periods
subsequent to January 17, 1997, Class A, Class B and Class C shares of
the Trust are subject to a fee structure which essentially fixes these
expenses (along with other administrative expenses) under a single
administrative fee based on the average daily net assets of a Fund
attributable to Class A, Class B and Class C shares. Under the current
fee structure, the Growth Fund, Target Fund, Opportunity Fund and
International Fund are expected to have higher total Fund operating
expenses (as compared to expenses for the fiscal year ended September
30, 1996) than their predecessors had under the fee structure for PAF.
All other things being equal, such higher expenses should adversely
affect future total return performance for these Funds compared to
historical periods.
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, the Baring
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 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/or the Portfolio Managers as advisers to clients other than the
Trust, and on the comparative performance or standing of the Adviser and/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
65
<PAGE>
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.
The total return of each class (and yield of each class in the
case of the Tax Exempt, Renaissance and Balanced Funds) may be used to compare
the performance of each class of a Fund's shares against certain widely
acknowledged standards or indexes for stock and bond market performance, against
interest rates on certificates of deposit and bank accounts, against the yield
on money market funds, against the cost of living (inflation) index, and against
hypothetical results based on a fixed rate of return.
The S&P's Composite Index of 500 Stocks (the "S&P 500") is a
market value-weighted and unmanaged index showing the changes in the aggregate
market value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included. The 500
companies represented include 385 industrial, 15 transportation, 45 utilities
and 55 financial services concerns. The S&P 500 represents about 77% of the
market value of all issues traded on the New York Stock Exchange.
The S&P's 400 Mid-Cap Index (the "S&P 400 Mid-Cap Index") is a
market value-weighted and unmanaged index showing the changes in the aggregate
market value of 400 stocks of companies whose capitalization range from $100
million to over $5 billion and which represent a wide range of industries. As of
December 31, 1995, approximately 26% of the 400 stocks were stocks listed on the
National Association of Securities Dealers Automated Quotations ("NASDAQ")
system, 72% were stocks listed on the New York Stock Exchange and 2% were stocks
listed on the American Stock Exchange. The Standard & Poor's Midcap 400 Index
P/TR consists of 400 domestic stocks chosen for market size (median market
capitalization of $676 million), liquidity and industry group representation. It
is a market-value weighted index (stock price times shares outstanding), with
each stock affecting the index in proportion to its market value. The index is
comprised of industrials, utilities, financials and transportation, in size
order.
The NASDAQ-OTC Price Index (the "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the NASDAQ system. Only
those over-the-counter stocks having only one market maker or traded on
exchanges are excluded.
The Russell 2000 Small Stock Index is an unmanaged index of
the 2000 smallest securities in the Russell 3000 Index, representing
approximately 7% of the Russell 3000 Index. The Russell 3000 Index represents
approximately 98% of the U.S. equity market by capitalization. The Russell 1000
Index is composed of the 1,000 largest companies in the Russell 3000 Index. The
Russell 1000 Index represents the universe of stocks from which most active
money managers typically select. This large cap index is highly correlated with
the S&P 500 . The Russell 1000 Value Index contains stocks from the Russell 1000
Index with a less-than-average growth orientation. It represents the universe of
stocks from which value managers typically select.
The Lehman Government Bond Index (the "SL Government Index")
is a measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage backed securities, flower bonds and foreign targeted issues
are not included in the SL Government Index.
The Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,000 bonds. To be included in the SL Government/Corporate Index, an issue must
have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher by an NRSRO.
The Merrill Lynch U.S. Treasury Intermediate-term Index is an
unmanaged index of ten U.S. Treasury securities with maturities ranging from 10
to 14.99 years. Over the ten year period from December 31, 1985 to December
66
<PAGE>
31, 1995, according to the Merrill Lynch U.S. Treasury Intermediate-term Index,
18% of total return was derived from price appreciation and 82% of total return
was derived from income.
BanXquote Money Market, a service of Masterfund Inc., provides
the average rate of return paid on 3 month certificates of deposit offered by
major banks and the average rate paid by major banks on bank money market funds.
The Donoghue Organization, Inc. a subsidiary of IBC USA Inc., publishes the
Money Fund Report which lists the 7 day average yield paid on money market
funds.
From time to time, the Trust may use, in its advertisements or
information furnished to present or prospective shareholders, data concerning
the performance and ranking of certain countries' stock markets, including
performance and ranking data based on annualized returns over one-, three-,
five- and ten-year periods. The Trust may also use data about the portion of
world equity capitalization represented by U.S. securities. As of December 31,
1995, the U.S. equity market capitalization represented approximately 30% of the
equity market capitalization of all the world's markets. This compares with 52%
in 1980 and 70% in 1972.
From time to time, the Trust may use, in its advertisements
and other information relating to certain of the Funds, data concerning the
performance of stocks relative to that of fixed income investments and relative
to the cost of living over various periods of time. The table below sets forth
the annual returns for each calendar year from 1971 through 1995 (as well as a
cumulative return and average annual return for that 25 year period) for the S&P
500 and Treasury bills (using the formula set forth after the table) as well as
the rates of inflation (based on the Consumer Price Index) during such periods.
<TABLE>
<CAPTION>
Consumer Price
Period S&P 500 Treasury Bills Index
- ------ ------- -------------- --------------
<S> <C> <C> <C>
1971 14.3% 4.4% 3.4%
1972 18.9 3.8 3.4
1973 -14.7 6.9 8.8
1974 -26.5 8.0 12.2
1975 37.2 5.8 7.0
1976 23.8 5.0 4.8
1977 -7.2 5.1 6.8
1978 6.5 7.2 9.0
1979 18.4 10.4 13.3
1980 32.4 11.2 12.4
1981 -4.9 14.7 8.9
1982 21.4 10.5 3.8
1983 22.5 8.8 3.8
1984 6.3 9.9 3.9
1985 32.2 7.7 3.8
1986 18.5 6.1 1.1
1987 5.2 5.5 4.4
1988 16.8 6.3 4.4
1989 31.5 8.4 4.6
1990 -3.2 7.8 6.1
1991 30.5 5.6 3.1
1992 7.7 3.5 2.9
1993 10.1 2.9 2.7
1994 1.3 3.9 2.7
1995 37.4 5.6 2.7
- -----------------------------------------------------------------
Cumulative Return
1971-1995 1683.3 % 439.5% 286.1%
- -----------------------------------------------------------------
</TABLE>
67
<PAGE>
Average Annual Return
1971-1995 12.2% 7.2% 5.6%
- --------------------------------------------------------------
The average returns for Treasury bills were computed using the
following method. For each month during a period, the Treasury bill having the
shortest remaining maturity (but not less than one month ) was selected. (Only
the remaining maturity was considered; the bill's original maturity was not
considered). The return for the selected Treasury bill was computed based on the
price of the bill as of the last trading day of the previous month and the price
on the last trading day of the current month. The price of the bill (P) at each
time (t) is given by
[1- rd]
P\t\ = ---
[ 360]
where,
r = decimal yield on the bill at time t (the average
of bid and ask quotes); and
d = the number of days to maturity as of time t.
Advertisements and information relating to the Target Fund may use
data comparing the performance of stocks of medium-sized companies to that of
other companies. The following table sets forth the annual returns for each year
from March 1981 (inception of Mid-Cap Index) through 1996 (as well as a
cumulative return and average annual return for this period) for stocks of
medium-sized companies (based on the Standard & Poor's Mid-Cap Index), stocks of
small companies (based on the Russell 2000 Index) and stocks of larger companies
(based on the S&P 500).
<TABLE>
<CAPTION>
Small Mid-Sized Large
Period Companies Companies Companies
- ------ --------- --------- ---------
<S> <C> <C> <C>
1981 (2/28 -12/31) 1.8 10.6 -2.5
1982 25.0 22.7 21.4
1983 29.1 26.1 22.5
1984 -7.3 1.2 6.3
1985 31.1 36.0 32.2
1986 5.7 16.2 18.5
1987 -8.8 -2.0 5.2
1988 24.9 20.9 16.8
1989 16.2 35.6 31.5
1990 -19.5 -5.1 -3.2
1991 46.1 50.1 30.5
1992 18.4 11.9 7.7
1993 18.9 14.0 10.1
1994 -1.8 -3.6 1.3
1995 28.4 30.9 37.6
1996 16.5 19.2 22.9
- -----------------------------------------------------------------------------
Cumulative Return
2/28/81- 12/31/96 579.7% 1096.3% 901.3%
- -----------------------------------------------------------------------------
Average Annual Return
2/28/81- 12/31/96 12.9% 17.0% 15.7%
- -----------------------------------------------------------------------------
</TABLE>
From time to time, the Trust may use, in its advertisements and other
information relating to the Precious Metals Fund, data concerning the relevant
performance and volatility of portfolios consisting of all stocks, portfolios
consisting of all bonds and portfolios consisting of stocks and bonds blended
with stocks of companies engaged in the extraction, processing,
68
<PAGE>
distribution or marketing of gold and other precious metals. The following table
shows the annual returns for each calendar year from 1971 through 1995 (as well
as cumulative return and average annual return for that 25 year period) for an
all-stock portfolio (using the S&P 500), an all-bond portfolio (using the
Salomon Brothers Long Term Corporate Bond Index), and for a hypothetical
portfolio with 45% of its assets in stocks comprising the S&P 500, 45% in bonds
comprising the Salomon Brothers Long Term Corporate Bond Index and 10% in stocks
comprising the Morgan Stanley Capital International Gold Mining Index.
(Information for the calendar year ended 1996 was not available on the date of
this Statement of Additional Information).
<TABLE>
<CAPTION>
Stocks 45%
All All Bonds 45%
Period Stocks Bonds Gold Stocks 10%
- ------ ------ ----- ---------------
<S> <C> <C> <C>
1971 14.3 11.0 10.4
1972 19.0 7.3 15.5
1973 -14.7 1.1 4.2
1974 -26.5 -3.1 -10.9
1975 37.5 14.6 20.4
1976 23.8 18.6 15.0
1977 -7.2 1.7 .5
1978 6.5 0.00 3.4
1979 18.4 -4.2 21.3
1980 32.4 -2.6 19.3
1981 -4.9 -0.1 -6.0
1982 21.4 43.8 33.9
1983 22.5 4.7 12.0
1984 6.3 16.4 7.2
1985 32.2 30.9 26.2
1986 18.5 19.8 18.5
1987 5.2 -0.02 6.6
1988 16.8 10.7 9.1
1989 31.5 16.2 26.4
1990 -3.2 6.8 -1.0
1991 30.5 19.9 21.8
1992 7.7 9.4 4.9
1993 10.1 13.2 23.5
1994 1.3 -5.8 -3.1
1995 37.4 27.2 29.7
- ---------------------------------------------------------------------------
Cumulative Return
1971-1995 1683.3% 899.6% 1504.3%
- ---------------------------------------------------------------------------
Average Annual Return
1971-1995 12.2% 9.6% 11.7%
- ---------------------------------------------------------------------------
</TABLE>
The Trust may use, in its advertisements and other information, data
concerning the projected cost of a college education in future years based on
1993/1994 costs of college and an assumed rate of increase for such costs. For
example, the table below sets forth the projected cost of four years of college
at a public college and a private college assuming a steady increase in both
cases of 7% per year. In presenting this information, the Trust is making no
prediction regarding what will be the actual growth rate in the cost of a
college education, which may be greater or less than 7% per year and may
69
<PAGE>
vary significantly from year to year. The Trust makes no representation that an
investment in any of the Funds will grow at or above the rate of growth of the
cost of a college education.
Potential College Cost Table
<TABLE>
<CAPTION>
Start Public Private Start Public Private
Year College College Year College College
- ----- ------- ------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
1996 $33,761 $ 86,035 2004 $58,007 $147,817
1997 $36,124 $ 92,057 2005 $62,067 $158,165
1998 $38,653 $ 98,501 2006 $66,412 $169,237
1999 $41,358 $105,396 2007 $71,061 $181,084
2000 $44,253 $112,774 2008 $76,035 $193,761
2001 $47,351 $120,668 2009 $81,357 $207,325
2002 $50,665 $129,115 2010 $87,051 $221,838
2003 $54,212 $138,146 2011 $93,143 $237,367
</TABLE>
Costs assume a steady increase in the annual cost of college of 7% per year from
a 1993-94 base year amount. Actual rates of increase may be more or less than 7%
and may vary.
In its advertisements and other materials, the Trust may compare the
returns over periods of time of investments in stocks, bonds and treasury bills
to each other and to the general rate of inflation. For example, the average
annual return of each during the 25 years from 1972 to 1995 was:
*Stocks: 12.2%
Bonds: 9.6%
T-Bills: 7.2%
Inflation: 5.6%
*Returns of unmanaged indexes do not reflect past or future
performance of any of the Funds of PIMCO Funds: Multi-Manager Series.
Stocks is represented by Ibbotson's Common Stock Total Return Index.
Bonds are represented by Ibbotson's Long-term Corporate Bond Index. T
bills are represented by Ibbotson's Treasury Bill Index and Inflation
is represented by the Cost of Living Index. These are all unmanaged
indexes, which can not be invested in directly. While Treasury bills
are insured and offer a fixed rate of return, both the principal and
yield of investment securities will fluctuate with changes in market
conditions. Source: Ibbotson, Roger G., and Rex A. Sinquefiled,
Stocks, Bonds, Bill and Inflation (SBBI), 1989, updated in Stocks,
Bonds, Bills and Inflation 1996 Yearbook, Ibbotson Associates,
Chicago. All rights reserved.
The Trust may also compare the relative historic returns and range of
returns for an investment in each of common stocks, bonds and treasury bills to
a portfolio that blends all three investments. For example, over the 25 years
from 1972- 1995, the average annual return of stocks comprising the Ibbotson's
Common Stock Total Return Index ranged from -26.5% to 37.4% while the annual
return of a hypothetical portfolio comprised 40% of such common stocks, 40% of
bonds comprising the Ibbotson's Long-term Corporate bond Index and 20% of
Treasury bills comprising the Ibbottson's Treasury Bill Index (a "mixed
portfolio") would have ranged from -10.2% to 28.2% over the same period. The
average annual returns of each investment for each of the years from 1972
through 1995 is set forth in the following table.
<TABLE>
<CAPTION>
MIXED
YEAR STOCKS BONDS T-BILLS INFLATION PORTFOLIO
- ---- ------ ----- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
1972 18.98% 7.26% 3.84% 3.41% 11.26%
1973 -14.66% 1.14% 6.93% 8.80% -4.02%
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1974 -26.47% -3.06% 8.00% 12.26% -10.21%
1975 37.20% 14.64% 5.80% 7.01% 21.90%
1976 23.84% 18.65% 5.08% 4.81% 18.01%
1977 -7.18% 1.71% 5.12% 6.77% -1.17%
1978 6.56% -0.07% 7.18% 9.03% 4.03%
1979 18.44% -4.18% 10.38% 13.31% 7.78%
1980 32.42% 2.61% 11.24% 12.40% 14.17%
1981 -4.91% -0.96% 14.71% 8.94% 0.59%
1982 21.41% 43.79% 10.54% 3.87% 28.19%
1983 22.51% 4.70% 8.80% 3.80% 12.64%
1984 6.27% 16.39% 9.85% 3.95% 11.03%
1985 32.16% 30.90% 7.72% 3.77% 26.77%
1986 18.47% 19.85% 6.16% 1.13% 16.56%
1987 5.23% -0.27% 5.46% 4.41% 3.08%
1988 16.81% 10.70% 6.35% 4.42% 12.28%
1989 31.49% 16.23% 8.37% 4.65% 20.76%
1990 -3.17% 6.87% 7.52% 6.11% 2.98%
1991 30.55% 19.79% 5.88% 3.06% 21.31%
1992 7.67% 9.39% 3.51% 2.90% 7.53%
1993 10.06% 13.17% 2.89% 2.75% 9.84%
1994 1.31% -5.76% 3.90% 2.67% -1.00%
1995 37.40% 27.20% 5.60% 2.70% 26.90%
</TABLE>
Returns of unmanaged indexes do not reflect past or future performance of
any of the Funds of PIMCO Funds: Multi-Manager Series. Stocks are
represented by Ibbotson's Common Stock Total Return Index. Bonds are
represented by Ibbotson's Long-term Corporate Bond Index. T'bills are
represented by Ibbotson's Treasury Bill Index and Inflation is
represented by the Cost of Living Index. Treasury bills are all unmanaged
indexes, which can not be invested in directly. While Treasury bills are
insured and offer a fixed rate of return, both the principal and yield of
investment securities will fluctuate with changes in market conditions.
Source: Ibbotson, Roger G., and Rex A. Sinquefiled, Stocks, Bonds, Bill
and Inflation (SBBI), 1989, updated in Stocks, Bonds, Bills and Inflation
1996 Yearbook, Ibbotson Associates, Chicago. All rights reserved.
The Trust may use in its advertisements and other materials examples
designed to demonstrate the effect of compounding when an investment is
maintained over several or many years. For example, the following table shows
the annual and total contributions necessary to accumulate $200,000 of savings
(assuming a fixed rate of return) over various periods of time:
<TABLE>
<CAPTION>
Investment Annual Total Total
Period Contribution Contribution Saved
------ ------------ ------------ -----
<S> <C> <C> <C>
30 Years $1,979 $59,370 $200,000
25 Years $2,955 $73,875 $200,000
20 Years $4,559 $91,180 $200,000
15 Years $7,438 $111,570 $200,000
10 Years $13,529 $135,290 $200,000
</TABLE>
This hypothetical example assumes a fixed 7% return compounded annually
and a guaranteed return of principal. The example is intended to show
the benefits of a long-term, regular investment program, and is in no
way representative of any past or future performance of a Fund of PIMCO
Funds: Multi-Manager Series.
71
<PAGE>
There can be no guarantee that you will be able to find
an investment that would provide such a return at the
times you invest and an investor in any of the Funds of
PIMCO Funds: Multi-Manager Series should be aware that
certain of the Funds of PIMCO Funds: Multi-Manager Series
have experienced periods of negative growth in the past
and may again in the future.
The Trust may set forth in its advertisements and other materials
information regarding the relative reliance in recent years on personal savings
for retirement income versus reliance on Social Security benefits and company
sponsored retirement plans. For example, the following table offers such
information for 1990:
<TABLE>
<CAPTION>
% of Income for Individuals
Aged 65 Years and Older in 1990*
-------------------------------
Social Security
Year and Pension Plans Other
---- ----------------- -----
<S> <C> <C>
1990 38% 62%
</TABLE>
* For individuals with an annual income of at least $51,000. Other
includes personal savings, earnings and other undisclosed sources of
income. Source: Social Security Administration.
Articles or reports which include information relating to performance,
rankings and other characteristics of the Funds may appear in various national
publications and services including, but not limited to: The Wall Street
Journal, Barron's, Pensions and Investments, Forbes, Smart Money, Mutual Fund
Magazine, The New York Times, Kiplinger's Personal Finance, Fortune, Money
Magazine, Morningstar's Mutual Fund Values, CDA Investment Technologies and The
Donoghue Organization. Some or all of these publications or reports may publish
their own rankings or performance reviews of mutual funds, including the Funds,
and may provide information relating to the Adviser and the Portfolio Managers,
including descriptions of assets under management and client base, and opinions
of the author(s) regarding the skills of personnel and employees of the Adviser
or the Portfolio Managers who have portfolio management responsibility. From
time to time, the Trust may include references to or reprints of such
publications or reports in its advertisements and other information relating to
the Funds.
From time to time, the Trust may set forth in its advertisements and
other materials information about the growth of a certain dollar-amount invested
in one or more of the Funds over a specified period of time and may use charts
and graphs to display that growth.
Ibbotson Associates ("Ibbotson") has analyzed the risk and returns of the
Funds and relevant benchmark market indexes in a variety of market conditions.
Based on its independent research and analysis, Ibbotson has developed model
portfolios of the Funds and series of PIMCO Funds: Pacific Investment Management
Series ("PIMS") which indicate how, in Ibbotson's opinion, a hypothetical
investor with a 5+ year investment horizon might allocate his or her assets
among the Funds and series of PIMS. Ibbotson bases its model portfolios on five
levels of investor risk tolerance which it developed and defines as ranging from
"Very Conservative" (low volatility; emphasis on capital preservation, with some
growth potential) to "Very Aggressive" (high volatility; emphasis on long-term
growth potential). However, neither Ibbotson nor the Trust offers Ibbotson's
model portfolios as investments. Moreover, neither the Trust, the Adviser, the
Portfolio Managers nor Ibbotson represent or guarantee that investors who
allocate their assets according to Ibbotson's models will achieve their desired
investment results.
72
<PAGE>
Voting Rights
Under the 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. Shareholders 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.
All classes of shares of the Funds have identical voting rights except
that each class of shares has exclusive voting rights on any matter submitted to
shareholders that relates solely to that class, and 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. These shares are entitled to vote
at meetings of shareholders. Matters submitted to shareholder vote must be
approved by each Fund separately except (i) when required by the 1940 Act shares
shall be voted together and (ii) when the Trustees have determined that the
matter does not affect all Funds, then only shareholders of the Fund or Funds
affected shall be entitled to vote on the matter. All classes of shares of a
Fund will vote together, except with respect to the Distribution and Servicing
Plan applicable to Class A, Class B or Class C shares, to the Distribution or
Administrative Services Plans applicable to Administrative Class shares or when
a class vote is required as specified above or otherwise by the 1940 Act.
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.
Certain Ownership of Trust Shares
As of December 31, 1996, the Trust believes that the Trustees and
officers of the Trust, as a group, owned less than one percent of each class of
each Fund and of the Trust as a whole, except that such Trustees and officers,
as a group, owned 1.6% of the outstanding Class A shares of the PIMCO Advisors
Equity Income Fund (which reorganized as the Trust's Renaissance Fund on January
17, 1997).
As of December 17, 1996, the Trust believes that the following persons
owned of record or beneficially 5% or more of the shares of the noted class of
the following Funds:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Percentage of
Outstanding
Class of Shares No. of Shares Shares of
Fund Beneficial or Record Owner Owned Owned Class Owned
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Income Pacific Mutual Life Insurance Company Institutional 1,579,852.835 19.40%
Fund FBO PM RISP
700 Newport Center Drive
Newport Beach, California 92660
- ----------------------------------------------------------------------------------------------------------------------
NBD Bank NA as Trustee for Institutional 1,509,11x.427 18.53%
AM Castle & Company Employee Pension
P.O. Box 77975
Detroit, Michigan 48277-0975
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage
of
Outstanding
Class of Shares No. of Shares Shares
Fund Beneficial or Record Owner Owned Owned of Class
Owned
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Santa Barbara Foundation Institutional 901,689.448 11.07%
15 East Carillo Street
Santa Barbara, California 93101-2780
- -----------------------------------------------------------------------------------------------------------------------------------
Hazlehurst & Associates Institutional 474,478.864 5.83%
400 Perimeter Center Terrace, Suite 850
Atlanta, Georgia 30346
- -----------------------------------------------------------------------------------------------------------------------------------
Bank of America NT & SA as Trustee Institutional 417,206.306 5.12%
for Mazda Motor of America
P.O. Box 2788
Los Angeles, CA 90051-0788
- -----------------------------------------------------------------------------------------------------------------------------------
First Union National Bank Administrative 476,962.731 96.85%*
401 S. Tyron Street, FRB-3
Charlotte, North Carolina 28288-1151
- -----------------------------------------------------------------------------------------------------------------------------------
Value Fund**** Pacific Mutual Life Insurance Company Institutional 2,083,327.831 42.86%*
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- -----------------------------------------------------------------------------------------------------------------------------------
Great Lakes Chemical Corporation Institutional 896,832.411 18.45%
Route 52 Northwest
P.O. Box 2200
Lafayette, Indiana 47906
- -----------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 594,018.931 12.22%
FBO CMTA-GMPP & Allied Worked Pension
700 Newport Center Drive
Newport Beach, California 92660
- -----------------------------------------------------------------------------------------------------------------------------------
BAC Local 19 Pension Trust Fund Institutional 319,348.666 6.57%
777 Davis Street
San Francisco, California 94126-2500
- -----------------------------------------------------------------------------------------------------------------------------------
PM Charitable Foundation Institutional 273,175.247 5.62%
700 Newport Center Drive
Newport Beach, California 92660
- -----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** A 113,020.000 14.63%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage
of
Outstanding
Class of Shares No. of Shares Shares
Fund Beneficial or Record Owner Owned Owned of Class
Owned
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc.** B 389,693.240 28.35%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 405,866.608 13.54%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- -----------------------------------------------------------------------------------------------------------------------------------
FTC & Co. C 200,242.393 6.68%
#022
Attn: Datalynx
P.O. Box 5508
Denver, CO 80217
- -----------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund Pacific Mutual Life Insurance Company Institutional 518,591.890 22.44%
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- -----------------------------------------------------------------------------------------------------------------------------------
Sheet Metal Workers' Local Unions Institutional 353,998.575 15.32%
and Councils Pension Fund
601 N. Fairfax Street, Suite 500
Alexandria, Virginia 22314-2054
- -----------------------------------------------------------------------------------------------------------------------------------
Victoria Bank and Trust Company, Institutional 268,816.710 11.63%
Structural Metals, Inc. Pension Plan
One O'Connor Plaza, 6th Floor
Victoria, Texas 77901-65497
- -----------------------------------------------------------------------------------------------------------------------------------
Mellon Bank, NA FBO Institutional 127,473.047 5.52%
Mac & Co
P.O. Box 320
Pittsburgh, Pennsylvania 15230-0320
- -----------------------------------------------------------------------------------------------------------------------------------
First Union National Bank Administrative 347,831.290 100.00%*
401 South Tyron Street, FRB-3
Charlotte, North Carolina 28202-1911
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Donaldson Lufkin & Jenrette** Institutional 4,523,965.341 19.74%
Fund Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
- -----------------------------------------------------------------------------------------------------------------------------------
Coopers & Lybrand L.L.P. Institutional 3,295,851.869 14.38%
1251 Avenue of the Americas
New York, New York 10020
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage
of
Outstanding
Class of Shares No. of Shares Shares
Fund Beneficial or Record Owner Owned Owned of Class
Owned
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Mutual Life Insurance Company Institutional 1,472,747.512 6.43%
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- -----------------------------------------------------------------------------------------------------------------------------------
Amsouth Bank as Trustee for Institutional 1,152,168.141 5.03%
Infirmary Health Systems
P.O. Box 11426
Birmingham, Alabama 35202-1426
- -----------------------------------------------------------------------------------------------------------------------------------
FIIOC as Agent for Administrative 66,443.361 97.39%*
Certain Employee Benefits Plan
100 Magetian KWIC
Covington, Kentucky 41015
- -----------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund **** State Street Bank & Trust Co. as Trustee for Institutional 2,682,606.870 21.29%
Dayton Hudson Retirement Savings Plan
One Enterprise Drive
North Quincy, Massachusetts 02171
- -----------------------------------------------------------------------------------------------------------------------------------
Caremark International, Inc. Institutional 1,118,405.465 8.87%
2215 Sanders Road
Northbrook, Illinois 60062
- -----------------------------------------------------------------------------------------------------------------------------------
Berklee College of Music, Inc. Institutional 840,814.302 6.67%
1140 Boylston Street
Boston, Massachusetts 02215-3693
- -----------------------------------------------------------------------------------------------------------------------------------=
Staff Retirement Plan of the Institutional 668,608.087 5.31%
International Telecommunications
Satellite Organization
3400 International Drive, N.W.
Washington, D.C. 20008-3006
- -----------------------------------------------------------------------------------------------------------------------------------
First Interstate Bank FBO Administrative 62,467.812 82.75%*
Choicemaster
5808 East Telephone Road, 2nd Floor
Ventura, California 93003
- -----------------------------------------------------------------------------------------------------------------------------------
The Sandra Hogue Living Trust Administrative 6,378.522 8.45%
Sandra Hogue Trustee
112 East Victoria Street
Santa Barbara, California 93109-2115
- -----------------------------------------------------------------------------------------------------------------------------------
FIIOC as Agent for Administrative 5,403.528 7.16%
Certain Employee Benefits Plan
100 Magetian KWIC
Covington, Kentucky 41015
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Percentage of
Outstanding
Class of Shares No. of Shares Shares of
Fund Beneficial or Record Owner Owned Owned Class Owned
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc.** A 151,032.000 16.22%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 653,431.837 36.71%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 657,987.000 20.50%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- -------------------------------------------------------------------------------------------------------------------
Micro Cap Charles Schwab & Co., Inc.** Institutional 1,418,971.914 22.95%
Growth Fund The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
- -------------------------------------------------------------------------------------------------------------------
Dominion Resources, Inc. Institutional 954,701.588 15.44%
701 East Byrd Street
P.O. Box 26532
Richmond, Virginia 23261
- -------------------------------------------------------------------------------------------------------------------
University of Southern California Institutional 907,986.469 14.68%
Treasurer's Office
University Park, BKS 402
Los Angeles, California 90089-2541
- -------------------------------------------------------------------------------------------------------------------
Oberlin College Institutional 606,761.440 9.81%
Oberlin College Investment Office
173 West Lorain Street
Oberlin, Ohio 44074
- -------------------------------------------------------------------------------------------------------------------
Toyota Motor Sales, USA, Inc. Institutional 430,683.004 6.96%
19001 South Western Avenue
P.O. Box 2991
Torrance, California 90509-2991
- -------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 361,010.830 5.84%
700 Newport Center Drive
Newport Beach, California 92660-6397
- -------------------------------------------------------------------------------------------------------------------
Baptist Sunday School Board Administrative 66,875.864 100.00%*
1279th Avenue N, MSN 187
Nashville, Tennessee 37234
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap The Jewish Federation of Institutional 809,070.615 30.18%*
Growth Fund Metropolitan Chicago
One South Franklin Street
Room 625
Chicago, Illinois 60606-4609
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 295,576.977 11.02%
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Auburn Theological Seminary Institutional 276,865.871 10.33%
3041 Broadway
New York, New York 10027-5710
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 260,281.104 9.71%
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
ESOR & Co. Institutional 197,355.259 7.36%
Associated Bank Green Bay
Trust Operations Department
P.O. Box 19006
Green Bay, Wisconsin 54307-9006
- ---------------------------------------------------------------------------------------------------------------------------------
Bessemer Trust Company for Institutional 99,453.008 7.08%
Naidot & Co.
100 Woodbridge Center Drive
Woodbridge, New Jersey 07095
- ---------------------------------------------------------------------------------------------------------------------------------
FTC & Co. Administrative 1,752.864 100.00%*
First Trust (Multi-Financial Group)
P.O. Box 173736
Denver, Colorado 80217-3736
- ---------------------------------------------------------------------------------------------------------------------------------
Core Equity Pacific Mutual Life Insurance Company Institutional 428,426.396 53.61%*
Fund 700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Charitable Foundation Institutional 129,569.184 16.21%
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Union Bank as Trustee for Institutional 98,185.970 12.29%
Pacific Corinthian Life Insurance Company
Pension Plan
10241 Wateridge Circle
San Diego, California 92121-2733
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Melville Corporation Administrative 1,996,528.589 80.85%*
One Theall Road
Rye, New York, 10580-1404
- ---------------------------------------------------------------------------------------------------------------------------------
The Bank of New York as Trustee for Administrative 374,308.300 15.16%
Marshalls Association 401(k) Trust
One Wall Street
MT/MC 12th Floor
New York, New York 10286-0001
- ---------------------------------------------------------------------------------------------------------------------------------
Mid Cap Equity Pacific Mutual Life Insurance Company Institutional 439,316.239 73.09%
Fund 700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
John W. Barnum Institutional 59,999.929 9.98%
5175 Tilden Street, N.W.
Washington, DC 20016-1961
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Charitable Foundation Institutional 34,047.362 5.66%
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Enhanced Equity First Interstate Bank of CA, Institutional 2,364,869.001 40.76%*
Fund Custodian S.F. BART
P.O. Box 9800
Calabasas, California 91372-0800
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 1,031,127.455 18.20%*
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 739,159.296 12.74%
FBO CMTA-GMPP & Allied Workers Pension
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Santa Clara Mission Institutional 377,566.842 6.51%
The Rector-Nobili Hall
Santa Clara University
Santa Clara, California 00009-5053
- ---------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Charles Schwab & Co., Inc.** Institutional 2,123,101.153 42.41%*
Fund 101 Montgomery Street
San Francisco, California 94104-4122
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Donaldson Lufkin & Jenrette** Institutional 586,410.766 11.71%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 575,190.664 11.49%
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 405,478.644 8.10%
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
FTC & Co. Administrative 12,856.817 99.40%*
First Trust (Multi-Financial Group)
P.O. Box 173736
Denver, Colorado 80217-3736
- ---------------------------------------------------------------------------------------------------------------------------------
International Pacific Financial Asset Institutional 1,158,760.796 16.12%
Developed Fund Management Corporation
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Atlanta Gas Light Company Institutional 1,069,185.946 14.88%
One Peachtree Center
303 Peachtree Street, N.E., 4th Floor
Atlanta, Georgia 30308
- ---------------------------------------------------------------------------------------------------------------------------------
Nissan Motor Corporation USA Institutional 724,581.330 10.08%
P.O. Box 191
Gardena, California 90248- 0191
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 795,944.075 11.08%
FBO PM Retirement Plan
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. ** Institutional 623,900.749 8.68%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
- ---------------------------------------------------------------------------------------------------------------------------------
First Interstate Bank as Trustee for Institutional 565,468.770 7.87%
Cadence Design System Inc.
P.O. Box 9800
Calabasas, California 91372-0800
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FTC & Co. Administrative 264,634.635 57.08%*
First Trust (Multi-Financial Group)
P.O. Box 173736
Denver, Colorado 80217-3736
- ---------------------------------------------------------------------------------------------------------------------------------
Baptist Sunday School Board Administrative 195,699.881 42.21%
1279th Avenue N, MSN 187
Nashville, Tennessee 37234
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Fund Pacific Mutual Life Insurance Company Institutional 1,353,889.627 22.21%
FBO California Race Track Association
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 1,183,538.060 19.42%
FBO PM RISP
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 742,119.907 12.18%
FBO WESCOM Credit Union
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Trustees of the Redlands Community Institutional 740,698.456 12.15%
Hospital Retirement Plan
350 Terracina Blvd.
Redlands, California 92373-4850
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 721,580.954 11.84%
FBO California Hardware Company
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Pacific Mutual Life Insurance Company Institutional 516,750.946 8.48%
FBO Dominguez Water Corporation Pension Fund
700 Newport Center Drive
Newport Beach, California 92660
- ---------------------------------------------------------------------------------------------------------------------------------
Target*** Merrill Lynch Pierce Fenner & Smith Inc.** A 1,847,898.482 20.84%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
J.C. Bradford & Company A 478,974.346 5.40%
FBO RCIP Limited Partnership I
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc.** B 1,314,329.183 41.85%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 19,051,280.977 32.44%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Precious Merrill Lynch Pierce Fenner & Smith Inc.** A 108,868.000 23.39%
Metals*** Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 42,955.000 21.73%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 647,256.269 20.00%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Renaissance*** Merrill Lynch Pierce Fenner & Smith Inc.** A 241,534.061 18.40%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 352,974.446 32.89%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 2,694,343.078 18.52%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Exempt*** Dain Bosworth, Inc. FBO A 140,258.827 28.49%
Kermit K. Kinsey
2801 NE 14th Street
Fort Lauderdale, FL 33304
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
82
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc.** A 122,145.000 24.81%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Donaldson Lufkin Jenrette Securities A 86,190.394 17.50%
Corporation, Inc.**
P.O. Box 2052
Jersey City, NJ 07303-9998
- ---------------------------------------------------------------------------------------------------------------------------------
Dain Bosworth Inc. FBO B 38,916.791 20.43%
Kermit K. Kinsey
2801 NE 14th Street
Ft. Lauderdale, FL 33304
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 25,698.000 13.49%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Paine Webber FBO B 17,043.832 8.94%
William H. Hoehn
2906 S.W. 130th Terr.
Archer, FL 32618-2124
- ---------------------------------------------------------------------------------------------------------------------------------
Herman Wertz Revocable Trust FBO B 14,909.045 7.82%
Herman Wertz
239 Franklin Avenue
Palmerton, PA 18071-1509
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 508,543.855 12.89%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Growth*** Merrill Lynch Pierce Fenner & Smith Inc.** A 484,061.173 8.44%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 574,892.405 38.17%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc.** C 8,495,865.976 14.92%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Opportunity*** Boston Safe Deposit & Trust Co. A 805,900.094 22.29%
TWA Pilots Directed Account
Plan UA January 1, 1986
1 Cabot Road
Medford, MA 02155-5158
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** A 556,200.000 15.38%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
American Express Trust Company A 329,860.684 9.12%
Wesco Distribution, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
None B
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 6,376,442.353 28.15%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Innovation*** Merrill Lynch Pierce Fenner & Smith Inc.** A 487,182.584 16.74%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 613,048.188 28.79%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 1,384,905.341 16.75%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
International*** Society National Bank A 227,473.042 14.19%
FBO RPM Retirement Plan
P.O. Box 6147
Cleveland, OH 44101-1147
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
84
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Class of Shares No. of Shares Outstanding
Fund Beneficial or Record Owner Owned Owned Shares of Class
Owned
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Inc.** A 207,546,455 12.94%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl.3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** B 163,186.227 33.45%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith Inc.** C 3,004,023.822 18.47%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------------------------------
</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 believed to be held only as nominee.
*** Represents ownership of Class A, Class B or Class C shares as of December
31, 1996 of former series of PAF which reorganized as the listed Funds of the
Trust on January 17, 1997.
**** Represents ownership of Class A, Class B or Class C shares as of
December 31, 1996 of former series of PAF which merged with the listed Funds of
the Trust on January 17, 1997.
Custodian
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, Missouri 64105, serves as custodian 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 those Funds that invest in foreign securities.
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, with an eligible foreign subcustodian, or with 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
85
<PAGE>
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. As described below under "Financial Statements," Coopers &
Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York 10019, served as
independent public accountants for former series of PAF which reorganized as
series of the Trust on January 17, 1997.
Registration Statement
This Statement of Additional Information and the Prospectuses do not
contain all of the information included in the Trust's registration statements
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 statements, including the exhibits
filed therewith, may be examined at the offices of the SEC in Washington, D.C.
Statements contained herein and in the Prospectuses 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 relevant registration statement,
each such statement being qualified in all respects by such reference.
Financial Statements
Financial statements for Institutional Class and Administrative Class
shares (if applicable) of the Equity Income, Value, Enhanced Equity, Capital
Appreciation, Mid Cap Growth, Small Cap Value, Small Cap Growth, Micro Cap
Growth, International Developed, Emerging Markets, Core Equity, Mid Cap Equity
and Balanced Funds of the Trust, as of June 30, 1996, for these Funds' fiscal
years then ended, including notes thereto, and the report of Price Waterhouse
LLP thereon dated August 12, 1996, are incorporated by reference from the
Trust's 1996 Annual Report. (As of such dates, these Funds were known as the NFJ
Equity Income, NFJ Diversified Low P/E, Parametric Enhanced Equity, Cadence
Capital Appreciation, Cadence Mid Cap Growth, NFJ Small Cap Value, Cadence Small
Cap Growth, Cadence Micro Cap Growth, Blairlogie International Active,
Blairlogie Emerging Markets, Columbus Circle Investors Core Equity, Columbus
Circle Investors Mid Cap Equity and Balanced Funds, respectively.) Financial
statements for Class A, Class B (except for the Opportunity Fund) and Class C
shares of the Renaissance, Growth, Target, Opportunity, Innovation, Tax Exempt,
International and Precious Metals Funds (prior to January 17, 1997, the Equity
Income, Growth, Target, Opportunity, Innovation, Tax Exempt, International, and
Precious Metals Funds of PAF, respectively) as of September 30, 1996, for these
Funds' fiscal years then ended, including notes thereto, and the report of
Coopers & Lybrand LLP thereon dated November 22, 1996, are incorporated by
reference from PAF's 1996 Annual Report. The Trust's and PAF's 1996 Annual
Reports are on file with the SEC.
86
<PAGE>
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
Certain of the Funds make use of average portfolio credit quality
standards to assist institutional investors whose own investment guidelines
limit their investments accordingly. In determining a Fund's overall
dollar-weighted average quality, unrated securities are treated as if rated,
based on the Adviser's view of their comparability to rated securities. A Fund's
use of average quality criteria is intended to be a guide for those
institutional investors whose investment guidelines require that assets be
invested according to comparable criteria. Reference to an overall average
quality rating for a Fund does not mean that all securities held by the Fund
will be rated in that category or higher. A Fund's investments may range in
quality from securities rated in the lowest category in which the Fund is
permitted to invest to securities rated in the highest category (as rated by
Moody's or S&P or, if unrated, determined by the Adviser to be of comparable
quality). The percentage of a Fund's assets invested in securities in a
particular rating category will vary. Following is a description of Moody's and
S&P's ratings applicable to fixed income securities.
Moody's Investors Service, Inc.
Corporate and Municipal Bond Ratings
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than with Aaa securities.
A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present that suggest a susceptibility to impairment sometime in the
future.
Baa: Bonds which are rated Baa are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
A-1
<PAGE>
C: Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classified from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Corporate Short-Term Debt Ratings
Moody's short-term debt ratings are opinions of the ability of
issuers to repay punctually senior debt obligations which have an original
maturity not exceeding one year. Obligations relying upon support mechanisms
such as letters of credit and bonds of indemnity are excluded unless explicitly
rated.
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the
Prime rating categories.
Standard & Poor's Corporation
Corporate and Municipal Bond Ratings
Investment Grade
AAA: Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small degree.
A-2
<PAGE>
A: Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions, or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
Speculative Grade
Debt rated BB, B, CCC, CC, and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C
the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major exposures
to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to
default and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating.
C: The rating C is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
CI: The rating CI is reserved for income bonds on which no
interest is being paid.
D: Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will also be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Plus (+) or Minus (-): The ratings from AA to CCC may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the debt being rated and indicates that payment of
debt service
A-3
<PAGE>
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.
r: The "r" is attached to highlight derivative, hybrid, and
certain other obligations that S&P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.
The absence of an "r" symbol should not be taken as an indication
that an obligation will exhibit no volatility or variability in total return.
N.R.: Not rated.
Debt obligations of issuers outside the United States and its
territories are rated on the same basis as domestic corporate and municipal
issues. The ratings measure the creditworthiness of the obligor but do not take
into account currency exchange and related uncertainties.
Commercial Paper Rating Definitions
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt having an original
maturity of no more than 365 days. Ratings are graded into several categories,
ranging from A for the highest quality obligations to D for the lowest. These
categories are as follows:
A-1: This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation
is satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
B: Issues rated B are regarded as having only speculative capacity
for timely payment.
C: This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D: Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due,
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period.
A commercial paper rating is not a recommendation to purchase,
sell or hold a security inasmuch as it does not comment as to market price or
suitability for a particular investor. The ratings are based on current
information furnished to Standard & Poor's by the issuer or obtained from other
sources it considers reliable. Standard & Poor's does not perform an audit in
connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information.
A-4
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
(1) Part A
Financial Highlights
(2) Part B
Financial statements dated as of June 30, 1996 are
incorporated by reference in the Statement of Additional
Information from the Funds' Annual Report dated as of June
30, 1996 and include the following:
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Schedule of Investments
Notes to Financial Statements
Report of Independent Accountants
Financial statements for the PIMCO Renaissance Fund, PIMCO
Growth Fund, PIMCO Target Fund, PIMCO Opportunity Fund,
PIMCO Innovation Fund, PIMCO Tax Exempt Fund, PIMCO
International Fund and PIMCO Precious Metals Fund (prior to
January 17, 1997, the Equity Income Fund, Growth Fund,
Target Fund, Opportunity Fund, Innovation Fund, Tax Exempt
Fund, International Fund and Precious Metals Fund,
respectively) for the fiscal year ended September 30, 1996,
and a related report of Coopers & Lybrand L.L.P., are
incorporated by reference in the Statement of Additional
Information from the Annual Report of PIMCO Advisors Funds
dated as of September 30, 1996.
(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)
<PAGE>
(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)
(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)
- 2 -
<PAGE>
(p) Form of Amended and Restated Agreement and Declaration of
Trust as of November 28, 1995(16)
(q) Form of Amended and Restated Agreement and Declaration of
Trust as of February 2, 1996(17)
(r) Form of Amended and Restated Agreement and Declaration of
Trust as of August 20, 1996(18)
(s) Form of Amended and Restated Agreement and Declaration of
Trust as of October 31, 1996(19)
(t) Form of Second Amended and Restated Agreement and
Declaration of Trust(20)
(2)(a) By-Laws(1)
(b) Form of First Amended and Restated Bylaws
(3) Not Applicable
(4) Not Applicable
- 3 -
<PAGE>
(5)(a) (i) Form of Investment Advisory Agreement(18)
(ii) Form of Amended and Restated Investment Advisory
Agreement
(b) (i) Form of Portfolio Management Agreement with
Pacific Mutual Life Insurance Company(12)
(ii) Form of Portfolio Management Agreement with
Pacific Investment Management Company(12)
(iii) Form of Portfolio Management Agreement with NFJ
Investment Group(18)
(iv) Form of Portfolio Management Agreement, as
amended, with NFJ Investment Group
- 4 -
<PAGE>
(v) Form of Portfolio Management Agreement with
Cadence Capital Management(18)
(vi) Form of Portfolio Management Agreement, as
amended, with Cadence Capital Management
(vii) Form of Portfolio Management Agreement with
Parametric Portfolio Associates(18)
(viii) Form of Portfolio Management Agreement, as
amended, with Parametric Portfolio Associates
(ix) Form of Portfolio Management Agreement with
Blairlogie Capital Management(12)
(x) Form of Amended and Restated Portfolio Management
Agreement with Blairlogie Capital Management
(xi) Form of Portfolio Management Agreement with
Columbus Circle Investors(12)
(xii) Form of Amended and Restated Portfolio
Management Agreement with Columbus Circle
Investors
(xiii) Form of Portfolio Management Agreement with Van
Eck Associates Corporation
(c) (i) Form of Administration Agreement(18)
(ii) Form of Amended Administration Agreement
(iii) Form of Sub-Administration Agreement(15)
(iv) Form of Administration Agreement between PIMCO
Advisors L.P. and Pacific Investment Management
Company
- 5 -
<PAGE>
(6)(a) Form of Distribution Agreement(18)
(b) Form of Amended Distribution Contract
(7) Not Applicable
(8)(a) Form of Custody Agreement and Addenda(18)
(b) Form of Addendum to Custody Agreement
(c) Form of Assignment of Custody Agreement
(9)(a) Form of Agency Agreement and Addenda(18)
(b) Form of Addendum to Agency Agreement
(c) Form of Assignment of Agency Agreement
(d) Form of Transfer Agency Agreement with
Shareholder Services, Inc.(21)
(e) Form of Service Plan for Institutional Services Shares(11)
(f) Form of Administrative Services Plan for Administrative
Class Shares
(10) Opinion and Consent of Counsel(2)
(11)(i) Consent of Price Waterhouse LLP
(ii) Consent of Coopers & Lybrand L.L.P
(12) Not Applicable
(13) Initial Capital Agreement(2)
(14) Not Applicable
(15)(a) Form of Distribution and Servicing Plan (Class A)
(b) Form of Distribution and Servicing Plan (Class B)
(c) Form of Distribution and Servicing Plan (Class C)
(d) Form of Distribution Plan for Administrative Class
Shares
(16) Schedule of Computation of Performance(13)
(17) Financial Data Schedule (filed as Exhibit 27)
- 6 -
<PAGE>
(18)(a) Form of Multiple Class Plan Pursuant to Rule 18f-3(18)
(b) Form of Amended and Restated Multi-Class Plan
(19) Powers of Attorney and Certificate of Secretary(18)
- --------------------
1 Included in the Registrant's initial Registration Statement on Form N-1A
(File No. 33-36528), as filed on August 24, 1990.
2 Included in Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on November 2, 1990.
3 Included in Pre-Effective Amendment No. 2 to the Registration Statement on
Form N-1A (File No. 33-36528), as filed on November 30, 1990.
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.
- 7 -
<PAGE>
10 Included in Post-Effective Amendment No. 10 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on November 4, 1993.
11 Included in Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on April 12, 1994.
12 Included in Post-Effective Amendment No. 15 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on October 14, 1994.
13 Included in Post-Effective Amendment No. 16 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on December 28, 1994.
14 Included in Post-Effective Amendment No. 17 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on June 28, 1995.
15 Included in Post-Effective Amendment No. 19 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on October 31, 1995.
16 Included in Post-Effective Amendment No. 20 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on December 29, 1995.
17 Included in Post-Effective Amendment No. 21 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on February 29, 1996.
18 Included in Post-Effective Amendment No. 22 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on July 1, 1996.
19 Included in Post-Effective Amendment No. 24 to the Registration Statement
on Form N-1A (File No. 33-36528), as filed on October 31, 1996.
20 Included in Definitive Proxy Statement (File No. 811-06161), as filed on
November 7, 1996.
21 Included in Post-Effective Amendment No. 33 to the Registration Statement
on Form N-1A of PIMCO Advisors Funds (File No. 2-87203), as filed on
November 30, 1995.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not Applicable.
Item 26. Number of Holders of Securities.
- 8 -
<PAGE>
As of December 17, 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............... 123 5
NFJ Diversified Low P/E Fund......... 146 0
NFJ Small Cap Value Fund............. 194 1
Cadence Capital Appreciation Fund.... 254 2
Cadence Mid Cap Growth Fund.......... 243 6
Cadence Micro Cap Growth Fund........ 73 1
Cadence Small Cap Growth Fund........ 40 1
Columbus Circle Investors Core
Equity Fund......................... 136 6
Columbus Circle Investors Mid Cap
Equity Fund......................... 135 0
Parametric Enhanced Equity Fund...... 154 0
Blairlogie Emerging Markets Fund..... 205 2
Blairlogie International Active Fund. 169 4
Balanced Fund........................ 21 0
</TABLE>
Item 27. Indemnification.
Reference is made to Article VIII, Section 1 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
- 9 -
<PAGE>
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.
Position
Name with Adviser Other Affiliations
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
Officer, Cadence
Capital Management.
Donald A. Chiboucas Member of Director and
Operating Board President, Columbus
Circle Investors
Management, Inc.;
Managing Director
- 10 -
<PAGE>
and President,
Columbus Circle
Investors.
William D. Cvengros Chief Executive Trustee and Chairman
Officer and of the Trust;
President, Member Trustee, Cash Accumulation
of Operating Trust; Director,
Board, Operating PIMCO Funds
Committee, and Distribution
Equity Board Company.
Walter B. Gerken Member 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;
Senior Vice
President, PIMCO
Funds; Director and
Vice President,
StocksPLUS
Management, Inc.; Member of PIMCO
Partners LLC.
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,
- 11 -
<PAGE>
PIMCO Funds and
PIMCO Commercial
Mortgage Securities
Trust, Inc.; Member of PIMCO Partners
LLC.
Amy M. Hogan Member of Managing Director,
Operating Board Columbus Circle
Investors; Director,
Columbus Circle
Investors
Management, Inc.
Donald R. Kurtz Member of Equity Formerly, Vice
Board President of
Internal Asset
Management, General
Motors Investment
Management Corp. and
Director, Thomson
Advisory Group L.P.
James F. McIntosh Member of Equity None
Board
Dean S. Meiling Member of Director and
Operating Board Managing Director,
PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management Company;
Vice President,
PIMCO Funds and
PIMCO Commercial
Mortgage Securities
Trust, Inc.
Donald K. Miller Member of Equity Chairman, Greylock
Board Financial Inc.;
Director, Huffy
Corporation, RPM,
Inc., and
Christensen Boyles
Corporation;
Director,
President
- 12 -
<PAGE>
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.; Member of PIMCO
Partners LLC.
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.; Member of PIMCO Partners
LLC.
William C. Powers Member of Director and
Operating Board Managing Director,
PIMCO Management,
Inc.; Managing
Director, Pacific
Investment
Management
Company;
- 13 -
<PAGE>
Senior Vice
President, PIMCO
Commercial Mortgage
Securities Trust,
Inc., Member of
PIMCO Partners LLC.
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.
Irwin F. Smith Member of Chairman and Managing
Operating Board, Director, Columbus
Operating Circle Investors;
Committee, and Director and Chairman,
Equity Board Columbus Circle Investors
Management, Inc.
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
- 14 -
<PAGE>
Pacific Financial
Holding Company.
William S. Chairman and Director, Managing
Thompson, Jr. Member of Director and Chief
Operating Board, Executive Officer,
Member of PIMCO Management,
Operating Inc.; Chief
Committee and Executive Officer
Equity Board and Managing
Director, 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- None
Legal, and
Assistant
Secretary
Robert M. Senior Vice Chief Financial Officer,
Fitzgerald President- Senior Vice President -
Finance, Chief Finance and Controller, PIMCO
Financial Officer Funds Distribution Company;
and Controller Senior Vice President, Finance
and Controller, Columbus Circle
Investors and Columbus Circle
Investors Management, Inc.;
Assistant Treasurer, Cadence
Capital Management; Treasurer,
Cadence Capital Management, Inc.,
NFJ Investment Group, NFJ
Management Inc.,
Parametric Portfolio Associates,
Parametric Management Inc.,
PIMCO Management, Inc., and
StocksPLUS Management, Inc.
- 15 -
<PAGE>
Kenneth M. Poovey General Counsel Partner, Latham &
and Board Watkins.
Secretary
Robert A. Vice President Trustee of the Trust.
Prindiville
Ernest L. Schmider Senior Vice Senior Vice President,
President-Legal, Secretary, Chief
and Assistant Administrative and
Secretary Legal Officer, PIMCO
Management, Inc.,
Director and Assistant
Secretary/Assistant
Treasurer, StocksPLUS
Management, Inc., Vice
President - Legal and
Assistant Secretary,
PIMCO Advisors L.P.
Newton B. Schott, Senior Vice Secretary, Columbus Circle
Jr. President-Legal, Investors, Columbus Circle
and Secretary Investors Management, Inc.,
Cadence Capital Management,
Inc., NFJ Management, Inc., and
Parametric Management, Inc.;
Director, Executive Vice
President/Secretary, PIMCO
Funds Distribution Company,
the Trust, and Cash
Accumulation Trust.
Stephen J. Treadway Executive Vice Director and
President Chairman, PIMCO
Funds Distribution
Company, and President
and Chief Executive Officer
of the Trust.
Robert S. Venable Vice President None
James Ward Senior Vice None
President
Richard M. Weil Senior Vice Assistant Secretary, Columbus
President, Legal Circle Investors, Columbus
Counsel Circle Investors, Inc., Cadence
Capital Management,
Cadence Capital Management,
Inc., NFJ Management, Inc.,
Parametric Management, Inc.,
PIMCO, PIMCO Management, Inc.
and PIMCO Funds Distribution
Company; Secretary, NFJ Investment
Group, Parametric Portfolio
Associates, and StocksPLUS
Management
- 16 -
<PAGE>
Cadence Capital Management
Exchange Place, 53 State Street,
Boston, Massachusetts 02109
Position
Name with Adviser Other Affiliations
William B. Bannick Managing Director Director and
and Executive Managing Director,
Vice President Cadence Capital
Management, Inc.
David B. Breed Managing Director Member of
and Chief Operating
Executive Officer Board, PIMCO
Advisors L.P.;
Director, Managing
Director and Chief
Executive Officer,
Cadence Capital
Management, Inc.
Katherine A. Burdon Managing Director None
Mary Ellen Malendez Secretary None
Barbara M. Green Treasurer None
Eric M. Wetlaufer Managing Director None
NFJ Investment Group
2121 San Jacinto, Suite 1440,
Dallas, Texas 75201
Position
Name with Adviser Other Affiliations
Benno J. Fischer Managing Director Director,
Managing Director,
and Co-Chairman,
NFJ Management, Inc.
Robert M. Fitzgerald Treasurer and See Pimco Advisors L.P.
Financial Officer
John L. Johnson Managing Director Director,
and Co-Chairman
Managing Director,
NFJ Management, Inc.
Jack C. Najork Managing Director Director, Managing
Director, Co-
Chairman, NFJ
Management, Inc.
- 17 -
<PAGE>
Parametric Portfolio Associates
7310 Columbia Center, 701 Fifth Avenue,
Seattle, Washington 98104-7090
Position
Name with Adviser Other Affiliations
William E. Managing Director Director and
Cornelius, Jr. Managing Director,
Parametric
Management, Inc.
Mark W. England- Managing Director Director, Managing
Markun Director and Chief
Executive Officer,
Parametric
Management, Inc.
David M. Stein Managing Director Director and
and Chief Managing Director,
Financial Officer Parametric
Management, Inc.
Pacific Investment Management Company ("PIMCO")
840 Newport Center Drive, Suite 360
Newport Beach, California 92660
Position
Name 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 II Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
- 18 -
<PAGE>
John B. Vice President Vice President,
Brynjolfsson PIMCO Management,
Inc.
R. Wesley Burns Executive Vice Executive Vice
President President, PIMCO
Management, Inc.;
President, PIMCO
and the Trust
Funds and PIMCO
Commercial Mortgage
Securities Trust,
Inc.; Vice President;
Cash Accumulation
Trust.
Wendy W. Cupps Vice President Vice President,
PIMCO Management,
Inc.
Charles M. Daniels, Executive Vice Executive Vice
III 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.; Member of
PIMCO Partners, LLC.
A. Benjamin Ehlert Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Robert A. Ettl Vice President Vice President,
PIMCO Management,
Inc.
Robert M. Treasurer See Pimco Advisors L.P.
Fitzgerald
- 19 -
<PAGE>
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, PIMCO
Advisors L.P.; Member of PIMCO
Partners LLC.
John L. Hague Managing Director Director and
Managing Director,
PIMCO Management,
Inc.; Member of PIMCO Partners LLC.
Gordon C. Hally Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Pasi M. Hamalainen Vice President Vice President,
PIMCO Management,
Inc.
John P. Hardaway Vice President Vice President,
PIMCO Management,
Inc.; Treasurer
of the Trust,
PIMCO Funds, PIMCO
Commercial Mortgage
Securities Trust,
Inc., and Cash
Accumulation Trust.
Brent R. Harris Managing Director Director and
Managing Director,
PIMCO Management,
Inc.; Director and
Vice President,
- 20 -
<PAGE>
StocksPLUS
Management, Inc.;
Trustee and
Chairman, PIMCO
Funds and PIMCO
Commercial Mortgage
Securities Trust,
Inc.; Member of
Operating Board,
PIMCO Advisors L.P.; Member of PIMCO
Partners LLC.
Douglas M. Hodge Senior Vice Senior Vice
President President, PIMCO
Management, Inc.
Brent L. Holden Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
Dwight F. Holloway, Vice President Vice President,
Jr. 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.; Vice President and
Assistant Secretary, StocksPLUS
Management, Inc.
Dean S. Meiling Managing Director Director and
Managing Director,
PIMCO Management,
Inc.; Vice President,
PIMCO Funds and
PIMCO Commercial
- 21 -
<PAGE>
Mortgage Securities
Trust, Inc.; Member
of Operating Board,
PIMCO Advisors L.P.; Member of PIMCO
Partners LLC.
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,
PIMCO Advisors L.P.; Member of PIMCO
Partners LLC.
Thomas J. Otterbein Vice President Vice President,
PIMCO Management,
Inc.
William F. Podlich, Managing Director Director and
III Managing Director,
PIMCO Management,
Inc.; Vice
President, PIMCO
Commercial Mortgage
Securities Trust,
Inc.; Member of
Equity and Operating
Boards, PIMCO
Advisors L.P.; Member of PIMCO
Partners LLC.
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,
PIMCO Advisors L.P.; Member of PIMCO
Partners LLC.
- 22 -
<PAGE>
Frank B.
Rabinovitch Managing Director Director and
Managing Director,
PIMCO Management,
Inc., Member of
PIMCO Partners LLC.
Edward P. Rennie Senior Vice Senior Vice
President President, PIMCO
Management, Inc.
Scott L. Roney Vice President Vice President,
PIMCO Management,
Inc.
Michael J. Vice President Vice President,
Rosborough PIMCO Management,
Inc.
Jeffrey M. Sargent Vice President Vice President of
the Trust, PIMCO
Management, Inc.,
PIMCO Funds, and
PIMCO Commercial
Mortgage Securities
Trust, Inc.
Ernest L. Schmider Senior Vice Senior Vice President,
President, Secretary, Chief
Secretary, Chief Administrative and Legal
Administrative Officer, PIMCO Management,
and Legal officer Inc.; Director and Assistant
Secretary/Assistant Treasurer,
StocksPLUS Management, Inc.;
Vice President - Legal and
Assistant Secretary,
PIMCO Advisors L.P.
Leland T. Scholey Senior Vice Senior Vice
President President, PIMCO
Management, Inc. and
PIMCO Funds.
Denise C. Seliga Vice President Vice President,
PIMCO Management,
Inc.
- 23 -
<PAGE>
Rita J. Seymour Vice President Vice President,
PIMCO Management,
Inc.
Lee R. Thomas Executive Vice Executive Vice
President President, PIMCO
Management, Inc.
William S. Chief Executive Director, Managing Director and
Thompson, Jr. Officer and Chief Executive Officer, PIMCO
Managing Director Management, Inc.; Director
and President, StocksPLUS
Management, Inc.; Vice President of
the PIMCO Funds and PIMCO Com-
mercial Mortgage Securities Trust,
Inc.; Member of Operating Board,
Operating Committee and Equity
Board of PIMCO Advisors
L.P.; Member of PIMCO Partners LLC.
Benjamin L. Trosky Managing Director Managing Director,
PIMCO Management,
Inc.; Senior Vice
President, PIMCO
Commercial Mortgage
Securities Trust,
Inc.; Member of PIMCO
Partners LLC.
Teresa A. Wagner Vice President Vice President of
the Trust, PIMCO
Management, Inc.,
PIMCO Funds, and
PIMCO Commercial
Mortgage Securities
- 24 -
<PAGE>
Trust, Inc.; Vice
President and
Assistant Clerk,
Cash Accumulation Trust.
Andrew C. Ward Vice President Vice President,
PIMCO Management,
Inc.; Senior Vice
President, PIMCO
Funds.
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.
Columbus Circle Investors
Metro Center
One Station Place, 8th Floor
Stamford, Connecticut 06902
Position
Name with Adviser Other Affiliations
Irwin F. Smith Chairman and Member of Equity and
Managing Operating Boards and
Director Operating Committee,
PIMCO Advisors,
L.P.; Director and
Chairman, Columbus
Circle Investors
Management, Inc.
Richard M. Weil Assistant See PIMCO Advisors L.P.
Secretary
- 25 -
<PAGE>
Louis P. Celentano Managing Director Director and Vice
President, Columbus
Circle Investors
Management, Inc.
Donald A. Chiboucas President and Member of Operating
Managing Director Board, PIMCO
Advisors L.P.;
Director and
President, Columbus
Circle Investors
Management, Inc.
Robert W. Fehrman Managing Director Director, Columbus
Circle Investors
Management, Inc.
Marc Felman Managing Director None
Mark Fishman Senior Vice None
President
Clifford G. Fox Managing Director None
Winthrop S. Headley Vice President None
Amy M. Hogan Managing Director Member of Operating
Board, PIMCO
Advisors L.P.;
Director, Columbus
Circle Investors
Management, Inc.
Jashree B. Kemraj Assistant Vice Assistant Vice President/
President/ Assistant Controller,
Assistant Columbus Circle Investors
Controller Management, Inc. and
PIMCO Funds Distribution
Company.
Jacob Naoon Senior Vice None
President
Daniel S. Pickett Managing Director Director, Columbus
Circle Investors
Management, Inc.
Anthony Rizza Managing Director None
Newton B. Schott, Jr. Secretary See PIMCO Advisors L.P.
C. Paul Tyborowski Managing Director None
- 26 -
<PAGE>
Nathaniel J. Vice President None
Belknap
Anne Maloney Vice President None
Paul Meeks Vice President None
Michele Montano Senior Vice None
President
Paul A. Pantalena Vice President None
Cecelia Pastore Vice President None
Harold R. Snedcof Vice President None
Sharon S. Weslow Vice President None
Blairlogie Capital Management, Limited
4th Floor, 125 Princes Street
Edinburgh EH2 4AD, Scotland
Position
Name with Adviser Other Affiliations
Gavin R. Dobson Chief Executive Director and Chief
Officer and Executive Officer,
Managing Director Blairlogie Holdings
Limited (U.K.)
James G.S. Smith Chief Investment Director and Chief
Officer and Investment Officer,
Managing Director Blairlogie Holdings
Limited (U.K.)
John R.W. Stevens Chief Financial Director and Chief
Officer and Financial Officer,
Managing Director Blairlogie Holdings
Limited (U.K.)
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
Position
Name with Adviser Other Affiliations
- ---- --------------- ------------------
Philip DeFeo Director, Trustee, Van Eck Funds ("VEF") and
President and Van Eck Worldwide Insurance Trust
Chief Executive ("WWIT")
Officer
John C. Van Eck Chairman of the Chairman of the Board and President,
Board VEF and WWIT; Chairman of the Board,
Van Eck Securities Corporation
("VESC"); Director, Eclipse
Financial Asset Trust. Formerly,
Director Abex Inc., Director, The
Henley Group, Inc.
Fred M. Van Eck Director Trustee, VEF and WWIT;
Private Investor, Director, VESC
Sigrid S. Van Eck Director, Vice Vice President, Assistant Treasurer
President and and Director of VESC
Assistant
Treasurer
Jan Van Eck Director Director and Executive
Vice President of VESC
Derek M. Van Eck Director and Director of VESC; President,
Executive Global Hard Assets and World
Vice President Trends Series of the Van Eck
Funds
Michael G. Doorley Vice President, Vice President, Treasurer, Controller
Treasurer, and Chief Financial Officer of VESC;
Controller and Vice President, VEF and WWIT
Chief Financial
Officer
Thaddeus M. Vice President, Vice President and Secretary
Leszcynski Secretary and of VEF and WWIT; Vice President,
General Counsel Secretary and General Counsel of
VESC.
William A. Director, Mining Vice President of VEF; Formerly,
Trebilcock Research Director Corner Bay Explorations
Ltd. Formerly, Director, Precambrian
Explorations Inc.
- 27 -
<PAGE>
Item 29. Principal Underwriters.
(a) PIMCO Funds Distribution Company. PIMCO Funds 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 of the Registrant.
(b)
Positions and Positions
Name and Principal Offices with and Offices
Business Address* Underwriter with Registrant
Jeffrey L. Booth Vice President None
James D. Bosch Vice President None
William D. Cvengros Director Trustee and
Chairman
Robert M. Fitzgerald Chief Financial None
Officer-
Treasurer
Michael J. Gallagher Vice President None
Ronald H. Gray Vice President None
Edward W. Janeczek Vice President None
Jaishree B. Kemraj Assistant Vice None
President and
Assistant
Controller
- 28 -
<PAGE>
William E. Lynch Regional Vice None
President
Jacqueline A. McCarthy Vice President None
Richard J. McLaughlin Vice President None
Andrew J. Meyers Executive Vice None
President
Giora Moyer Vice President None
Joffrey H. Pearlman Vice President None
Glynne Pisapia Vice President None
Matthew M. Russell Vice President None
Newton B. Schott, Jr. Director, Vice President and Secretary
Executive Vice
President and
Secretary
David P. Stone Vice President None
William H. Thomas, Jr. Regional Vice None
President
Stephen J. Treadway Director and President and Chief Executive
Chairman Officer
Paul H. Troyer Regional Vice None
President
Brian F. Trumbore Executive Vice None
President
Richard M. Weil Assistant Vice President
Secretary
____________________
* Principal business address for all individuals listed is One Station Place,
Stamford, Connecticut 06902.
(c) Not Applicable.
- 29 -
<PAGE>
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 Investors Fiduciary
Trust Company, 21 West 10th Street, Kansas City, Missouri 64105, and Shareholder
Services, Inc., P.O. Box 5866, Denver, CO 80217.
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 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.
(d) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest report to
shareholders, upon request and without charge.
(e) Registrant undertakes to file a post-effective amendment using
financial statements of the Parametric Structured Emerging Markets
Fund, which need not be certified, within four to six months from the
latter of the effective date of Post-Effective Amendment No. 23 or the
date on which shares of the Fund are first sold (other than shares
sold for seed money).
- 30 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 25 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 13th
day of January, 1997.
PIMCO Funds: Equity Advisors Series
By: /s/ William D. Cvengros
---------------------------------------------
William D. Cvengros, Chairman of the Board,
President, and Trustee
- 31 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 25 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.
Signature Title Date
/s/ John P. Hardaway
- ------------------------ 1/13/97
John P. Hardaway Treasurer (Principal
Financial and
Accounting Officer
- ------------------------ 1/13/97
Richard L. Nelson* Trustee
- ------------------------ 1/13/97
Lyman W. Porter* Trustee
- ------------------------ 1/13/97
Alan Richards* Trustee
*By: /s/William D. Cvengros
------------------------
William D. Cvengros
Chairman of the Board, President, and Trustee
as Attorney-in-Fact
Powers of Attorney for Messrs. Nelson, Porter, Richards and Cvengros, and a
certificate included pursuant to Rule 483(b) under the Securities Act of 1933,
were filed as Exhibit 19 to Post-Effective Amendment No. 22 filed on July 1,
1996 and are incorporated herein by reference.
- 32 -
<PAGE>
EXHIBIT LIST
Exhibit Exhibit EDGAR
No. Name Exhibit No.
2(b) Form of First Amended and Restated Bylaws 99.B2(b)
5(a)(ii) Form of Amended and Restated Investment 99.B5(a)(ii)
Advisory Agreement
5(b)(iv) Form of Portfolio Management Agreement, as 99.B5(b)(iv)
amended, with NFJ Investment Group
5(b)(vi) Form of Portfolio Management Agreement, 99.B5(b)(vi)
as amended, with Cadence Capital Management
5(b)(viii) Form of Portfolio Management Agreement, 99.B5(b)(viii)
as amended, with Parametric Portfolio
Associates
5(b)(x) Form of Amended and Restated 99.B5(b)(x)
Portfolio Management Agreement
with Blairlogie Capital Management
5(b)(xii) Form of Amended and Restated 99.B5(b)(xii)
Portfolio Management Agreement
with Columbus Circle Investors
5(b)(xiii) Form of Portfolio Management Agreement 99.B5(b)(xiii)
with Van Eck Associates Corporation
5(c)(ii) Form of Amended Administration Agreement 99.B5(c)(ii)
5(c)(iv) Form of Administration Agreement 99.B5(c)(iv)
between PIMCO Advisors L.P. and
Pacific Investment Management
Company
6(b) Form of Amended Distribution Contract 99.B6(b)
8(b) Form of Addendum to Custody Agreement 99.B8(b)
8(c) Form of Assignment of Custody Agreement 99.B8(c)
9(b) Form of Addendum to Agency Agreement 99.B9(b)
9(c) Form of Assignment of Agency Agreement 99.B9(c)
9(f) Form of Administrative Services Plan for 99.B9(f)
Administrative Class Shares
11(i) Consent of Price Waterhouse LLP 99.B11(i)
11(ii) Consent of Coopers & Lybrand L.L.P 99.B11(ii)
15(a) Form of Distribution and Servicing Plan 99.B15(a)
(Class A)
15(b) Form of Distribution and Servicing Plan 99.B15(b)
(Class B)
15(c) Form of Distribution and Servicing Plan 99.B15(c)
(Class C)
15(d) Form of Distribution Plan for Administrative 99.B15(d)
Class Shares
17 Financial Data Schedule 99.B27
18(b) Form of Amended and Restated Multi-Class Plan 99.B18(b)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT DATED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER> 031
<NAME> NFJ EQUITY INCOME FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 103,191
<INVESTMENTS-AT-VALUE> 120,863
<RECEIVABLES> 2,855
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 907
<TOTAL-LIABILITIES> 907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,579
<SHARES-COMMON-STOCK> 8,130
<SHARES-COMMON-PRIOR> 9,013
<ACCUMULATED-NII-CURRENT> 3,782
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,778
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,672
<NET-ASSETS> 122,811
<DIVIDEND-INCOME> 3,622
<INTEREST-INCOME> 276
<OTHER-INCOME> 0
<EXPENSES-NET> 678
<NET-INVESTMENT-INCOME> 3,220
<REALIZED-GAINS-CURRENT> 11,596
<APPREC-INCREASE-CURRENT> 6,902
<NET-CHANGE-FROM-OPS> 21,718
<EQUALIZATION> (222)
<DISTRIBUTIONS-OF-INCOME> 3,072
<DISTRIBUTIONS-OF-GAINS> 4,404
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,560
<NUMBER-OF-SHARES-REDEEMED> 3,957
<SHARES-REINVESTED> 514
<NET-CHANGE-IN-ASSETS> 4,656
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,607
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 678
<AVERAGE-NET-ASSETS> 136,173
<PER-SHARE-NAV-BEGIN> 13.09
<PER-SHARE-NII> 0.78
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 0.48
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.36
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>032
<NAME>NFJ EQUITY INCOME FUND - ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 103,191
<INVESTMENTS-AT-VALUE> 120,863
<RECEIVABLES> 2,855
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 123,718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 907
<TOTAL-LIABILITIES> 907
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,579
<SHARES-COMMON-STOCK> 425
<SHARES-COMMON-PRIOR> 11
<ACCUMULATED-NII-CURRENT> 3,782
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,778
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,672
<NET-ASSETS> 122,811
<DIVIDEND-INCOME> 3,622
<INTEREST-INCOME> 276
<OTHER-INCOME> 0
<EXPENSES-NET> 678
<NET-INVESTMENT-INCOME> 3,220
<REALIZED-GAINS-CURRENT> 11,596
<APPREC-INCREASE-CURRENT> 6,902
<NET-CHANGE-FROM-OPS> 21,718
<EQUALIZATION> (222)
<DISTRIBUTIONS-OF-INCOME> 155
<DISTRIBUTIONS-OF-GAINS> 232
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 524
<NUMBER-OF-SHARES-REDEEMED> 139
<SHARES-REINVESTED> 29
<NET-CHANGE-IN-ASSETS> 4,656
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,607
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 678
<AVERAGE-NET-ASSETS> 6,341
<PER-SHARE-NAV-BEGIN> 13.13
<PER-SHARE-NII> 0.75
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0.36
<PER-SHARE-DISTRIBUTIONS> 0.48
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.35
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>041
<NAME>NFJ DIVERSIFIED LOW P/E FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 52,446
<INVESTMENTS-AT-VALUE> 55,606
<RECEIVABLES> 139
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 499
<TOTAL-ASSETS> 56,244
<PAYABLE-FOR-SECURITIES> 3,492
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25
<TOTAL-LIABILITIES> 3,517
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,467
<SHARES-COMMON-STOCK> 4,232
<SHARES-COMMON-PRIOR> 1,153
<ACCUMULATED-NII-CURRENT> 348
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 752
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,160
<NET-ASSETS> 52,727
<DIVIDEND-INCOME> 379
<INTEREST-INCOME> 79
<OTHER-INCOME> 0
<EXPENSES-NET> 103
<NET-INVESTMENT-INCOME> 355
<REALIZED-GAINS-CURRENT> 1,115
<APPREC-INCREASE-CURRENT> 1,082
<NET-CHANGE-FROM-OPS> 2,552
<EQUALIZATION> 42
<DISTRIBUTIONS-OF-INCOME> 355
<DISTRIBUTIONS-OF-GAINS> 2,045
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,925
<NUMBER-OF-SHARES-REDEEMED> 53
<SHARES-REINVESTED> 207
<NET-CHANGE-IN-ASSETS> 38,284
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,030
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 66
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103
<AVERAGE-NET-ASSETS> 22,311
<PER-SHARE-NAV-BEGIN> 12.53
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> 1.62
<PER-SHARE-DIVIDEND> 0.17
<PER-SHARE-DISTRIBUTIONS> 1.77
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.46
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>051
<NAME>PARAMETRIC ENHANCED EQUITY FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 69,689
<INVESTMENTS-AT-VALUE> 83,354
<RECEIVABLES> 116
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83,470
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45
<TOTAL-LIABILITIES> 45
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,946
<SHARES-COMMON-STOCK> 5,243
<SHARES-COMMON-PRIOR> 5,126
<ACCUMULATED-NII-CURRENT> 954
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,860
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,665
<NET-ASSETS> 83,425
<DIVIDEND-INCOME> 1,342
<INTEREST-INCOME> 46
<OTHER-INCOME> 0
<EXPENSES-NET> 430
<NET-INVESTMENT-INCOME> 958
<REALIZED-GAINS-CURRENT> 11,972
<APPREC-INCREASE-CURRENT> (909)
<NET-CHANGE-FROM-OPS> 12,021
<EQUALIZATION> 10
<DISTRIBUTIONS-OF-INCOME> 958
<DISTRIBUTIONS-OF-GAINS> 2,327
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,985
<NUMBER-OF-SHARES-REDEEMED> 3,078
<SHARES-REINVESTED> 210
<NET-CHANGE-IN-ASSETS> 9,426
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,169
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 275
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 430
<AVERAGE-NET-ASSETS> 91,516
<PER-SHARE-NAV-BEGIN> 14.44
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.38
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.91
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>061
<NAME>CADENCE CAPITAL APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 292,387
<INVESTMENTS-AT-VALUE> 343,036
<RECEIVABLES> 6,079
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 349,115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 387
<TOTAL-LIABILITIES> 387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,949
<SHARES-COMMON-STOCK> 19,265
<SHARES-COMMON-PRIOR> 13,946
<ACCUMULATED-NII-CURRENT> 3,922
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27,208
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 50,649
<NET-ASSETS> 348,728
<DIVIDEND-INCOME> 3,231
<INTEREST-INCOME> 778
<OTHER-INCOME> 0
<EXPENSES-NET> 1,385
<NET-INVESTMENT-INCOME> 2,624
<REALIZED-GAINS-CURRENT> 31,135
<APPREC-INCREASE-CURRENT> 6,136
<NET-CHANGE-FROM-OPS> 39,895
<EQUALIZATION> 214
<DISTRIBUTIONS-OF-INCOME> 2,624
<DISTRIBUTIONS-OF-GAINS> 15,492
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,442
<NUMBER-OF-SHARES-REDEEMED> 1,070
<SHARES-REINVESTED> 947
<NET-CHANGE-IN-ASSETS> 112,508
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 15,487
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 883
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,385
<AVERAGE-NET-ASSETS> 296,348
<PER-SHARE-NAV-BEGIN> 16.94
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 1.99
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 1.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.10
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in is entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>071
<NAME>NFJ SMALL CAP VALUE FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 29,537
<INVESTMENTS-AT-VALUE> 33,417
<RECEIVABLES> 89
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,506
<PAYABLE-FOR-SECURITIES> 25
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 56
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,770
<SHARES-COMMON-STOCK> 2,044
<SHARES-COMMON-PRIOR> 2,679
<ACCUMULATED-NII-CURRENT> 837
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,963
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,880
<NET-ASSETS> 33,450
<DIVIDEND-INCOME> 708
<INTEREST-INCOME> 67
<OTHER-INCOME> 0
<EXPENSES-NET> 231
<NET-INVESTMENT-INCOME> 544
<REALIZED-GAINS-CURRENT> 3,943
<APPREC-INCREASE-CURRENT> 1,415
<NET-CHANGE-FROM-OPS> 5,902
<EQUALIZATION> (26)
<DISTRIBUTIONS-OF-INCOME> 488
<DISTRIBUTIONS-OF-GAINS> 2,049
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 201
<NUMBER-OF-SHARES-REDEEMED> 1,028
<SHARES-REINVESTED> 192
<NET-CHANGE-IN-ASSETS> (1,643)
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> 2,205
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 231
<AVERAGE-NET-ASSETS> 34,470
<PER-SHARE-NAV-BEGIN> 13.10
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 1.49
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.74
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>072
<NAME>NFJ SMALL CAP VALUE FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 29,537
<INVESTMENTS-AT-VALUE> 33,417
<RECEIVABLES> 89
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,506
<PAYABLE-FOR-SECURITIES> 25
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 56
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,770
<SHARES-COMMON-STOCK> 312
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 837
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,963
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,880
<NET-ASSETS> 33,450
<DIVIDEND-INCOME> 708
<INTEREST-INCOME> 67
<OTHER-INCOME> 0
<EXPENSES-NET> 231
<NET-INVESTMENT-INCOME> 544
<REALIZED-GAINS-CURRENT> 3,943
<APPREC-INCREASE-CURRENT> 1,415
<NET-CHANGE-FROM-OPS> 5,902
<EQUALIZATION> (26)
<DISTRIBUTIONS-OF-INCOME> 63
<DISTRIBUTIONS-OF-GAINS> 293
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 437
<NUMBER-OF-SHARES-REDEEMED> 152
<SHARES-REINVESTED> 27
<NET-CHANGE-IN-ASSETS> (1,643)
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> 2,205
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 231
<AVERAGE-NET-ASSETS> 4,823
<PER-SHARE-NAV-BEGIN> 13.16
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 1.43
<PER-SHARE-DIVIDEND> 0.19
<PER-SHARE-DISTRIBUTIONS> 0.74
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>081
<NAME>CADENCE SMALL CAP GROWTH FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 27,901
<INVESTMENTS-AT-VALUE> 32,870
<RECEIVABLES> 634
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,504
<PAYABLE-FOR-SECURITIES> 332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106
<TOTAL-LIABILITIES> 438
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,237
<SHARES-COMMON-STOCK> 1,582
<SHARES-COMMON-PRIOR> 3,519
<ACCUMULATED-NII-CURRENT> 3,202
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,658
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,969
<NET-ASSETS> 33,066
<DIVIDEND-INCOME> 345
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> 534
<NET-INVESTMENT-INCOME> (86)
<REALIZED-GAINS-CURRENT> 15,949
<APPREC-INCREASE-CURRENT> (11,349)
<NET-CHANGE-FROM-OPS> 4,514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 5,641
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 238
<NUMBER-OF-SHARES-REDEEMED> 2,414
<SHARES-REINVESTED> 239
<NET-CHANGE-IN-ASSETS> (41,455)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,693
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 534
<AVERAGE-NET-ASSETS> 63,443
<PER-SHARE-NAV-BEGIN> 21.02
<PER-SHARE-NII> 2.02
<PER-SHARE-GAIN-APPREC> (0.61)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.60
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.83
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>082
<NAME>CADENCE SMALL CAP GROWTH FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 27,901
<INVESTMENTS-AT-VALUE> 32,870
<RECEIVABLES> 634
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,504
<PAYABLE-FOR-SECURITIES> 332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106
<TOTAL-LIABILITIES> 438
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,237
<SHARES-COMMON-STOCK> 5
<SHARES-COMMON-PRIOR> 26
<ACCUMULATED-NII-CURRENT> 3,202
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,658
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,969
<NET-ASSETS> 33,066
<DIVIDEND-INCOME> 345
<INTEREST-INCOME> 103
<OTHER-INCOME> 0
<EXPENSES-NET> 534
<NET-INVESTMENT-INCOME> (86)
<REALIZED-GAINS-CURRENT> 15,949
<APPREC-INCREASE-CURRENT> (11,349)
<NET-CHANGE-FROM-OPS> 4,514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 55
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22
<NUMBER-OF-SHARES-REDEEMED> 45
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> (41,455)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,693
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 534
<AVERAGE-NET-ASSETS> 506
<PER-SHARE-NAV-BEGIN> 21.01
<PER-SHARE-NII> 2.02
<PER-SHARE-GAIN-APPREC> (0.61)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.60
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.82
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>101
<NAME>BALANCED FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 79,066
<INVESTMENTS-AT-VALUE> 89,475
<RECEIVABLES> 4,481
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 93,956
<PAYABLE-FOR-SECURITIES> 11,283
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111
<TOTAL-LIABILITIES> 11,394
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,614
<SHARES-COMMON-STOCK> 7,096
<SHARES-COMMON-PRIOR> 6,109
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,338
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,610
<NET-ASSETS> 82,562
<DIVIDEND-INCOME> 680
<INTEREST-INCOME> 1,491
<OTHER-INCOME> 0
<EXPENSES-NET> 369
<NET-INVESTMENT-INCOME> 1,802
<REALIZED-GAINS-CURRENT> 1,778
<APPREC-INCREASE-CURRENT> 3,088
<NET-CHANGE-FROM-OPS> 6,668
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,802
<DISTRIBUTIONS-OF-GAINS> 6,227
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 821
<NUMBER-OF-SHARES-REDEEMED> 538
<SHARES-REINVESTED> 704
<NET-CHANGE-IN-ASSETS> 9,924
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,787
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 236
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 369
<AVERAGE-NET-ASSETS> 78,368
<PER-SHARE-NAV-BEGIN> 11.89
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 0.76
<PER-SHARE-DIVIDEND> 0.27
<PER-SHARE-DISTRIBUTIONS> 1.01
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.64
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>111
<NAME>CADENCE MID CAP GROWTH FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 200,715
<INVESTMENTS-AT-VALUE> 231,855
<RECEIVABLES> 1,212
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 233,067
<PAYABLE-FOR-SECURITIES> 713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 272
<TOTAL-LIABILITIES> 985
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 169,974
<SHARES-COMMON-STOCK> 11,881
<SHARES-COMMON-PRIOR> 10,423
<ACCUMULATED-NII-CURRENT> 2,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,839
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,140
<NET-ASSETS> 232,082
<DIVIDEND-INCOME> 2,042
<INTEREST-INCOME> 452
<OTHER-INCOME> 0
<EXPENSES-NET> 970
<NET-INVESTMENT-INCOME> 1,524
<REALIZED-GAINS-CURRENT> 30,980
<APPREC-INCREASE-CURRENT> (13,220)
<NET-CHANGE-FROM-OPS> 19,284
<EQUALIZATION> 59
<DISTRIBUTIONS-OF-INCOME> 1,520
<DISTRIBUTIONS-OF-GAINS> 4,245
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,438
<NUMBER-OF-SHARES-REDEEMED> 2,281
<SHARES-REINVESTED> 301
<NET-CHANGE-IN-ASSETS> 41,870
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,256
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 970
<AVERAGE-NET-ASSETS> 205,838
<PER-SHARE-NAV-BEGIN> 18.16
<PER-SHARE-NII> 0.32
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.14
<PER-SHARE-DISTRIBUTIONS> 0.43
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.44
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>112
<NAME>CADENCE MID CAP GROWTH FUND - ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 200,715
<INVESTMENTS-AT-VALUE> 231,855
<RECEIVABLES> 1,212
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 233,067
<PAYABLE-FOR-SECURITIES> 713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 272
<TOTAL-LIABILITIES> 985
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 169,974
<SHARES-COMMON-STOCK> 55
<SHARES-COMMON-PRIOR> 49
<ACCUMULATED-NII-CURRENT> 2,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,839
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,140
<NET-ASSETS> 232,082
<DIVIDEND-INCOME> 2,042
<INTEREST-INCOME> 452
<OTHER-INCOME> 0
<EXPENSES-NET> 970
<NET-INVESTMENT-INCOME> 1,524
<REALIZED-GAINS-CURRENT> 30,980
<APPREC-INCREASE-CURRENT> (13,220)
<NET-CHANGE-FROM-OPS> 19,284
<EQUALIZATION> 59
<DISTRIBUTIONS-OF-INCOME> 6
<DISTRIBUTIONS-OF-GAINS> 21
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14
<NUMBER-OF-SHARES-REDEEMED> 10
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 41,870
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,256
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 618
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 970
<AVERAGE-NET-ASSETS> 991
<PER-SHARE-NAV-BEGIN> 18.17
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.11
<PER-SHARE-DISTRIBUTIONS> 0.43
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.44
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>121
<NAME>BLAIRLOGIE EMERGING MARKETS FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 70,913
<INVESTMENTS-AT-VALUE> 77,256
<RECEIVABLES> 3,101
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 831
<TOTAL-ASSETS> 81,188
<PAYABLE-FOR-SECURITIES> 97
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 275
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,130
<SHARES-COMMON-STOCK> 6,361
<SHARES-COMMON-PRIOR> 6,525
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 33
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 13,517
<ACCUM-APPREC-OR-DEPREC> 6,333
<NET-ASSETS> 80,913
<DIVIDEND-INCOME> 1,083
<INTEREST-INCOME> 55
<OTHER-INCOME> 0
<EXPENSES-NET> 704
<NET-INVESTMENT-INCOME> 434
<REALIZED-GAINS-CURRENT> 1,358
<APPREC-INCREASE-CURRENT> 7,303
<NET-CHANGE-FROM-OPS> 9,095
<EQUALIZATION> (4)
<DISTRIBUTIONS-OF-INCOME> 236
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,675
<NUMBER-OF-SHARES-REDEEMED> 2,853
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 6,544
<ACCUMULATED-NII-PRIOR> 10
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 15,113
<GROSS-ADVISORY-FEES> 441
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 704
<AVERAGE-NET-ASSETS> 77,404
<PER-SHARE-NAV-BEGIN> 11.27
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.40
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.66
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>122
<NAME>BLAIRLOGIE EMERGING MARKETS FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 70,913
<INVESTMENTS-AT-VALUE> 77,256
<RECEIVABLES> 3,101
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 831
<TOTAL-ASSETS> 81,188
<PAYABLE-FOR-SECURITIES> 97
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 275
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,130
<SHARES-COMMON-STOCK> 29
<SHARES-COMMON-PRIOR> 74
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 33
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 13,517
<ACCUM-APPREC-OR-DEPREC> 6,333
<NET-ASSETS> 80,913
<DIVIDEND-INCOME> 1,083
<INTEREST-INCOME> 55
<OTHER-INCOME> 0
<EXPENSES-NET> 704
<NET-INVESTMENT-INCOME> 434
<REALIZED-GAINS-CURRENT> 1,358
<APPREC-INCREASE-CURRENT> 7,303
<NET-CHANGE-FROM-OPS> 9,095
<EQUALIZATION> (4)
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33
<NUMBER-OF-SHARES-REDEEMED> 78
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,544
<ACCUMULATED-NII-PRIOR> 10
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 15,113
<GROSS-ADVISORY-FEES> 441
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 704
<AVERAGE-NET-ASSETS> 756
<PER-SHARE-NAV-BEGIN> 11.24
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.40
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.63
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>131
<NAME>BLAIRLOGIE INTERNATIONAL ACTIVE FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 64,970
<INVESTMENTS-AT-VALUE> 71,062
<RECEIVABLES> 1,256
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,679
<TOTAL-ASSETS> 75,997
<PAYABLE-FOR-SECURITIES> 54
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112
<TOTAL-LIABILITIES> 166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,518
<SHARES-COMMON-STOCK> 5,600
<SHARES-COMMON-PRIOR> 5,418
<ACCUMULATED-NII-CURRENT> 1,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,214
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,163
<NET-ASSETS> 75,831
<DIVIDEND-INCOME> 833
<INTEREST-INCOME> 112
<OTHER-INCOME> 0
<EXPENSES-NET> 546
<NET-INVESTMENT-INCOME> 399
<REALIZED-GAINS-CURRENT> 2,749
<APPREC-INCREASE-CURRENT> 5,113
<NET-CHANGE-FROM-OPS> 8,261
<EQUALIZATION> 62
<DISTRIBUTIONS-OF-INCOME> 2,278
<DISTRIBUTIONS-OF-GAINS> 1,127
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,178
<NUMBER-OF-SHARES-REDEEMED> 1,178
<SHARES-REINVESTED> 182
<NET-CHANGE-IN-ASSETS> 11,549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,510
<OVERDISTRIB-NII-PRIOR> 13
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546
<AVERAGE-NET-ASSETS> 71,131
<PER-SHARE-NAV-BEGIN> 11.74
<PER-SHARE-NII> 0.72
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> 0.43
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.54
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>132
<NAME>BLAIRLOGIE INTERNATIONAL ACTIVE FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 64,970
<INVESTMENTS-AT-VALUE> 71,062
<RECEIVABLES> 1,256
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,679
<TOTAL-ASSETS> 75,997
<PAYABLE-FOR-SECURITIES> 54
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112
<TOTAL-LIABILITIES> 166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,518
<SHARES-COMMON-STOCK> 450
<SHARES-COMMON-PRIOR> 58
<ACCUMULATED-NII-CURRENT> 1,936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,214
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,163
<NET-ASSETS> 75,831
<DIVIDEND-INCOME> 833
<INTEREST-INCOME> 112
<OTHER-INCOME> 0
<EXPENSES-NET> 546
<NET-INVESTMENT-INCOME> 399
<REALIZED-GAINS-CURRENT> 2,749
<APPREC-INCREASE-CURRENT> 5,113
<NET-CHANGE-FROM-OPS> 8,261
<EQUALIZATION> 62
<DISTRIBUTIONS-OF-INCOME> 25
<DISTRIBUTIONS-OF-GAINS> 13
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 428
<NUMBER-OF-SHARES-REDEEMED> 39
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 11,549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,510
<OVERDISTRIB-NII-PRIOR> 13
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 546
<AVERAGE-NET-ASSETS> 2,529
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.69
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> 0.42
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.51
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>141
<NAME>CADENCE MICRO CAP GROWTH FUND-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 62,615
<INVESTMENTS-AT-VALUE> 84,865
<RECEIVABLES> 769
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,634
<PAYABLE-FOR-SECURITIES> 986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109
<TOTAL-LIABILITIES> 1,095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,355
<SHARES-COMMON-STOCK> 4,546
<SHARES-COMMON-PRIOR> 4,536
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,250
<NET-ASSETS> 84,539
<DIVIDEND-INCOME> 337
<INTEREST-INCOME> 226
<OTHER-INCOME> 0
<EXPENSES-NET> 807
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 8,951
<APPREC-INCREASE-CURRENT> 8,025
<NET-CHANGE-FROM-OPS> 16,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,543
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,333
<NUMBER-OF-SHARES-REDEEMED> 1,411
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> 14,764
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 670
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 807
<AVERAGE-NET-ASSETS> 80,637
<PER-SHARE-NAV-BEGIN> 15.38
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 3.43
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.34
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.47
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>142
<NAME>CADENCE MICRO CAP GROWTH FUND-ADMINISTRATIVE CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 62,615
<INVESTMENTS-AT-VALUE> 84,865
<RECEIVABLES> 769
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,634
<PAYABLE-FOR-SECURITIES> 986
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109
<TOTAL-LIABILITIES> 1,095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,355
<SHARES-COMMON-STOCK> 31
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,934
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,250
<NET-ASSETS> 84,539
<DIVIDEND-INCOME> 337
<INTEREST-INCOME> 226
<OTHER-INCOME> 0
<EXPENSES-NET> 807
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 8,951
<APPREC-INCREASE-CURRENT> 8,025
<NET-CHANGE-FROM-OPS> 16,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40
<NUMBER-OF-SHARES-REDEEMED> 9
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,764
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 670
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 807
<AVERAGE-NET-ASSETS> 432
<PER-SHARE-NAV-BEGIN> 16.73
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 1.70
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.46
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>161
<NAME>COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND-INST. CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 40,203
<INVESTMENTS-AT-VALUE> 44,328
<RECEIVABLES> 459
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 44,788
<PAYABLE-FOR-SECURITIES> 330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 431
<TOTAL-LIABILITIES> 761
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,342
<SHARES-COMMON-STOCK> 771
<SHARES-COMMON-PRIOR> 613
<ACCUMULATED-NII-CURRENT> 1,498
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 58
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,129
<NET-ASSETS> 44,027
<DIVIDEND-INCOME> 242
<INTEREST-INCOME> 105
<OTHER-INCOME> 0
<EXPENSES-NET> 260
<NET-INVESTMENT-INCOME> 87
<REALIZED-GAINS-CURRENT> 1,584
<APPREC-INCREASE-CURRENT> 1,689
<NET-CHANGE-FROM-OPS> 3,360
<EQUALIZATION> 21
<DISTRIBUTIONS-OF-INCOME> 38
<DISTRIBUTIONS-OF-GAINS> 180
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 162
<NUMBER-OF-SHARES-REDEEMED> 9
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 11,591
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 756
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260
<AVERAGE-NET-ASSETS> 9,028
<PER-SHARE-NAV-BEGIN> 12.72
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> .65
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.28
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.55
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>162
<NAME>COLUMBUS CIRCLE INVESTORS CORE EQUITY FUND-ADMIN. CLASS
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 40,203
<INVESTMENTS-AT-VALUE> 44,328
<RECEIVABLES> 459
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 44,788
<PAYABLE-FOR-SECURITIES> 330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 431
<TOTAL-LIABILITIES> 761
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,342
<SHARES-COMMON-STOCK> 2,477
<SHARES-COMMON-PRIOR> 1,937
<ACCUMULATED-NII-CURRENT> 1,498
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 58
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,129
<NET-ASSETS> 44,027
<DIVIDEND-INCOME> 242
<INTEREST-INCOME> 105
<OTHER-INCOME> 0
<EXPENSES-NET> 260
<NET-INVESTMENT-INCOME> 87
<REALIZED-GAINS-CURRENT> 1,584
<APPREC-INCREASE-CURRENT> 1,689
<NET-CHANGE-FROM-OPS> 3,360
<EQUALIZATION> 21
<DISTRIBUTIONS-OF-INCOME> 76
<DISTRIBUTIONS-OF-GAINS> 577
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,313
<NUMBER-OF-SHARES-REDEEMED> 825
<SHARES-REINVESTED> 52
<NET-CHANGE-IN-ASSETS> 11,591
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 756
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260
<AVERAGE-NET-ASSETS> 29,565
<PER-SHARE-NAV-BEGIN> 12.73
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> .65
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.28
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.56
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the annual
report dated June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867297
<NAME> PIMCO FUNDS: EQUITY ADVISORS SERIES
<SERIES>
<NUMBER>171
<NAME>COLUMBUS CIRCLE INVESTORS MID CAP EQUITY FUND
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 6,449
<INVESTMENTS-AT-VALUE> 8,355
<RECEIVABLES> 180
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 28
<TOTAL-ASSETS> 8,563
<PAYABLE-FOR-SECURITIES> 179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6
<TOTAL-LIABILITIES> 185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,019
<SHARES-COMMON-STOCK> 571
<SHARES-COMMON-PRIOR> 647
<ACCUMULATED-NII-CURRENT> 280
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 173
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,906
<NET-ASSETS> 8,378
<DIVIDEND-INCOME> 17
<INTEREST-INCOME> 15
<OTHER-INCOME> 0
<EXPENSES-NET> 50
<NET-INVESTMENT-INCOME> (18)
<REALIZED-GAINS-CURRENT> 471
<APPREC-INCREASE-CURRENT> 853
<NET-CHANGE-FROM-OPS> 1,306
<EQUALIZATION> (1)
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 243
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36
<NUMBER-OF-SHARES-REDEEMED> 118
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> 21
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 243
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50
<AVERAGE-NET-ASSETS> 8,441
<PER-SHARE-NAV-BEGIN> 12.92
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 1.62
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.37
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.66
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> GROWTH FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,413,666
<INVESTMENTS-AT-VALUE> 1,666,094
<RECEIVABLES> 6,138
<ASSETS-OTHER> 57
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,672,289
<PAYABLE-FOR-SECURITIES> 23,408
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,306
<TOTAL-LIABILITIES> 33,714
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,192,644
<SHARES-COMMON-STOCK> 5,686
<SHARES-COMMON-PRIOR> 5,239
<ACCUMULATED-NII-CURRENT> 5,470
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 188,061
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 252,400
<NET-ASSETS> 1,638,575
<DIVIDEND-INCOME> 13,480
<INTEREST-INCOME> 7,085
<OTHER-INCOME> 0
<EXPENSES-NET> 27,269
<NET-INVESTMENT-INCOME> (6,704)
<REALIZED-GAINS-CURRENT> 216,171
<APPREC-INCREASE-CURRENT> 8,598
<NET-CHANGE-FROM-OPS> 218,065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 15,282
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,783
<NUMBER-OF-SHARES-REDEEMED> 1,944
<SHARES-REINVESTED> 608
<NET-CHANGE-IN-ASSETS> 205,933
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 151,252
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,988
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,269
<AVERAGE-NET-ASSETS> 140,603
<PER-SHARE-NAV-BEGIN> 25.73
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 3.72
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.93
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26.58
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> GROWTH FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,413,666
<INVESTMENTS-AT-VALUE> 1,666,094
<RECEIVABLES> 6,138
<ASSETS-OTHER> 57
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,672,289
<PAYABLE-FOR-SECURITIES> 23,408
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,306
<TOTAL-LIABILITIES> 33,714
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,192,644
<SHARES-COMMON-STOCK> 1,463
<SHARES-COMMON-PRIOR> 308
<ACCUMULATED-NII-CURRENT> 5,470
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 188,061
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 252,400
<NET-ASSETS> 1,638,575
<DIVIDEND-INCOME> 13,480
<INTEREST-INCOME> 7,085
<OTHER-INCOME> 0
<EXPENSES-NET> 27,269
<NET-INVESTMENT-INCOME> (6,704)
<REALIZED-GAINS-CURRENT> 216,171
<APPREC-INCREASE-CURRENT> 8,598
<NET-CHANGE-FROM-OPS> 218,065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,264
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,222
<NUMBER-OF-SHARES-REDEEMED> 116
<SHARES-REINVESTED> 49
<NET-CHANGE-IN-ASSETS> 205,933
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 151,252
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,988
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,269
<AVERAGE-NET-ASSETS> 21,178
<PER-SHARE-NAV-BEGIN> 24.94
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 3.52
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.93
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.46
<EXPENSE-RATIO> 1.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> GROWTH FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,413,666
<INVESTMENTS-AT-VALUE> 1,666,094
<RECEIVABLES> 6,138
<ASSETS-OTHER> 57
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,672,289
<PAYABLE-FOR-SECURITIES> 23,408
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,306
<TOTAL-LIABILITIES> 33,174
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,192,644
<SHARES-COMMON-STOCK> 56,968
<SHARES-COMMON-PRIOR> 51,739
<ACCUMULATED-NII-CURRENT> 5,470
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 188,061
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 252,400
<NET-ASSETS> 1,638,575
<DIVIDEND-INCOME> 13,480
<INTEREST-INCOME> 7,085
<OTHER-INCOME> 0
<EXPENSES-NET> 27,269
<NET-INVESTMENT-INCOME> (6,704)
<REALIZED-GAINS-CURRENT> 216,171
<APPREC-INCREASE-CURRENT> 8,598
<NET-CHANGE-FROM-OPS> 218,065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 150,649
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,080
<NUMBER-OF-SHARES-REDEEMED> 13,015
<SHARES-REINVESTED> 6,164
<NET-CHANGE-IN-ASSETS> 205,933
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 151,252
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,988
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,269
<AVERAGE-NET-ASSETS> 1,359,377
<PER-SHARE-NAV-BEGIN> 24.94
<PER-SHARE-NII> (0.12)
<PER-SHARE-GAIN-APPREC> 3.57
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.93
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 25.46
<EXPENSE-RATIO> 1.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30,1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> OPPORTUNITY FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 688,340
<INVESTMENTS-AT-VALUE> 938,361
<RECEIVABLES> 12,151
<ASSETS-OTHER> 23
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 950,535
<PAYABLE-FOR-SECURITIES> 4,767
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,658
<TOTAL-LIABILITIES> 15,425
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 557,912
<SHARES-COMMON-STOCK> 3,610
<SHARES-COMMON-PRIOR> 3,092
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 126,974
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 250,224
<NET-ASSETS> 935,110
<DIVIDEND-INCOME> 1,022
<INTEREST-INCOME> 6,007
<OTHER-INCOME> 0
<EXPENSES-NET> 15,391
<NET-INVESTMENT-INCOME> (8,362)
<REALIZED-GAINS-CURRENT> 127,759
<APPREC-INCREASE-CURRENT> 25,501
<NET-CHANGE-FROM-OPS> 144,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 23,619
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,508
<NUMBER-OF-SHARES-REDEEMED> 1,653
<SHARES-REINVESTED> 663
<NET-CHANGE-IN-ASSETS> 99,089
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 168,596
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,184
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,391
<AVERAGE-NET-ASSETS> 123,518
<PER-SHARE-NAV-BEGIN> 39.08
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 6.12
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 7.73
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 37.36
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER, 30 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> OPPORTUNITY FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 688,340
<INVESTMENTS-AT-VALUE> 938,361
<RECEIVABLES> 12,151
<ASSETS-OTHER> 23
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 950,535
<PAYABLE-FOR-SECURITIES> 4,767
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,658
<TOTAL-LIABILITIES> 15,425
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 557,912
<SHARES-COMMON-STOCK> 22,619
<SHARES-COMMON-PRIOR> 19,002
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 126,974
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 250,224
<NET-ASSETS> 935,110
<DIVIDEND-INCOME> 1,022
<INTEREST-INCOME> 6,007
<OTHER-INCOME> 0
<EXPENSES-NET> 15,391
<NET-INVESTMENT-INCOME> (8,362)
<REALIZED-GAINS-CURRENT> 127,759
<APPREC-INCREASE-CURRENT> 25,501
<NET-CHANGE-FROM-OPS> 144,898
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 145,763
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,429
<NUMBER-OF-SHARES-REDEEMED> 13,067
<SHARES-REINVESTED> 4,255
<NET-CHANGE-IN-ASSETS> 99,089
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 168,596
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,184
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,391
<AVERAGE-NET-ASSETS> 745,563
<PER-SHARE-NAV-BEGIN> 37.64
<PER-SHARE-NII> (0.35)
<PER-SHARE-GAIN-APPREC> 5.82
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 7.73
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 35.38
<EXPENSE-RATIO> 1.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FIANCIAL INFORMATION EXTRACT FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 061
<NAME> TAX EXEMPT FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 51,502
<INVESTMENTS-AT-VALUE> 54,521
<RECEIVABLES> 980
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 302
<TOTAL-LIABILITIES> 302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,018
<SHARES-COMMON-STOCK> 494
<SHARES-COMMON-PRIOR> 228
<ACCUMULATED-NII-CURRENT> 231
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,064
<ACCUM-APPREC-OR-DEPREC> 3,019
<NET-ASSETS> 55,204
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,439
<OTHER-INCOME> 0
<EXPENSES-NET> 980
<NET-INVESTMENT-INCOME> 2,459
<REALIZED-GAINS-CURRENT> (8)
<APPREC-INCREASE-CURRENT> 28
<NET-CHANGE-FROM-OPS> 2,479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 196
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 320
<NUMBER-OF-SHARES-REDEEMED> 63
<SHARES-REINVESTED> 9
<NET-CHANGE-IN-ASSETS> (2,009)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 132
<OVERDIST-NET-GAINS-PRIOR> 1,055
<GROSS-ADVISORY-FEES> 333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 980
<AVERAGE-NET-ASSETS> 4,115
<PER-SHARE-NAV-BEGIN> 11.83
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.87
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 062
<NAME> TAX EXEMPT FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 51,052
<INVESTMENTS-AT-VALUE> 54,521
<RECEIVABLES> 980
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 302
<TOTAL-LIABILITIES> 302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,018
<SHARES-COMMON-STOCK> 190
<SHARES-COMMON-PRIOR> 24
<ACCUMULATED-NII-CURRENT> 231
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,064
<ACCUM-APPREC-OR-DEPREC> 3,019
<NET-ASSETS> 55,205
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,439
<OTHER-INCOME> 0
<EXPENSES-NET> 980
<NET-INVESTMENT-INCOME> 2,459
<REALIZED-GAINS-CURRENT> (8)
<APPREC-INCREASE-CURRENT> 28
<NET-CHANGE-FROM-OPS> 2,479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 59
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 180
<NUMBER-OF-SHARES-REDEEMED> 17
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> (2,009)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 132
<OVERDIST-NET-GAINS-PRIOR> 1,055
<GROSS-ADVISORY-FEES> 333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 980
<AVERAGE-NET-ASSETS> 1,467
<PER-SHARE-NAV-BEGIN> 11.84
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.48
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.89
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 063
<NAME> TAX EXEMPT FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 51,502
<INVESTMENTS-AT-VALUE> 54,521
<RECEIVABLES> 980
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 302
<TOTAL-LIABILITIES> 302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,018
<SHARES-COMMON-STOCK> 3,971
<SHARES-COMMON-PRIOR> 4,586
<ACCUMULATED-NII-CURRENT> 231
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,064
<ACCUM-APPREC-OR-DEPREC> 3,019
<NET-ASSETS> 55,204
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,439
<OTHER-INCOME> 0
<EXPENSES-NET> 980
<NET-INVESTMENT-INCOME> 2,459
<REALIZED-GAINS-CURRENT> (8)
<APPREC-INCREASE-CURRENT> 28
<NET-CHANGE-FROM-OPS> 2,479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,014
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 404
<NUMBER-OF-SHARES-REDEEMED> 1,141
<SHARES-REINVESTED> 122
<NET-CHANGE-IN-ASSETS> (2,009)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 132
<OVERDIST-NET-GAINS-PRIOR> 1,055
<GROSS-ADVISORY-FEES> 333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 980
<AVERAGE-NET-ASSETS> 49,976
<PER-SHARE-NAV-BEGIN> 11.82
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.86
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 071
<NAME> INTERNATIONAL FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 200,893
<INVESTMENTS-AT-VALUE> 213,664
<RECEIVABLES> 38,152
<ASSETS-OTHER> 12
<OTHER-ITEMS-ASSETS> 30,288
<TOTAL-ASSETS> 282,116
<PAYABLE-FOR-SECURITIES> 28,776
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,847
<TOTAL-LIABILITIES> 52,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211,834
<SHARES-COMMON-STOCK> 1,539
<SHARES-COMMON-PRIOR> 1,473
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 407
<ACCUMULATED-NET-GAINS> 5,696
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,370
<NET-ASSETS> 229,493
<DIVIDEND-INCOME> 3,864
<INTEREST-INCOME> 503
<OTHER-INCOME> 0
<EXPENSES-NET> 4,901
<NET-INVESTMENT-INCOME> (534)
<REALIZED-GAINS-CURRENT> 9,721
<APPREC-INCREASE-CURRENT> 4,720
<NET-CHANGE-FROM-OPS> 13,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,580
<NUMBER-OF-SHARES-REDEEMED> 6,514
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,310)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 1,318
<OVERDIST-NET-GAINS-PRIOR> 3,925
<GROSS-ADVISORY-FEES> 1,873
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,901
<AVERAGE-NET-ASSETS> 20,016
<PER-SHARE-NAV-BEGIN> 12.19
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.77
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.03
<EXPENSE-RATIO> 1.41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 072
<NAME> INTERNATIONAL FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 200,893
<INVESTMENTS-AT-VALUE> 213,664
<RECEIVABLES> 38,152
<ASSETS-OTHER> 12
<OTHER-ITEMS-ASSETS> 30,288
<TOTAL-ASSETS> 282,116
<PAYABLE-FOR-SECURITIES> 28,776
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,847
<TOTAL-LIABILITIES> 52,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211,834
<SHARES-COMMON-STOCK> 472
<SHARES-COMMON-PRIOR> 43
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 407
<ACCUMULATED-NET-GAINS> 5,696
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,370
<NET-ASSETS> 229,493
<DIVIDEND-INCOME> 3,864
<INTEREST-INCOME> 503
<OTHER-INCOME> 0
<EXPENSES-NET> 4,901
<NET-INVESTMENT-INCOME> (534)
<REALIZED-GAINS-CURRENT> 9,721
<APPREC-INCREASE-CURRENT> 4,720
<NET-CHANGE-FROM-OPS> 13,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 484
<NUMBER-OF-SHARES-REDEEMED> 55
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,310)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 1,318
<OVERDIST-NET-GAINS-PRIOR> 3,925
<GROSS-ADVISORY-FEES> 1,873
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,901
<AVERAGE-NET-ASSETS> 3,234
<PER-SHARE-NAV-BEGIN> 11.75
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.73
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.48
<EXPENSE-RATIO> 2.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 073
<NAME> INTERNATIONAL FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 200,893
<INVESTMENTS-AT-VALUE> 213,664
<RECEIVABLES> 38,152
<ASSETS-OTHER> 12
<OTHER-ITEMS-ASSETS> 30,288
<TOTAL-ASSETS> 282,116
<PAYABLE-FOR-SECURITIES> 28,776
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,847
<TOTAL-LIABILITIES> 52,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211,834
<SHARES-COMMON-STOCK> 16,320
<SHARES-COMMON-PRIOR> 18,332
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 407
<ACCUMULATED-NET-GAINS> 5,696
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,370
<NET-ASSETS> 229,493
<DIVIDEND-INCOME> 3,864
<INTEREST-INCOME> 503
<OTHER-INCOME> 0
<EXPENSES-NET> 4,901
<NET-INVESTMENT-INCOME> (534)
<REALIZED-GAINS-CURRENT> 9,721
<APPREC-INCREASE-CURRENT> 4,720
<NET-CHANGE-FROM-OPS> 13,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,776
<NUMBER-OF-SHARES-REDEEMED> 8,788
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,310)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 1,318
<OVERDIST-NET-GAINS-PRIOR> 3,925
<GROSS-ADVISORY-FEES> 1,873
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,901
<AVERAGE-NET-ASSETS> 210,826
<PER-SHARE-NAV-BEGIN> 11.75
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 0.77
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.47
<EXPENSE-RATIO> 2.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 081
<NAME> EQUITY INCOME FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 239,313
<INVESTMENTS-AT-VALUE> 266,916
<RECEIVABLES> 7,866
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 2,182
<TOTAL-ASSETS> 276,969
<PAYABLE-FOR-SECURITIES> 9,661
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 925
<TOTAL-LIABILITIES> 10,586
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 204,649
<SHARES-COMMON-STOCK> 1,283
<SHARES-COMMON-PRIOR> 915
<ACCUMULATED-NII-CURRENT> 21,658
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,473
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,603
<NET-ASSETS> 266,383
<DIVIDEND-INCOME> 4,236
<INTEREST-INCOME> 1,979
<OTHER-INCOME> 0
<EXPENSES-NET> 4,242
<NET-INVESTMENT-INCOME> 1,973
<REALIZED-GAINS-CURRENT> 37,469
<APPREC-INCREASE-CURRENT> 3,195
<NET-CHANGE-FROM-OPS> 42,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 313
<DISTRIBUTIONS-OF-GAINS> 710
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 559
<NUMBER-OF-SHARES-REDEEMED> 254
<SHARES-REINVESTED> 63
<NET-CHANGE-IN-ASSETS> 77,374
<ACCUMULATED-NII-PRIOR> 570
<ACCUMULATED-GAINS-PRIOR> 7,217
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,628
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,242
<AVERAGE-NET-ASSETS> 15,589
<PER-SHARE-NAV-BEGIN> 14.14
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 2.79
<PER-SHARE-DIVIDEND> 0.30
<PER-SHARE-DISTRIBUTIONS> 0.78
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.08
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 082
<NAME> EQUITY INCOME FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 239,313
<INVESTMENTS-AT-VALUE> 266,916
<RECEIVABLES> 7,866
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 2,182
<TOTAL-ASSETS> 276,969
<PAYABLE-FOR-SECURITIES> 9,661
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 925
<TOTAL-LIABILITIES> 10,586
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 204,649
<SHARES-COMMON-STOCK> 974
<SHARES-COMMON-PRIOR> 125
<ACCUMULATED-NII-CURRENT> 21,658
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,473
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,603
<NET-ASSETS> 266,383
<DIVIDEND-INCOME> 4,236
<INTEREST-INCOME> 1,979
<OTHER-INCOME> 0
<EXPENSES-NET> 4,242
<NET-INVESTMENT-INCOME> 1,973
<REALIZED-GAINS-CURRENT> 37,469
<APPREC-INCREASE-CURRENT> 3,195
<NET-CHANGE-FROM-OPS> 42,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 76
<DISTRIBUTIONS-OF-GAINS> 132
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 882
<NUMBER-OF-SHARES-REDEEMED> 45
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 77,374
<ACCUMULATED-NII-PRIOR> 570
<ACCUMULATED-GAINS-PRIOR> 7,217
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,628
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,242
<AVERAGE-NET-ASSETS> 6,220
<PER-SHARE-NAV-BEGIN> 14.13
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 2.83
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0.78
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.12
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 083
<NAME> EQUITY INCOME FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 239,313
<INVESTMENTS-AT-VALUE> 266,916
<RECEIVABLES> 7,866
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 2,182
<TOTAL-ASSETS> 276,969
<PAYABLE-FOR-SECURITIES> 9,661
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 925
<TOTAL-LIABILITIES> 10,586
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 204,649
<SHARES-COMMON-STOCK> 14,336
<SHARES-COMMON-PRIOR> 12,367
<ACCUMULATED-NII-CURRENT> 21,658
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,473
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,603
<NET-ASSETS> 266,383
<DIVIDEND-INCOME> 4,236
<INTEREST-INCOME> 1,979
<OTHER-INCOME> 0
<EXPENSES-NET> 4,242
<NET-INVESTMENT-INCOME> 1,973
<REALIZED-GAINS-CURRENT> 37,469
<APPREC-INCREASE-CURRENT> 3,195
<NET-CHANGE-FROM-OPS> 42,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,181
<DISTRIBUTIONS-OF-GAINS> 9,562
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,430
<NUMBER-OF-SHARES-REDEEMED> 2,213
<SHARES-REINVESTED> 752
<NET-CHANGE-IN-ASSETS> 77,374
<ACCUMULATED-NII-PRIOR> 570
<ACCUMULATED-GAINS-PRIOR> 7,217
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,628
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,242
<AVERAGE-NET-ASSETS> 196,545
<PER-SHARE-NAV-BEGIN> 14.09
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 2.78
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.78
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.05
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERNCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 091
<NAME> PRECIOUS METALS FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 42,493
<INVESTMENTS-AT-VALUE> 46,515
<RECEIVABLES> 972
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 121
<TOTAL-ASSETS> 47,610
<PAYABLE-FOR-SECURITIES> 857
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 681
<TOTAL-LIABILITIES> 1,538
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,451
<SHARES-COMMON-STOCK> 515
<SHARES-COMMON-PRIOR> 622
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 401
<ACCUM-APPREC-OR-DEPREC> 4,022
<NET-ASSETS> 46,072
<DIVIDEND-INCOME> 663
<INTEREST-INCOME> 147
<OTHER-INCOME> 0
<EXPENSES-NET> 1,032
<NET-INVESTMENT-INCOME> (222)
<REALIZED-GAINS-CURRENT> 147
<APPREC-INCREASE-CURRENT> 272
<NET-CHANGE-FROM-OPS> 197
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,051
<NUMBER-OF-SHARES-REDEEMED> 11,158
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,190)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 542
<GROSS-ADVISORY-FEES> 398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,032
<AVERAGE-NET-ASSETS> 8,566
<PER-SHARE-NAV-BEGIN> 12.33
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (0.24)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.12
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 092
<NAME> PRECIOUS METALS FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 42,493
<INVESTMENTS-AT-VALUE> 46,515
<RECEIVABLES> 972
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 121
<TOTAL-ASSETS> 47,610
<PAYABLE-FOR-SECURITIES> 857
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 681
<TOTAL-LIABILITIES> 1,538
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,451
<SHARES-COMMON-STOCK> 191
<SHARES-COMMON-PRIOR> 21
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 401
<ACCUM-APPREC-OR-DEPREC> 4,022
<NET-ASSETS> 46,072
<DIVIDEND-INCOME> 663
<INTEREST-INCOME> 147
<OTHER-INCOME> 0
<EXPENSES-NET> 1,032
<NET-INVESTMENT-INCOME> (222)
<REALIZED-GAINS-CURRENT> 147
<APPREC-INCREASE-CURRENT> 272
<NET-CHANGE-FROM-OPS> 197
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 249
<NUMBER-OF-SHARES-REDEEMED> 79
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,190)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 542
<GROSS-ADVISORY-FEES> 398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,032
<AVERAGE-NET-ASSETS> 1,408
<PER-SHARE-NAV-BEGIN> 11.90
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> (0.25)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.62
<EXPENSE-RATIO> 2.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 093
<NAME> PRECIOUS METALS FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 42,493
<INVESTMENTS-AT-VALUE> 46,515
<RECEIVABLES> 972
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 121
<TOTAL-ASSETS> 47,610
<PAYABLE-FOR-SECURITIES> 857
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 681
<TOTAL-LIABILITIES> 1,538
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,451
<SHARES-COMMON-STOCK> 3,237
<SHARES-COMMON-PRIOR> 3,559
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 401
<ACCUM-APPREC-OR-DEPREC> 4,022
<NET-ASSETS> 46,072
<DIVIDEND-INCOME> 663
<INTEREST-INCOME> 147
<OTHER-INCOME> 0
<EXPENSES-NET> 1,032
<NET-INVESTMENT-INCOME> (222)
<REALIZED-GAINS-CURRENT> 147
<APPREC-INCREASE-CURRENT> 272
<NET-CHANGE-FROM-OPS> 197
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,876
<NUMBER-OF-SHARES-REDEEMED> 12,198
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,190)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 542
<GROSS-ADVISORY-FEES> 398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,032
<AVERAGE-NET-ASSETS> 43,085
<PER-SHARE-NAV-BEGIN> 11.90
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> (0.21)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.62
<EXPENSE-RATIO> 2.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 111
<NAME> TARGET FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,007,728
<INVESTMENTS-AT-VALUE> 1,204,809
<RECEIVABLES> 3,776
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,208,620
<PAYABLE-FOR-SECURITIES> 19,938
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,856
<TOTAL-LIABILITIES> 27,794
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 876,385
<SHARES-COMMON-STOCK> 9,120
<SHARES-COMMON-PRIOR> 7,433
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 107,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 197,081
<NET-ASSETS> 1,180,826
<DIVIDEND-INCOME> 3,147
<INTEREST-INCOME> 5,456
<OTHER-INCOME> 0
<EXPENSES-NET> 18,790
<NET-INVESTMENT-INCOME> (10,187)
<REALIZED-GAINS-CURRENT> 111,518
<APPREC-INCREASE-CURRENT> 51,871
<NET-CHANGE-FROM-OPS> 153,202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 13,463
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23,466
<NUMBER-OF-SHARES-REDEEMED> 22,596
<SHARES-REINVESTED> 817
<NET-CHANGE-IN-ASSETS> 271,001
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 98,230
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,790
<AVERAGE-NET-ASSETS> 135,439
<PER-SHARE-NAV-BEGIN> 16.40
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 2.54
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.78
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.11
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 112
<NAME> TARGET FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,007,728
<INVESTMENTS-AT-VALUE> 1,204,809
<RECEIVABLES> 3,776
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,208,620
<PAYABLE-FOR-SECURITIES> 19,938
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,856
<TOTAL-LIABILITIES> 27,794
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 876,385
<SHARES-COMMON-STOCK> 3,007
<SHARES-COMMON-PRIOR> 470
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 107,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 197,081
<NET-ASSETS> 1,180,826
<DIVIDEND-INCOME> 3,147
<INTEREST-INCOME> 5,456
<OTHER-INCOME> 0
<EXPENSES-NET> 18,790
<NET-INVESTMENT-INCOME> (10,187)
<REALIZED-GAINS-CURRENT> 111,518
<APPREC-INCREASE-CURRENT> 51,871
<NET-CHANGE-FROM-OPS> 153,202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,163
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,560
<NUMBER-OF-SHARES-REDEEMED> 97
<SHARES-REINVESTED> 74
<NET-CHANGE-IN-ASSETS> 271,001
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 98,230
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,790
<AVERAGE-NET-ASSETS> 24,114
<PER-SHARE-NAV-BEGIN> 16.06
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 2.39
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.78
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.58
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 113
<NAME> TARGET FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,007,728
<INVESTMENTS-AT-VALUE> 1,204,809
<RECEIVABLES> 3,776
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,208,620
<PAYABLE-FOR-SECURITIES> 19,938
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,856
<TOTAL-LIABILITIES> 27,794
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 876,385
<SHARES-COMMON-STOCK> 58,811
<SHARES-COMMON-PRIOR> 48,606
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 107,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 197,081
<NET-ASSETS> 1,180,826
<DIVIDEND-INCOME> 3,147
<INTEREST-INCOME> 5,456
<OTHER-INCOME> 0
<EXPENSES-NET> 18,790
<NET-INVESTMENT-INCOME> (10,187)
<REALIZED-GAINS-CURRENT> 111,518
<APPREC-INCREASE-CURRENT> 51,871
<NET-CHANGE-FROM-OPS> 153,202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 87,762
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,255
<NUMBER-OF-SHARES-REDEEMED> 15,586
<SHARES-REINVESTED> 5,536
<NET-CHANGE-IN-ASSETS> 271,001
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 98,230
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,790
<AVERAGE-NET-ASSETS> 868,414
<PER-SHARE-NAV-BEGIN> 16.05
<PER-SHARE-NII> (0.16)
<PER-SHARE-GAIN-APPREC> 2.47
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.78
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.58
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 121
<NAME> INNOVATION FUND - CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 177,850
<INVESTMENTS-AT-VALUE> 222,050
<RECEIVABLES> 5,323
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 2,689
<TOTAL-ASSETS> 230,097
<PAYABLE-FOR-SECURITIES> 7,178
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,322
<TOTAL-LIABILITIES> 8,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175,301
<SHARES-COMMON-STOCK> 2,900
<SHARES-COMMON-PRIOR> 1,916
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,096
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,200
<NET-ASSETS> 221,597
<DIVIDEND-INCOME> 141
<INTEREST-INCOME> 855
<OTHER-INCOME> 0
<EXPENSES-NET> 2,651
<NET-INVESTMENT-INCOME> (1,655)
<REALIZED-GAINS-CURRENT> 3,337
<APPREC-INCREASE-CURRENT> 27,654
<NET-CHANGE-FROM-OPS> 29,336
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 689
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,281
<NUMBER-OF-SHARES-REDEEMED> 2,340
<SHARES-REINVESTED> 43
<NET-CHANGE-IN-ASSETS> 122,896
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,894
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,064
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,651
<AVERAGE-NET-ASSETS> 35,236
<PER-SHARE-NAV-BEGIN> 14.74
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 2.94
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.35
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.26
<EXPENSE-RATIO> 1.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 122
<NAME> INNOVATION FUND - CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 177,850
<INVESTMENTS-AT-VALUE> 222,050
<RECEIVABLES> 5,323
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 2,689
<TOTAL-ASSETS> 230,097
<PAYABLE-FOR-SECURITIES> 7,178
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,322
<TOTAL-LIABILITIES> 8,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175,301
<SHARES-COMMON-STOCK> 1,982
<SHARES-COMMON-PRIOR> 444
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,096
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,200
<NET-ASSETS> 221,597
<DIVIDEND-INCOME> 141
<INTEREST-INCOME> 855
<OTHER-INCOME> 0
<EXPENSES-NET> 2,651
<NET-INVESTMENT-INCOME> (1,655)
<REALIZED-GAINS-CURRENT> 3,337
<APPREC-INCREASE-CURRENT> 27,654
<NET-CHANGE-FROM-OPS> 29,336
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 219
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,776
<NUMBER-OF-SHARES-REDEEMED> 252
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 122,896
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,894
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,064
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,651
<AVERAGE-NET-ASSETS> 16,675
<PER-SHARE-NAV-BEGIN> 14.66
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 2.84
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.35
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.04
<EXPENSE-RATIO> 2.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PIMCO
ADVISORS FUNDS ANNUAL REPORT DATED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 123
<NAME> INNOVATION FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 177,850
<INVESTMENTS-AT-VALUE> 222,050
<RECEIVABLES> 5,323
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 2,689
<TOTAL-ASSETS> 230,097
<PAYABLE-FOR-SECURITIES> 7,178
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,322
<TOTAL-LIABILITIES> 8,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175,301
<SHARES-COMMON-STOCK> 8,086
<SHARES-COMMON-PRIOR> 4,364
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,096
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44,200
<NET-ASSETS> 221,597
<DIVIDEND-INCOME> 141
<INTEREST-INCOME> 855
<OTHER-INCOME> 0
<EXPENSES-NET> 2,651
<NET-INVESTMENT-INCOME> (1,655)
<REALIZED-GAINS-CURRENT> 3,337
<APPREC-INCREASE-CURRENT> 27,654
<NET-CHANGE-FROM-OPS> 29,336
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,571
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,695
<NUMBER-OF-SHARES-REDEEMED> 4,076
<SHARES-REINVESTED> 103
<NET-CHANGE-IN-ASSETS> 122,896
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,894
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,064
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,651
<AVERAGE-NET-ASSETS> 89,938
<PER-SHARE-NAV-BEGIN> 14.65
<PER-SHARE-NII> (0.15)
<PER-SHARE-GAIN-APPREC> 2.89
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.35
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.04
<EXPENSE-RATIO> 2.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
2(b) FORM OF FIRST AMENDED AND RESTATED BYLAWS 99.B2(b)
<PAGE>
FIRST AMENDED AND RESTATED
BYLAWS
of
PIMCO FUNDS: MULTI-MANAGER SERIES
(formerly PIMCO Funds: Equity Advisors Series)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Principal Office of the Trust. A principal office of the Trust shall
-----------------------------
be located in Newport Beach, California. The Trust may have other principal
offices within or without Massachusetts as the Trustees may determine or as they
may authorize.
1.2 Agreement and Declaration of Trust. These Bylaws shall be subject to
----------------------------------
the Second Amended and Restated Agreement and Declaration of Trust, as amended
and restated from time to time (the "Declaration of Trust"), of PIMCO Funds:
Multi-Manager Series, the Massachusetts business trust established by the
Declaration of Trust (formerly PIMCO Funds: Equity Advisors Series) (the
"Trust").
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
----------------
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as the annual meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
----------------
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Clerk or
an assistant Clerk or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to the Trustee of a special
------
meeting to send notice by mail at least forty-eight hours or by telegram, telex
or telecopy or other electronic facsimile transmission method at least twenty-
four hours before the meeting addressed to the Trustee at his or her usual or
last known business or residence address or to give notice to him or her in
person or by telephone at least twenty-four hours before the meeting. Notice of
a meeting need not be given to any Trustee if a written waiver of notice,
executed by him or her, before or after the meeting, is filed with the records
of the meeting, or to any Trustee who attends the meeting without protesting
prior thereto or at its commencement the lack of notice to him or her. Neither
notice of a meeting nor a waiver of a notice need specify the purposes of the
meeting.
<PAGE>
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees
------
then in office shall constitute a quorum. Any meeting may be adjourned from
time to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
ARTICLE 3
Officers
3.1 Enumeration: Qualification. The officers of the Trust shall be a
---------------------------
President, a Treasurer, a Clerk, and such other officers including a Chairman of
the Trustees, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time
may in their discretion appoint. The Chairman of the Trustees, if one is
elected, shall be a Trustee and may but need not be a shareholder; and any other
officer may but does not need to be a Trustee or a shareholder. Any two or more
offices may be held by the same person.
3.2 Election. The President, the Treasurer, and the Clerk shall be
--------
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at said meeting or at any other time. Vacancies in
any office may be filled at any time.
3.3 Tenure. The Chairman of the Trustees, if one is elected, the
------
President, the Treasurer and the Clerk shall hold office until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed or becomes disqualified. Each other officer shall
hold office and each agent shall retain authority at the pleasure of the
Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each officer
------
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
-------------------
Chairman of the Trustees or, if there is none or in the absence of the Chairman,
the President shall preside at all meetings of the shareholders and of the
Trustees. The President shall be the chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief financial and accounting
---------
officer of the Trust, and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with a custodian, investment
adviser or manager, or transfer, shareholder servicing or similar agent, be in
charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and power as may be designated from time
to time by the Trustees or by the President.
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3.7 Clerk. The Clerk shall record all proceedings of the shareholders and
-----
the Trustees in books to be kept therefor, which books or a copy thereof shall
be kept at the principal office of the Trust. In the absence of the Clerk from
any meeting of the shareholders or Trustees, an assistant clerk, or if there be
none or if he or she is absent, a temporary clerk chosen at such meeting shall
record the proceedings thereof in the aforesaid books.
3.8 Resignations. Any officer may resign at any time by written
------------
instrument signed by him or her and delivered to the Chairman, the President or
the Clerk or to a meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no officer
resigning and no officer removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
on account of such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any Committee of the
--------------
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may participate in a
meeting of such Committee by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the time
-------
and in the manner required by the Declaration of Trust of any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise provided by the
-------
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, the subsequent fiscal
years shall end on such date in subsequent years.
3
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ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a flat faced die with
-------
the word "Massachusetts", together with the name of the Trust and the year of
its organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular cases
-------
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares, the
------------------
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share certificates.
In that event, each shareholder shall be entitled to a certificate stating the
number of shares owned by him, in such form as shall be prescribed from time to
time by the Trustees. Such certificates shall be signed by the President or any
Vice President and by the Treasurer or any Assistant Treasurer. Such signatures
may be facsimile if the certificate is signed by a transfer agent, or by a
registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he were such officer at
the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction or
--------------------
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificates to Pledgee. A pledgee of shares
---------------------------------------
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new
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certificate shall express on its face that it is held as collateral security,
and the name of pledgor shall be stated thereon, who alone shall be liable as a
shareholder and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
------------------------------------------
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not effect the
ownership of shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1 Certain Definitions. When used herein the following words shall have
-------------------
the following meanings: "Distributor" shall mean any one or more corporations,
firms or associates which have distributor's or principal underwriter's
contracts in effect with the Trust providing that redeemable shares issued by
the Trust shall be offered and sold by such Distributor. "Manager" shall mean
any corporation, firm or association which may at the time have an advisory or
management contract with the Trust and any corporation, firm or association
which may at any time have a sub-advisory contract relating to the Trust with
any such Manager.
10.2 Limitation on Holdings by the Trust of Certain Securities and on
----------------------------------------------------------------
Dealings with Officers or Trustees. The Trust may not purchase or retain shares
- ----------------------------------
or securities issued by an issuer if one or more of the holders of the shares or
securities issued by an issuer or one or more of the officers or directors of
such issuer is an officer or Trustee of the Trust or officer or director of the
Manager and if one or more of such officers, Trustees or directors owns
beneficially more than 1/2 of 1% of the shares or securities, or both, of such
issuer and such officers, Trustees and directors owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities. Each officer and Trustee of the Trust shall keep the Treasurer
of the Trust informed of the names of all issuers of shares or securities which
are held in the portfolio of the Trust in which such officer or Trustee owns as
much as 1/2 of 1% of the outstanding shares or securities.
The Trust will not lend any of its assets to the Distributor or Manager or
to any officer or director of the Distributor or Manager or any officer or
Trustee of the Trust, and shall not permit any officer or Trustee or any officer
or director of the Distributor or Manager to deal for or on behalf of the Trust
with himself or herself as principal or agent, or with any partnership,
association or corporation in which he or she has a financial interest; provided
that the foregoing provisions shall not prevent (a) officers and Trustees of the
Trust or officers and directors of the Distributor or Manager from buying,
holding or selling shares in the Trust or from being partners, officers or
directors of or otherwise financially interested in the Distributor or the
Manager; (b) purchases or sales of securities or other property if such
transaction is permitted by or is exempt or exempted from the provisions of the
Investment Company Act of 1940 or any Rule or Regulation thereunder (together,
the "1940 Act"); (c) employment of legal counsel, registrar, transfer agent,
shareholder servicing agent,
5
<PAGE>
dividend disbursing agent or custodian who is, or has a partner, shareholder,
officer or director who is, an officer or Trustee of the Trust or an officer or
director of the Distributor or Manager; (d) sharing statistical, research, legal
and management expenses and office hire and expenses with any other investment
company in which an officer or Trustee of the Trust or an officer or director of
the Distributor or Manager is an officer or director of otherwise financially
interested.
10.3 Limitation on Dealing in Securities of the Trust by Certain Officers,
---------------------------------------------------------------------
Trustees, Distributor or Manager. Neither the Distributor nor the Manager, nor
- --------------------------------
any officer or Trustee of the Trust or officer or director of the Distributor or
Manager shall take long or short positions in securities issued by the Trust;
provided, however, that:
(a) the Distributor may purchase from the Trust and otherwise deal in
shares issued by the Trust pursuant to the terms of its contract with the
Trust;
(b) any officer or Trustee of the Trust or officer or director of the
Distributor or Manager or any trustee or fiduciary for the benefit of any
of them may at any time, or from time to time, purchase from the Trust or
from the Distributor shares issued by the Trust at the price available to
the public or to such officer, Trustee, director, trustee or fiduciary, no
such purchase to be in contravention of any applicable state or federal
requirement; and
(c) the Distributor or the Manager may at any time, or from time to
time, purchase for investment shares issued by the Trust.
10.4 Securities and Cash of the Trust to be held by Custodian subject to
-------------------------------------------------------------------
certain Terms and Conditions.
- ----------------------------
(a) All securities and cash owned by this Trust shall be held by or
deposited with one or more banks or trust companies having (according to
its last published report) not less than $500,000 aggregate capital,
surplus and undivided profits (any such bank or trust company being hereby
designated as "Custodian"), provided such a Custodian can be found ready
and willing to act; subject to such rules, regulations and orders, if any,
as the Securities and Exchange Commission may adopt, this Trust may, or may
permit any Custodian to, deposit all or any part of the securities owned by
this Trust in a system for the central handling of securities pursuant to
which all securities of any particular class or series of any issue
deposited within the system may be transferred or pledged by bookkeeping
entry, without physical delivery. The Custodian may appoint, subject to
the approval of the Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract with each Custodian
regarding the powers, duties and compensation of such Custodian with
respect to the cash and
6
<PAGE>
securities of the Trust held by such Custodian. Said contract and all
amendments thereto shall be approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve, use its
best efforts to obtain a successor Custodian;
(ii) require that the cash and securities owned by the Trust be
delivered directly to the successor Custodian; and
(iii) in the event that no successor Custodian can be found,
submit to the shareholders, before permitting delivery of the
cash and securities owned by the Trust otherwise than to a
successor Custodian, the question whether the Trust shall be
liquidated or shall function without a Custodian.
10.5 Requirements and Restrictions Regarding the Management Contract.
---------------------------------------------------------------
Every advisory or management contract entered into by the Trust shall provide
that in the event that the total expenses of any series of shares of shares of
the Trust for any fiscal year should exceed the limits imposed on investment
company expenses imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Trust are offered for sale, the compensation
due the Manager for such fiscal year shall be reduced by the amount of such
excess by a reduction or refund thereof.
10.6 Reports to Shareholders: Distribution from Realized Gains. The
----------------------------------------------------------
Trust shall send to each shareholder of record at least semi-annually a
statement of the condition of the Trust and of the results of its operations,
containing all information required by applicable laws or regulations.
10.7 Determination of Net Asset Value Per Share. Net asset value per
------------------------------------------
share of each series of shares of the Trust shall mean: (i) the value of all
the assets of such series; (ii) less total liabilities of such series; (iii)
divided by the number of shares of such series outstanding, in each case at the
time of each determination. The net asset value per share of each series shall
be determined as of the normal close of trading on the New York Stock Exchange
on each day on which such Exchange is open. As of any time other than the
normal close of trading on such Exchange, the Trustees may cause the net asset
value per share last determined to be determined again in a similar manner or
adjusted to reflect changes in market values of securities in the portfolio,
such adjustment to be made on the basis of changes in selected security prices
determined by the Trustees to be relevant to the portfolio of such series or in
averages or in other standard and readily ascertainable market data, and the
Trustees may fix the time when such redetermined or adjusted net asset value per
share of each series shall become effective.
7
<PAGE>
In valuing the portfolio investments of any series for determination of the
net asset value per share of such series, securities for which market quotations
are not readily available shall be valued at prices which, in the opinion of the
Trustees or the person designated by the Trustees to make the determination,
most nearly represent the market value of such securities, and other securities
and assets shall be valued at their fair value as determined by or pursuant to
the direction of the Trustees, which in the case of short-term debt obligations,
commercial paper and repurchase agreements may, but need not, be on the basis of
quoted yields for securities of comparable maturity, quality and type, or on the
basis of amortized cost. Expenses and liabilities of the Trust shall be accrued
each day. Liabilities may include such reserves for taxes, estimated accrued
expenses and contingencies as the Trustees or their designates may in their sole
discretion deem fair and reasonable under the circumstances. No accruals shall
be made in respect of taxes on unrealized appreciation of securities owned
unless the Trustees shall otherwise determine. Dividends payable by the Trust
shall be deducted as at the time of but immediately prior to the determination
of net asset value per share on the record date therefor.
ARTICLE 11
Shareholders' Voting Powers and Meetings
11.1 Voting Powers. The Shareholders shall have power to vote only (i)
-------------
for the election of Trustees as provided in Article IV, Section 1 of the
Declaration of Trust, provided, however, that no meeting of Shareholders is
-------- -------
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) with respect to any Manager or Sub-Adviser as provided in
Article IV, Section 6 of the Declaration of Trust to the extent required by the
1940 Act, (iii) with respect to any termination of this Trust to the extent and
as provided in Article IX, Section 4 of the Declaration of Trust, (iv) with
respect to any amendment of the Declaration of Trust to the extent and as
provided in Article IX, Section 7 of the Declaration of Trust, (v) to the same
extent as the stockholders of a Massachusetts business corporation as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (vi) with respect to such additional matters relating to the
Trust as may be required by law, the Declaration of Trust, these Bylaws or any
registration of the Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider necessary or
desirable. 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. On any matter submitted to a vote of
Shareholders all Shares of the Trust then entitled to vote shall be voted by
individual series, except (i) when required by the 1940 Act, Shares shall be
voted in the aggregate and not by individual series and (ii) when the Trustees
have determined that the matter affects only the interests of one or more
series, then only Shareholders of such series shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees. Shares may be
voted in person or by proxy. 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
8
<PAGE>
any one of them. The placing of a Shareholder's name on a proxy pursuant to
telephonic or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such Shareholder shall constitute execution of such proxy by or on
behalf of such Shareholder 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.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, the Declaration of Trust or these
Bylaws to be taken by shareholders.
11.2 Voting Power and Meetings. Meetings of the Shareholders may be
-------------------------
called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section I of the Declaration of Trust and for such other purposes as
may be prescribed by law, by the Declaration of Trust or by these Bylaws.
Meetings of the Shareholders may also be called by the Trustees from time to
time for the purpose of taking action upon any other matter deemed by the
Trustees to be necessary or desirable. A meeting of Shareholders may be held at
any place designated by the Trustees. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least seven days before such meeting, postage prepaid, stating
the time and place of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. Whenever notice of a meeting
is required to be given to a Shareholder under the Declaration of Trust or these
Bylaws, a written waiver thereof, executed before or after the meeting by such
Shareholder or his attorney thereunto authorized and filed with the records of
the meeting, shall be deemed equivalent to such notice. 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.
11.3 Quorum and Required Vote. Except when a larger quorum is required by
------------------------
any provision of law or the Declaration of Trust or these Bylaws, thirty percent
of the Shares entitled to vote shall constitute a quorum for the transaction of
business at a Shareholders' meeting, except that where any provision of law or
the Declaration of Trust or these Bylaws permits or requires that holders of any
series shall vote as a series, then thirty percent (unless a larger quorum is
required as specified above) of Shares of that series entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that series.
Any lesser number shall be sufficient for adjournments. Any adjourned session
or sessions may be held, within a reasonable time after the date set for the
original meeting, without the necessity of further notice. Except when a larger
vote is required by any provision of law or the Declaration of Trust or these
Bylaws, a plurality of the quorum of Shares necessary for the transaction of
business at a Shareholders' meeting shall decide any questions and a plurality
of Shares voted shall elect a Trustee, provided that where any provision of law
or of the Declaration of Trust or these Bylaws permits or requires that the
holders of any series shall vote as a series, then a plurality of the quorum of
Shares of that series necessary for the
9
<PAGE>
transaction of business by that series at a Shareholders' meeting shall decide
that matter insofar as that series is concerned.
11.4 Action by Written Consent. Any action taken by Shareholders may be
-------------------------
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws) consent to the
action in writing and such 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.
11.5 Record Dates. For the purpose of determining the shareholders who
------------
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 90
days before the date of any meeting of shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders of record on such record date shall have the
right notwithstanding any transfer of shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purpose close the register or transfer books for all or any part of such period.
ARTICLE 12
Amendment to the Bylaws
12.1 General. These Bylaws may be amended or repealed, in whole or part,
-------
by a majority of the Trustees then in office at any meeting of the Trustees, or
by one or more writings signed by such a majority.
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<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(a)(ii) Form of Amended and Restated Investment 99.B5(a)(ii)
Advisory Agreement
<PAGE>
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 15th day of November, 1994 and amended and
restated effective as of this ___ day of _________, 199_ between PIMCO Funds:
Multi-Manager Series ("Trust"), 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 PIMCO International Fund, PIMCO International Developed Fund,
PIMCO Emerging Markets Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Renaissance Fund, PIMCO Core Equity Fund, PIMCO Growth Fund, PIMCO Mid Cap
Equity Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Tax Exempt Fund, PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small
Cap Value Fund, PIMCO Enhanced Equity Fund, PIMCO Structured Emerging Markets
Fund, PIMCO Balanced Fund, and PIMCO Precious Metals 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
<PAGE>
WHEREAS, the Trust desires to retain the Adviser so that it and its
subsidiaries and affiliates will render 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, affiliates, and others 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 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, 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
- 2 -
<PAGE>
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 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.
(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 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 Adviser's (or Portfolio Manager's) primary
consideration in effecting a
- 3 -
<PAGE>
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 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 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,
- 4 -
<PAGE>
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 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 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 portfolio, and will furnish the Trust's
Board of
- 5 -
<PAGE>
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 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' Forms ADV, and any
supplements or amendments thereto, as filed with the SEC.
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
- 6 -
<PAGE>
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 or a third-party
beneficiary. 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 (although the Adviser or an affiliate 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(s), registrar,
dividend disbursing agent(s), 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;
- 7 -
<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, its subsidiaries
or affiliates, or any Portfolio Manager of the Trust;
(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;
(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 of printing certificates representing shares of the
Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Adviser, its subsidiaries or
affiliates, or any Portfolio Manager of the Trust;
(o) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
- 8 -
<PAGE>
(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
(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, partners, limited partners, 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 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 at an annual rate of
the average daily net assets of each of the Funds as set forth on the Schedule
attached hereto. The
- 9 -
<PAGE>
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 date hereof, and shall remain in effect, unless sooner terminated as
provided herein, with respect to a Fund for a period of two years following the
date set forth on the attached Schedule. This Agreement shall continue
thereafter on an annual basis with respect to a Fund 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 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.
- 10 -
<PAGE>
This Agreement may be terminated:
(a) by the Trust at any time with respect to the services provided
by the Adviser, without the payment of any penalty, by vote of a
majority of the 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
or, in the case of the PIMCO Growth Fund, PIMCO Target Fund, PIMCO
Opportunity Fund, PIMCO Innovation Fund, PIMCO Tax Exempt Fund, PIMCO
Renaissance Fund, PIMCO Precious Metals Fund, and PIMCO International
Fund, by a vote of a majority of the Trustees of the Trust who are not
"interested persons" (as such term is defined in the 1940 Act) of the
Trust;
(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) 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 800 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 840 Newport Center Drive,
Newport Beach, California 92660, or to such other address or to such individual
as shall be specified by the Trust.
- 11 -
<PAGE>
14. Fund Obligation. A copy of the Trust's Second Amended and
---------------
Restated 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.
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 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.
- 12 -
<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 FUNDS: MULTI-MANAGER
SERIES
Attest: By:
---------------------- ---------------------------
Title: Title:
PIMCO ADVISORS L.P.
Attest: By:
---------------------- ---------------------------
Title: Title:
- 13 -
<PAGE>
Schedule to Amended and Restated
Investment Advisory Agreement
<TABLE>
<CAPTION>
Effective
Fund Fee Rate Date
- ---- -------- ---------
<S> <C> <C>
PIMCO Tax Exempt Fund .30% 01/14/1997
PIMCO Capital Appreciation .45% 11/15/1994
PIMCO Mid Cap Growth .45% 11/15/1994
PIMCO Equity Income .45% 11/15/1994
PIMCO Value .45% 11/15/1994
PIMCO Enhanced Equity .45% 11/15/1994
PIMCO Balanced .45% 11/15/1994
PIMCO Structured Emerging Markets .45% 09/15/1996
PIMCO Growth .50% 01/14/1997
PIMCO International .55% 01/14/1997
PIMCO Target .55% 01/14/1997
PIMCO Core Equity .57% 12/28/1994
PIMCO International Developed .60% 11/15/1994
PIMCO Renaissance .60% 01/14/1997
PIMCO Small Cap Value .60% 11/15/1994
PIMCO Precious Metals .60% 01/14/1997
PIMCO Mid Cap Equity .63% 12/28/1994
PIMCO Opportunity .65% 01/14/1997
PIMCO Innovation .65% 01/14/1997
PIMCO Emerging Markets .85% 11/15/1996
PIMCO Small Cap Growth 1.00% 11/15/1996
PIMCO Micro Cap Growth 1.25% 11/15/1996
</TABLE>
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(b)(iv) Form of Portfolio Management Agreement, as 99.B5(b)(iv)
amended, with NFJ Investment Group
<PAGE>
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _______ day of ______________, 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 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 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
__________, 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 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
<PAGE>
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 NFJ Investment Group to
-----------
act as Portfolio Manager to the 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 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 each Fund 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 Funds 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
- 2 -
<PAGE>
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 a 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 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
- 3 -
<PAGE>
Manager's overall responsibilities with respect to the Fund 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.
(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 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 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 Funds, as may be reasonably necessary to enable
the custodian to perform its administrative and recordkeeping
responsibilities
- 4 -
<PAGE>
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 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 securities dealer,
transfer agent, or entity or person required to be registered
under the
- 5 -
<PAGE>
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.
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
requirements 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 services under this Agreement. The Portfolio
Manager shall not be
- 6 -
<PAGE>
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 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;
- 7 -
<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 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.
- 8 -
<PAGE>
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 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 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
-----------------
- 9 -
<PAGE>
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 by Rule 31a-l 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 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.
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
- 10 -
<PAGE>
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
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 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
- 11 -
<PAGE>
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.
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 July __, 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, by a majority
of the Trustees of the Trust who are not "interested persons" (as such
term is defined in the 1940 Act) of the Trust or the Portfolio
Manager, 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,
- 12 -
<PAGE>
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
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.
- 13 -
<PAGE>
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.
(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.
- 14 -
<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:
- 15 -
<PAGE>
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
------------------------------------------
The Portfolio Management Agreement, made the 15th day of November, 1994
between PIMCO Advisors ("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
__________, 199_.
WITNESSETH:
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust"), formerly PIMCO
Funds: Equity Advisors Series and PIMCO Advisors Institutional Funds, is
authorized to issue shares of beneficial interest in separate series, with each
such series representing interests in separate portfolio of securities and other
assets; and
WHEREAS, the Trust currently consists of multiple separate series,
including those series designated as the PIMCO Equity Income Fund, PIMCO Value
Fund, PIMCO Small Cap Value Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Core Equity Fund, PIMCO Mid Cap Equity Fund, PIMCO Enhanced Equity Fund, PIMCO
Structured Emerging Markets Fund, PIMCO Emerging Markets Fund, PIMCO
International Developed Fund, PIMCO Balanced Fund, the PIMCO International Fund,
PIMCO Renaissance Fund, PIMCO Growth Fund, PIMCO Target Fund, PIMCO Opportunity
Fund, PIMCO Innovation Fund, PIMCO Tax Exempt Fund, and PIMCO Precious Metals
Fund (each a "Fund"); and
WHEREAS, the Trust has retained PIMCO Advisors to render management
services to the Funds pursuant to an Amended and Restated Investment Advisory
Agreement dated as of November 15, 1994, as amended and restated effective as of
the date hereof, 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 PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small Cap
Value Fund, and the Common Stock Segment of the PIMCO Balanced Fund, pursuant to
the agreement;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
<PAGE>
1. Paragraph five (5) ("Compensation") of the Agreement is amended and
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
.35% of the average daily net assets of each of the PIMCO Equity Income
Fund, the PIMCO Value Fund, and the Common Stock Segment of the PIMCO
Balanced Fund allocated to NFJ, and at the annual rate of .50% of the
average daily net assets of the PIMCO Small Cap Value Fund.
<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 L.P.
Attest: By:
--------------- ------------------------------
Name: Name:
Title: Title:
NFJ INVESTMENT GROUP
Attest: By:
--------------- ------------------------------
Name: Name:
Title: Title:
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(b)(vi) Form of Portfolio Management Agreement, as 99.B5(b)(vi)
amended, with Cadence Capital Management
<PAGE>
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _______ day of ______________, 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 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
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
__________, 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 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
<PAGE>
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 Cap 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 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 the Funds. To the extent permitted by the investment policies of the
Funds, the Portfolio Manager shall make decisions for the Funds 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
- 2 -
<PAGE>
options and futures on foreign currencies and shall execute and perform the same
on behalf of the Funds. 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 a 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 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
- 3 -
<PAGE>
either that particular transaction or the Portfolio Manager's overall
responsibilities with respect to the Fund 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.
(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 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 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 Funds, as may be reasonably necessary to enable
the custodian to perform
- 4 -
<PAGE>
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 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 securities dealer,
transfer agent, or entity or
- 5 -
<PAGE>
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.
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 services
- 6 -
<PAGE>
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 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
- 7 -
<PAGE>
of the Trust's shares for sale;
(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 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.
- 8 -
<PAGE>
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 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 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
-----------------
- 9 -
<PAGE>
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 by Rule 31a-l 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 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.
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
- 10 -
<PAGE>
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
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 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
- 11 -
<PAGE>
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.
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 July __, 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, by a majority
of the Trustees of the Trust who are not "interested persons" (as such
term is defined in the 1940 Act) of the Trust or the Portfolio
Manager, 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,
- 12 -
<PAGE>
on 60 days' written notice to the Portfolio Manager;
- 13 -
<PAGE>
(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
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.
- 14 -
<PAGE>
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.
(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.
- 15 -
<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:
- 16 -
<PAGE>
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
------------------------------------------
The Portfolio Management Agreement, made the 15th day of November, 1994
between PIMCO Advisors ("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 __________, 199_.
WITNESSETH:
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust"), formerly PIMCO
Funds: Equity Advisors Series and PIMCO Advisors Institutional Funds, is
authorized to issue shares of beneficial interest in separate series, with each
such series representing interests in separate portfolio of securities and other
assets; and
WHEREAS, the Trust currently consists of multiple separate series,
including those series designated as the PIMCO Equity Income Fund, PIMCO Value
Fund, PIMCO Small Cap Value Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Core Equity Fund, PIMCO Mid Cap Equity Fund, PIMCO Enhanced Equity Fund, PIMCO
Structured Emerging Markets Fund, PIMCO Emerging Markets Fund, PIMCO
International Developed Fund, PIMCO Balanced Fund, the PIMCO International Fund,
PIMCO Renaissance Fund, PIMCO Growth Fund, PIMCO Target Fund, PIMCO Opportunity
Fund, PIMCO Innovation Fund, PIMCO Tax Exempt Fund, and PIMCO Precious Metals
Fund (each a "Fund"); and
WHEREAS, the Trust has retained PIMCO Advisors to render management
services to the Funds pursuant to an Amended and Restated Investment Advisory
Agreement dated as of November 15, 1994, as amended and restated effective as of
the date hereof, 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 PIMCO Capital Appreciation Fund, PIMCO Mid Cap Growth Fund,
PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, and the Common Stock
Segment of the PIMCO Balanced Fund, pursuant to the agreement;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
<PAGE>
1. Paragraph five (5) ("Compensation") of the Agreement is amended and
------------
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 .35% of the average daily net assets of each of the
PIMCO Capital Appreciation Fund, the PIMCO Mid Cap Growth Fund, and
the Common Stock Segment of the PIMCO Balanced Fund allocated to
Cadence, at the annual rate of .90% of the average daily net assets of
the PIMCO Small Cap Growth Fund, and at the annual rate of 1.15% of
the average daily net assets of the PIMCO Micro Cap Growth Fund.
<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 L.P.
Attest: By:
--------------- ------------------------------
Name: Name:
Title: Title:
CADENCE CAPITAL MANAGEMENT
Attest: By:
--------------- ------------------------------
Name: Name:
Title: Title:
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(b)(viii) Form of Portfolio Management Agreement, as 99.B5(b)(viii)
amended, with Parametric Portofolio Associates
<PAGE>
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _______ day of ______________, 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 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 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
__________, 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 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
<PAGE>
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 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
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
-2-
<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.
(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 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
-3-
<PAGE>
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.
(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 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 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.
-4-
<PAGE>
(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 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 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,
-5-
<PAGE>
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.
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 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;
-6-
<PAGE>
(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 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;
(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
-7-
<PAGE>
(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 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 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.
-8-
<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 by Rule 31a-l 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 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.
-9-
<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
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.
-10-
<PAGE>
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 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.
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 July __, 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:
-11-
<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 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.
-12-
<PAGE>
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.
(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.
-13-
<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:
-14-
<PAGE>
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
------------------------------------------
The Portfolio Management Agreement, made the 15th day of November,
1994 between PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser"), a limited
partnership, and Parametric Portfolio Associates ("Parametric" 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 __________, 199_.
WITNESSETH:
WHEREAS, PIMCO Funds: Multi-Manager Series, formerly PIMCO Funds:
Equity Advisors Series and PIMCO Advisors Institutional Funds, (the "Trust") is
authorized to issue shares of beneficial interest in separate series, with each
such series representing interests in separate portfolio of securities and other
assets; and
WHEREAS, the Trust currently consists of multiple separate series,
including those series designated as the PIMCO Equity Income Fund, PIMCO Value
Fund, PIMCO Small Cap Value Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Core Equity Fund, PIMCO Mid Cap Equity Fund, PIMCO Enhanced Equity Fund, PIMCO
Structured Emerging Markets Fund, PIMCO Emerging Markets Fund, PIMCO
International Developed Fund, PIMCO Balanced Fund, PIMCO International Fund,
PIMCO Renaissance Fund, PIMCO Growth Fund, PIMCO Target Fund, PIMCO Opportunity
Fund, PIMCO Innovation Fund, PIMCO Tax Exempt Fund, and PIMCO Precious Metals
Fund (each a "Fund"); and
WHEREAS, the Trust has retained PIMCO Advisors to render management
services to the Funds pursuant to an Amended and Restated Investment Advisory
Agreement dated as of November 15, 1994, as amended and restated effective as of
the date hereof, 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 PIMCO Enhanced Equity Fund and PIMCO Structured
Emerging Markets Fund, pursuant to the agreement;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
<PAGE>
1. Paragraph five (5) ("Compensation") of the Agreement is amended and
------------
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
.35% of the average daily net assets of each of the PIMCO Enhanced Equity
Fund and PIMCO Structured Emerging Markets Fund.
<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 L.P.
Attest: By:
------------------------------ -----------------------------
Name: Name:
Title: Title:
PARAMETRIC PORTFOLIO ASSOCIATES
Attest: By:
------------------------------ -----------------------------
Name: Name:
Title: Title:
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(b)(x) Form of Amended and Restated 99.B5(b)(x)
Portfolio Management Agreement
with Blairlogie Capital Management
<PAGE>
AMENDED AND RESTATED
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made the 15th day of November, 1994 and amended effective
this _______ day of ______________, 199__ between PIMCO Advisors L.P.
("Adviser"), a limited partnership, and Blairlogie Capital Management
("Portfolio Manager"), a partnership.
WHEREAS, PIMCO Funds: Multi-Manager Series (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 multiple series, including
operational series or series that are expected to be operational that are
designated as the PIMCO International Developed Fund, PIMCO International Fund,
PIMCO Emerging Markets Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Renaissance Fund, PIMCO Core Equity Fund, PIMCO Growth Fund, PIMCO Mid Cap
Equity Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Tax Exempt Fund, PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small
Cap Value Fund, PIMCO Enhanced Equity Fund, PIMCO Structured Emerging Markets
Fund, PIMCO Balanced Fund, and PIMCO Precious Metals 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
November 15, 1994, as amended effective as of the date of the amendment hereof,
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 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;
<PAGE>
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 Blairlogie Capital
-----------
Management to act as Portfolio Manager to the PIMCO Emerging Markets, PIMCO
International Developed, and PIMCO International Funds (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
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
- 2 -
<PAGE>
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.
(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 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
- 3 -
<PAGE>
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.
(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 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 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 assist the custodian and recordkeeping agent(s) 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
- 4 -
<PAGE>
for which the custodian and recordkeeping agent(s) seek assistance
from the Portfolio Manager or identify 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 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 each Fund and the issuers and securities
represented in each Fund's portfolio, 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) 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 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
- 5 -
<PAGE>
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.
3. Disclosure about Portfolio Manager. The Portfolio Manager has
----------------------------------
reviewed the 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 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(s), registrar, dividend
disbursing agent(s), 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
- 6 -
<PAGE>
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 are not officers, directors,
stockholders, or employees of the Adviser, its subsidiaries or
affiliates, or any Portfolio Manager of the Trust;
(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;
(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
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<PAGE>
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 computed daily and, payable monthly, based
on the average daily net assets of the PIMCO Emerging Markets Fund, the PIMCO
International Developed Fund, and the PIMCO International Fund at the annual
rate of .75%, .50%, and .40%, respectively of the average daily net assets of
each 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 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
- 8 -
<PAGE>
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 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 by Rule 31a-l 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 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
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<PAGE>
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, "Blairlogie 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 Blairlogie
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 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 Blairlogie 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 obligations 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
- 10 -
<PAGE>
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 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 indicated date for each Fund: (1) PIMCO Emerging Markets Fund (11/15/1994);
(2) PIMCO International Developed Fund (11/15/1994); and (3) PIMCO International
Fund (01/14/1997). This Agreement 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
(1) a majority of the Trustees of the Trust; (2) a majority of the
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<PAGE>
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; or (3) 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 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. Agreement and Declaration of Trust. A copy of the Second Amended
----------------------------------
and Restated Agreement and Declaration of Trust for the Trust is on file with
the Secretary of the Commonwealth of Massachusetts. The Second Amended and
Restated 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.
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
rules or orders of the SEC thereunder.
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<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.
(d) The parties hereto acknowledge and agree that the Trust is an
express third party beneficiary to this Agreement.
(e) With respect to any actions brought by the Adviser or the Trust
against the Portfolio Manager, the Portfolio Manager: (i) consents to
the subject matter and in personam jurisdiction and venue in the
United States District Court for the Central District of California;
(ii) waives the right to contest the subject matter and in personam
jurisdiction and venue in the United States District Court for the
Central District of California on any ground; and (iii) agrees that
service of process upon it can be made either in person or by
certified or registered mail, return receipt requested, to the Adviser
at 800 Newport Center Drive, Newport Beach, California 92660, or any
other address designated by the Adviser as the address to which
notices pursuant to this Agreement should be sent. The Portfolio
Manager agrees that service to such address shall be deemed to
constitute sufficient service of process under both the federal and
state rules of civil procedure wherever the case is filed. In the
event it is determined that the United States District Court for the
Central District of California should lack subject matter jurisdiction
for any reason, the Portfolio Manager consents to the subject matter
and in personam jurisdiction and venue in a California State court of
competent jurisdiction in Orange County.
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<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:
BLAIRLOGIE CAPITAL MANAGEMENT
By:
- ------------------------- --------------------------
Attest: Title:
Title:
- 14 -
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(b)(xii) Form of Amended and Restated 99.B5(b)(xii)
Portfolio Management Agreement with
Columbus Circle Investors
<PAGE>
AMENDED AND RESTATED
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made the 15th day of November, 1994 and amended effective
this ___ day of ____________ , 199__ between PIMCO Advisors L.P. ("Adviser"), a
limited partnership, and Columbus Circle Investors ("Portfolio Manager"), a
partnership.
WHEREAS, PIMCO Funds: Multi-Manager Series (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 multiple series, including
operational series or series that are expected to be operational that are
designated as the PIMCO International Fund, PIMCO International Developed Fund,
PIMCO Emerging Markets Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Renaissance Fund, PIMCO Core Equity Fund, PIMCO Growth Fund, PIMCO Mid Cap
Equity Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Tax Exempt Fund, PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small
Cap Value Fund, PIMCO Enhanced Equity Fund, PIMCO Structured Emerging Markets
Fund, PIMCO Balanced Fund, and PIMCO Precious Metals 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
November 15, 1994, as amended effective as of the date of the amendment hereof,
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
<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;
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 Columbus Circle
-----------
Investors to act as Portfolio Manager to the PIMCO Renaissance Fund, the PIMCO
Core Equity Fund, the PIMCO Growth Fund, the PIMCO Mid Cap Equity Fund, the
PIMCO Target Fund, the PIMCO Opportunity Fund, the PIMCO Innovation Fund, and
the PIMCO Tax Exempt 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
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 Fund's 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 the Funds. To the extent permitted by
- 2 -
<PAGE>
the investment policies of the Funds, the Portfolio Manager shall make decisions
for the Funds 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:
(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 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
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
- 3 -
<PAGE>
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 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 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
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 and sale of securities
for each Fund, arrange for the transmission to the custodian for
the Trust on a daily basis, such
- 4 -
<PAGE>
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 assist the custodian and recordkeeping agent(s) 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(s)
seek assistance from the Portfolio Manager or identify 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 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 each Fund and the issuers and securities
represented in each Fund's portfolio, 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) 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
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<PAGE>
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
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.
3. Disclosure about Portfolio Manager. The Portfolio Manager
----------------------------------
has reviewed the 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
- 6 -
<PAGE>
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 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(s), registrar,
dividend disbursing agent(s), 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 are not officers,
directors, stockholders, or employees of the Adviser, its
subsidiaries or affiliates, or any Portfolio Manager of the
Trust;
(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;
- 7 -
<PAGE>
(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;
(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.
- 8 -
<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 each of the Funds as set forth on the
Schedule attached hereto.
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 Funds.
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 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
----------------------
- 9 -
<PAGE>
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 Fund 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 by Rule 31a-l 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 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
- 10 -
<PAGE>
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.
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, "CCI 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 CCI 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
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 CCI 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.
- 11 -
<PAGE>
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 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.
14. Duration and Termination. This Agreement shall take effect
------------------------
as of the date indicated on the attached Schedule with respect to each Fund.
This Agreement 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
- 12 -
<PAGE>
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 (1) a majority of the Trustees of the Trust;
(2) a majority of the 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 (except with respect to the PIMCO Core Equity
Fund and the PIMCO Mid Cap Equity Fund); or (3) 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 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.
- 13 -
<PAGE>
15. Agreement and Declaration of Trust. A copy of the Second
----------------------------------
Amended and Restated Agreement and Declaration of Trust for the Trust is on file
with the Secretary of the Commonwealth of Massachusetts. The Second Amended and
Restated 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.
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 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.
- 14 -
<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:
COLUMBUS CIRCLE INVESTORS
- ---------------------- By:--------------------------
Attest: Title:
Title:
- 15 -
<PAGE>
Schedule for Portfolio Management Agreement
<TABLE>
<CAPTION>
Fund Fee Rate Effective Date
- ---- -------- --------------
<S> <C> <C>
PIMCO Tax Exempt Fund .30% 01/14/97
PIMCO Growth Fund .34% 01/14/97
PIMCO Target Fund .36% 01/14/97
PIMCO Renaissance Fund .38% 01/14/97
PIMCO Innovation Fund .38% 01/14/97
PIMCO Core Equity Fund .47% 12/28/94
PIMCO Opportunity Fund .48% 01/14/97
PIMCO Mid Cap Equity Fund .53% 12/28/94
</TABLE>
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(b)(xiii) Form of Portfolio Management Agreement with 99.B5(b)(xiii)
Van Eck Associates Corporation
<PAGE>
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this _______ day of ______________, 199__ between
PIMCO Advisors L.P. ("Adviser"), a limited partnership, and Van Eck Associates
Corporation ("Portfolio Manager"), a Delaware corporation.
WHEREAS, PIMCO Funds: Multi-Manager Series (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 multiple series, including
operational series or series that are expected to be operational that are
designated as the PIMCO International Developed Fund, PIMCO International Fund,
PIMCO Emerging Markets Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap
Growth Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO
Renaissance Fund, PIMCO Core Equity Fund, PIMCO Growth Fund, PIMCO Mid Cap
Equity Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Tax Exempt Fund, PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small
Cap Value Fund, PIMCO Enhanced Equity Fund, PIMCO Structured Emerging Markets
Fund, PIMCO Balanced Fund, and PIMCO Precious Metals 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
November 15, 1994, as amended and restated effective as of the date hereof, 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
<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;
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 Van Eck Associates
-----------
Corporation to act as Portfolio Manager to the PIMCO Precious Metals Fund (the
"Fund") 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 Fund,
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 Fund and determine the composition of the
assets of the Fund, including determination of the purchase, retention, or sale
of the securities, cash, and other investments for the Fund. 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 Fund's 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
Portfolio Manager is hereby authorized to execute and perform such services on
behalf of the Fund. To the extent permitted by the investment policies
- 2 -
<PAGE>
of the Fund, 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 the Fund. The
Portfolio Manager will provide the services under this Agreement 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, 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 take no actions in managing the Fund that would cause the
Fund to fail to qualify as a 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 Fund, 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
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 Portfolio Manager
shall not be deemed to have acted unlawfully or to have
- 3 -
<PAGE>
breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Fund 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 Fund 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 Fund 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 Fund 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 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 Portfolio Manager in a manner
that is fair and equitable in the reasonable judgment of the Portfolio
- 4 -
<PAGE>
Manager in the exercise of its 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 assist the custodian and recordkeeping agent(s) 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(s) seek assistance from the
Portfolio Manager or identify for review by the Portfolio Manager.
(g) Will make available to the Trust and Adviser, promptly upon
request, any of the Fund's 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 Fund's portfolio, and will furnish the Trust's
Board of
- 5 -
<PAGE>
Trustees with respect to the Fund such periodic and special reports as
the Trustees may reasonably request.
(i) 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 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.
3. Disclosure about Portfolio Manager. The Portfolio Manager has
----------------------------------
reviewed the 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
- 6 -
<PAGE>
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 services under this Agreement including, but not limited to,
(i) all necessary investment and management facilities, including salaries of
personnel, required for it to execute its duties hereunder faithfully and (ii)
administrative facilities, including bookkeeping, clerical personnel and
equipment necessary for the efficient conduct of the investment affairs of the
Fund, including verification and oversight of the pricing of the Fund's
portfolio (but excluding determination of net asset value and shareholder
accounting services). 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(s), registrar, dividend
disbursing agent(s), 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
Fund's net assets;
- 7 -
<PAGE>
(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 are not officers, directors,
stockholders, or employees of the Adviser, its subsidiaries or
affiliates, or any Portfolio Manager of the Trust;
(h) Taxes, if any, levied against the Trust or any of the Fund;
(i) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Fund;
(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;
(m) Costs of printing stock certificates representing shares of the
Trust;
- 8 -
<PAGE>
(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 computed daily and, payable monthly, based
on the average daily net assets of the Fund at the annual rate of .35% of the
average daily net assets of the 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.
- 9 -
<PAGE>
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 the 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 the 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 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
- 10 -
<PAGE>
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 Fund 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 by Rule 31a-l 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 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 Fund) or from engaging in
other activities. It is understood that any of the shareholders, Trustees,
officers and employees of the Trust may be a shareholder, director, officer or
employee of, or be otherwise interested in, the Portfolio Manager, and in any
person controlled by or under common control with the Portfolio Manager, and
that the Portfolio Manager may have an interest in the Trust. It is also
understood that the Portfolio Manager and persons controlled by or under common
control with the Portfolio Manager have and may have advisory, management
service or other contracts with other organizations and persons, and may have
other interests and businesses; provided, however, that neither the Portfolio
Manager nor any of its affiliates operating under the Van Eck name shall
undertake to act as investment adviser or sub-adviser for any other registered
investment company that is not sponsored or managed by the Portfolio Manager or
one of its affiliates except upon not less than 60 days' prior notice in
- 11 -
<PAGE>
writing to the Adviser and the Trust.
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.
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, "Van Eck 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 Van Eck
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 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 Van Eck Indemnified Person); provided, however,
that in no case is the
- 12 -
<PAGE>
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 obligations 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 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.
14. Duration and Termination. This Agreement shall take effect as of
------------------------
the date hereof, and shall remain in effect for
- 13 -
<PAGE>
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
(1) a majority of the Trustees of the Trust; (2) a majority of the
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; or (3) 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 180 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
- 14 -
<PAGE>
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
assignment, as that term is defined in the 1940 Act, by the Portfolio Manager.
15. Agreement and Declaration of Trust. A copy of the Second Amended
----------------------------------
and Restated Agreement and Declaration of Trust for the Trust is on file with
the Secretary of the Commonwealth of Massachusetts. The Second Amended and
Restated 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.
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 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.
- 15 -
<PAGE>
(d) Except with the agreement or on the specific instructions of the
Trustees of the Trust or the Adviser, the Portfolio Manager shall not
exercise or procure the exercise of any voting right attaching to
investments of the Fund.
- 16 -
<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:
VAN ECK ASSOCIATES CORPORATION
By:
- ---------------------- ----------------------------
Attest: Title:
Title:
- 17 -
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(c)(ii) Form of Amended Administration Agreement 99.B5(c)(ii)
<PAGE>
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made this _____ day of _____, 199_, between
PIMCO Funds: Multi-Manager Series (the "Trust"), a Massachusetts business
trust, and PIMCO Advisors L.P. (the "Administrator" or "PALP"), a limited
partnership organized under the laws of Delaware.
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 PIMCO
International Fund, PIMCO International Developed Fund, PIMCO Emerging Markets
Fund, PIMCO Capital Appreciation Fund, PIMCO Mid Cap Growth Fund, PIMCO Small
Cap Growth Fund, PIMCO Micro Cap Growth Fund, PIMCO Renaissance Fund, PIMCO Core
Equity Fund, PIMCO Growth Fund, PIMCO Mid Cap Equity Fund, PIMCO Target Fund,
PIMCO Opportunity Fund, PIMCO Innovation Fund, PIMCO Tax Exempt Fund, PIMCO
Equity Income Fund, PIMCO Value Fund, PIMCO Small Cap Value Fund, PIMCO Enhanced
Equity Fund, PIMCO Structured Emerging Markets Fund, PIMCO Balanced Fund, and
PIMCO Precious Metals Fund (each a "Fund"); and
WHEREAS, on or after the effect date of this agreement, each Fund
offers up to five classes of shares: Institutional Class, Administrative Class,
Class A, Class B, and Class C, of which Class A, Class B, and Class C shares are
referred to herein as "Retail Class" shares; and
WHEREAS, the Trust wishes to retain PALP 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, PALP 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:
<PAGE>
1. Appointment. The Trust hereby appoints PALP as the Administrator
-----------
to 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.
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, 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 PALP pursuant to its Investment
Advisory Agreement with the Trust.
(a) Administrative Services. Subject to the approval or consent
-----------------------
of 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(s), transfer agent(s), dividend disbursing
agent(s), and recordkeeping agent(s) (including pricing and valuation
of the Funds), accountants, 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
- 2 -
<PAGE>
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 Funds 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 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) Other Services. Subject to the approval or consent of the Board
--------------
of Trustees, the Administrator shall also provide or procure on behalf of the
Trust and the Funds, and at the expense of the Administrator, the following
services to the Funds: (i) custodian services to provide for the safekeeping of
the Funds' assets; (ii) recordkeeping services to maintain the portfolio
accounting records for the Funds; (iii) transfer agency services to maintain the
portfolio accounting records for the Funds; and (iv) dividend disbursing
services for the Funds. The services to be provided under (iii) and (iv) of
this Section 2(b) shall be commensurate with the level of services reasonably
necessary for the institutional investors that are eligible to invest in
Institutional and Administrative Classes of the Funds, as set forth in the
prospectus or prospectuses for such Classes of the Funds. The Trust may be a
party to any agreement with any person or persons engaged to provide the
services referred to in this Section 2(b).
(c) Retail Class Services. In addition to the Administrator's
---------------------
responsibilities as specified in Subsections (a) and (b) above, subject to the
approval or consent of the Board of Trustees, the Administrator, at its own
expense, also shall provide, directly or through persons selected by the
Administrator, to the Retail Classes of the Funds administrative,
recordkeeping, and shareholder services reasonably required by the Retail
Classes of the Funds, which may include some or all of the following services:
(i) transfer agency services reasonably necessary to meet the increased account
activity associated with Retail Classes; (ii) dividend disbursing services
reasonably necessary to meet the increased number of accounts associated with
the Retail Classes; (iii) preparing and arranging for the distribution of
prospectuses, statements of additional information, proxy materials, periodic
reports to shareholders, and other communications with Retail
- 3 -
<PAGE>
Class shareholders; and (iv) taking such other actions and providing or
procuring such other services with respect to the Retail Classes as are
reasonably necessary or desirable.
(d) Organizational Services. The Administrator shall provide the
-----------------------
Trust and the Funds, at the Administrator's expense, with the services
necessary to organize any Funds that commence operations on or after
the date of this Agreement so that such Funds can conduct business as
described in the Trust's Registration Statement.
(e) 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.
(f) In performing these services, the Administrator:
(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.
3. Documentation. The Trust has delivered copies of each of the
-------------
following documents to the Administrator and will deliver to it all future
amendments and supplements thereto, if
- 4 -
<PAGE>
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 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 Agreement, the Trust shall pay to the Administrator a fee based on the
average daily net assets of each of the Funds as set forth in the attached
Schedule. The fees payable to the Administrator 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.
6. Non-Exclusivity. It is understood that the services of the
---------------
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 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(s), registrar,
dividend disbursing agent(s), and shareholder recordkeeping services;
(c) Services of the Trust's custodian, including any
recordkeeping services provided by the custodian;
- 5 -
<PAGE>
(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
(except as described in subsection (f) below);
(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;
(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;
(c) Brokerage fees and commissions in connection with the
purchase and sale of portfolio securities for any of the Funds;
- 6 -
<PAGE>
(d) Costs, including the interest expenses, of borrowing money;
(e) Fees and expenses of trustees who are not officers,
employees, or stockholders of PALP 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;
(f) Extraordinary expenses, including extraordinary legal
expenses and federal and state securities registration fees and
expenses to the extent authorized by the Trust's Board of Trustees, 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;
(g) Organizational and offering expenses of the Trust and the
Funds to the extent authorized by the Trust's Board of Trustees, and
any other expenses which are capitalized in accordance with generally
accepted accounting principles; and
(h) Any expenses allocated or allocable to a specific class of
shares, including fees paid pursuant to an administrative services or
distribution plan.
8. Liability. The Administrator shall give the Trust the benefit of
---------
the 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
- 7 -
<PAGE>
provide services for the Funds as described in Section 2(b) or (c) of this
Agreement.
9. Term and Continuation. This Agreement shall take effect as of the
---------------------
date hereof, and shall remain in effect, unless sooner terminated as provided
herein, until two years from the date of this Agreement, and shall continue
thereafter on an annual basis with respect to each Fund, 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 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 PALP, 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 (1) a majority of the
Trustees of the Trust; (2) with respect to PIMCO International Fund,
PIMCO Renaissance Fund, PIMCO Growth Fund, PIMCO Target Fund, PIMCO
Opportunity Fund, PIMCO Innovation Fund, PIMCO Tax Exempt Fund, and
PIMCO Precious Metals Fund, a majority of the Trustees of the Trust
who are not "interested persons" (as such term is defined in the 1940
Act) of the Trust or PALP; or (3) 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
(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 "PIMCO Advisors L.P."
-----------
or "PALP" or any derivative thereof or logo associated with those names are the
valuable property of PALP 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 ____________.
11. Notices. Notices of any kind to be given to the Administrator by
-------
the Trust shall be in writing and shall be duly given if mailed or delivered to
the Administrator at 800 Newport Center Drive, Newport Beach, California 92660,
or to such other address or to such individual as shall be specified by the
- 8 -
<PAGE>
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 and Declaration of Trust, as amended, 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
------------
counterparts, each of which shall be deemed to be an original.
14. 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 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 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 be assigned by the Trust or the
Administrator without the consent of the other party.
- 9 -
<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 FUNDS: MULTI-MANAGER
SERIES
Attest: By:
----------------------- -----------------------------
Title: Title:
PIMCO ADVISORS L.P.
Attest: By:
----------------------- -----------------------------
Title: Title:
- 10 -
<PAGE>
Schedule to Administration Agreement
<TABLE>
<CAPTION>
Fee Rate:
--------
Non-Retail Classes Retail Classes
------------------ --------------
Custody and Custody and
Portfolio Portfolio
Accounting Other Total Accounting Other Total*
---------- ----- ----- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
PIMCO Capital Appreciation 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Mid Cap Growth 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Small Cap Growth 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Micro Cap Growth 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Renaissance 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Core Equity 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Growth 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Mid Cap Equity 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Target 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Opportunity 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Innovation 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Tax Exempt 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Equity Income 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Value 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Small Cap Value 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Enhanced Equity 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Balanced 0.10 0.15 0.25 0.10 0.30 0.40
PIMCO Precious Metal 0.10 0.20 0.30 0.10 0.35 0.45
PIMCO International 0.10 0.40 0.50 0.10 0.55 0.65
PIMCO International Developed 0.10 0.40 0.50 0.10 0.55 0.65
PIMCO Emerging Markets 0.10 0.40 0.50 0.10 0.55 0.65
PIMCO Structured Emerging Markets 0.10 0.40 0.50 0.10 0.55 0.65
- -------------------
</TABLE>
* Subject to a reduction of .05% once Fund assets attributable to Retail
Class shares exceed $2.5 billion.
- 11 -
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
5(c)(iv) Form of Administration Agreeement 99.B5(c)(iv)
between PIMCO Advisors L.P. and Pacific
Investment Management Company
<PAGE>
ADMINISTRATION AGREEMENT
================================================================================
ADMINISTRATION AGREEMENT, made as of the 14th day of January 1997, between
PIMCO Advisors L.P., a Delaware limited partnership ("PALP"), and Pacific
Investment Management Company, a Delaware general partnership (the
"Administrator" or "PIMCO").
WITNESSETH
WHEREAS, PALP has administration/management agreements (the "PALP
Administration Agreements") with PIMCO Funds: Multi-Manager Series, a
Massachusetts business trust ("PFMMS") and Cash Accumulation Trust, a
Massachusetts business trust ("CAT") and PIMCO has an Administration Agreement
(the "PIMCO Administration Agreement") with PIMCO Funds: Pacific Investment
Management Series, a Massachusetts business trust ("PIMS") (the PALP
Administration Agreements and the PIMCO Administration Agreement are
collectively the "Administration Agreements" and PFMMS, PIMS and CAT are each a
"Trust" and, collectively, the "Trusts");
WHEREAS, each 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");
WHEREAS, PFMMS and PIMS have each established multiple series and CAT has
established a single series (each such series a "Fund" and, collectively the
"Funds");
WHEREAS, PALP, pursuant to the PALP Administration Agreements, provides
various administrative and other services to PFMMS and CAT, and PIMCO pursuant
to the PIMCO Administration Agreement provides various administrative and other
services to PIMS;
WHEREAS, on or after the effective date of this Agreement, each Fund of
PFMMS and PIMS may offer five classes of shares: Institutional Class,
Administrative Class, Class A, Class B, and Class C, of which Class A, Class B,
and Class C shares are referred to herein as "Retail Class" shares; and
WHEREAS, PALP wishes PIMCO to provide certain administrative and other
services (but not investment advisory services) to the Trusts with respect to
the Funds in the manner and on the terms hereinafter set forth;
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 hereto agree as follows:
<PAGE>
Administration Agreement
Page 2
1. Appointment. PALP hereby appoints PIMCO as the Administrator to provide
-----------
the administrative and other services set forth in Section 2 with
respect to the PFMMS and CAT Funds and for the Retail Shares of PIMS 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 provided in
Section 5.
In the event any Trust establishes and designates additional series with
respect to which PALP desires to retain the Administrator to render
administrative and other services hereunder, PALP shall notify the
Administrator in writing, whereupon such additional series shall become
a Fund hereunder unless the Administrator is not willing to render such
services and it so notifies PALP in writing within five (5) days of
receiving such notice.
2. Duties. Subject to the approval or consent of PALP and the Board of
------
Trustees of each Trust, 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 PALP and/or various sub-advisors pursuant to the
investment advisory contracts (the "Investment Advisory Contracts") with
each Trust and, where appropriate, the sub-advisory agreements between
PALP and the sub-advisors.
(a) Administrative Services. Subject to the general supervision of the
-----------------------
Board of Trustees of each Trust and PALP, 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 advisor or advisors to the Funds, the custodian(s), transfer
agent(s), dividend disbursing agent(s) and recordkeeping agent(s)
(including pricing and valuation of the Funds), accountants,
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 Trusts and the Funds as
may be required by applicable federal or state law other than any
records and ledgers that PALP indicates it will maintain under the
Investment Advisory Contracts; (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,
<PAGE>
Administration Agreement
Page 3
filing, and arranging for the distribution of proxy materials and annual
and semi-annual financial statements 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 Funds and qualify the Trusts 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
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. It is understood and
agreed that any printing, mailing and filing fee expenses in connection
with items (v) and/or (vi) above shall be the responsibility of PALP
and/or the Trusts and not the responsibility of the Administrator.
(b) Other Services. Subject to the approval or consent of PALP and the Board
--------------
of Trustees of each Trust, the Administrator shall assist each Trust and
the Funds to procure (at the expense of the Administrator with respect
to the PIMS Institutional and Administrative shares and of PALP for the
PIMS Retail Shares and all shares of PFMMS) the following services for
the Funds: (i) custodian services for the Funds to provide for the
safekeeping of the Funds' assets; (ii) recordkeeping services to
maintain the portfolio accounting records for the Funds; (iii) transfer
agent services for the Funds; and (iv) dividend disbursing services for
the Funds. As required by the Administration Agreements, the services to
be provided under (iii) and (iv) of this Section 2(b) shall be
commensurate with the level of services reasonably necessary for the
institutional investors that are eligible to invest in Institutional and
Administrative Classes of the Funds, as set forth in the prospectus or
prospectuses for such Classes of the Funds.
(c) Retail Class Services. In addition to the Administrator's
---------------------
responsibilities as specified in Subsections (a) and (b) above, subject
to the general supervision of the Board of Trustees of each Trust and
PALP, the Administrator, at PALP's expense, also shall provide, directly
or through persons selected by the Administrator, to the Retail Classes
of the Funds the following administrative, recordkeeping, and
shareholder services: (i) transfer agency services reasonably necessary
to meet the increased account activity associated with the Retail
Classes; (ii) dividend disbursing services reasonably necessary to meet
the increased number of accounts associated with the Retail Classes;
<PAGE>
Administration Agreement
Page 4
(iii) preparing and arranging for the distribution of
prospectuses, statements of additional information, proxy
materials, periodic reports to shareholders, and other
communications with Retail Class shareholders; and (iv) taking
such other actions and providing or procuring such other services
with respect to the Retail Classes as are reasonably necessary or
desirable.
(d) Organizational Services. The Administrator shall provide the
-----------------------
Trusts and the Funds (at PALP's expense with respect to the PIMS
Retail Shares and all Shares of PFMMS and at the Administrator's
expense with respect to the PIMS Institutional and Administrative
Shares) with the services necessary to organize any Funds that
commence operations on or after the date of this Agreement so that
such Funds can conduct business as described in the applicable
Trust's Registration Statement.
(e) The Administrator shall also make its officers and employees
available to the Board of Trustees and officers of each Trust for
consultation and discussions regarding the administration of the
Funds and services provided to the Funds under this Agreement.
(f) In performing these services, the Administrator:
(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 each Trust's Board of Trustees, with the
provisions of each Trust's Registration Statement filed on
Form N-1A as supplemented or amended from time to time.
(ii) Will make available to each Trust, promptly upon request,
any of the Fund's 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
such Trust are being conducted in a manner consistent with
applicable laws and regulations.
(iii) Will regularly report to each Trust's Board of Trustees
(including in connection with each approval of an Investment
Advisory Contract pursuant to Section 15 of the 1940 Act) on
the services provided under this Agreement and will
<PAGE>
Administration Agreement
Page 5
furnish each Trust's Board of Trustees with respect to the Funds
such periodic and special reports as the Trustees may reasonably
request.
For as long as this Agreement remains in effect, PALP shall relinquish
any and all potential economic benefits to be derived from
administrative fees to be paid PFMMS' former Managed Bond and Income
Fund and Money Market Fund which have been reorganized as series of
PIMS. Accordingly, PIMCO shall be entitled to retain the full amount of
advisory and administrative fees paid by these Funds effective as of
October 31, 1995.
In the event that this Agreement is terminated, then PALP shall be
entitled to receive from PIMCO compensation in the amount of $36,917
per month for the loss of the economic benefits associated with the
reorganization, effective October 31, 1995, of PFMMS' former Managed
Bond and Income Fund as a new series of PIMS (now called the PIMCO
Total Return Fund II). If, after the termination of this Agreement, the
total net assets of the PIMCO Total Return Fund II fall below $443
million, then the monthly compensation to be received by PALP shall
instead be equal to one-twelfth of 0.10% of the average daily net
assets of the PIMCO Total Return Fund II (adjusted upward to include an
amount equal to the net exchanges (if any) out of the PIMCO Total
Return Fund II into another portfolio or portfolios managed by PIMCO).
PALP shall be entitled to receive such compensation only so long as
PIMCO serves as both the advisor and administrator to the PIMCO Total
Return Fund II or its sucessor, or until such time that the parties
mutually agree to delete or amend this provision.
3. Documentation. PALP has delivered copies of each of the following
-------------
documents with respect to each Trust to the Administrator and will
deliver to it all future amendments and supplements thereto, if any:
(a) each Trust's Registration Statement as filed with the SEC and any
amendments thereto;
(b) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the
Registration Statements described above; and
(c) copies of the Agreement and Declaration of Trust and Bylaws of
each Trust, as amended and restated through the date hereof.
4. Independent Contractor. The Administrator 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 a
Trust from time to
<PAGE>
Administration Agreement
Page 6
time, have no authority to act for or represent any Trust in any way
or otherwise be deemed its agent.
5. Compensation. PALP shall receive all administrative fees pursuant to
------------
the Administration Agreements with PFMMS and CAT and PIMCO shall pay
or assign to PALP all administrative fees payable with respect to the
Retail Classes pursuant to the PIMS Administration Agreement. As
compensation for the services rendered under this Agreement, PALP
shall pay to the Administrator a fee at an annual rate of .035% on the
first $10 billion in aggregate average daily net assets of the Funds
of PFMMS and CAT and of the Retail Shares of PIMS and .028% on such
assets in excess of $10 billion. The average daily net asset value of
each Fund of PFMMS and CAT and of the Retail Shares of PIMS shall be
determined by taking an average of all of the determinations of such
net asset value during such month at the close of business on each
business day during such month while this Agreement is in effect. The
fees payable to the Administrator for all of the Funds shall be paid
monthly within five (5) business days after the end of such month. If
for any month during the term of this Agreement, the aggregate
compensation payable to the Administrator hereunder is less the
$100,000, then on or before the fifth business day of the subsequent
month, PALP shall pay the Administrator a special fee equal to the
difference between $100,000 and the aggregate compensation payable to
the Administrator for such prior month. Thereafter, if any future
monthly payment to the Administrator exceeds $100,000, there shall be
no adjustment in such amount because of any special fee paid pursuant
to the prior sentence. If the Administrator shall serve for less than
any whole month or less than any whole year, the foregoing
compensation shall be prorated.
6. Non-Exclusivity. It is understood that the services of the
---------------
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
--------
pay all expenses (except those to be borne by the Trusts pursuant to
the Administration Agreements or the Investment Advisory Contracts and
those to be borne by PALP as provided herein) incurred by it in
connection with its obligations under this Agreement, which shall
include the expenses of maintaining its staff and personnel and
providing the equipment, office space, and facilities necessary to
perform its obligations under this Agreement. In addition, except as
otherwise provided herein, the Administrator shall pay all of the
expenses it has agreed to pay pursuant to the PIMS Administration
Agreement and PALP shall pay all of the expenses it has agreed to pay
pursuant to the PALP Administration Agreements.
<PAGE>
Administration Agreement
Page 7
8. Liability. The Administrator shall give PALP and each Trust the
---------
benefit of the 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, PALP agrees that neither the Administrator nor
its 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 the 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 PALP of the Administrator and that of its officers,
directors, and employees, and shall in no way govern any other
liability to any 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(b) or (c) hereof.
9. Term and Continuation. This Agreement shall take effect as of January
---------------------
14, 1997 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, unless
terminated as set forth below.
This Agreement may be terminated:
(a) by PALP at any time, without the payment of any penalty, upon 60
days' written notice to the Administrator;
(b) by the Administrator at any time, without the payment of any
penalty, upon 60 days' written notice to PALP; or
(c) with respect to services rendered or to be rendered to PFMMS, at
any time without the payment of any penalty, by vote of a
majority of the independent Trustees of PFMMS.
This Agreement shall automatically terminate as to any Fund if the
Administration Agreement with respect to such Fund between PALP or
PIMCO, as the case may be, and the applicable Trust shall terminate.
10. Notices. Notices of any kind to be given to the Administrator by PALP
-------
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 PALP by the Administrator shall be in writing and
<PAGE>
Administration Agreement
Page 8
shall be duly given if mailed or delivered to PALP at 800 Newport
Center Drive, Suite 100, Newport Beach, California 92660, or to such
other address or to such individual as shall be specified by PALP.
11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original.
12. Miscellaneous.
-------------
(a) This Agreement shall be governed by the laws of the State 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 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 be assigned by PALP or the Administrator
without the consent of the other party.
<PAGE>
Administration Agreement
Page 9
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 L.P.
By:
-----------------------------
Attest: Name:
------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
PACIFIC INVESTMENT
MANAGEMENT COMPANY
By:
-----------------------------
Attest: Name:
------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
6(b) Form of Amended Distribution Contract 99.B6(b)
<PAGE>
DISTRIBUTION CONTRACT
PIMCO Funds: Multi-Manager Series
840 Newport Center Drive
Newport Beach, California 92660
January __, 1997
PIMCO Funds Distribution Company
2187 Atlantic Avenue
Stamford, Connecticut 06902
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") and
you (the "Distributor") as follows:
1. Description of Trust and Classes of Shares. The Trust is an open-end
investment company which presently has the following twenty-two investment
portfolios: Equity Income Fund, Value Fund, Renaissance Fund, Enhanced Equity
Fund, Growth Fund, Capital Appreciation Fund, Mid Cap Growth Fund, Core Equity
Fund, Mid Cap Equity Fund, Target Fund, Small Cap Value Fund, Small Cap Growth
Fund, Opportunity Fund, Micro Cap Growth Fund, Innovation Fund, International
Fund, International Developed Fund, Emerging Markets Fund, Structured Emerging
Markets Fund, Precious Metals Fund, Balanced Fund and Tax Exempt Fund (each a
"Fund," and collectively, the "Funds"). Additional investment portfolios may be
established in the future. This Contract shall pertain to the Funds and to such
additional investment portfolios as shall be designated in Supplements to this
Contract, as further agreed between the Trust and the Distributor. A separate
series of shares of beneficial interest in the Trust is offered to investors
with respect to each Fund, and each Fund currently offers its shares with
respect to up to five classes: Class A shares, Class B shares, and Class C
shares (together, the "Retail Classes"), and Institutional Class shares and
Administrative Class shares. 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 and restrictions specified in the
<PAGE>
the Trust's currently effective Prospectus or Prospectuses and Statement of
Additional Information (together, the "Prospectus") relating to the Retail,
Institutional and Administrative Classes of 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 Investment Company Act of 1940, as
amended (together with the rules and regulations thereunder, the "1940 Act") and
the Securities Act of 1933, as amended (together with the rules and regulations
thereunder, the "1933 Act"). Copies of the documents referred to in the
preceding sentence have been furnished to the Distributor. Any amendments to
those documents shall be furnished to the Distributor promptly. The Trust has
adopted separate Distribution and Servicing Plans pursuant to Rule 12b-l under
the 1940 Act with respect to each of the Retail Classes (the "Retail Class
Plans") and has adopted a Distribution Plan, also pursuant to Rule 12b-1, with
respect to the Administrative Class shares of the Funds (the "Administrative
Distribution Plan"). The Trust has also adopted an Administrative Services Plan
with respect to the Administrative Class shares of the Funds, in conformity with
Rule 12b-1, as if the expenditures made thereunder were subject to Rule 12b-1,
excepting the shareholder voting rights under Rule 12b-1 (the "Administrative
Services Plan," and together with the Retail Class Plans and the Administrative
Distribution Plan, the "Plans").
2. Appointment and Acceptance. The Trust hereby appoints the Distributor
as a distributor of shares of beneficial interest in the Trust (the "shares")
which may from time to time be registered under the 1933 Act and as servicing
agent of shareholders and shareholder accounts of the Trust, and the Distributor
hereby accepts such appointment in accordance with the terms and conditions set
forth herein. As the Trust's agent, the Distributor shall, except to the extent
provided in Section 4 hereof, be the exclusive distributor for the unsold
portion of the shares.
3. Sale of Shares to Distributor and Sales by Distributor. The Distributor
will have the right, as principal, to sell shares of each Class of each Fund
directly to the public against orders therefor at the applicable public offering
price as described below in the case of Class A shares, and at net asset value
in the case of Class B shares, Class C shares, Institutional Class shares and
Administrative Class shares. For such purposes, the Distributor will have the
right to purchase shares at net asset value. The Distributor will also have the
right, as agent, to sell shares of a Fund indirectly to the public through
broker dealers who are members of the National Association of Securities
Dealers, Inc. and who are acting as introducing brokers pursuant to clearing
agreements with the Distributor ("introducing brokers"), to broker dealers which
are members of the National Association of Securities Dealers, Inc. and who have
entered into selling agreements with the Distributor ("participating brokers")
or through other financial intermediaries, in each case against orders therefor.
The price for introducing brokers, participating brokers and other financial
intermediaries shall be, in the case of Class A shares, the applicable public
offering price less a concession to be determined by the Distributor, which
concession will not exceed the amount of the sales charge or underwriting
discount, if any, described below and, in the case of Class B shares, Class C
shares, Institutional Class shares and Administrative Class shares, net asset
value.
2
<PAGE>
The Trust shall sell through the Distributor, as the Trust's agent, shares
to eligible investors as described in the Prospectus. All orders through the
Distributor shall be subject to acceptance and confirmation by the Trust. The
Trust shall have the right, at its election, to deliver either shares issued
upon original issue or treasury shares.
Prior to the time of transfer of any shares by the Trust to, or on the
order of, the Distributor or any introducing broker, participating broker or
other financial intermediary, the Distributor shall pay or cause to be paid to
the Trust or to its order an amount in New York clearing house funds equal to
the applicable net asset value of the shares. Upon receipt of registration
instructions in proper form, the Distributor will transmit or cause to be
transmitted such instructions to the Trust or its agent for registration of the
shares purchased.
The public offering price of Class A shares shall be the net asset value of
such shares, plus any applicable sales charge as set forth in the Prospectus. In
no event will any applicable sales charge or underwriting discount exceed the
limitations on permissible sales loads imposed by Section 22(b) of the 1940 Act
and Section 26(d)(1) of Article III of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., as either or both may be
amended from time to time.
On every sale, the Trust shall receive the net asset value of the shares.
The net asset value of the shares shall be determined in the manner provided in
the Declaration of Trust and By-laws of the Trust as then amended or restated.
In the case of Class A shares, the Distributor may retain so much of any sales
charge or underwriting discount as is not allowed by the Distributor as a
concession to dealers and such sales charge or underwriting discount shall be in
addition to the fee paid to the Distributor in respect of Class A shares as
described in Section 5 hereof.
4. Sales of Shares by the Trust. In addition to sales by the Distributor,
the Trust reserves the right to issue shares at any time directly to its
shareholders as a stock dividend or stock split or to sell shares to its
shareholders or other persons at not less than net asset value to the extent
that the Trust, its officers, or other persons associated with the Trust
participate in the sale, or to the extent that the Trust or the transfer agent
for its shares receive purchase requests for shares.
5. Fees. For its services as servicing agent of a Fund's Class A
shareholders and Class A shareholder accounts, the Trust shall pay the
Distributor on behalf of the Fund a servicing fee at the annual rate of 0.25% of
the Fund's average daily net assets attributable to its Class A shares upon the
terms and conditions set forth in the Distribution and Servicing Plan attached
as Exhibit A hereto, and as amended from time to time, and may retain so much of
any sales charge or underwriting discount as is not allowed by the Distributor
as a concession to dealers, and shall receive any contingent deferred sales
charge as provided in Section 8 hereof.
3
<PAGE>
For its services as distributor of a Fund's Class B and Class C shares and
as servicing agent of Class B and Class C shareholders and Class B and Class C
shareholder accounts, the Trust shall pay the Distributor on behalf of the Fund
a distribution fee at the annual rate of 0.75% of the Fund's average daily net
assets, and a servicing fee at the annual rate of 0.25% of the Fund's average
daily net assets, attributable to the Fund's Class B shares and Class C shares,
respectively, upon the terms and conditions set forth in the relevant
Distribution and Servicing Plans attached as Exhibits B and C hereto, as amended
from time to time, and shall receive any contingent deferred sales charge as
provided in Section 8 hereof. The respective distribution and servicing fees
shall be accrued daily and paid monthly to the Distributor as soon as
practicable after the end of the calendar month in which they accrue, but in any
event within 5 business days following the last calendar day of each month.
The Trust shall reimburse the Distributor at an annual rate not to exceed
0.25% of the Fund's average daily net assets attributable to its Administrative
Class shares for payments made by the Distributor to various financial
intermediaries in connection with the distribution of Administrative Class
shares upon the terms and conditions set forth in the Administrative
Distribution Plan set forth as Exhibit D hereto.
6. Reservation of Right Not to Sell. The Trust reserves the right to refuse
at any time or times to sell any of its shares for any reason deemed adequate by
it.
7. Use of Sub-Agents; Non-exclusivity. The Distributor may employ such sub-
agents, including one or more participating brokers or introducing brokers, for
the purposes of selling shares of the Trust as the Distributor, in its sole
discretion, shall deem advisable or desirable. The Distributor may enter into
similar arrangements with other issuers and, except to the extent necessary to
perform its obligations hereunder, nothing herein shall be deemed to limit or
restrict the right of the Distributor, or any affiliate of the Distributor, or
any employee of the Distributor, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.
8. Repurchase of Shares. The Distributor will act as agent for the Trust in
connection with the repurchase and redemption of shares by the Trust upon the
terms and conditions set forth in the Prospectus or as the Trust acting through
its Trustees may otherwise direct. The Distributor may employ such sub-agents,
including one or more participating brokers or introducing brokers, for such
purposes as the Distributor, in its sole discretion, shall deem to be advisable
or desirable. Any contingent deferred sales charge imposed on repurchases and
redemptions of Class A, Class B and Class C shares upon the terms and conditions
set forth in the Prospectus shall be paid to the Distributor in addition to the
fees with respect to Class A, Class B and Class C shares set forth in Section 5
hereof. The Trust will take such steps as are commercially reasonable to track
on a share-by-share basis the aging of its shares for purposes of calculating
any contingent deferred sales charges and/or distribution fees.
4
<PAGE>
9. Basis of Purchases and Sales of Shares. The Distributor's obligation to
sell shares hereunder shall be on a best efforts basis only and the Distributor
shall not be obligated to sell any specific number of shares. Shares will be
sold by the Distributor only against orders therefor. The Distributor will not
purchase shares from anyone other than the Trust except in accordance with
Section 8 hereof, and will not take "long" or "short" positions in shares
contrary to any applicable provisions of the Declaration of Trust of the Trust,
as amended or restated from time to time.
10. Rules of Securities Associations, etc. As the Trust's agent, 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. In this connection, the Distributor shall comply
with all laws, rules and regulations applicable to it, including, without
limiting the generality of the foregoing, all applicable rules or regulations
under the 1940 Act and of any securities association registered under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "1934 Act"). The Distributor will conform to the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
and the securities laws of any jurisdiction in which it sells, directly or
indirectly, any shares. The Distributor also agrees to furnish to the Trust
sufficient copies of any agreement or plans it intends to use in connection with
any sales of shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use, and not to use them until so
filed and cleared.
11. Independent Contractor. The Distributor shall be an independent
contractor and neither the Distributor nor any of its officers or employees as
such, is or shall be an employee of the Trust. The Distributor is responsible
for its own conduct and the employment, control and conduct of its agents and
employees and for injury to such agents or employees or to others through its
agents or employees. The Distributor assumes full responsibility for its agents
and employees under applicable statutes and agrees to pay all employer taxes
thereunder.
12. Registration and Qualification of Shares. The Trust agrees to execute
such papers and to do such acts and things as shall from time to time be
reasonably requested by the Distributor for the purpose of qualifying and
maintaining qualification of the shares for sale under the so-called Blue Sky
Laws of any state or for maintaining the registration of each Fund of the Trust
and the Trust under the 1933 Act and the 1940 Act, to the end that there will be
available for sale from time to time such number of shares as the Distributor
may reasonably be expected to sell. The Trust shall advise the Distributor
promptly of (a) any action of the Securities and Exchange Commission or any
authorities of any state or territory, of which it may be advised, affecting
registration or qualification of the Trust, a Fund or the shares thereof, or
rights to offer such shares for sale and (b) the happening of any event which
makes untrue any statement or which requires the making of any change in the
registration statement or Prospectus in order to make the statements therein not
misleading.
5
<PAGE>
13. Securities Transactions. The Trust agrees that the Distributor may
effect a transaction on any national securities exchange of which it is a member
for the account of the Trust and any Fund of the Trust which is permitted by
Section 11(a) of the 1934 Act.
14. Expenses.
(a) The Distributor shall from time to time employ or associate with
it such persons as it believes necessary to assist it in carrying out its
obligations under this Contract. The compensation of such persons shall be paid
by the Distributor.
(b) The Distributor shall pay all expenses incurred in connection with
its qualification as a dealer or broker under Federal or state law.
(c) The Distributor will pay all expenses of preparing, printing and
distributing advertising and sales literature as such expenses relate to Retail
Class shares (apart from expenses of registering shares under the 1933 Act and
the 1940 Act and the preparation and printing of prospectuses and reports for
shareholders as required by said Acts and the direct expenses of the issue of
shares, except that the Distributor will pay the cost of the preparation and
printing of prospectuses and shareholders' reports used by it in the sale of
Trust shares). The Trust may enter into arrangements with affiliates of the
Distributor providing for the payment by such affiliates of some or all of these
expenses as they relate to Institutional and Administrative Class shares.
(d) The Trust shall pay or cause to be paid all expenses incurred in
connection with (i) the preparation, printing and distribution to shareholders
of the Prospectus and reports and other communications to existing shareholders,
(ii) future registrations of shares under the 1933 Act and the 1940 Act, (iii)
amendments of the Registration Statement subsequent to the initial public
offering of shares, (iv) qualification of shares for sale in jurisdictions
designated by the Distributor, including under the securities or so-called "Blue
Sky" laws of any State, (v) qualification of the Trust as a dealer or broker
under the laws of jurisdictions designated by the Distributor, (vi)
qualification of the Trust as a foreign corporation authorized to do business in
any jurisdiction if the Distributor determines that such qualification is
necessary or desirable for the purpose of facilitating sales of shares,
(vii) maintaining facilities for the issue and transfer of shares, (viii)
supplying information, prices and other data to be furnished by the Trust under
this Contract, (ix) any expenses assumed by the Trust with regard to shares of
each Retail Class of each Fund pursuant to the Retail Class Plan applicable to
that class; (x) any expenses assumed by the Trust with regard to the
Administrative Class shares of each Fund pursuant to the Administrative
Distribution Plan; and (xi) any expenses assumed by the Trust with regard to the
Administrative Class shares of each Fund pursuant to the Administrative Services
Plan.
(e) The Trust shall pay any original issue taxes or transfer taxes
applicable to the sale or delivery of shares or certificates therefor.
6
<PAGE>
15. Indemnification of Distributor. The Trust shall prepare and furnish to
the Distributor from time to time such number of copies of the most recent form
of the Prospectus filed with the SEC as the Distributor may reasonably request.
The Trust authorizes the Distributor to use the Prospectus, in the form
furnished to the Distributor from time to time, in connection with the sale of
shares. The Trust shall indemnify, defend and hold harmless the Distributor, its
officers and trustees and any person who controls the Distributor within the
meaning of the 1933 Act, from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which the Distributor, its officers and trustees or any such
controlling person may incur under the 1933 Act, the 1940 Act, the common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or
arising out of or based upon any alleged omission to state a material fact
required to be stated in either or necessary to make the statements in either
not misleading. This Contract shall not be construed to protect the Distributor
against any liability to the Trust or its shareholders to which the Distributor
would otherwise be subject by reason of 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 Contract. This indemnity
agreement is expressly conditioned upon the Trust being notified of any action
brought against the Distributor, its officers or directors or any such
controlling person, which notification shall be given by letter or by telegram
addressed to the Trust at its principal office in Newport Beach, California, and
sent to the Trust by the person against whom such action is brought within 10
days after the summons or other first legal process shall have been served. The
failure to notify the Trust of any such action shall not relieve the Trust from
any liability which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or omission otherwise
than on account of the indemnity agreement contained in this Section 15. The
Trust shall be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but, in such case, the defense shall be
conducted by counsel chosen by the Trust and approved by the Distributor. If the
Trust elects to assume the defense of any such suit and retain counsel approved
by the Distributor, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them, but in case the
Trust does not elect to assume the defense of any such suit, or in the case the
Distributor does not approve of counsel chosen by the Trust, the Trust will
reimburse the Distributor, its officers and directors or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by the Distributor or them. In addition, the
Distributor shall have the right to employ counsel to represent it, its officers
and directors and any such controlling person who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Distributor against the Trust hereunder if in the reasonable judgment of the
Distributor it is advisable for the Distributor, its officers and directors or
such controlling person to be represented by separate counsel, in which event
the fees and expense of such separate counsel shall be borne by the Trust. This
indemnity agreement and the Trust's representations and warranties in this
Contract shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Distributor, its officers and
directors or any such controlling
7
<PAGE>
person. This indemnity agreement shall inure exclusively to the benefit of the
Distributor and its successors, the Distributor's officers and directors and
their respective estates and any such controlling persons and their successors
and estates. The Trust shall promptly notify the Distributor of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any shares.
16. Indemnification of Trust. The Distributor agrees to indemnify, defend
and hold harmless the Trust, its officers and Trustees and any person who
controls the Trust within the meaning of the 1933 Act, from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or Trustees
or any such controlling person, may incur under the 1933 Act, the 1940 Act, the
common law or otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or Trustees or such controlling person
resulting from such claims or demands shall arise out of or be based upon (a)
any alleged untrue statement of a material fact contained in information
furnished in writing by the Distributor to the Trust specifically for use in the
Registration Statement or the Prospectus or shall arise out of or be based upon
any alleged omission to state a material fact in connection with such
information required to be stated in the Registration Statement or the
Prospectus or necessary to make such information not misleading, (b) any alleged
act or omission on the Distributor's part as the Trust's agent that has not been
expressly authorized by the Trust in writing, and (c) any claim, action, suit or
proceeding which arises out of or is alleged to arise out of the Distributor's
failure to exercise reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, employee benefit and other
plans for shares. The foregoing rights of indemnification shall be in addition
to any other rights to which the Trust or a trustee may be entitled as a matter
of law. This indemnity agreement is expressly conditioned upon the Distributor
being notified of any action brought against the Trust, its officers or Trustees
or any such controlling person, which notification shall be given by letter or
telegram addressed to the Distributor at its principal office in Stamford,
Connecticut, and sent to the Distributor by the person against whom such action
is brought, within 10 days after the summons or other first legal process shall
have been served. The failure to notify the Distributor of any such action shall
not relieve the Distributor from any liability which it may have to the Trust,
its officers or Trustees or such controlling person by reason of any alleged
misstatement, omission, act or failure on the Distributor's part otherwise than
on account of the indemnity agreement contained in this Section 16. The
Distributor shall have a right to control the defense of such action with
counsel of its own choosing and approved by the Trust if such action is based
solely upon such alleged misstatement, omission, act or failure on the
Distributor's part, and in any other event the Trust, its officers and Trustees
or such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action at their own expense.
If the Distributor elects to assume the defense of any such suit and retain
counsel approved by the Trust, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them,
but in case the Distributor does not elect to assume the defense of any such
suit, or in the case the Trust does not approve of counsel chosen by the
Distributor, the Distributor will reimburse
8
<PAGE>
the Trust, its officers and Trustees or the controlling person or persons named
as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by the Trust or them. In addition, the Trust shall have the
right to employ counsel to represent it, its officers and Trustees and any such
controlling person who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Trust against the Distributor
hereunder if in the reasonable judgment of the Trust it is advisable for the
Trust, its officers and Trustees or such controlling person to be represented by
separate counsel, in which event the fees and expense of such separate counsel
shall be borne by the Distributor. This indemnity agreement and the
Distributor's representations and warranties in this Contract shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Trust, its officers and Trustees or any such controlling
person. This indemnity agreement shall inure exclusively to the benefit of the
Trust and its successors, the Trust's officers and Trustees and their respective
estates and any such controlling persons and their successors and estates. The
Distributor shall promptly notify the Trust of the commencement of any
litigation or proceedings against it in connection with the issue and sale of
any shares.
17. Assignment Terminates this Contract; Amendments of this Contract. This
Contract shall automatically terminate, without the payment of any penalty, in
the event of its assignment. This Contract may be amended only if such amendment
be approved either by action of the Trustees of the Trust or at a meeting of the
shareholders of the Trust by the affirmative vote of a majority of the
outstanding shares of the Trust, and by a majority of the Trustees of the Trust
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Plans or this Contract by vote cast
in person at a meeting called for the purpose of voting on such approval.
18. Effective Period and Termination of this Contact. This Contract shall
take effect upon the date first above written and shall remain in full force and
effect continuously as to a Fund and a class of shares thereof (unless
terminated automatically as set forth in Section 17 hereof) until terminated:
(a) Either by such Fund or such class or the Distributor by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the other
party; or
(b) Automatically as to any Fund or class thereof at the close of
business one year from the date hereof, or upon the expiration of one year
from the effective date of the last continuance of this Contract, whichever
is later, if the continuance of this Contract is not specifically approved
at least annually by the Trustees of the Trust or the shareholders of such
Fund or such class by the affirmative vote of a majority of the outstanding
shares of such Fund or such class, and by a majority of the Trustees of the
Trust who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the Plans or this Contract
by vote cast in person at a meeting called for the purpose of voting on
such approval.
9
<PAGE>
Action by a Fund or a class thereof under (a) above may be taken either (i)
by vote of the Trustees of the Trust, or (ii) by the affirmative vote of a
majority of the outstanding shares of such Fund or such class. The requirement
under (b) above that the continuance of this Contract be "specifically approved
at least annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
Termination of this Contract pursuant to this Section 18 shall be without
the payment of any penalty.
If this Contract is terminated or not renewed with respect to one or more
Funds or classes thereof, it may continue in effect with respect to any Fund or
any class thereof as to which it has not been terminated (or has been renewed).
19. Limited Recourse. The Distributor hereby acknowledges that the Trust's
obligations hereunder with respect to the distribution fee or servicing fee or
contingent deferred sales charges payable with respect to the shares of any Fund
of the Trust or a particular class of shares of a Fund are binding only on the
assets and property belonging to such Fund or allocated to such class.
20. Certain Definitions. For the purposes of this Contract, the
"affirmative vote of a majority of the outstanding shares" means the affirmative
vote, at a duly called and held meeting of shareholders, (a) of the holders of
67% or more of the shares of the Trust, Fund or class, as the case may be,
present (in person or by proxy) and entitled to vote at such meeting, if the
holders of more than 50% of the outstanding shares of the Trust, Fund or class,
as the case may be, entitled to vote at such meeting are present in person or by
proxy, or (b) of the holders of more than 50% of the outstanding shares of the
Trust, Fund or class, as the case may be, entitled to vote at such meeting,
whichever is less.
For the purposes of this Contract, the terms "interested persons" and
"assignment" shall have the meanings defined in the 1940 Act, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. Certain other items used herein that are not otherwise defined
have the meaning given in the Trust's Prospectus or constituent agreements or
documents of the Trust.
A copy of the First Amended and Restated Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
the Trust.
If the foregoing correctly sets forth the agreement between the Trust and
the Distributor, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
10
<PAGE>
Very truly yours,
PIMCO FUNDS: MULTI-
MANAGER SERIES
By:
-------------------
Title:
ACCEPTED:
PIMCO FUNDS DISTRIBUTION COMPANY
By:
----------------------------------------
Title:
11
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
8(b) Form of Addendum to Custody Agreement 99.B8(b)
<PAGE>
ADDENDUM TO CUSTODY AGREEMENT
-----------------------------
The Custody Agreement, made the 17th day of December, 1990, (and
subsequently amended heretofore), between PIMCO Funds: Multi-Manager Series,
formerly PIMCO Funds: Equity Advisors Series (the "Trust"), a Massachusetts
business trust having its principal place of business at 840 Newport Center
Drive, Suite 360 Newport Beach, CA 92660, PIMCO Advisors L.P., a limited
partnership having its principal place of business at 800 Newport Center Drive,
Newport Beach, California 92660 ("PALP"), 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 __________, 199_.
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 multiple separate series,
including those 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 Small Cap Growth Fund, Cadence Micro 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 (each a "Fund"); and
WHEREAS, the Trust intends to redesignate 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 Small Cap Growth Fund, Cadence Micro
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 as, respectively, PIMCO Equity
Income Fund, PIMCO Value Fund, PIMCO Small Cap Value Fund, PIMCO Capital
Appreciation Fund, PIMCO Mid Cap Growth Fund, PIMCO Small Cap Growth Fund, PIMCO
Micro Cap Growth Fund, PIMCO Core Equity Fund, PIMCO Mid Cap Equity Fund, PIMCO
Enhanced Equity Fund, PIMCO Structured Emerging Markets Fund, PIMCO Emerging
Markets Fund, PIMCO International Developed Fund, and PIMCO Balanced Fund (the
"Redesignated Funds"); and
<PAGE>
WHEREAS, the Trust intends to establish eight additional series to be
designated as the PIMCO International Fund, PIMCO Renaissance Fund, PIMCO Growth
Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund, PIMCO
Tax Exempt Fund, and PIMCO Precious Metals Fund (the "New Funds"); and
WHEREAS, the Trust desires to appoint IFTC as Custodian for the
Redesignated Funds and the New Funds 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 Redesignated Funds and the New
Funds, 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.
- 2 -
<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: MULTI-MANAGER SERIES
Attest: By:
---------------------- ------------------------------
Name: Name:
Title: Title:
PIMCO ADVISORS L.P.
Attest: By:
---------------------- ------------------------------
Name: Name:
Title: Title:
INVESTORS FIDUCIARY TRUST COMPANY
Attest: By:
---------------------- ------------------------------
Name: Name:
Title: Title:
- 3 -
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
8(c) Form of Assignment of Custody Agreement 99.B8(c)
<PAGE>
Assignment
of Custody Agreement
AGREEMENT, made this ____ day of ______, 199_ among PIMCO Funds:
Multi-Manager Series (the "Fund"), a Massachusetts business trust, Pacific
Investment Management Company ("PIMCO"), a corporation organized under the laws
of California, PIMCO Advisors L.P. ("PALP"), a limited partnership, and
Investors Fiduciary Trust Company ("Custodian"), a trust company chartered under
the laws of the State of Missouri.
WHEREAS, the Fund, Pacific Financial Asset Management Corporation
("PFAMCo"), the corporate predecessor of PALP, and the Custodian entered into a
Custody Agreement dated December 17, 1990 (together with all Addenda thereto,
the "Custody Agreement"), pursuant to which the Custodian 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 PALP under the Custody
Agreement effective November 15, 1994, and the Fund and the Custodian consented
to such assignment; and
WHEREAS, in accordance with paragraph H of Section 13 of the Custody
Agreement, PALP assigned its rights and obligations to PIMCO under the Custody
Agreement effective August 11, 1995, and the Fund and the Custodian consented to
such assignment; and
WHEREAS, PIMCO wishes to assign its rights and obligations under the
Custody Agreement to PALP, effective as of the date indicated above; and
WHEREAS, the Fund wishes for the Custodian to continue to serve as
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, PIMCO hereby assigns all
of its rights, duties, and obligations under the Custody Agreement to PALP.
<PAGE>
2. Performance of Duties.
---------------------
Effective as of the date indicated above, PALP hereby assumes and
agrees to perform all of PIMCO'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 PALP. PALP 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 PALP, and PIMCO
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 PIMCO.
3. Consent.
-------
The Fund and the Custodian hereby consent to this assignment to
PALP of PIMCO's rights, duties and obligations under the Custody Agreement and
the assumption by PALP of such rights, duties, and obligations, and agree,
subject to the terms and conditions of the Custody Agreement, to look to PALP
for the performance of the duties and obligations previously assumed by PIMCO
under said Agreement after the effective date as described above.
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 FUNDS: MULTI-MANAGER SERIES
By:
- ---------------------------- ---------------------------------
Attest: Title:
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY
By:
- ---------------------------- ---------------------------------
Attest: Title:
Title:
PIMCO ADVISORS L.P.
By:
- ---------------------------- ---------------------------------
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST COMPANY
By:
- ---------------------------- ---------------------------------
Attest: Title:
Title:
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
9(b) Form of Addendum to Agency Agreement 99.B9(b)
<PAGE>
ADDENDUM TO AGENCY AGREEMENT
----------------------------
The Agency Agreement, made the 17th day of December, 1990, (and
subsequently amended), between PIMCO Funds: Multi-Manager Series, formerly
PIMCO Funds: Equity Advisors Series (the "Trust"), a Massachusetts business
trust having its principal place of business at 840 Newport Center Drive, Suite
360, Newport Beach, CA 92660, PIMCO Advisors L.P. ("PALP"), a limited
partnership having its principal place of business at 800 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 __________, 199_.
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 Fund currently consists of multiple separate series,
including those 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 Small Cap Growth Fund, Cadence Micro 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 (each a "Fund"); and
WHEREAS, the Fund intends to redesignate 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 Small Cap Growth Fund, Cadence Micro
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 as, respectively, PIMCO Equity
Income Fund, PIMCO Value Fund, PIMCO Small Cap Value Fund, PIMCO Capital
Appreciation Fund, PIMCO Mid Cap Growth Fund, PIMCO Small Cap Growth Fund, PIMCO
Micro Cap Growth Fund, PIMCO Core Equity Fund, PIMCO Mid Cap Equity Fund, PIMCO
Enhanced Equity Fund, PIMCO Structured Emerging Markets Fund, PIMCO Emerging
Markets Fund, PIMCO International Developed Fund, and PIMCO Balanced Fund (the
"Redesignated Funds"); and
<PAGE>
WHEREAS, the Trust intends to establish eight additional series to be
designated as the PIMCO International Fund, PIMCO Renaissance Fund, PIMCO
Growth Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Tax Exempt Fund, and PIMCO Precious Metals Fund (the "New Funds"); and
WHEREAS, the Fund desires to appoint IFTC as Transfer Agent and
Dividend Disbursing Agent for the Institutional Class shares and Administrative
Class shares of the Redesignated Funds and the New Funds 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
Institutional Class shares and Administrative Class shares of the
Redesignated Funds and the New Funds which, in addition to all
other Funds previously established by the Trust, shall each be
deemed one 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.
- 2 -
<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: MULTI-MANAGER SERIES
Attest: By:
---------------------- -------------------------------
Name: Name:
Title: Title:
PIMCO ADVISORS L.P.
Attest: By:
---------------------- -------------------------------
Name: Name:
Title: Title:
INVESTORS FIDUCIARY TRUST COMPANY
Attest: By:
---------------------- -------------------------------
Name: Name:
Title: Title:
- 3 -
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
9(c) Form of Assignment of Agency Agreement 99.B9(c)
<PAGE>
Assignment
of Agency Agreement
AGREEMENT, made this ____ day of ______, 199_ among PIMCO Funds:
Multi-Manager Series (the "Fund"), a Massachusetts business trust, Pacific
Investment Management Company ("PIMCO"), a corporation organized under the laws
of California, PIMCO Advisors L.P. ("PALP"), 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 PALP, 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 PALP under the Agency Agreement effective
November 15, 1994, and the Fund and IFTC consented to such assignment; and
WHEREAS, in accordance with the terms of the Agency Agreement, PALP
assigned its rights and obligations to PIMCO under the Agency Agreement
effective August 11, 1995, and the Fund and IFTC consented to such assignment;
and
WHEREAS, PIMCO wishes to assign its rights and obligations under the
Agency Agreement to PALP 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, PIMCO hereby assigns all
of its rights, duties, and obligations under the Agency Agreement to PALP.
2. Performance of Duties.
---------------------
Effective as of the date indicated above, PALP hereby assumes and
agrees to perform all of PIMCO'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 PALP. PALP 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
<PAGE>
by PALP, and PIMCO shall not be responsible for any claim or demand arising
under the Agency Agreement from services rendered after the effective date of
this Assignment unless otherwise agreed by PIMCO.
3. Consent.
-------
The Fund and IFTC hereby consent to this assignment to PALP of
PIMCO's rights, duties and obligations under the Agency Agreement and the
assumption by PALP of such rights, duties, and obligations, and agree, subject
to the terms and conditions of the Agency Agreement, to look to PALP for the
performance of the duties and obligations previously assumed by PIMCO under said
Agreement after the effective date as described above.
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 FUNDS: MULTI-MANAGER
SERIES
By:
- ------------------------- ----------------------------
Attest: Title:
Title:
PACIFIC INVESTMENT MANAGEMENT
CORPORATION
By:
- ------------------------- ----------------------------
Attest: Title:
Title:
PIMCO ADVISORS L.P.
By:
- ------------------------- ----------------------------
Attest: Title:
Title:
INVESTORS FIDUCIARY TRUST
COMPANY
By:
- ------------------------- ----------------------------
Attest: Title:
Title:
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
9(f) Form of Administrative Services Plan 99.B9(f)
for Administrative Class Shares
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
ADMINISTRATIVE SERVICES PLAN
FOR ADMINISTRATIVE CLASS SHARES
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust") is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust issues shares of beneficial interest ("shares") in
separate series ("Funds"), with each Fund representing interests in a separate
portfolio of securities and other assets;
WHEREAS, the Trust is authorized to issue shares of the Funds in
separate classes of shares, one of which is designated the Administrative Class
(the "Administrative Class" shares);
WHEREAS, certain shareholders of the Trust may require administrative,
recordkeeping, and other services that are in addition to services required by
other shareholders, and the provision of such services to shareholders requiring
these services may benefit such shareholders and facilitate their ability to
invest in the Funds;
WHEREAS, issuance of shares of the Funds in a class subject to a fee
for the Funds' cost of providing administrative, recordkeeping, and shareholder
services would allocate the Funds' expense of rendering such services to the
shareholders who receive such additional services;
WHEREAS, the Funds with respect to their Administrative Class shares
intend to enter into Administrative Services Agreements ("Agreements") pursuant
to this Administrative Services Plan (the "Plan") with various Service
Organizations ("Service Organizations"), either directly or through the Funds'
principal underwriter, PIMCO Funds Distribution Company (the "Distributor") or
other agent of the Fund, pursuant to which the Service Organization will provide
certain administrative, recordkeeping and/or shareholder services to its
clients, members or customers who purchase shares of the Administrative Class of
a Fund;
WHEREAS, the Funds have adopted a multiple class plan pursuant to Rule
18f-3 under the 1940 Act to permit the issuance of shares in different classes;
and
WHEREAS, the Board of Trustees of the Trust has determined that there
is a reasonable likelihood that the Plan will benefit the Funds and their
shareholders.
NOW THEREFORE, the Trust hereby adopts this Plan on the
<PAGE>
following terms and conditions:
1. The Trust (or the Distributor or other person acting as agent of
the Trust) shall reimburse a Service Organization with which the Trust (or the
Distributor or other agent), regarding the Administrative Class of a Fund, has
an Agreement, for costs and expenses incurred in connection with providing
certain administrative services for shareholders of that Class, at a rate
specified in paragraph 2 below, based upon the average daily net assets of the
Fund attributable to the Administrative Class.
2. Subject to the limitations of applicable law and regulations,
including rules of the National Association of Securities Dealers, Inc.
("NASD"), the Service Organization will be reimbursed quarterly for such costs,
expenses or payments at an annual rate of up to but not more than 0.25% of the
average daily net assets of the Fund attributable to the Administrative Class.
Any expense payable hereunder may be carried forward for reimbursement for up to
twelve months beyond the date in which it is incurred, subject always to the
limit that not more than 0.25% of the Fund's average daily net assets
attributable to the Administrative Class may be used in any month to pay
expenses pursuant to the Agreement. Each Administrative Class shall incur no
interest or carrying charges for expenses carried forward. In the event the
Plan is terminated as herein provided, the Administrative Class shall have no
liability for expenses that were not reimbursed as of the date of termination.
3. The payment of fees to a Service Organization is subject to
compliance by the Service Organization with the terms of the Agreement between
the Service Organization and the Trust (or the Distributor or other agent). If
an Administrative Class shareholder ceases to be a client of a Service
Organization that has entered into such an Agreement, but continues to hold
Administrative Class shares, the Service Organization will be entitled to
receive a similar payment in respect of the services provided to such investors
and/or the provision of certain shareholder services to its customers that
invest in the Funds. For the purposes of determining the fees payable under the
Plan, the average daily net asset value of the Fund attributable to the
Administrative Class shares shall be computed in the manner specified in the
Trust's Declaration of Trust and current prospectus.
4. Services which a Service Organization will provide under an
Administrative Services Agreement may include, but are not limited to, the
following functions: receiving, aggregating and processing shareholder orders;
furnishing shareholder sub-accounting; providing and maintaining elective
shareholder
- 2 -
<PAGE>
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;
issuing confirmations for transactions by shareholders; and performing similar
account administrative services.
5. Any Service Organization entering into an Agreement with the Trust
(or with the Distributor or other agent) under this Plan may also enter into a
Distribution Agreement with regard to the Administrative Class of a Fund
pursuant to a Distribution Plan adopted for such Class. However, in the event
the Service Organization enters into both types of agreements, the Service
Organization shall not be eligible to receive fees under more than one agreement
with respect to the same assets. The Trust (or the Distributor or other person,
acting as the Trust's agent) under this Plan may enter into more than one
Administrative Services Agreement for its Administrative Class shares, with
different Service Organizations providing services to different groups of
shareholders.
6. The Plan shall not take effect until it has been approved,
together with any related agreements and supplements, by votes of a majority of
both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust
who are not "interested persons" (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Plan or any agreements
related to it (the "Plan Trustees"), cast in person at a meeting (or meetings)
called for the purpose of voting on the Plan and such related agreements.
7. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 6.
8. Any person authorized to direct the disposition of monies paid or
payable by an Administrative Class pursuant to the Plan or any related agreement
shall provide to the Trust's Board of Trustees, and the Board shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
9. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated at any time as to a Fund,
without payment of any penalty, by vote of a majority of the Plan Trustees, on
not more than sixty (60) days' written notice to any other party to the
agreement; and (b) that such agreement shall terminate
- 3 -
<PAGE>
automatically in the event of its assignment.
10. The Plan may be amended at any time with respect to a Fund by the
Board of Trustees, provided that any amendment to increase materially the costs
which the Administrative Class shares may bear for administrative services
pursuant to the Plan shall be effective only upon approval as provided in
paragraph 6 hereof.
11. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons.
12. The Trust shall preserve copies of the Plan, any related
agreement and any report made pursuant to paragraph 8 hereof, for a period of
not less than six (6) years from the date of the Plan, such agreement or report,
as the case may be, the first two (2) years of which shall be in an easily
accessible place.
13. It is understood and expressly stipulated that neither the
holders of shares of any Fund nor any Trustee, officer, agent or employee of the
Trust shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has adopted this amended and restated
Administrative Services Plan effective as of the ______ day of ____________,
199_.
PIMCO FUNDS: MULTI-MANAGER SERIES
By:
-----------------------------
Title:
- 4 -
<PAGE>
<TABLE>
<CAPTION>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
<S> <C> <C>
11(i) Consent of Price Waterhouse LLP 99.B11(i)
</TABLE>
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus describing
the Institutional and Administrative Classes of shares (Prospectus) and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 25 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated August 12, 1996, relating to the financial
statements and financial highlights appearing in the June 30, 1996 Annual Report
to Shareholders of the PIMCO Funds: Equity Advisors Series, which is also
incorporated by reference into the Registration Statement. We also 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.
Price Waterhouse LLP
/s/ Price Waterhouse LLP
Kansas City, Missouri
January 13, 1997
<PAGE>
<TABLE>
<CAPTION>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
<S> <C> <C>
11(ii) Consent of Coopers & Lybrand L.L.P. 99.B11(ii)
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective
Amendment No. 25 to the Registration Statement of PIMCO Funds: Multi-Manager
Series on Form N-1A (File No. 33-36528)(the "Registration Statement") of our
report dated November 22, 1996 on our audit of the financial statements and
financial highlights of PIMCO Advisors Funds which is included in the Annual
Report of PIMCO Advisors Funds for the year ended September 30, 1996 which is
also incorporated by reference in the Registration Statement.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
New York, New York
January 10, 1997
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
15(a) Form of Distribution and Servicing Plan 99.B15(a)
(Class A)
<PAGE>
EXHIBIT A
---------
<PAGE>
PIMCO FUNDS: Multi-Manager Series
---------------------------------
Distribution and Servicing Plan (Class A)
This Plan (the "Plan") dated as of January , 1997, and amended
thereafter, constitutes the Distribution and Servicing Plan with respect to the
Class A shares of PIMCO FUNDS: MULTI-MANAGER SERIES, a Massachusetts business
trust (the "Trust").
Section 1. The Trust will pay to the principal distributor of the Trust's
shares (the "Distributor") a fee (the "Servicing Fee") for services rendered and
expenses borne by the Distributor in connection with personal service rendered
to Class A shareholders of the Trust and/or maintenance of Class A shareholder
accounts, at an annual rate with respect to each Fund (series) of the Trust (a
"Fund") not to exceed 0.25% of the Fund's average daily net assets attributable
to its Class A shares. Subject to such limit and subject to the provisions of
Section 9 hereof, the Servicing Fee shall be as approved from time to time by
(a) the Trustees of the Trust and (b) the Independent Trustees of the Trust and
may be paid in respect of services rendered and expenses borne in the past as to
which no Servicing Fee was paid on account of such limitation. If at any time
this Plan shall not be in effect with respect to all Funds of the Trust, the
Servicing Fee shall be computed on the basis of net assets attributable to Class
A shares of those Funds for which the Plan is in effect. The Servicing Fee
shall be accrued daily and paid monthly or at such other intervals as the
Trustees shall determine.
Section 2. The Servicing Fee may be spent by the Distributor on personal
services rendered to Class A shareholders of the Trust and/or maintenance of
Class A shareholder accounts (but will generally not be spent on record keeping
charges, accounting expenses, transfer costs, or custodian fees). The
Distributor's expenditures may include, but shall not be limited to,
compensation to, and expenses (including telephone and overhead expenses) of,
financial consultants or other employees of the Distributor or of participating
or introducing brokers, certain banks and other financial intermediaries who aid
in the processing of purchase or redemption requests for Class A shares or the
processing of dividend payments with respect to Class A shares, who provide
information periodically to Class A shareholders showing their positions in a
Fund's Class A shares, who issue confirmations for transactions by Class A
shareholders, who forward communications from the Trust to Class A shareholders,
who render ongoing advice concerning the suitability of particular investment
opportunities offered by the Trust in light of Class A shareholders' needs, who
provide and maintain elective Class A shareholder services such as check writing
and wire transfer services, who provide and maintain pre-authorized investment
plans for Class A shareholders, who act as sole shareholder of record and
nominee for Class A shareholders, who respond to inquiries from Class A
shareholders relating to such services, who train personnel in the provision of
such services or who provide such similar services as permitted under applicable
statutes, rules or regulations.
2
<PAGE>
Section 3. Unless otherwise permitted under applicable law, this Plan
shall not take effect with respect to any Fund of the Trust until it has been
approved by a vote of at least a majority of the outstanding Class A voting
securities of that Fund. This Plan shall be deemed to have been effectively
approved with respect to any Fund if a majority of the outstanding Class A
voting securities of that Fund votes for the approval of this Plan,
notwithstanding that this Plan has not been approved by a majority of the
outstanding Class A voting securities of any other Fund or that this Plan has
not been approved by a majority of the outstanding Class A voting securities of
the Trust.
Section 4. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules and regulations
thereunder) of both (a) the Trustees of the Trust, and (b) the Independent
Trustees of the Trust cast in person at a meeting called for the purpose of
voting on this Plan or such agreement.
Section 5. This Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 4. It is acknowledged that the Distributor may expend or impute
interest expense in respect of its activities or expenses under this Plan and
the Trustees and the Independent Trustees may give such weight to such interest
expense as they determine in their discretion.
Section 6. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
Section 7. This Plan may be terminated at any time with respect to the
Class A shares of any Fund by vote of a majority of the Independent Trustees, or
by vote of a majority of the outstanding Class A voting securities of that Fund.
Section 8. All agreements with any person relating to implementation of
this Plan with respect to any Fund shall be in writing, and any agreement
related to this Plan with respect to any Fund shall provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Independent Trustees or by
vote of majority of the outstanding Class A voting securities of such
Fund, on not more than 60 days' written notice to any other party to
the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
3
<PAGE>
Section 9. This Plan may not be amended to increase materially the amount
of Servicing Fees permitted pursuant to Section 1 hereof without approval in the
manner provided in Section 3 hereof, and all material amendments to this Plan
shall be approved in the manner provided for approval of this Plan in Section 4
hereof.
Section 10. As used in this Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission, (c) the term "introducing broker" shall mean any broker or
dealer who is a member of the National Association of Securities Dealers, Inc.
and who is acting as an introducing broker pursuant to clearing agreements with
the Distributor; and (d) the term "participating broker" shall mean any broker
or dealer which is a member of the National Association of Securities Dealers,
Inc. and who has entered into a selling or dealer agreement with the
Distributor.
Section 11. This Plan has been adopted pursuant to Rule 12b-1 under the
Act and is designed to comply with all applicable requirements imposed under
such Rule. To the extent that any or all of the Servicing Fees may be deemed to
have financed any activity which is primarily intended to result in the sale of
the Trust's shares (within the meaning of Rule 12b-1), all those Servicing Fees
paid by the Trust shall be deemed to be made under this Plan and pursuant to
clause (b) of such Rule.
Dated: January __, 1997
4
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
15(b) Form of Distribution and Servicing 99.B15(b)
Plan (Class B)
<PAGE>
EXHIBIT B
---------
<PAGE>
PIMCO FUNDS: Multi-Manager Series
---------------------------------
Distribution and Servicing Plan (Class B)
This Plan (the "Plan"), dated as of January ___, 1997, and amended
thereafter, constitutes the Distribution and Servicing Plan with respect to the
Class B shares of PIMCO FUNDS: MULTI-MANAGER SERIES, a Massachusetts business
trust (the "Trust").
Section 1. The Trust will pay to the principal distributor of the Trust's
shares (the "Distributor") a fee (the "Distribution Fee") for services rendered
and expenses borne by the Distributor in connection with the distribution of
Class B shares of the Trust and another fee (the "Servicing Fee") in connection
with personal services rendered to Class B shareholders of the Trust and/or
maintenance of Class B shareholder accounts. The Distribution Fee shall be paid
at an annual rate with respect to each Fund (series) of the Trust (a "Fund") not
to exceed 0.75 of 1% of the Fund's average daily net assets attributable to its
Class B shares, and the Servicing Fee shall be paid at an annual rate not to
exceed 0.25 of 1% of the Fund's average daily net assets attributable to Class B
shares. Subject to such limits and subject to the provisions of Section 9
hereof, the Distribution and Servicing Fees shall be as approved from time to
time by (a) the Trustees of the Trust and (b) the Independent Trustees of the
Trust and may be paid in respect of services rendered and expenses borne in the
past as to which no Distribution and Servicing Fees were paid on account of such
limitation. If at any time this Plan shall not be in effect with respect to all
Funds of the Trust, the Distribution and Servicing Fees shall be computed on the
basis of sales of Class B shares or net assets attributable to Class B shares
(as applicable) of those Funds for which the Plan is in effect. The
Distribution and Servicing Fees shall be accrued daily and paid monthly or at
such other intervals as the Trustees shall determine.
Section 2. The Distribution Fee may be spent by the Distributor on any
activities or expenses primarily intended to result in the sale of Class B
shares of the Trust, including, but not limited to compensation to, and expenses
(including overhead and telephone expenses) of, financial consultants or other
employees of the Distributor or of participating or introducing brokers who
engage in distribution of Class B shares, preparing, printing and delivering
prospectuses and reports for other than existing Class B shareholders, providing
facilities to answer questions from other than existing Class B shareholders,
advertising and preparation, printing and distribution of sales literature,
receiving and answering correspondence, including requests for prospectuses and
statements of additional information, complying with federal and state
securities laws pertaining to the sale of Class B shares and assisting investors
in completing application forms and selecting dividend and other account options
for Class B shares. The Servicing Fee may be spent by the Distributor on
personal services rendered to Class B shareholders of the Trust and/or
maintenance of Class B shareholder accounts (but will generally not be spent on
record keeping charges, accounting expenses, transfer costs, or
2
<PAGE>
custodian fees). The Distributor's Servicing Fee expenditures may include, but
shall not be limited to, compensation to, and expenses (including telephone and
overhead expenses) of, financial consultants or other employees of the
Distributor or of participating or introducing brokers, certain banks and other
financial intermediaries who aid in the processing of purchase or redemption
requests for Class B shares or the processing of dividend payments with respect
to Class B shares, who provide information periodically to Class B shareholders
showing their positions in a Fund's Class B shares, who issue confirmations for
transactions by Class B shareholders, who forward communications from the Trust
to Class B shareholders, who render ongoing advice concerning the suitability of
particular investment opportunities offered by the Trust in light of Class B
shareholders' needs, who provide and maintain elective Class B shareholder
services such as check writing and wire transfer services, who provide and
maintain pre-authorized investment plans for Class B shareholders, who act as
sole shareholder of record and nominee for Class B shareholders, who respond to
inquiries from Class B shareholders relating to such services, who train
personnel in the provision of such services or who provide such similar services
as permitted under applicable statutes, rules or regulations.
Section 3. Unless otherwise permitted under applicable law, this Plan
shall not take effect with respect to any Fund of the Trust until it has been
approved by a vote of at least a majority of the outstanding Class B voting
securities of that Fund. This Plan shall be deemed to have been effectively
approved with respect to any Fund if a majority of the outstanding Class B
voting securities of that Fund votes for the approval of this Plan,
notwithstanding that this Plan has not been approved by a majority of the
outstanding Class B voting securities of any other Fund or that this Plan has
not been approved by a majority of the outstanding Class B voting securities of
the Trust.
Section 4. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules and regulations
thereunder) of both (a) the Trustees of the Trust, and (b) the Independent
Trustees of the Trust cast in person at a meeting called for the purpose of
voting on this Plan or such agreement.
Section 5. This Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 4. It is acknowledged that the Distributor may expend or impute
interest expense in respect of its activities or expenses under this Plan and
the Trustees and the Independent Trustees may give such weight to such interest
expense as they determine in their discretion.
Section 6. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
3
<PAGE>
Section 7. This Plan may be terminated at any time with respect to the
Class B shares of any Fund by vote of a majority of the Independent Trustees, or
by vote of a majority of the outstanding Class B voting securities of that Fund.
Section 8. All agreements with any person relating to implementation of
this Plan with respect to any Fund shall be in writing, and any agreement
related to this Plan with respect to any Fund shall provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Independent Trustees or by
vote of a majority of the outstanding Class B voting securities of
such Fund, on not more than 60 days' written notice to any other party
to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 9. This Plan may not be amended to increase materially the
aggregate amount of Distribution and Servicing Fees permitted pursuant to
Section 1 hereof without approval in the manner provided in Section 3 hereof,
and all material amendments to this Plan shall be approved in the manner
provided for approval of this Plan in Section 4 hereof.
Section 10. As used in this Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission, (c) the term "introducing broker" shall mean any broker or
dealer who is a member of the National Association of Securities Dealers, Inc.
and who is acting as an introducing broker pursuant to clearing agreements with
the Distributor; and (d) the term "participating broker" shall mean any broker
or dealer which is a member of the National Association of Securities Dealers,
Inc. and who has entered into a selling or dealer agreement with the
Distributor.
Section 11. This Plan has been adopted pursuant to Rule 12b-1 under the
Act and is designed to comply with all applicable requirements imposed under
such Rule. All Distribution Fees and, to the extent that any or all of the
Servicing Fees may be deemed to have financed any activity which is primarily
intended to result in the sale of the Trust's shares (within the meaning of Rule
12b-1), those Servicing Fees shall be deemed to have been paid under this Plan
and pursuant to clause (b) of such Rule.
Dated: January ___, 1997.
4
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
15(c) Form of Distribution and Servicing Plan 99.B15(c)
(Class C)
<PAGE>
EXHIBIT C
---------
<PAGE>
PIMCO FUNDS: Multi-Manager Series
---------------------------------
Distribution and Servicing Plan (Class C)
This Plan (the "Plan"), dated as of January ___, 1997, and amended
thereafter, constitutes the Distribution and Servicing Plan with respect to the
Class C shares of PIMCO FUNDS: MULTI-MANAGER SERIES, a Massachusetts business
trust (the "Trust").
Section 1. The Trust will pay to the principal distributor of the Trust's
shares (the "Distributor") a fee (the "Distribution Fee") for services rendered
and expenses borne by the Distributor in connection with the distribution of
Class C shares of the Trust and another fee (the "Servicing Fee") in connection
with personal services rendered to Class C shareholders of the Trust and/or
maintenance of Class C shareholder accounts. The Distribution Fee shall be paid
at an annual rate with respect to each Fund (series) of the Trust (a "Fund") not
to exceed 0.75 of 1% of the Fund's average daily net assets attributable to its
Class C shares, and the Servicing Fee shall be paid at an annual rate not to
exceed 0.25 of 1% of the Fund's average daily net assets attributable to Class C
shares. Subject to such limits and subject to the provisions of Section 9
hereof, the Distribution and Servicing Fees shall be as approved from time to
time by (a) the Trustees of the Trust and (b) the Independent Trustees of the
Trust and may be paid in respect of services rendered and expenses borne in the
past as to which no Distribution and Servicing Fees were paid on account of such
limitation. If at any time this Plan shall not be in effect with respect to all
Funds of the Trust, the Distribution and Servicing Fees shall be computed on the
basis of sales of Class C shares or net assets attributable to Class C shares
(as applicable) of those Funds for which the Plan is in effect. The
Distribution and Servicing Fees shall be accrued daily and paid monthly or at
such other intervals as the Trustees shall determine.
Section 2. The Distribution Fee may be spent by the Distributor on any
activities or expenses primarily intended to result in the sale of Class C
shares of the Trust, including, but not limited to compensation to, and expenses
(including overhead and telephone expenses) of, financial consultants or other
employees of the Distributor or of participating or introducing brokers who
engage in distribution of Class C shares, preparing, printing and delivering
prospectuses and reports for other than existing Class C shareholders, providing
facilities to answer questions from other than existing Class C shareholders,
advertising and preparation, printing and distribution of sales literature,
receiving and answering correspondence, including requests for prospectuses and
statements of additional information, complying with federal and state
securities laws pertaining to the sale of Class C shares and assisting investors
in completing application forms and selecting dividend and other account options
for Class C shares. The Servicing Fee may be spent by the Distributor on
personal services rendered to Class C shareholders of the Trust and/or
maintenance of Class C shareholder accounts (but will generally not be spent on
record keeping charges, accounting expenses, transfer costs, or custodian fees).
The Distributor's Servicing Fee expenditures may include, but shall not be
limited to, compensation to, and expenses (including telephone and overhead
expenses) of, financial consultants or other employees of the Distributor or of
participating or introducing
2
<PAGE>
brokers, certain banks and other financial intermediaries who aid in the
processing of purchase or redemption requests for Class C shares or the
processing of dividend payments with respect to Class C shares, who provide
information periodically to Class C shareholders showing their positions in a
Fund's Class C shares, who issue confirmations for transactions by Class C
shareholders, who forward communications from the Trust to Class C shareholders,
who render ongoing advice concerning the suitability of particular investment
opportunities offered by the Trust in light of Class C shareholders' needs, who
provide and maintain elective Class C shareholder services such as check writing
and wire transfer services, who provide and maintain pre-authorized investment
plans for Class C shareholders, who act as sole shareholder of record and
nominee for Class C shareholders, who respond to inquiries from Class C
shareholders relating to such services, who train personnel in the provision of
such services or who provide such similar services as permitted under applicable
statutes, rules or regulations.
Section 3. Unless otherwise permitted under applicable law, this Plan
shall not take effect with respect to any Fund of the Trust until it has been
approved by a vote of at least a majority of the outstanding Class C voting
securities of that Fund. This Plan shall be deemed to have been effectively
approved with respect to any Fund if a majority of the outstanding Class C
voting securities of that Fund votes for the approval of this Plan,
notwithstanding that this Plan has not been approved by a majority of the
outstanding Class C voting securities of any other Fund or that this Plan has
not been approved by a majority of the outstanding Class C voting securities of
the Trust.
Section 4. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Investment Company Act of 1940 (the "Act") or the rules and regulations
thereunder) of both (a) the Trustees of the Trust, and (b) the Independent
Trustees of the Trust cast in person at a meeting called for the purpose of
voting on this Plan or such agreement.
Section 5. This Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 4. It is acknowledged that the Distributor may expend or impute
interest expense in respect of its activities or expenses under this Plan and
the Trustees and the Independent Trustees may give such weight to such interest
expense as they determine in their discretion.
Section 6. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
Section 7. This Plan may be terminated at any time with respect to the
Class C shares of any Fund by vote of a majority of the Independent Trustees, or
by vote of a majority of the outstanding Class C voting securities of that Fund.
3
<PAGE>
Section 8. All agreements with any person relating to implementation of
this Plan with respect to any Fund shall be in writing, and any agreement
related to this Plan with respect to any Fund shall provide:
A. That such agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of the Independent Trustees or by
vote of majority of the outstanding Class C voting securities of such
Fund, on not more than 60 days' written notice to any other party to
the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 9. This Plan may not be amended to increase materially the
aggregate amount of Distribution and Servicing Fees permitted pursuant to
Section 1 hereof without approval in the manner provided in Section 3 hereof,
and all material amendments to this Plan shall be approved in the manner
provided for approval of this Plan in Section 4 hereof.
Section 10. As used in this Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission, (c) the term "introducing broker" shall mean any broker or
dealer who is a member of the National Association of Securities Dealers, Inc.
and who is acting as an introducing broker pursuant to clearing agreements with
the Distributor; and (d) the term "participating broker" shall mean any broker
or dealer which is a member of the National Association of Securities Dealers,
Inc. and who has entered into a selling or dealer agreement with the
Distributor.
Section 11. This Plan has been adopted pursuant to Rule 12b-1 under the
Act and is designed to comply with all applicable requirements imposed under
such Rule. All Distribution Fees and, to the extent that any or all of the
Servicing Fees may be deemed to have financed any activity which is primarily
intended to result in the sale of the Trust's shares (within the meaning of Rule
12b-1), those Servicing Fees shall be deemed to have been paid under this Plan
and pursuant to clause (b) of such Rule.
Dated: January ___, 1997.
4
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
15(d) Form of Distribution Plan for 99.B15(d)
Administrative Class Shares
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
DISTRIBUTION PLAN
FOR ADMINISTRATIVE CLASS SHARES
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust") is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust issues shares of beneficial interest ("shares") in
separate series ("Funds"), with each Fund representing interests in a separate
portfolio of securities and other assets;
WHEREAS, the Trust issues shares of the Funds in separate classes of
shares, one of which is designated the Administrative Class (the "Administrative
Class" shares);
WHEREAS, certain shareholders of the Trust may require distribution
and related services that are in addition to services required by other
shareholders, and the provision of such services to shareholders requiring these
services may benefit such shareholders and facilitate their ability to invest in
the Funds;
WHEREAS, issuance of shares of the Funds in a class subject to a fee
for the Funds' cost of providing distribution and related services would
allocate the Funds' expense of rendering such services to the shareholders who
receive such additional services;
WHEREAS, the Funds with respect to their Administrative Class shares
intend to enter into Distribution Agreements ("Agreements") pursuant to this
Distribution Plan (the "Plan") with various Service Organizations ("Service
Organizations"), either directly or through the Trust's distributor, PIMCO Funds
Distribution Company (the "Distributor"), pursuant to which the Service
Organization will make available or offer Administrative Class shares of the
Funds for sale to the public and/or provide certain shareholder services to its
customers that invest in the Funds;
WHEREAS, the Funds have adopted a multiple class plan pursuant to Rule
18f-3 under the 1940 Act to permit the issuance of shares in different classes;
WHEREAS, the Board of Trustees of the Trust has determined that there
is a reasonable likelihood that the Plan will benefit the Funds and their
shareholders;
NOW THEREFORE, the Trust hereby adopts this Distribution Plan on the
following terms and conditions:
<PAGE>
1. The Trust (or the Distributor, acting as agent of the Trust) shall
reimburse a Service Organization with which the Trust (or the Distributor),
regarding the Administrative Class of a Fund, has an Agreement, for costs and
expenses incurred in connection with the distribution and marketing of shares of
that Class and/or the provision of certain shareholder services to its customers
that invest in the Funds, at a rate specified in paragraph 2 below, based upon
the average daily net assets of the Fund attributable to the Administrative
Class.
2. Subject to the limitations of applicable law and regulations,
including rules of the National Association of Securities Dealers, Inc.
("NASD"), the Service Organization will be reimbursed quarterly for such costs,
expenses or payments at an annual rate of up to but not more than 0.25% of the
average daily net assets of the Fund attributable to the Administrative Class.
Any expense payable hereunder may be carried forward for reimbursement for up to
twelve months beyond the date in which it is incurred, subject always to the
limit that not more than 0.25% of the average daily net assets attributable to
an Administrative Class may be used in any month to pay expenses pursuant to the
Agreement. An Administrative Class shall incur no interest or carrying charges
for expenses carried forward. In the event the Plan is terminated as herein
provided, the Administrative Class shall have no liability for expenses that
were not reimbursed as of the date of termination.
3. The payment of fees to a Service Organization is subject to
compliance by the Service Organization with the terms of the Agreement between
the Service Organization and the Trust (or the Distributor). If an
Administrative Class shareholder ceases to be a client of a Service Organization
that has entered into an Agreement with the Trust (or the Distributor), but
continues to hold Administrative Class shares, the Service Organization will be
entitled to receive a similar payment in respect of the services provided to
such investors, except that the Distributor may determine that the Service
Organization shall no longer be entitled to such payment if the client becomes a
client of another Service Organization that has an Agreement with the Trust (or
the Distributor). For the purposes of determining the fees payable under the
Plan, the average daily net asset value of the Fund attributable to the
Administrative Class shares shall be computed in the manner specified in the
Trust's Declaration of Trust and current prospectus.
4. Services which a Service Organization will provide under an
Agreement may include, but are not limited to, the following functions: placing
orders directly for the purchase of a Fund's shares and tendering a Fund's
shares for redemption; engaging in advertising with respect to a Fund's shares;
- 2 -
<PAGE>
providing information about the Funds; providing facilities to answer questions
from prospective investors about the Fund; receiving and answering
correspondence, including requests for prospectuses and statements of additional
information; preparing, printing and delivering prospectuses and shareholder
reports to prospective shareholders; complying with federal and state securities
laws pertaining to the sale of Administrative Class shares; and assisting
investors in applying to purchase Fund shares and selecting dividend and other
account options.
Shareholder services which a Service Organization will
provide under an Agreement may include, but are not limited to, the following
functions: receiving, aggregating and processing shareholder orders; furnishing
shareholder 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;
issuing confirmations for transactions by shareholders; and performing similar
account administrative services. In addition, Service Organizations can provide
their endorsement of the Administrative Class shares of a Fund to their clients,
members or customers as an inducement to invest in the Fund.
5. Any Service Organization entering into an Agreement with a Fund
(or with the Distributor) under this Plan may also enter into an Administrative
Services Agreement with regard to its Administrative Class with that Fund (or
with the Distributor), pursuant to an Administrative Services Plan adopted by
the Trust, which will not be subject to the terms of this Plan. However, in the
event the Service Organization enters into both types of agreements, the Service
Organization shall not be eligible to receive fees under more than one agreement
with respect to the same assets. A Fund (or the Distributor, acting as the
Fund's agent) under this Plan may enter into more than one Distribution
Agreement for its Administrative Class shares, with different Service
Organizations providing services to different groups of shareholders.
6. For so long as required pursuant to Rule 12b-1 under the 1940 Act,
the Plan shall not take effect with respect to a Fund until it has been approved
by a vote of at least a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Administrative Class of that Fund, which may include
the vote by an affiliated person of the Fund as the sole shareholder of the
Fund. With respect to the submission of the Plan for such a vote, it shall have
been effectively approved with respect to a Fund if a majority of the
outstanding voting
- 3 -
<PAGE>
securities of the Administrative Class of the Fund votes for approval of the
Plan, notwithstanding that the matter has not been approved by a majority of the
outstanding voting securities of the Administrative Class of any other Fund.
7. The Plan shall not take effect until it has been approved,
together with any related agreements and supplements, by votes of a majority of
both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust
who are not "interested persons" (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Plan or any agreements
related to it (the "Plan Trustees"), cast in person at a meeting (or meetings)
called for the purpose of voting on the Plan and such related agreements.
8. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 7.
9. Any person authorized to direct the disposition of monies paid or
payable by an Administrative Class pursuant to the Plan or any related agreement
shall provide to the Trust's Board of Trustees, and the Board shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
10. Any agreement related to the Plan, as such phrase is used is Rule
12b-1 under the 1940 Act, shall be in writing and shall provide: (a) that such
agreement may be terminated at any time as to a Fund, without payment of any
penalty, by vote of a majority of the Plan Trustees or by vote of a majority of
the outstanding voting securities of the Administrative Class of a Fund, on not
more than sixty (60) days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the event of its
assignment.
11. The Plan may be amended at any time with respect to a Fund by the
Board of Trustees, provided that (a) for so long as required pursuant to Rule
12b-1 under the 1940 Act, any amendment to increase materially the costs which
the Administrative Class shares may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the outstanding
voting securities of the Administrative Class of the Fund, and (b) any material
amendments of the terms of the Plan shall become effective only upon approval as
provided in paragraph 7 hereof.
12. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust shall be committed to the
- 4 -
<PAGE>
discretion of the Trustees who are not interested persons of the Trust.
13. The Trust shall preserve copies of the Plan, any related
agreement and any report made pursuant to paragraph 9 hereof, for a period of
not less than six (6) years from the date of the Plan, such agreement or report,
as the case may be, the first two (2) years of which shall be in an easily
accessible place.
14. It is understood and expressly stipulated that neither the
holders of shares of any Fund nor any Trustee, officer, agent or employee of the
Trust shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has adopted this Distribution Plan
effective as of the day of , 199 .
------ ------------ -
PIMCO FUNDS: MULTI-MANAGER SERIES
By:
-----------------------------
TITLE:
- 5 -
<PAGE>
EDGAR
EXHIBIT NO. EXHIBIT NAME EXHIBIT NO.
- ----------- ------------ -----------
18(b) Form of Amended and Restated 99.B18(b)
Multi-Class Plan
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
(formerly PIMCO Funds: Equity Advisors Series)
AMENDED AND RESTATED MULTI-CLASS PLAN
Plan pursuant to Rule 18f-3 under the Investment Company Act of 1940
--------------------------------------------------------------------
Effective Date (January __, 1997)
WHEREAS, the Board of Trustees of the PIMCO Funds: Multi-Manager Series
(formerly PIMCO Funds: Equity Advisors Series) (the "Trust") have considered the
following Amended and Restated Multi-Class Plan (the "Plan") under which the
Trust may offer multiple classes of shares of its now existing and hereafter
created series pursuant to Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, a majority of the Trustees of the Trust and a majority of the
Trustees who are not interested persons of the Trust ("Independent Trustees")
have found the Plan, as proposed, to be in the best interests of each class of
the Trust individually and the Trust as a whole;
NOW, THEREFORE, the Trust hereby approves and adopts the following Plan
pursuant to Rule 18f-3 under the 1940 Act.
1. FEATURES OF THE CLASSES
Each now existing and hereafter created series (each a "Fund") of the Trust
is authorized to issue from time to time its shares of beneficial interest in
five classes: Class A shares, Class B shares, Class C shares, Institutional
Class shares and Administrative Class shares./1/ Each class is subject to such
investment minimums and other conditions of eligibility as are set forth in the
Trust's prospectus(es) as from time to time in effect (together with all
relevant Statements of Additional Information, the "Prospectus"). Each Fund
offers such classes of shares to such classes of persons as are set forth in the
Prospectus.
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
- ---------------------------------------------
/1/ The Opportunity Fund has never offered Class B shares and sales of Class A
and Class C shares of the Opportunity Fund are subject to certain restrictions
as described in the Prospectus.
<PAGE>
other class and shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to that class.
In addition, Class A, Class B, Class C, Institutional Class and
Administrative Class shares shall have the features described in Sections 2, 3,
4 and 5 below. These features are subject to change, to the extent permitted by
law and by the Amended and Restated Declaration of Trust and By-laws of the
Trust, by action of the Board of Trustees of the Trust.
2. SALES CHARGE STRUCTURE
(a) Initial Sales Charge. Class A shares of the Funds are offered at a
--------------------
public offering price that is equal to their net asset value ("NAV") plus a
sales charge of up to 5.50% of the public offering price (which maximum may be
less for certain Funds, as described in the Prospectus). The sales charges on
Class A shares are subject to reduction or waiver as permitted by Rule 22d-1
under the 1940 Act, as described in the Prospectus. For example, as of the date
of this Plan, each Fund may waive the Class A sales charge for certain
categories of investors, including current or retired officers, trustees,
directors or employees of the Trust, and for current registered representatives
and other full-time employees of participating brokers.
Class B, Class C, Institutional Class and Administrative Class shares of
the Funds are offered at their NAV, without an initial sales charge.
(b) Contingent Deferred Sales Charge. A contingent deferred sales charge
--------------------------------
(a "CDSC") may be imposed on Class A, Class B or Class C shares under certain
circumstances. The Trust imposes a CDSC on redemptions of a particular class of
shares of a Fund if the investor redeems an amount which causes the current
value of the investor's account for the Fund to fall below the total dollar
amount of purchase payments subject to the CDSC, except that no CDSC is imposed
if the shares redeemed have been acquired through the reinvestment of dividends
or capital gains distributions or if the amount redeemed is derived from
increases in the value of the account above the amount of purchase payments
subject to a CDSC. In determining whether a CDSC is payable, it is assumed that
the purchase payment from which the redemption is made is the earliest purchase
payment from which a redemption or exchange has not already been effected. In
determining whether an amount is available for redemption of a certain class
without incurring a CDSC, the purchase payments made for all shares of that
class in the investor's account with the particular Fund are aggregated, and the
current value of all such shares is aggregated.
Purchases of Class A shares of each Fund of $1 million or more that are
redeemed within eighteen months of their purchase are subject to a CDSC of 1%,
except that the CDSC
<PAGE>
on Class A shares does not apply to an investor purchasing $1 million or more of
a Fund's Class A shares if such investor is otherwise eligible (i.e. without
regard to the amount of the purchase) to purchase Class A shares of such Fund
without any sales charge. The conditions for such eligibility will be set forth
in the Prospectus.
Class B shares that are redeemed within 6 years from purchase are subject
to a CDSC of up to 5% of the redemption amount to which the CDSC applies; such
percentage declines, eventually to 0%, the longer the shares are held, as
described in the Prospectus. As of the date of this Plan, purchases of Class B
shares are subject to a CDSC according to the following schedule:
<TABLE>
<CAPTION>
Years Since Purchase Percentage
Payment was Made CDSC
-------------------- ----------
<S> <C>
First.................... 5
Second................... 4
Third.................... 3
Fourth................... 3
Fifth.................... 2
Sixth.................... 1
Seventh.................. 0
Eighth................... *
</TABLE>
* Class B shares convert into Class A shares as described below.
Class C shares are subject to a CDSC of 1% if redeemed within 1 year after
purchase.
As permitted by Rule 6c-10 under the 1940 Act and as described in the
Prospectus, the CDSC otherwise applicable to Class A, Class B and Class C shares
is subject to reduction or waiver in connection with particular classes of
transactions provided the conditions in Rule 22d-1 under the 1940 Act are
satisfied. As of the date of this Plan, examples of redemptions for which the
CDSC is not applicable include any partial or complete redemption following
death or disability of a shareholder from an account in which the deceased or
disabled is named, provided the redemption is requested within one year of the
death or initial determination of disability (which applies to all classes), and
any redemption resulting from a return of an excess contribution to a qualified
employer retirement plan or an IRA (which applies only to Class A and Class C
shares).
Institutional Class and Administrative Class shares of each Fund are not
subject to a CDSC.
<PAGE>
3. SERVICE, DISTRIBUTION AND ADMINISTRATIVE FEES
(a) Service and Distribution Fees. Class A, Class B and Class C shares
-----------------------------
pay PIMCO Funds Distribution Company (the "Distributor") fees for services
rendered and expenses borne in connection with personal services rendered to
shareholders of that class and the maintenance of shareholder accounts ("Service
Fees"). Class A, Class B and Class C shares of each Fund pay a Service Fee of up
to 0.25% per annum of the average daily net assets of such Fund attributable to
such class, as described in the Prospectus. In addition, Class B and Class C
shares pay the Distributor fees in connection with the distribution of shares of
that class ("Distribution Fees"). Class B and Class C shares of each Fund pay a
Distribution Fee of up to 0.75% per annum of the average daily net assets of
such Fund attributable to such class, as described in the Prospectus. Class A
Service Fees and Class B and C Distribution and Service Fees ("12b-1 Fees") are
paid pursuant to separate plans adopted for each class pursuant to Rule 12b-1
under the 1940 Act.
The Trust has not adopted an administrative services plan or a
distribution plan with respect to the Institutional Class shares of the Funds.
However, Institutional Class shares may 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 and may
charge transaction or account fees. Service agents are responsible for
transmitting to their customers a schedule of any such fees and conditions.
The Trust has adopted an administrative services plan and a distribution
plan with respect to the Administrative Class shares of each Fund. Under the
terms of each plan, the Trust 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 ("Administrative Class
Fees"), financial intermediaries that provide services in connection with the
distribution of shares or administration of plans or programs that use Fund
shares as their funding medium, as described in the Prospectus. The same entity
may not receive both distribution and administrative services fees with respect
to the same assets but, with respect to separate assets, may receive fees under
both a distribution plan and an administrative services plan.
(b) Administration Fees. Each class of shares of each Fund pays
-------------------
administration fees ("Administration Fees") to PIMCO Advisors L.P. (the
"Administrator") pursuant to an administration agreement, which may be amended
from time to time, to provide or procure such services as custody, transfer
agency, accounting, legal and printing services. Institutional and
Administrative Class shares of each Fund currently pay Administration Fees at
the
<PAGE>
following annual rates based on the average daily net asset value of the Fund
attributable to the particular class:
Fees for Instit'l. Class
Fund and Admin. Class
---- ------------------------
Precious Metals .30%
International Developed, .50%
International, Structured
Emerging Markets and
Emerging Markets
All other Funds .25%
Class A, Class B (except the Opportunity Fund) and Class C shares of each
Fund currently pay their allocable share (based on relative net assets) of
Administration Fees based on the average daily net asset value of each Fund
attributable in the aggregate to Class A, Class B and Class C shares:
Fees for
Fund Class A, B, C
---- -------------
Precious Metals .45% of first $2.5 billion
.40% of amounts over $2.5 billion
International Developed, .65% of first $2.5 billion
International, Structured .60% of amounts over $2.5 billion
Emerging Markets and
Emerging Markets
All other Funds .40% of first $2.5 billion
.35% of amounts over $2.5 billion
4. ALLOCATION OF INCOME AND EXPENSES
(a) Class A, Class B, Class C and Administrative Class shares pay the
expenses associated with their different distribution and shareholder servicing
arrangements. All classes pay their respective Administration Fees. Each class
of shares may, at the Trustees' discretion, also pay a different share of other
expenses (together with 12b-1 Fees,
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Administrative Class Fees and Administration Fees, "Class Expenses"), not
including advisory fees or other expenses related to the management of the
Trust's assets, if these expenses are actually incurred in a different amount by
that class, or if the class receives services of a different kind or to a
different degree than other classes.
(b) 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 above, 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").
Expenses of a Fund shall be apportioned to each class of shares depending
on the nature of the expense item. Corporate Level Expenses and Fund Expenses
shall 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
imposition 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 1940 Act and
the Internal Revenue Code of 1986, as amended (the "Code").
5. EXCHANGE PRIVILEGES
Except with respect to exchanges for shares of the Opportunity Fund,
shareholders may exchange shares of one class of a Fund at net asset value,
without the imposition of any sales charge or CDSC, for shares of the same class
offered by another Fund or by PIMCO Funds: Pacific Investment Management Series,
a registered investment company advised by Pacific Investment Management
Company, provided that the exchange is made in states where the securities being
acquired are properly registered. Shareholders of Funds other than the
Opportunity Fund are not permitted to exchange any of their shares for
Opportunity Fund shares unless the shareholders are independently eligible to
purchase Opportunity Fund shares
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as described in the Prospectus. Institutional Class shares of a Fund may be
exchanged for Administrative Class shares offered by any Fund or by PIMCO Funds:
Pacific Investment Management Series, or vice versa, provided that the
Institutional Class or Administrative Class shareholder, as the case may be,
meets the eligibility requirements of the class into which the shareholder seeks
to exchange.
With respect to Class A, Class B and Class C shares subject to a CDSC, if
less than all of an investment is exchanged out of a Fund, any portion of the
investment attributable to capital appreciation and/or reinvested dividends or
capital gains distributions will be exchanged first, and thereafter any portions
exchanged will be from the earliest investment made in the Fund from which the
exchange was made.
6. CONVERSION FEATURES
Class B shares of each Fund automatically convert to Class A shares of the
same Fund after they have been held for 7 years, and thereafter are subject to
the lower fees charged to Class A shares. In this regard, if there is any
material increase in 12b-1 Fees applicable to Class A shares without the
approval of the Class B shareholders, the Trust will establish a new class of
shares, into which Class B shares would convert, on the same terms as those that
applied to Class A shares before such increase. No other conversion features
exist between classes of shares of the Funds.
7. DIVIDENDS/DISTRIBUTIONS
Each Fund pays out as dividends substantially all of its net investment
income (which comes from dividends and interest it receives from its
investments) and net realized short-term capital gains.
All dividends and/or distributions will be paid in the form of additional
shares of the class of shares of the Fund to which the dividends and/or
distributions relate or, at the election of the shareholder, of another Fund or
a series of PIMCO Funds: Pacific Investment Management Series at net asset value
of such Fund or series, unless the shareholder elects to receive cash. Dividends
paid by each Fund are calculated in the same manner and at the same time with
respect to each class.
8. WAIVER OR REIMBURSEMENT OF EXPENSES
Expenses may be waived or reimbursed by any adviser or sub-adviser 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.
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9. 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
and supersedes all previous plans of the Trust adopted pursuant to Rule 18f-3
under the 1940 Act.
10. 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 hereof in
section 9 above.
11. 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.
