<PAGE>
As filed with the Securities and Exchange Commission on October 31, 1997
Registration Nos. 33-36528;
811-6161
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. 28 /X/
--
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
--
Amendment No. 30 /X/
--
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)
(714) 760-4867
(Registrant's telephone number, including area code)
<TABLE>
<CAPTION>
Name and address
of agent for service: Copies to:
- -------------------- ---------
<S> <C> <C>
Stephen J. Treadway Newton B. Schott, Jr., Esq. Joseph B. Kittredge, Esq.
c/o PIMCO Advisors L.P. c/o PIMCO Advisors L.P. Ropes & Gray
2187 Atlantic Street 2187 Atlantic Street One International Place
Stamford, Connecticut 06902 Stamford, Connecticut 06902 Boston, Massachusetts 02110
</TABLE>
It is proposed that this filing will become effective (check
appropriate box):
/_/ immediately upon filing pursuant to paragraph (b)
/X/ on November 1, 1997 pursuant to paragraph (b)
- --
/_/ 60 days after filing pursuant to paragraph (a)(1)
/_/ on [date] pursuant to paragraph (a)(1)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on [date] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
THIS POST-EFFECTIVE AMENDMENT RELATES SOLELY TO 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 TAX-MANAGED STRUCTURED EMERGING MARKETS FUND, PIMCO
EMERGING MARKETS FUND, PIMCO INTERNATIONAL DEVELOPED FUND, PIMCO INTERNATIONAL
FUND, PIMCO INTERNATIONAL GROWTH FUND, PIMCO BALANCED FUND, AND PIMCO PRECIOUS
METALS FUND SERIES OF THE REGISTRANT. NO INFORMATION RELATING TO ANY OTHER
SERIES OF PIMCO FUNDS: MULTI-MANAGER SERIES (INCLUDING THE PIMCO ACTIVE SHORT-
TERM FUND) IS AMENDED OR SUPERSEDED HEREBY.
<PAGE>
PIMCO FUNDS: MULTI-MANAGER 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, PIMCO Structured
Emerging Markets Fund, PIMCO Tax-Managed Structured Emerging Markets Fund, PIMCO
International Growth 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; Performance
Information 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
5A. Management's Discussion Not Applicable
of Fund Performance
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
Being Offered Asset Value is Determined; Alternative
Purchase Arrangements; Distributor and
Distribution and Servicing Plans
8. Redemption or Repurchase How to Redeem
9. Pending Legal Proceedings Not Applicable
<PAGE>
PIMCO FUNDS: MULTI-MANAGER 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 Tax-Managed Structured Emerging Markets Fund, PIMCO
Emerging Markets Fund, PIMCO International Developed Fund, PIMCO International
Fund, PIMCO International Growth 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 Policies;
Registrant Investment Restrictions; Characteristics
and Risks of Securities and Investment
Techniques
5. Management of the Fund Management of the Trust; Portfolio
Transactions
5A. Management's Discussion Not Applicable
of Fund Performance
6. Capital Stock and Other Other Information; Portfolio
Securities Transactions; Dividends, Distributions
and Taxes
7. Purchase of Securities Management of the Trust; Purchase of
Being Offered Shares; Net Asset Value
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not Applicable
<PAGE>
PIMCO FUNDS: MULTI-MANAGER 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 Tax-Managed Structured Emerging Markets Fund, PIMCO Emerging
Markets Fund, PIMCO International Developed Fund, PIMCO International Fund,
PIMCO International Growth 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 Objective and Investment Objectives and Policies;
Policies Investment Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Other Information
Principal Holders of
Securities
16. Investment Advisory and Management of the Trust; Distribution
Other Services of Trust Shares
17. Brokerage Allocation and Portfolio Transactions and Brokerage
Other Practices
18. Capital Stock and Other Other Information
Securities
19. Purchase, Redemption and Distribution of Trust Shares; Net Asset
Pricing of Securities Being Value
Offered
20. Tax Status Taxation
21. Underwriters Distribution of Trust Shares
-3-
<PAGE>
22. Calculation of Performance Other Information
Data
23. Financial Statements Other Information - Financial Statements
-4-
<PAGE>
PIMCO Funds Prospectus
Multi-Manager Series
November 1, 1997
STOCK FUNDS
Equity Income Fund
Renaissance Fund
Value Fund
Capital Appreciation Fund
Growth Fund
Mid Cap Growth Fund
Target Fund
AGGRESSIVE STOCK FUNDS
Small Cap Value Fund
Opportunity Fund
INTERNATIONAL STOCK FUNDS
International Developed Fund
International Fund
Emerging Markets Fund
SPECIALIZED STOCK FUNDS
Innovation Fund
Precious Metals Fund
STOCK AND BOND FUNDS
Balanced Fund
BOND FUNDS
Tax Exempt Fund
PIMCO
<PAGE>
PIMCO Funds: Multi-Manager Series
Prospectus
November 1, 1997
PIMCO Funds: Multi-Manager Series (the "Trust") is an open-end se-
ries management investment company offering sixteen 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 Fund) 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). The Opportunity Fund does not of-
fer Class B 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
Arrangements."
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, 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 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 November 1, 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.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PIMCO Funds Overview.........................................................3
Schedule of Fees.............................................................4
Financial Highlights.........................................................8
Investment Objectives and Policies..........................................16
Characteristics and Risks of Securities and Investment Techniques...........25
Performance Information.....................................................37
How to Buy Shares...........................................................38
Alternative Purchase Arrangements...........................................42
Exchange Privilege..........................................................50
How to Redeem...............................................................51
Distributor and Distribution and Servicing Plans............................55
How Net Asset Value Is Determined...........................................58
Distributions...............................................................59
Taxes.......................................................................60
Management of the Trust.....................................................61
Description of the Trust....................................................67
Mailings to Shareholders....................................................68
</TABLE>
2 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Funds 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 September
30, 1997, PIMCO Advisors and its subsidiary partnerships had over
$130 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 Manag-
ers are affiliates of PIMCO Advisors except for Van Eck Associates
Corporation ("Van Eck"), an independent Portfolio Manager that ad-
vises the Precious Metals Fund. The affiliated Portfolio Managers
are listed below.
<TABLE>
<CAPTION>
INVESTMENT SPECIALTY
---------------------------------------------------------------------------
<S> <C>
COLUMBUS CIRCLE Stocks, using its "Positive Momentum & Positive
INVESTORS ("Columbus Surprise" discipline
Circle")
---------------------------------------------------
CADENCE CAPITAL Stocks of growth companies that the Portfolio Manager
MANAGEMENT ("Cadence") believes are trading at a reasonable price
---------------------------------------------------
NFJ INVESTMENT GROUP Value stocks that the Portfolio Manager believes are
("NFJ") undervalued and/or offer above-average dividend yields
---------------------------------------------------
BLAIRLOGIE CAPITAL International stocks
MANAGEMENT
("Blairlogie")
---------------------------------------------------
PACIFIC INVESTMENT All sectors of the bond market using its total return
MANAGEMENT COMPANY philosophy--seeking both yield and capital
("Pacific Investment appreciation
Management")
</TABLE>
FUND PROFILES
<TABLE>
<CAPTION>
FUND NAME INVESTMENT OBJECTIVE PRIMARY INVESTMENTS (/1/) PORTFOLIO MANAGER
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STOCK FUNDS Equity Current income as a Common stocks with below- NFJ
Income primary objective; long- average price to earnings
term growth of capital ratios and higher dividend
as a secondary objective 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 below- NFJ
capital and income average price to earnings
ratios relative to their
industry groups
------------------------------------------------------------------------------------------
Capital Growth of capital Common stocks of companies Cadence
Appreciation 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 companies Columbus Circle
capital; income is with medium to large
incidental market capitalizations
------------------------------------------------------------------------------------------
Mid Cap Growth of capital Common stocks of companies Cadence
Growth 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 companies Columbus Circle
consideration given to with medium market
income capitalizations
--------------------------------------------------------------------------------------------------------
AGGRESSIVE Small Cap Long-term growth of Common stocks of companies NFJ
STOCK FUNDS Value capital and income with market
capitalizations between
$50 million and $1 billion
and below-average price to
earnings ratios relative
to their industry groups
------------------------------------------------------------------------------------------
Opportunity (/2/) Capital appreciation; no Common stocks of companies Columbus Circle
consideration given to with small market
income capitalizations (less than
$1 billion)
--------------------------------------------------------------------------------------------------------
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 companies with small,
incidental medium and large market
capitalizations (developed
and emerging markets)
------------------------------------------------------------------------------------------
Emerging Long-term growth of Common stocks of companies Blairlogie
Markets capital located in emerging market
countries
--------------------------------------------------------------------------------------------------------
SPECIALIZED Innovation Capital appreciation; no Common stocks of companies Columbus Circle
STOCK FUNDS consideration given to with small, medium and
income large market
capitalizations
(technology-related
stocks)
------------------------------------------------------------------------------------------
Precious Capital appreciation; no U.S. and non-U.S. stocks Van Eck
Metals 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 municipal Columbus Circle
exempt from federal securities (tax-exempt
income tax, consistent 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. 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."
November 1, 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.
CLASS A SHARES
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5%
annual return and (2)
ANNUAL FUND OPERATING EXPENSES 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
-----------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------
OPPORTUNITY .65 .40 .25 1.30 68 94 122 203
-----------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------
OPPORTUNITY 68 94 122 203
-----------------------------------------------------------------------------------------
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>
1. The Administrative Fees for each Fund are subject to reduction
to the extent that the average net assets attributable in the ag-
gregate to the Fund's Class A, Class B and Class C shares exceed
$2.5 billion. See "Management of the Trust -- Advisory and Admin-
istrative 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 Distribu-
tion and Servicing Plans."
4 PIMCO Funds: Multi-Manager Series
<PAGE>
CLASS B SHARES
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5%
ANNUAL FUND OPERATING EXPENSES annual return and (2) redemption
(As a percentage of average net assets): at the end 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
-------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------
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>
1. The Administrative Fees for each Fund are subject to reduction
to the extent that the average net assets attributable in the ag-
gregate to the Fund's Class A, Class B and Class C shares exceed
$2.5 billion. See "Management of the Trust--Advisory and Adminis-
trative Fees."
2. 12b-1 fees which are equal to .25% represent servicing fees
which are paid annually to the Distributor and repaid to partici-
pating 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."
November 1, 1997 Prospectus 5
<PAGE>
CLASS C SHARES
<TABLE>
<CAPTION>
EXAMPLE: You would pay the
following expenses on a $1,000
investment assuming (1) 5%
ANNUAL FUND OPERATING EXPENSES annual return and (2) redemption
(As a percentage of average net assets): at the end 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
----------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------
OPPORTUNITY .65 .40 1.00 2.05 31 64 110 238
----------------------------------------------------------------------------------------
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:
YEAR
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
----------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------
OPPORTUNITY 21 64 110 238
----------------------------------------------------------------------------------------
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>
1. The Administrative Fees for each Fund are subject to reduction
to the extent that the average net assets attributable in the ag-
gregate to the Fund's Class A, Class B and Class C shares exceed
$2.5 billion. See "Management of the Trust--Advisory and Adminis-
trative Fees."
2. 12b-1 fees which are equal to .25% represent servicing fees
which are paid annually to the Distributor and repaid to partici-
pating 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."
The purpose of the foregoing 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. The information has been restated as
appropriate to reflect a Fund's current fees and expenses. The Ex-
amples for Class A shares assume payment of the current maximum
applicable 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.
6 PIMCO Funds: Multi-Manager Series
<PAGE>
(This Page Left Blank Intentionally)
November 1, 1997 Prospectus 7
<PAGE>
Financial Highlights
The financial highlights set forth on the following pages present certain in-
formation and ratios as well as performance information for the Funds. Certain
information provided below is included in the June 30, 1997 PIMCO Funds Annual
Report (relating to Class A, B and C shares) and, except as noted below, has
been audited by Price Waterhouse LLP, independent accountants, whose report
thereon is also included in such Annual Report. The Annual Report is incorpo-
rated by reference in the Statement of Additional Information and may be ob-
tained without charge from the Distributor. Financial Statements and related
notes are also incorporated by reference in the Statement of Additional Infor-
mation.
<TABLE>
<CAPTION>
Selected Per Share Data NET REALIZED/ DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
for the Period Ended: NET ASSET VALUE NET UNREALIZED TOTAL INCOME FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT INVESTMENT INVESTMENT REALIZED CAPITAL
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS
--------------- ------------- -------------- --------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME
FUND
Class A
01/20/97-
06/30/97 $ 13.94 $ 0.15 $ 1.48 $ 1.63 $ (0.18) $ 0.00 $ 0.00
Class B
01/20/97-
06/30/97 13.94 0.11 1.48 1.59 (0.16) 0.00 0.00
Class C
01/20/97-
06/30/97 13.94 0.11 1.48 1.59 (0.16) 0.00 0.00
RENAISSANCE
FUND (i)
Class A
10/01/96-
06/30/97 $ 16.08 $ 0.12 (a) $ 3.90 (a) $ 4.02 $ (0.12) $ 0.00 $ (2.25)
9/30/96 14.14 0.23 2.79 3.02 (0.23) (0.07) (0.78)
9/30/95 12.50 0.36 1.61 1.97 (0.33) 0.00 0.00
9/30/94 12.88 0.34 (0.17) 0.17 (0.33) 0.00 (0.22)
9/30/93 10.57 0.33 2.30 2.63 (0.32) 0.00 0.00
9/30/92 9.92 0.34 0.71 1.05 (0.40) 0.00 0.00
2/1/91-
9/30/91 8.38 0.28 1.54 1.82 (0.28) 0.00 0.00
Class B
10/01/96-
06/30/97 16.12 0.03 (a) 3.92 (a) 3.95 (0.05) 0.00 (2.25)
9/30/96 14.13 0.09 2.83 2.92 (0.11) (0.04) (0.78)
5/22/95-
9/30/95 12.55 0.11 1.55 1.66 (0.08) 0.00 0.00
Class C
10/01/96-
06/30/97 16.05 0.03 (a) 3.90 (a) 3.93 (0.04) 0.00 (2.25)
9/30/96 14.09 0.12 2.78 2.90 (0.13) (0.03) (0.78)
9/30/95 12.47 0.27 1.59 1.86 (0.24) 0.00 0.00
9/30/94 12.85 0.24 (0.16) 0.08 (0.24) 0.00 (0.22)
9/30/93 10.56 0.25 2.29 2.54 (0.25) 0.00 0.00
9/30/92 9.91 0.29 0.68 0.97 (0.32) 0.00 0.00
9/30/91 8.16 0.36 1.75 2.11 (0.36) 0.00 0.00
9/30/90 11.17 0.49 (2.32) (1.83) (0.49) 0.00 (0.69)
9/30/89 10.05 0.55 1.19 1.74 (0.62) 0.00 0.00
4/18/88-
9/30/88 10.00 0.24 (0.05) 0.19 (0.14) 0.00 0.00
VALUE FUND
Class A
01/13/97-
06/30/97 $ 13.17 $ 0.47 $ 1.26 $ 1.73 $ (0.10) $ 0.00 $ 0.00
Class B
01/13/97-
06/30/97 13.16 0.44 1.26 1.70 (0.06) 0.00 0.00
Class C
01/13/97-
06/30/97 13.15 0.43 1.28 1.71 (0.06) 0.00 0.00
CAPITAL AP-
PRECIATION
FUND
Class A
01/20/97-
06/30/97 $ 19.31 $ 0.09 $ 1.76 $ 1.85 $ 0.00 $ 0.00 $ 0.00
Class B
01/20/97-
06/30/97 19.31 0.01 1.78 1.79 0.00 0.00 0.00
Class C
01/20/97-
06/30/97 19.31 0.02 1.77 1.79 0.00 0.00 0.00
GROWTH FUND
Class A
10/01/96-
06/30/97 $ 26.58 $ 0.69 $ 3.27 $ 3.96 $ 0.00 $ 0.00 $ (3.51)
9/30/96 25.73 0.06 3.72 3.78 0.00 0.00 (2.93)
9/30/95 22.01 0.12 4.79 4.91 0.00 0.00 (1.19)
9/30/94 23.64 0.12 0.12 0.24 0.00 0.00 (1.87)
9/30/93 20.76 0.09 3.53 3.62 0.00 0.00 (0.74)
9/30/92 20.63 0.14 1.38 1.52 (0.14) 0.00 (1.25)
10/26/90-
9/30/91 16.99 0.21 5.28 5.49 (0.19) 0.00 (1.66)
Class B
10/01/96-
06/30/97 25.46 0.35 3.29 3.64 0.00 0.00 (3.51)
9/30/96 24.94 (0.07) 3.52 3.45 0.00 0.00 (2.93)
5/23/95-
9/30/95 22.63 (0.03) 2.34 2.31 0.00 0.00 0.00
<CAPTION>
Selected Per Share Data DISTRIBUTIONS
for the Period Ended: IN EXCESS OF
NET REALIZED
CAPITAL GAINS
-------------
<S> <C>
EQUITY INCOME
FUND
Class A
01/20/97-
06/30/97 $ 0.00
Class B
01/20/97-
06/30/97 0.00
Class C
01/20/97-
06/30/97 0.00
RENAISSANCE
FUND (i)
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
2/1/91-
9/30/91 0.00
Class B
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/22/95-
9/30/95 0.00
Class C
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
9/30/91 0.00
9/30/90 0.00
9/30/89 0.00
4/18/88-
9/30/88 0.00
VALUE FUND
Class A
01/13/97-
06/30/97 $ 0.00
Class B
01/13/97-
06/30/97 0.00
Class C
01/13/97-
06/30/97 0.00
CAPITAL AP-
PRECIATION
FUND
Class A
01/20/97-
06/30/97 $ 0.00
Class B
01/20/97-
06/30/97 0.00
Class C
01/20/97-
06/30/97 0.00
GROWTH FUND
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
10/26/90-
9/30/91 0.00
Class B
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/23/95-
9/30/95 0.00
</TABLE>
*Annualized
(a)Per share amounts based upon average number of shares outstanding during
the period.
(i) Formerly, the PIMCO Advisors Equity Income Fund. The information provided
reflects results of operations under the Fund's former investment
objective and policies through January 31, 1992; such results would not
necessarily have been achieved had the Fund's current objective and
policies then been in effect.
8 PIMCO Funds: Multi-Manager Series
<PAGE>
The information provided for each of the Renaissance, Growth, Target, Opportu-
nity, International, Innovation, Precious Metals and Tax Exempt Funds reflects
the operational history of a corresponding series of PIMCO Advisors Funds which
reorganized as a series of the Trust on January 17, 1997. In connection with
the reorganizations, these Funds changed their fiscal year ends from September
30 to June 30. The information provided for these Funds for each of the five-
year periods ended prior to October 1, 1996 has been audited by other indepen-
dent accountants. The expense ratios provided for these Funds reflect fee ar-
rangements of PIMCO Advisors Funds in effect prior to January 17, 1997 which
differ from the current fee arrangements of the Trust.
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
DISTRIBUTIONS TAX BASIS NET ASSET EXPENSES TO INCOME TO
FROM RETURN OF TOTAL VALUE END OF NET ASSETS END AVERAGE NET AVERAGE NET PORTFOLIO
EQUALIZATION CAPITAL DISTRIBUTIONS PERIOD TOTAL RETURN OF PERIOD (000S) ASSETS ASSETS TURNOVER RATE
- ------------- --------- ------------- ------------ ------------ ---------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ 0.00 $ (0.18) $ 15.39 11.77% $ 1,756 1.13%* 2.85%* 45%
0.00 0.00 (0.16) 15.37 11.45 2,561 1.87* 2.11* 45
0.00 0.00 (0.16) 15.37 11.42 6,624 1.87* 2.15* 45
$ 0.00 $ 0.00 $ (2.37) $ 17.73 27.53% $ 33,606 1.23%* 0.95%* 131%
0.00 0.00 (1.08) 16.08 22.37 20,631 1.25 1.60 203
0.00 0.00 (0.33) 14.14 16.10 12,933 1.30 2.90 177
0.00 0.00 (0.55) 12.50 1.40 14,942 1.30 2.70 175
0.00 0.00 (0.32) 12.88 25.30 6,328 1.30 2.90 168
0.00 0.00 (0.40) 10.57 10.70 2,593 1.40 3.30 149
0.00 0.00 (0.28) 9.92 34.80 15 1.60* 4.40* 143
0.00 0.00 (2.30) 17.77 26.88 37,253 1.97* 0.20* 131
0.00 0.00 (0.93) 16.12 21.54 15,693 2.00 0.85 203
0.00 0.00 (0.08) 14.13 13.30 1,760 2.10* 2.20* 177
0.00 0.00 (2.29) 17.69 26.86 313,226 1.97* 0.21* 131
0.00 0.00 (0.94) 16.05 21.52 230,058 2.00 0.85 203
0.00 0.00 (0.24) 14.09 15.20 174,316 2.10 2.10 177
0.00 0.00 (0.46) 12.47 0.70 178,892 2.00 2.00 175
0.00 0.00 (0.25) 12.85 24.40 94,247 2.10 2.20 168
0.00 0.00 (0.32) 10.56 9.90 45,101 2.10 2.70 149
0.00 0.00 (0.36) 9.91 26.50 22,651 2.20 4.20 143
0.00 0.00 (1.18) 8.16 (18.00) 25,758 2.00 5.10 70
0.00 0.00 (0.62) 11.17 17.90 45,168 1.90 5.20 85
0.00 0.00 (0.14) 10.05 4.30 47,118 2.00* 5.40* 23
$ 0.00 $ 0.00 $ (0.10) $ 14.80 13.19% $ 15,648 1.11%* 1.71%* 71%
0.00 0.00 (0.06) 14.80 12.93 25,433 1.86* 0.96* 71
0.00 0.00 (0.06) 14.80 13.02 64,110 1.86* 0.97* 71
$ 0.00 $ 0.00 $ 0.00 $ 21.16 9.58% $ 6,534 1.11%* 0.59%* 87%
0.00 0.00 0.00 21.10 9.27 3,022 1.85* (0.26)* 87
0.00 0.00 0.00 21.10 9.27 13,093 1.86* (0.23)* 87
$ 0.00 $ 0.00 $ (3.51) $ 27.03 15.93% $147,276 1.11%* 0.13%* 94%
0.00 0.00 (2.93) 26.58 16.11 151,103 1.11 0.24 104
0.00 0.00 (1.19) 25.73 23.70 134,819 1.10 0.50 111
0.00 0.00 (1.87) 22.01 1.30 107,269 1.10 0.60 115
0.00 0.00 (0.74) 23.64 17.70 97,509 1.10 0.40 110
0.00 0.00 (1.39) 20.76 7.70 71,209 1.10 0.70 92
0.00 0.00 (1.85) 20.63 38.60 17,064 1.20* 0.90* 95
0.00 0.00 (3.51) 25.59 15.32 55,626 1.86* (0.62)* 94
0.00 0.00 (2.93) 25.46 15.22 37,256 1.86 (0.51) 104
0.00 0.00 0.00 24.94 10.20 7,671 1.90* (0.40)* 111
<CAPTION>
DISTRIBUTIONS
FROM AVERAGE
EQUALIZATION COMMISSION RATE
- -------------- ---------------
<S> <C>
$ 0.00 $ 0.06
0.00 0.06
0.00 0.06
$ 0.00 $ 0.06
0.00 0.06
0.00
0.00
0.00
0.00
0.00
0.00 0.06
0.00 0.06
0.00
0.00 0.06
0.00 0.06
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$ 0.00 $ 0.06
0.00 0.06
0.00 0.06
$ 0.00 $ 0.06
0.00 0.06
0.00 0.06
$ 0.00 $ 0.05
0.00 0.07
0.00
0.00
0.00
0.00
0.00
0.00 0.05
0.00 0.07
0.00
</TABLE>
November 1, 1997 Prospectus 9
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected Per Share Data NET REALIZED/ DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
for the Period Ended: NET ASSET VALUE NET UNREALIZED TOTAL INCOME FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT INVESTMENT INVESTMENT REALIZED CAPITAL
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS
--------------- ------------- -------------- --------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
(CONT.)
Class C
10/01/96-
06/30/97 $ 25.46 $ 0.45 $ 3.18 $ 3.63 $ 0.00 $ 0.00 $ (3.51)
9/30/96 24.94 (0.12) 3.57 3.45 0.00 0.00 (2.93)
9/30/95 21.52 (0.04) 4.65 4.61 0.00 0.00 (1.19)
9/30/94 23.32 (0.04) 0.11 0.07 0.00 0.00 (1.87)
9/30/93 20.64 (0.07) 3.49 3.42 0.00 0.00 (0.74)
9/30/92 20.54 (0.01) 1.37 1.36 (0.01) 0.00 (1.25)
9/30/91 16.93 0.12 5.32 5.44 (0.17) 0.00 (1.66)
9/30/90 19.71 0.19 (1.67) (1.48) (0.18) 0.00 (1.12)
9/30/89 13.93 0.11 5.77 5.88 (0.10) 0.00 0.00
9/30/88 18.04 0.09 (2.96) (2.87) (0.11) 0.00 (1.13)
MID CAP
GROWTH FUND
Class A
01/13/97-
06/30/97 $ 18.14 $(0.04) $ 2.14 $ 2.10 $ 0.00 $ 0.00 $ 0.00
Class B
01/13/97-
06/30/97 18.14 (0.11) 2.14 2.03 0.00 0.00 0.00
Class C
01/13/97-
06/30/97 18.14 (0.10) 2.14 2.04 0.00 0.00 0.00
TARGET FUND
Class A
10/01/96-
06/30/97 $ 17.11 $(0.04) (a) $ 1.82 (a) $ 1.78 $ 0.00 $ 0.00 $ (2.07)
9/30/96 16.40 (0.05) 2.54 2.49 0.00 0.00 (1.78)
9/30/95 13.13 (0.02) 3.45 3.43 0.00 0.00 (0.16)
9/30/94 12.72 (0.04) 0.57 0.53 0.00 0.00 (0.12)
12/17/92-
9/30/93 10.00 (0.02) 2.74 2.72 0.00 0.00 0.00
Class B
10/01/96-
06/30/97 16.58 (0.12) (a) 1.75 (a) 1.63 0.00 0.00 (2.07)
9/30/96 16.06 (0.09) 2.39 2.30 0.00 0.00 (1.78)
5/22/95-
9/30/95 13.93 (0.05) 2.18 2.13 0.00 0.00 0.00
Class C
10/01/96-
06/30/97 16.58 (0.12) (a) 1.74 (a) 1.62 0.00 0.00 (2.07)
9/30/96 16.05 (0.16) 2.47 2.31 0.00 0.00 (1.78)
9/30/95 12.95 (0.12) 3.38 3.26 0.00 0.00 (0.16)
9/30/94 12.65 (0.14) 0.56 0.42 0.00 0.00 (0.12)
12/17/92-
9/30/93 10.00 (0.09) 2.74 2.65 0.00 0.00 0.00
SMALL CAP
VALUE FUND
Class A
01/20/97-
06/30/97 $ 14.02 $ 0.10 $ 1.63 $ 1.73 $ 0.00 $ 0.00 $ 0.00
Class B
01/20/97-
06/30/97 14.02 0.08 1.61 1.69 0.00 0.00 0.00
Class C
01/20/97-
06/30/97 14.02 0.08 1.61 1.69 0.00 0.00 0.00
OPPORTUNITY
FUND
Class A
10/01/96-
06/30/97 $ 37.36 $ 0.00 $(3.10) $ (3.10) $ 0.00 $ 0.00 $ (4.91)
9/30/96 39.08 (0.11) 6.12 6.01 0.00 0.00 (7.73)
9/30/95 28.87 (0.11) 11.19 11.08 0.00 0.00 (0.87)
9/30/94 33.43 (0.17) (2.02) (2.19) 0.00 0.00 (2.26)
9/30/93 19.84 (0.15) 14.00 13.85 0.00 0.00 (0.26)
9/30/92 17.95 (0.04) 3.61 3.57 0.00 0.00 (1.68)
12/17/90-
9/30/91 11.78 (0.03) 6.20 6.17 0.00 0.00 0.00
Class C
10/01/96-
06/30/97 35.38 (0.04) (3.05) (3.09) 0.00 0.00 (4.91)
9/30/96 37.64 (0.35) 5.82 5.47 0.00 0.00 (7.73)
9/30/95 28.04 (0.34) 10.81 10.47 0.00 0.00 (0.87)
9/30/94 32.77 (0.38) (1.98) (2.36) 0.00 0.00 (2.26)
9/30/93 19.60 (0.34) 13.77 13.43 0.00 0.00 (0.26)
9/30/92 17.87 (0.18) 3.59 3.41 0.00 0.00 (1.68)
9/30/91 11.93 (0.11) 6.42 6.31 0.00 0.00 (0.37)
9/30/90 15.78 (0.01) (2.13) (2.14) 0.00 0.00 (1.71)
9/30/89 11.84 (0.03) 3.97 3.94 0.00 0.00 0.00
9/30/88 16.73 0.03 (2.34) (2.31) (0.03) 0.00 (2.55)
<CAPTION>
Selected Per Share Data DISTRIBUTIONS
for the Period Ended: IN EXCESS OF
NET REALIZED
CAPITAL GAINS
-------------
<S> <C>
GROWTH FUND
(CONT.)
Class C
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
9/30/91 0.00
9/30/90 0.00
9/30/89 0.00
9/30/88 0.00
MID CAP
GROWTH FUND
Class A
01/13/97-
06/30/97 $ 0.00
Class B
01/13/97-
06/30/97 0.00
Class C
01/13/97-
06/30/97 0.00
TARGET FUND
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
12/17/92-
9/30/93 0.00
Class B
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/22/95-
9/30/95 0.00
Class C
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
12/17/92-
9/30/93 0.00
SMALL CAP
VALUE FUND
Class A
01/20/97-
06/30/97 $ 0.00
Class B
01/20/97-
06/30/97 0.00
Class C
01/20/97-
06/30/97 0.00
OPPORTUNITY
FUND
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
12/17/90-
9/30/91 0.00
Class C
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
9/30/91 0.00
9/30/90 0.00
9/30/89 0.00
9/30/88 0.00
</TABLE>
*Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
10 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
DISTRIBUTIONS TAX BASIS NET ASSET EXPENSES TO INCOME TO
FROM RETURN OF TOTAL VALUE END OF NET ASSETS END AVERAGE NET AVERAGE NET PORTFOLIO
EQUALIZATION CAPITAL DISTRIBUTIONS PERIOD TOTAL RETURN OF PERIOD (000S) ASSETS ASSETS TURNOVER RATE
------------- --------- ------------- ------------ ------------ ---------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
(CONT.)
Class C
10/01/96-
06/30/97 $ 0.00 $ 0.00 $ (3.51) $ 25.58 15.27% $1,514,432 1.86%* (0.61)%* 94%
9/30/96 0.00 0.00 (2.93) 25.46 15.22 1,450,216 1.86 (0.51) 104
9/30/95 0.00 0.00 (1.19) 24.94 22.80 1,290,152 1.90 (0.20) 111
9/30/94 0.00 0.00 (1.87) 21.52 0.50 1,085,427 1.90 (0.20) 115
9/30/93 0.00 0.00 (0.74) 23.32 16.90 1,077,490 1.90 (0.30) 110
9/30/92 0.00 0.00 (1.26) 20.64 6.90 853,121 1.90 (0.10) 92
9/30/91 0.00 0.00 (1.83) 20.54 35.10 564,398 1.80 0.60 95
9/30/90 0.00 0.00 (1.30) 16.93 (8.00) 314,075 1.70 1.00 89
9/30/89 0.00 0.00 (0.10) 19.71 42.40 373,490 1.70 0.70 83
9/30/88 0.00 0.00 (1.24) 13.93 (14.80) 338,493 1.80 0.60 104
MID CAP
GROWTH FUND
CLASS A
01/13/97-
06/30/97 $ 0.00 $ 0.00 $ 0.00 $ 20.24 11.58% $ 12,184 1.11%* 0.17%* 82%
CLASS B
01/13/97-
06/30/97 0.00 0.00 0.00 20.17 11.19 28,259 1.85* (0.58)* 82
CLASS C
01/13/97-
06/30/97 0.00 0.00 0.00 20.18 11.25 53,686 1.86* (0.58)* 82
TARGET FUND
CLASS A
10/01/96-
06/30/97 $ 0.00 $ 0.00 $ (2.07) $ 16.82 11.19% $ 150,689 1.20%* (0.31)%* 145%
9/30/96 0.00 0.00 (1.78) 17.11 16.50 156,027 1.18 (0.34) 141
9/30/95 0.00 0.00 (0.16) 16.40 26.50 121,915 1.20 (0.10) 128
9/30/94 0.00 0.00 (0.12) 13.13 4.20 90,527 1.20 (0.30) 104
12/17/92-
9/30/93 0.00 0.00 0.00 12.72 27.20 48,787 1.30* (0.30)* 76
CLASS B
10/01/96-
06/30/97 0.00 0.00 (2.07) 16.14 10.58 67,531 1.94* (1.05)* 145
9/30/97 0.00 0.00 (1.78) 16.58 15.58 49,851 1.93 (1.09) 141
5/22/95-
9/30/95 0.00 0.00 0.00 16.06 15.30 7,554 2.00* (0.90)* 128
CLASS C
10/01/96-
06/30/97 0.00 0.00 (2.07) 16.13 10.52 969,317 1.94* (1.06)* 145
9/30/96 0.00 0.00 (1.78) 16.58 15.66 974,948 1.93 (1.09) 141
9/30/95 0.00 0.00 (0.16) 16.05 25.60 780,355 2.00 (0.90) 128
9/30/94 0.00 0.00 (0.12) 12.95 3.40 556,043 2.00 (1.10) 104
12/17/92-
9/30/93 0.00 0.00 0.00 12.65 26.50 298,238 2.00* (1.00)* 76
SMALL CAP
VALUE FUND
CLASS A
01/20/97-
06/30/97 $ 0.00 $ 0.00 $ 0.00 $ 15.75 12.34% $ 6,563 1.30%* 1.94%* 48%
CLASS B
01/20/97-
06/30/97 0.00 0.00 0.00 15.71 12.05 11,077 2.04* 1.23* 48
CLASS C
01/20/97-
06/30/97 0.00 0.00 0.00 15.71 12.05 20,637 2.05* 1.13* 48
OPPORTUNITY
FUND
CLASS A
10/01/96-
06/30/97 $ 0.00 $ 0.00 $ (4.91) $ 29.35 (8.87)% $ 213,484 1.25%* (0.12)%* 69%
9/30/96 0.00 0.00 (7.73) 37.36 18.35 134,859 1.13 (0.32) 91
9/30/95 0.00 0.00 (0.87) 39.08 39.70 120,830 1.20 (0.40) 102
9/30/94 0.00 (0.11) (2.37) 28.87 (6.70) 95,261 1.10 (0.60) 78
9/30/93 0.00 0.00 (0.26) 33.43 70.40 106,666 1.20 (0.60) 105
9/30/92 0.00 0.00 (1.68) 19.84 21.60 22,454 1.30 (0.20) 94
12/17/90-
9/30/91 0.00 0.00 0.00 17.95 70.90 1,623 1.40* (0.50)* 145
CLASS C
10/01/96-
06/30/97 0.00 0.00 (4.91) 27.38 (9.40) 629,446 1.97* (0.95)* 69
9/30/96 0.00 0.00 (7.73) 35.38 17.47 800,250 1.88 (1.07) 91
9/30/95 0.00 0.00 (0.87) 37.64 38.60 715,191 1.90 (1.10) 102
9/30/94 0.00 (0.11) (2.37) 28.04 (7.40) 553,460 1.90 (1.40) 78
9/30/93 0.00 0.00 (0.26) 32.77 69.10 618,193 2.00 (1.30) 105
9/30/92 0.00 0.00 (1.68) 19.60 20.80 179,081 2.00 (1.00) 94
9/30/91 0.00 0.00 (0.37) 17.87 54.40 58,656 2.00 (0.80) 145
9/30/90 0.00 0.00 (1.71) 11.93 (14.80) 33,472 1.90 (0.10) 106
9/30/89 0.00 0.00 0.00 15.78 33.30 51,680 1.90 (0.20) 153
9/30/88 0.00 0.00 (2.58) 11.84 (9.00) 51,062 2.00 (0.30) 125
<CAPTION>
AVERAGE
COMMISSION RATE
---------------
<S> <C>
GROWTH FUND
(CONT.)
Class C
10/01/96-
06/30/97 $ 0.05
9/30/96 0.07
9/30/95
9/30/94
9/30/93
9/30/92
9/30/91
9/30/90
9/30/89
9/30/88
MID CAP
GROWTH FUND
CLASS A
01/13/97-
06/30/97 $ 0.06
CLASS B
01/13/97-
06/30/97 0.06
CLASS C
01/13/97-
06/30/97 0.06
TARGET FUND
CLASS A
10/01/96-
06/30/97 $ 0.04
9/30/96 0.06
9/30/95
9/30/94
12/17/92-
9/30/93
CLASS B
10/01/96-
06/30/97 0.04
9/30/97 0.06
5/22/95-
9/30/95
CLASS C
10/01/96-
06/30/97 0.04
9/30/96 0.06
9/30/95
9/30/94
12/17/92-
9/30/93
SMALL CAP
VALUE FUND
CLASS A
01/20/97-
06/30/97 $ 0.06
CLASS B
01/20/97-
06/30/97 0.06
CLASS C
01/20/97-
06/30/97 0.06
OPPORTUNITY
FUND
CLASS A
10/01/96-
06/30/97 $ 0.06
9/30/96 0.07
9/30/95
9/30/94
9/30/93
9/30/92
12/17/90-
9/30/91
CLASS C
10/01/96-
06/30/97 0.06
9/30/96 0.07
9/30/95
9/30/94
9/30/93
9/30/92
9/30/91
9/30/90
9/30/89
9/30/88
</TABLE>
November 1, 1997 Prospectus 11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected Per Share Data NET REALIZED/ DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
for the Period Ended: NET ASSET VALUE NET UNREALIZED TOTAL INCOME FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT INVESTMENT INVESTMENT REALIZED CAPITAL
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS
--------------- ------------- -------------- --------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL
DEVELOPED FUND
Class A
01/20/97-
06/30/97 $ 11.71 $ 0.09 (a) $ 1.28 (a) $ 1.37 $ 0.00 $ 0.00 $ 0.00
Class B
01/20/97-
06/30/97 11.71 0.06 (a) 1.29 (a) 1.35 0.00 0.00 0.00
Class C
01/20/97-
06/30/97 11.71 0.06 (a) 1.29 (a) 1.35 0.00 0.00 0.00
INTERNATIONAL
FUND (ii)
Class A
10/01/96-
06/30/97 $ 13.03 $ 0.29 $ 1.33 $ 1.62 $ 0.00 $ 0.00 $ (0.39)
9/30/96 12.19 0.07 0.77 0.84 0.00 0.00 0.00
9/30/95 12.92 0.07 (0.56) (0.49) 0.00 0.00 (0.24)
9/30/94 12.17 0.04 0.94 0.98 0.00 0.00 (0.23)
9/30/93 10.04 0.07 2.80 2.87 0.00 0.00 (0.74)
9/30/92 10.54 0.05 (0.37) (0.32) 0.00 0.00 (0.18)
2/1/91-9/30/91 9.48 0.02 1.04 1.06 0.00 0.00 0.00
Class B
10/01/96-
06/30/97 12.48 0.16 1.31 1.47 0.00 0.00 (0.39)
9/30/96 11.75 0.00 (a) 0.73 (a) 0.73 0.00 0.00 0.00
5/22/95-
9/30/95 11.30 0.00 0.45 0.45 0.00 0.00 0.00
Class C
10/01/96-
06/30/97 12.47 0.18 1.29 1.47 0.00 0.00 (0.39)
9/30/96 11.75 (0.05) 0.77 0.72 0.00 0.00 0.00
9/30/95 12.56 (0.02) (0.55) (0.57) 0.00 0.00 (0.24)
9/30/94 11.92 (0.06) 0.93 0.87 0.00 0.00 (0.23)
9/30/93 9.92 (0.01) 2.75 2.74 0.00 0.00 (0.74)
9/30/92 10.49 (0.06) (0.33) (0.39) 0.00 0.00 (0.18)
9/30/91 10.04 (0.08) 1.76 1.68 0.00 0.00 (1.23)
9/30/90 13.33 (0.10) (2.02) (2.12) 0.00 0.00 (1.17)
9/30/89 10.07 (0.18) 3.44 3.26 0.00 0.00 0.00
9/30/88 12.87 (0.10) (1.83) (1.93) 0.00 0.00 (0.87)
EMERGING MARKETS
FUND
Class A
01/20/97-
06/30/97 $ 12.82 $ 0.09 (a) $ 1.03 (a) $ 1.12 $ 0.00 $ 0.00 $ 0.00
Class B
01/20/97-
06/30/97 12.82 0.03 (a) 1.04 (a) 1.07 0.00 0.00 0.00
Class C
01/20/97-
06/30/97 12.82 0.04 (a) 1.03 (a) 1.07 0.00 0.00 0.00
INNOVATION FUND
Class A
10/01/96-
06/30/97 $ 17.26 $ 0.07 $ 0.36 $ 0.43 $ 0.00 $ 0.00 $ (0.26)
9/30/96 14.74 (0.07) 2.94 2.87 0.00 0.00 (0.35)
12/22/94-
9/30/95 10.00 (0.06) (b) 4.80 4.74 0.00 0.00 0.00
Class B
10/01/96-
06/30/97 17.04 (0.03) 0.35 0.32 0.00 0.00 (0.26)
9/30/96 14.66 (0.11) 2.84 2.73 0.00 0.00 (0.35)
5/22/95-
9/30/95 11.81 (0.08) 2.93 2.85 0.00 0.00 0.00
Class C
10/01/96-
06/30/97 17.04 (0.02) 0.33 0.31 0.00 0.00 (0.26)
9/30/96 14.65 (0.15) 2.89 2.74 0.00 0.00 (0.35)
12/22/94-
9/30/95 10.00 (0.13) (b) 4.78 4.65 0.00 0.00 0.00
<CAPTION>
Selected Per Share Data DISTRIBUTIONS
for the Period Ended: IN EXCESS OF
NET REALIZED
CAPITAL GAINS
-------------
<S> <C>
INTERNATIONAL
DEVELOPED FUND
Class A
01/20/97-
06/30/97 $ 0.00
Class B
01/20/97-
06/30/97 0.00
Class C
01/20/97-
06/30/97 0.00
INTERNATIONAL
FUND (ii)
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
2/1/91-9/30/91 0.00
Class B
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/22/95-
9/30/95 0.00
Class C
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
9/30/91 0.00
9/30/90 0.00
9/30/89 0.00
9/30/88 0.00
EMERGING MARKETS
FUND
Class A
01/20/97-
06/30/97 $ 0.00
Class B
01/20/97-
06/30/97 0.00
Class C
01/20/97-
06/30/97 0.00
INNOVATION FUND
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
12/22/94-
9/30/95 0.00
Class B
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/22/95-
9/30/95 0.00
Class C
10/01/96-
06/30/97 0.00
9/30/96 0.00
12/22/94-
9/30/95 0.00
</TABLE>
*Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
(b) Reflecting voluntary waiver of investment advisory fee of $4,666 (0.00
per share) by the Advisor.
(ii) The information provided for the International Fund reflects results of
operations under 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 then been in
effect. On November 15, 1994, Blairlogie became the Portfolio Manager of
the Fund.
12 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
DISTRIBUTIONS TAX BASIS NET ASSET EXPENSES TO INCOME TO
FROM RETURN OF TOTAL VALUE END OF NET ASSETS END AVERAGE NET AVERAGE NET PORTFOLIO
EQUALIZATION CAPITAL DISTRIBUTIONS PERIOD TOTAL RETURN OF PERIOD (000S) ASSETS ASSETS TURNOVER RATE
- ------------- --------- ------------- ------------ ------------ ---------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ 0.00 $ 0.00 $ 13.08 11.70% $ 318 1.54%* 1.74%* 77%
0.00 0.00 0.00 13.06 11.53 1,123 2.28* 1.08* 77
0.00 0.00 0.00 13.06 11.53 2,526 2.28* 1.07* 77
$ 0.00 $ 0.00 $ (0.39) $ 14.26 12.82% $ 18,287 1.51%* 0.58%* 59%
0.00 0.00 0.00 13.03 6.89 20,056 1.41 0.49 110
0.00 0.00 (0.24) 12.19 (3.70) 17,951 1.50 0.60 170
0.00 0.00 (0.23) 12.92 8.20 23,289 1.40 0.30 55
0.00 0.00 (0.74) 12.17 30.40 11,992 1.40 0.60 68
0.00 0.00 (0.18) 10.04 (3.10) 471 1.90 0.50 160
0.00 0.00 0.00 10.54 17.30 22 1.90* 0.70* 107
0.00 0.00 (0.39) 13.56 12.17 8,676 2.26* 0.18* 59
0.00 0.00 0.00 12.48 6.21 5,893 2.16 (0.26) 110
0.00 0.00 0.00 11.75 4.00 503 2.30* (0.10)* 170
0.00 0.00 (0.39) 13.55 12.18 168,446 2.25* (0.25)* 59
0.00 0.00 0.00 12.47 6.13 203,544 2.16 (0.26) 110
0.00 0.00 (0.24) 11.75 (4.50) 215,349 2.20 (0.20) 170
0.00 0.00 (0.23) 12.56 7.40 294,492 2.20 (0.50) 55
0.00 0.00 (0.74) 11.92 29.40 147,194 2.20 (0.10) 68
0.00 0.00 (0.18) 9.92 (3.80) 28,299 2.60 (0.60) 160
0.00 0.00 (1.23) 10.49 18.30 33,594 2.60 (0.20) 107
0.00 0.00 (1.17) 10.04 (17.40) 36,282 2.30 (0.30) 93
0.00 0.00 0.00 13.33 32.40 56,150 2.30 (0.70) 84
0.00 0.00 (0.87) 10.07 (14.00) 60,394 2.40 (0.50) 95
$ 0.00 $ 0.00 $ 0.00 $ 13.94 8.74% $ 214 1.89%* 1.52%* 74%
0.00 0.00 0.00 13.89 8.35 308 2.62* 0.47* 74
0.00 0.00 0.00 13.89 8.35 1,833 2.63* 0.66* 74
$ 0.00 $ 0.00 $ (0.26) $ 17.43 2.41% $ 56,215 1.28%* (0.68)%* 80%
0.00 0.00 (0.35) 17.26 19.86 50,067 1.31 (0.61) 123
0.00 0.00 0.00 14.74 47.40 28,239 1.40* (0.60)* 86
0.00 0.00 (0.26) 17.10 1.79 51,472 2.03* (1.43)* 80
0.00 0.00 (0.35) 17.04 18.99 33,778 2.06 (1.36) 123
0.00 0.00 0.00 14.66 24.10 6,509 2.30* (1.70)* 86
0.00 0.00 (0.26) 17.09 1.73 162,889 2.03* (1.43)* 80
0.00 0.00 (0.35) 17.04 19.08 137,752 2.06 (1.36) 123
0.00 0.00 0.00 14.65 46.50 63,952 2.20* (1.40)* 86
<CAPTION>
DISTRIBUTIONS
FROM AVERAGE
EQUALIZATION COMMISSION RATE
- -------------- ---------------
<S> <C>
$ 0.00 $ 0.03
0.00 0.03
0.00 0.03
$ 0.00 $ 0.00
0.00 0.00
0.00
0.00
0.00
0.00
0.00
0.00 0.00
0.00 0.00
0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$ 0.00 $ 0.00
0.00 0.00
0.00 0.00
$ 0.00 $ 0.05
0.00 0.06
0.00
0.00 0.05
0.00 0.06
0.00
0.00 0.05
0.00 0.06
0.00
</TABLE>
November 1, 1997 Prospectus 13
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected Per Share Data NET REALIZED/ DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
for the Period Ended: NET ASSET VALUE NET UNREALIZED TOTAL INCOME FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT INVESTMENT INVESTMENT REALIZED CAPITAL
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS
--------------- ------------- -------------- --------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
PRECIOUS MET-
ALS FUND
(iii)
Class A
10/01/96-
06/30/97 $ 12.12 $ 0.17 $ (3.29) $ (3.12) $ 0.00 $ 0.00 $ 0.00
9/30/96 12.33 0.03 (0.24) (0.21) 0.00 0.00 0.00
9/30/95 14.14 0.07 (1.88) (1.81) 0.00 0.00 0.00
9/30/94 10.32 0.08 3.74 3.82 0.00 0.00 0.00
9/30/93 7.54 0.06 2.72 2.78 0.00 0.00 0.00
9/30/92 7.51 (0.01) 0.04 0.03 0.00 0.00 0.00
2/1/91-
9/30/91 7.19 (0.07) 0.39 0.32 0.00 0.00 0.00
Class B
10/01/96-
06/30/97 11.62 0.00 (3.03) (3.03) 0.00 0.00 0.00
9/30/96 11.90 (0.03) (0.25) (0.28) 0.00 0.00 0.00
6/15/95-
9/30/95 11.61 (0.01) 0.30 0.29 0.00 0.00 0.00
Class C
10/01/96-
06/30/97 11.62 (0.03) (2.99) (3.02) 0.00 0.00 0.00
9/30/96 11.90 (0.07) (0.21) (0.28) 0.00 0.00 0.00
9/30/95 13.75 (0.02) (1.83) (1.85) 0.00 0.00 0.00
9/30/94 10.11 (0.02) 3.66 3.64 0.00 0.00 0.00
9/30/93 7.44 (0.02) 2.69 2.67 0.00 0.00 0.00
9/30/92 7.46 (0.06) 0.04 (0.02) 0.00 0.00 0.00
9/30/91 9.40 (0.05) (1.89) (1.94) 0.00 0.00 0.00
9/30/90 9.86 (0.05) (0.41) (0.46) 0.00 0.00 0.00
10/10/88-
9/30/89 10.00 (0.05) (0.08) (0.13) (0.01) 0.00 0.00
BALANCED FUND
Class A
01/20/97-
06/30/97 $ 10.77 $ 0.21 $ 0.58 $ 0.79 $ (0.16) $ 0.00 $ 0.00
Class B
01/20/97-
06/30/97 10.77 0.19 0.58 0.77 (0.15) 0.00 0.00
Class C
01/20/97-
06/30/97 10.77 0.18 0.58 0.76 (0.14) 0.00 0.00
TAX EXEMPT
FUND
Class A
10/01/96-
06/30/97 $ 11.87 $ 0.42 $ 0.11 $ 0.53 $ (0.43) $ 0.00 $ 0.00
9/30/96 11.83 0.62 (0.01) 0.61 (0.52) (0.05) 0.00
9/30/95 11.21 0.57 0.63 1.20 (0.58) 0.00 0.00
9/30/94 12.74 0.56 (1.31) (0.75) (0.58) 0.00 (0.20)
9/30/93 11.94 0.61 1.02 1.63 (0.64) 0.00 (0.19)
9/30/92 11.53 0.65 0.42 1.07 (0.66) 0.00 0.00
3/14/91-
9/30/91 11.30 0.38 0.23 0.61 (0.38) 0.00 0.00
Class B
10/01/96-
06/30/97 11.89 0.36 0.09 0.45 (0.37) 0.00 0.00
9/30/96 11.84 0.53 0.00 0.53 (0.44) (0.04) 0.00
5/30/95-
9/30/95 11.90 0.16 (0.07) 0.09 (0.15) 0.00 0.00
Class C
10/01/96-
06/30/97 11.86 0.36 0.11 0.47 (0.36) 0.00 0.00
9/30/96 11.82 0.52 0.00 0.52 (0.44) (0.04) 0.00
9/30/95 11.21 0.48 0.62 1.10 (0.49) 0.00 0.00
9/30/94 12.73 0.47 (1.30) (0.83) (0.49) 0.00 (0.20)
9/30/93 11.94 0.52 1.01 1.53 (0.55) 0.00 (0.19)
9/30/92 11.53 0.58 0.41 0.99 (0.58) 0.00 0.00
9/30/91 10.97 0.62 0.56 1.18 (0.62) 0.00 0.00
9/30/90 11.10 0.63 (0.13) 0.50 (0.63) 0.00 0.00
9/30/89 10.82 0.65 0.28 0.93 (0.65) 0.00 0.00
9/30/88 10.23 0.65 0.59 1.24 (0.65) 0.00 0.00
<CAPTION>
Selected Per Share Data DISTRIBUTIONS
for the Period Ended: IN EXCESS OF
NET REALIZED
CAPITAL GAINS
-------------
<S> <C>
PRECIOUS MET-
ALS FUND
(iii)
Class A
10/01/96-
06/30/97 $ (0.17)
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
2/1/91-
9/30/91 0.00
Class B
10/01/96-
06/30/97 (0.17)
9/30/96 0.00
6/15/95-
9/30/95 0.00
Class C
10/01/96-
06/30/97 (0.17)
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
9/30/91 0.00
9/30/90 0.00
10/10/88-
9/30/89 0.00
BALANCED FUND
Class A
01/20/97-
06/30/97 $ 0.00
Class B
01/20/97-
06/30/97 0.00
Class C
01/20/97-
06/30/97 0.00
TAX EXEMPT
FUND
Class A
10/01/96-
06/30/97 $ 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
3/14/91-
9/30/91 0.00
Class B
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/30/95-
9/30/95 0.00
Class C
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
9/30/93 0.00
9/30/92 0.00
9/30/91 0.00
9/30/90 0.00
9/30/89 0.00
9/30/88 0.00
</TABLE>
*Annualized
(iii) The information provided for the Precious Metals Fund reflects results
of operations under the Fund's former investment objective and policies
through November 14, 1994; such results would not necessarily have been
achieved had the Fund's current objective and policies then been in effect.
14 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
DISTRIBUTIONS TAX BASIS NET ASSET EXPENSES TO INCOME TO
FROM RETURN OF TOTAL VALUE END OF NET ASSETS END AVERAGE NET AVERAGE NET PORTFOLIO
EQUALIZATION CAPITAL DISTRIBUTIONS PERIOD TOTAL RETURN OF PERIOD (000S) ASSETS ASSETS TURNOVER RATE
- ------------- --------- ------------- ------------ ------------ ---------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ 0.00 $ (0.17) $ 8.83 (26.05)% $ 4,016 1.37%* 0.33%* 46%
0.00 0.00 0.00 12.12 (1.70) 6,245 1.32 0.19 35
0.00 0.00 0.00 12.33 (12.80) 7,670 1.40 0.60 9
0.00 0.00 0.00 14.14 37.00 11,229 1.30 0.60 11
0.00 0.00 0.00 10.32 36.90 3,425 1.40 0.60 10
0.00 0.00 0.00 7.54 0.40 668 1.90 (0.10) 30
0.00 0.00 0.00 7.51 6.80 514 2.10* (1.40)* 19
0.00 0.00 (0.17) 8.42 (26.40) 4,248 2.13* (0.33)* 46
0.00 0.00 0.00 11.62 (2.35) 2,218 2.07 (0.56) 35
0.00 0.00 0.00 11.90 2.50 251 2.20* (0.20)* 9
0.00 0.00 (0.17) 8.43 (26.31) 25,113 2.15* (0.41)* 46
0.00 0.00 0.00 11.62 (2.35) 37,609 2.07 (0.56) 35
0.00 0.00 0.00 11.90 (13.50) 42,341 2.20 (0.20) 9
0.00 0.00 0.00 13.75 36.00 62,825 2.10 (0.20) 11
0.00 0.00 0.00 10.11 35.90 23,884 2.20 (0.20) 10
0.00 0.00 0.00 7.44 (0.30) 6,633 2.60 (0.80) 30
0.00 0.00 0.00 7.46 (20.60) 6,995 2.40 (0.80) 19
0.00 0.00 0.00 9.40 (4.70) 9,918 2.40 (0.80) 23
0.00 0.00 (0.01) 9.86 (1.30) 6,630 2.50 (0.60) 9
$ 0.00 $ 0.00 $ (0.16) $ 11.40 7.42% $ 366 1.15%* 3.01%* 199%
0.00 0.00 (0.15) 11.39 7.15 1,124 1.90* 2.28* 199
0.00 0.00 (0.14) 11.39 7.12 921 1.90* 2.26* 199
$ 0.00 $ 0.00 $ (0.43) $ 11.97 4.65% $ 5,503 1.09%* 4.76%* 70%
0.00 0.00 (0.57) 11.87 5.22 5,864 1.07 5.12 49
0.00 0.00 (0.58) 11.83 11.00 2,701 1.10 5.00 35
0.00 0.00 (0.78) 11.21 (6.10) 2,726 1.10 4.70 63
0.00 0.00 (0.83) 12.74 14.20 2,852 1.10 5.00 56
0.00 0.00 (0.66) 11.94 9.50 2,295 1.10 5.60 107
0.00 0.00 (0.38) 11.53 10.40 321 1.10* 5.80* 119
0.00 0.00 (0.37) 11.97 3.79 2,542 1.82* 4.02* 70
0.00 0.00 (0.48) 11.89 4.54 2,258 1.82 4.37 49
0.00 0.00 (0.15) 11.84 0.80 288 1.90* 4.00* 35
0.00 0.00 (0.36) 11.97 4.07 41,464 1.83* 4.01* 70
0.00 0.00 (0.48) 11.86 4.46 47,082 1.82 4.37 49
0.00 0.00 (0.49) 11.82 10.10 54,224 1.80 4.30 35
0.00 0.00 (0.69) 11.21 (6.70) 68,214 1.80 4.00 63
0.00 0.00 (0.74) 12.73 13.30 81,475 1.80 4.20 56
0.00 0.00 (0.58) 11.94 8.80 52,113 1.80 4.90 107
0.00 0.00 (0.62) 11.53 11.00 46,663 1.80 5.50 119
0.00 0.00 (0.63) 10.97 4.50 46,630 1.70 5.60 78
0.00 0.00 (0.65) 11.10 8.80 60,609 1.70 5.90 204
0.00 0.00 (0.65) 10.82 12.40 63,261 1.80 6.10 211
<CAPTION>
DISTRIBUTIONS
FROM AVERAGE
EQUALIZATION COMMISSION RATE
- -------------- ---------------
<S> <C>
$ 0.00 $ 0.03
0.00 0.02
0.00
0.00
0.00
0.00
0.00
0.00 0.03
0.00 0.02
0.00
0.00 0.03
0.00 0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$ 0.00 $ 0.06
0.00 0.06
0.00 0.06
$ 0.00 $ N/A
0.00 N/A
0.00
0.00
0.00
0.00
0.00
0.00 N/A
0.00 N/A
0.00
0.00 N/A
0.00 N/A
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
</TABLE>
November 1, 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. Specific portfolio
securities eligible for purchase by the Funds, investment tech-
niques that may be used by the Funds, and the risks associated
with these securities and techniques are described more fully un-
der "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 information
on other investment policies of the Equity Income, Renaissance,
Value, Capital Appreciation, Growth, Mid Cap Growth, Target, Small
Cap Value, Opportunity, International Developed, International,
Emerging Markets, Innovation and Precious Metals Funds (together,
the "Equity Funds"), see "Investment Objectives and Policies--Eq-
uity Funds" below.
FUND
DESCRIP-
TIONS EQUITY INCOME FUND seeks current income as a primary investment
objective, and long-term growth of capital as a secondary objec-
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. 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. For a discus-
sion of such risks, see "Characteristics and Risks of Securities
and Investment Techniques--Foreign Securities." The Fund may also
purchase and write call and put options on securities and securi-
ties indexes; enter into futures contracts and use options on
futures contracts; buy or
16 PIMCO Funds: Multi-Manager Series
<PAGE>
sell foreign currencies; and enter into forward foreign currency
contracts. The Portfolio Manager for the Renaissance Fund is Co-
lumbus 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. The Portfolio Manager for the Value Fund is
NFJ.
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
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. The Portfolio Manager for the Capital Appre-
ciation 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. For a
discussion of such risks, see "Characteristics and Risks of Secu-
rities and Investment Techniques--Foreign Securities." 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. 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
November 1, 1997 Prospectus 17
<PAGE>
growth and value characteristics for the entire Fund. The Portfo-
lio 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. For a discussion of such risks,
see "Characteristics and Risks of Securities and Investment Tech-
niques--Foreign Securities." 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 cur-
rency contracts. The Portfolio Manager for the Target Fund is Co-
lumbus 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. The Portfolio Manager for the Small Cap Value Fund is NFJ.
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.
For a discussion of such risks, see "Characteristics and Risks of
Securities and Investment Techniques--Foreign Securities." 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. The Portfolio Man-
ager for the Opportunity Fund is Columbus Circle.
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
18 PIMCO Funds: Multi-Manager Series
<PAGE>
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 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 a discussion of such risks, see "Character-
istics and Risks of Securities and Investment Techniques--Foreign
Securities." 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 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
U.S. securities markets. 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 geo-
graphic asset distribution and the Fund has the authority to in-
vest in securities traded in securities markets of any country in
the world. In allocating the Fund's assets among the various secu-
rities markets of any country of the world, the Portfolio Manager
will consider such factors as the condition and growth potential
of the various economies and securities markets, currency and tax-
ation considerations and other pertinent financial, social, na-
tional 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 prin-
cipally 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
November 1, 1997 Prospectus 19
<PAGE>
traded in the U.S., including money market instruments, obliga-
tions 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, and particulary
emerging market issuers, involves special risks and considerations
not typically associated with investing in U.S. companies. For a
discussion of such risks, see "Characteristics and Risks of Secu-
rities and Investment Techniques--Foreign Securities." The Portfo-
lio Manager for the International Fund is Blairlogie.
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 Africa Venezuela
China India Pakistan South Korea Zimbabwe
Colombia Indonesia Peru Sri Lanka
Czech Republic Israel Philippines Taiwan
For purposes of allocating the Fund's investments, a company is
considered to be located in the country in which it is domiciled,
in which it is primarily traded, from which it derives a 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.
Investing in securities of foreign issuers, and particularly
emerging market issuers, involves special risks and considerations
not typically associated with investing in U.S. companies. For a
discussion of such risks, see "Characteristics and Risks of Secu-
rities and Investment Techniques--Foreign Securities." The Portfo-
lio Manager for the Emerging Markets Fund is Blairlogie.
20 PIMCO Funds: Multi-Manager Series
<PAGE>
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 with minimal emphasis on
more traditional factors such as growth potential or value rela-
tive 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, en-
hanced 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 busi-
ness 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.
For a discussion of such risks, see "Characteristics and Risks of
Securities and Investment Techniques--Foreign Securities." 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. The Portfolio Man-
ager 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 any 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 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 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 or
on foreign securities markets. Investing in the securities of for-
eign issuers involves special risks and considerations not typi-
cally associated with investing in U.S. companies. For a discus-
sion of such risks, see "Characteristics and Risks of Securities
and Investment Techniques--Foreign Securities." 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 pre-
cious metals; buy or sell foreign currencies; and enter into for-
ward 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.
The Portfolio Manager for the Precious Metals Fund is Van Eck.
November 1, 1997 Prospectus 21
<PAGE>
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 by both 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 considered to be investment grade, and are
commonly referred to as "junk bonds." Securities rated below in-
vestment grade and comparable unrated securities are subject to
greater risks than higher quality fixed income securities. See
"Characteristics and Risks of Securities and Investment Tech-
niques--Risks of 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.
22 PIMCO Funds: Multi-Manager Series
<PAGE>
Investing in securities denominated in foreign currencies and se-
curities of foreign issuers involves special risks and considera-
tions not typically associated with investing in U.S. securities.
For a discussion of such risks, see "Characteristics and Risks of
Securities and Investment Techniques--Foreign Securities."
Each Portfolio Manager generally invests a portion of its allo-
cation in liquid securities to facilitate redemptions. In addi-
tion, PIMCO Advisors reserves the right to allocate a portion of
the Fund's assets (the "Money Market Segment") for investment in
money market instruments and reserves the right to manage the in-
vestment of such assets. 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. See
"Characteristics and Risks of Securities and Investment Tech-
niques--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.
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 delivery basis and enter into forward commit-
ments 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 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
November 1, 1997 Prospectus 23
<PAGE>
Fund from the use of such instruments, including by reason of
"marking to market," 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 share-
holders (possibly requiring the liquidation of other portfolio se-
curities) and will be taxable to shareholders as a combination of
ordinary income and long-term capital gain. The Portfolio Manager
for the Tax Exempt Fund is Columbus Circle.
EQUITY The Equity Income, Value, Capital Appreciation, Mid Cap Growth,
FUNDS Small Cap Value, International Developed and Emerging Markets
Funds will each invest primarily (normally at least 65% of its as-
sets) in common stock. Each of these Funds may maintain a portion
of its assets, which will usually not exceed 10%, in U.S. Govern-
ment securities, high quality debt securities (whose maturity or
remaining maturity will not exceed five years), money market obli-
gations, 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 will each invest primarily
(normally at least 65% of its assets) in equity securities (in-
come-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 exer-
cisable for common stocks. Each of these Funds may invest a por-
tion of its assets in debt securities and, 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.
While attempting to identify suitable investments, the Funds may
hold assets in cash, short-term U.S. Government Securities and
other money market instruments. Any of the Equity Funds may tempo-
rarily not contain the number of securities in which the Fund nor-
mally invests if the Fund does not have sufficient assets to be
fully invested, or pending the Portfolio Manager's ability to pru-
dently 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 International Developed, International, Emerging
Markets and Precious Metals Funds may invest in European Deposi-
tory 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 Tech-
niques" in this Prospectus and "Investment Objectives and Poli-
cies" in the Statement of Additional Information.
DURATION Under normal circumstances, the average portfolio duration of the
Fixed Income Securities Segment of the Balanced Fund will vary
within a three- to six-year time frame, 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
24 PIMCO Funds: Multi-Manager Series
<PAGE>
payment, taking no account of the pattern of the security's pay-
ments 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 manage-
ment is one of the fundamental tools used by the Portfolio Manag-
ers for the Fixed Income Securities Segment of the Balanced Fund
and the Tax Exempt Fund. For more information on investments in
fixed income securities, see "Characteristics and Risks of Securi-
ties and Investment Techniques" in this Prospectus and "Investment
Objectives and Policies" in the Statement of Additional Informa-
tion.
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.
INVESTMENTS Certain of the Funds may invest in common stock of companies with
IN market capitalizations that are small compared to other publicly
COMPANIES traded companies. Generally, small market capitalization is con-
WITH SMALL sidered to be less than $1 billion and large market capitalization
AND MEDIUM is considered to be more than $5 billion. Under normal market con-
MARKET ditions, the Small Cap Value and Opportunity Funds will invest
CAPITALIZA- primarily in companies with market capitalizations of $1 billion
TIONS or less. Investments in larger companies present certain advan-
tages in that such companies generally have greater financial re-
sources, 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 in the over-the-counter market or on a re-
gional exchange, or may otherwise have limited liquidity. As a re-
sult of owning large positions in this type of security, a Fund is
subject to the additional risk of possibly having to sell portfo-
lio securities at disadvantageous times and prices if redemptions
require the Fund to liquidate its securities positions. In addi-
tion, it may be prudent for a Fund with a relatively large asset
size to limit the number of relatively small positions it holds in
securities having limited liquidity in order to minimize its expo-
sure to such risks, to minimize transaction costs, and to maximize
the benefits of research. As a consequence, as a Fund's asset size
increases, the Fund may reduce its exposure to illiquid small cap-
italization securities, which could adversely affect performance.
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
November 1, 1997 Prospectus 25
<PAGE>
and greater financial resources and their stocks tend to be more
liquid and less volatile than those of smaller capitalization is-
suers.
FOREIGN The International Developed, International and Emerging Markets
SECURITIES 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 Balanced Fund may invest up to
20% of its Fixed Income Securities Segment in securities denomi-
nated in foreign currencies, and may invest beyond this limit in
U.S. dollar-denominated securities of foreign issuers. The Renais-
sance, 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
(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 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. Individual foreign economies may differ favorably or unfa-
vorably from the U.S. economy in such respects as growth of gross
domestic product, rate of inflation, capital reinvestment, re-
sources, self-sufficiency, and balance of payments position. The
securities markets, values of securities, yields, and risks asso-
ciated with securities markets may change independently of each
other. 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 distributions to consti-
tute 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
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 securities. Repatriation of invest-
ment income, capital, and the proceeds of sales by foreign invest-
ors may require governmental registration and/or approval in some
emerging market countries. A number of the currencies of
26 PIMCO Funds: Multi-Manager Series
<PAGE>
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 con-
tinue 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 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. Also, any change in the leadership or policies of
emerging market countries, or the countries that exercise a sig-
nificant influence over those countries, may halt the expansion of
or reverse the liberalization of foreign investment policies now
occurring and adversely affect existing investment opportunities.
In addition, emerging securities markets may have different
clearance and settlement procedures, which may be unable to keep
pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems
may cause a Fund to miss attractive investment opportunities, hold
a portion of its assets in cash pending investment, or delay in
disposing of a portfolio security. Such a delay could result in
possible liability to a purchaser of the security.
FOREIGN Foreign currency exchange rates may fluctuate significantly over
CURRENCY short periods of time. They generally are determined by the forces
TRANSACS- of supply and demand in the foreign exchange markets and the rela-
TION 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 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
November 1, 1997 Prospectus 27
<PAGE>
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 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. 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, deter-
mined to be of comparable quality by the Advisor or a Port-
folio Manager;
(4) corporate obligations with a remaining maturity of 397 days
or less whose issuers have outstanding short-term debt ob-
ligations 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 Advisor or a Portfolio Manager;
and
(5) repurchase agreements with domestic commercial banks or reg-
istered broker-dealers.
MORTGAGE- All Funds that may purchase debt securities for investment pur-
RELATEDAND poses (and in particular, the Balanced Fund) may invest in mort-
OTHERASSET- gage-related securities, and in other asset-backed securities (un-
BACKED related to mortgage loans) that are offered to investors currently
SECURITIES or in the future. The value of some mortgage-related or asset-
backed securities in which the Funds invest may be particularly
sensitive to changes in prevailing interest rates, and, like other
fixed income investments, 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 eco-
nomic 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 foreclosure, net of fees and costs which may
be incurred) may expose a Fund to a lower rate of return upon re-
investment 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 securi-
ties, when interest rates rise,
28 PIMCO Funds: Multi-Manager Series
<PAGE>
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 unan-
ticipated 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. 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, on a monthly basis.
CMOs may be collateralized by whole mortgage loans but are more
typically collateralized by portfolios of mortgage pass-through
securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are structured
into multiple classes, with each class bearing a different stated
maturity. Monthly payments of principal, including prepayments,
are first returned to investors holding the shortest maturity
class; investors holding the longer maturity classes receive 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 a Fund, while other CMOs, even if collateralized by U.S.
Government securities, will have the same status as other pri-
vately issued securities for purposes of applying a Fund's diver-
sification 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.
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
November 1, 1997 Prospectus 29
<PAGE>
rapid rate of principal payments may have a material adverse ef-
fect on a Fund's yield to maturity from these securities. For a
discussion of the characteristics 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 The Renaissance, Growth, Balanced and Tax Exempt Funds may invest
HIGH YIELD a portion of their assets in fixed income securities rated lower
SECURITIES than Baa by Moody's or lower than BBB by S&P but rated at least B
("JUNK by Moody's or S&P or, if not rated, determined by the Portfolio
BONDS") Manager to be of comparable quality. In addition, the Renaissance
Fund may invest up to 10% of its total assets in convertible secu-
rities rated below B by Moody's or S&P (or, if unrated, considered
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 some-
times 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 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,
30 PIMCO Funds: Multi-Manager Series
<PAGE>
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 sus-
ceptible to real or perceived adverse economic and competitive in-
dustry 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 description of
these rating categories, see the Appendix to the Statement of Ad-
ditional Information. The columns related to unrated securities
present the percentage of a Fund's total net assets invested dur-
ing such fiscal year (1) in unrated high yield securities believed
by the Advisor 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.
RATED
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Renaissance* -- 1.08% 4.13% 1.55% 4.01% 3.67% -- -- -- --
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* -- -- -- -- -- 6.41% -- -- -- -- 6.41%
</TABLE>
*Represents holdings of the Renaissance Fund for the period of Oc-
tober 1, 1996 through June 30, 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 To the extent permitted by the investment objective and policies
INSTRUMENTS of each Fund, a Fund may purchase and write call and put options
on securities, securities indexes and foreign currencies, and en-
ter into futures contracts and use options on futures contracts as
further described below. In pursuit of their investment objec-
tives, 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 and may engage in the pur-
chase and writing of options on securities indexes. The Tax Exempt
Fund may purchase call or put options on U.S. Government securi-
ties, 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 securi-
ties may engage in the purchase and writing of call and put op-
tions on foreign currencies. The International Developed, Emerging
Markets and Balanced Funds may also enter into swap agreements
with respect to securities indexes. The Balanced Fund may also en-
ter 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 International Developed, Inter-
national and Emerging Markets Funds, to increase exposure to a
foreign currency, to shift exposure to foreign currency fluctua-
tions from one country to another, or as part of their overall in-
vestment 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, en-
ter into certain offsetting positions) to cover its obligations
under options, futures, and swaps to limit leveraging of the Fund.
November 1, 1997 Prospectus 31
<PAGE>
Derivative instruments are considered for these purposes 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 "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 other-
wise, due to the possible inability of a Fund to purchase or sell
a portfolio security at a time that would be favorable or the pos-
sible need to sell a portfolio security at a disadvantageous time
because the Fund is required to maintain asset coverage or offset-
ting positions in connection with transactions in derivative in-
struments, 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 security above the exer-
cise 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 no-
tice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the un-
derlying 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 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 mar-
ket 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.
32 PIMCO Funds: Multi-Manager Series
<PAGE>
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 in which certain Funds may invest dif-
fer 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 cer-
tain 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 Trustees
to limit any potential leveraging of the Fund's portfolio. Obliga-
tions under swap agreements so covered will not be construed to be
"senior securities" for purposes of a Fund's investment restric-
tion 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 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.
November 1, 1997 Prospectus 33
<PAGE>
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 Interna-
tional Developed, International, Emerging Markets, Precious Metals
and Balanced Funds may invest in stock index futures contracts and
options thereon. The International Developed, International,
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 con-
tracts 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 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.
PRECIOUS The Precious Metals Fund will concentrate its investments in the
METALS 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 For the purpose of achieving income, each Fund (with the exception
PORTFOLIO of the Tax Exempt Fund) may lend its portfolio securities to bro-
SECURITIES 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
34 PIMCO Funds: Multi-Manager Series
<PAGE>
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.
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.
WHEN- Each Fund may purchase securities which it is eligible to purchase
ISSUED, on a when-issued basis, may purchase and sell such securities for
DELAYED delayed delivery and may make contracts to purchase such securi-
DELIVERY ties for a fixed price at a future date beyond normal settlement
AND time (forward commitments). When-issued transactions, delayed de-
FORWARD livery purchases and forward commitments involve a risk of loss if
COMMITMENT the value of the securities declines prior to the settlement date,
TRANSAC- which risk is in addition to the risk of decline in the value of
TIONS the Fund's other assets. Typically, no income accrues on securi-
ties a Fund has committed to purchase prior to the time delivery
of the securities is made, although a Fund may earn income on se-
curities it has deposited in a segregated account.
REPURCHASE For the purposes of maintaining liquidity and achieving income,
AGREEMENTS 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.
REVERSE A reverse repurchase agreement may for some purposes be considered
REPURCHASE borrowing that involves the sale of a security by a Fund and its
AGREEMENTS agreement to repurchase the instrument at a specified time and
AND OTHER price. The Fund will maintain a segregated account consisting of
BORROWINGS assets determined to be liquid by the Advisor or Portfolio Manager
in accordance with procedures established by the Board of Trustees
to cover its obligations under reverse repurchase agreements. Re-
verse repurchase agreements will be subject to the Funds' limita-
tions 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. Lev-
erage 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.
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. See
"Management of the Trust--Portfolio Transactions." Such sales may
result in realization of taxable capital gains. See "Taxes." Port-
folio turnover rates for the Renaissance, Growth, Target, Opportu-
nity, International, Innovation, Precious Metals and Tax Exempt
Funds are set forth under "Financial Highlights." The Portfolio
turnover rates for the past two fiscal years for the remaining
Funds were as follows (for the fiscal years ended June 30, 1997
and 1996,
November 1, 1997 Prospectus 35
<PAGE>
respectively): Equity Income--45% and 52%; Value--71% and 29%;
Capital Appreciation--87% and 73%; Mid Cap Growth--82% and 79%;
Small Cap Value--48% and 35%; International Developed--77% and
60%; Emerging Markets--74% and 74%; and Balanced--199% and 140%.
ILLIQUID Each Fund may invest in securities that are illiquid so long as no
SECURITIES more than 15% of the value of the Fund's net assets (taken at mar-
ket value at the time of investment) would be invested in such se-
curities. 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 signifi-
cant delays in disposing of illiquid securities, and transactions
in illiquid securities may entail registration expenses and other
transaction costs that are higher than those for transactions in
liquid 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
which legally or in the Advisor's or a Portfolio Manager's opinion
may be deemed illiquid (not including securities issued pursuant
to Rule 144A under the Securities Act of 1933 and certain commer-
cial paper that the Advisor or a Portfolio Manager has determined
to be liquid under procedures approved by the Board of Trustees).
INVESTMENT The International Developed, International and Emerging Markets
IN Funds may invest in securities of other investment companies, such
INVESTMENT as closed-end management investment companies, or in pooled ac-
COMPANIES 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.
"FUNDA- The investment objective of each of the Renaissance, Growth, Tar-
ENTAL" get, Opportunity, International, Innovation, Precious Metals and
POLICIES 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.
36 PIMCO Funds: Multi-Manager Series
<PAGE>
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.
The total return of Class A, Class B and/or Class C shares of
all Funds may be included in advertisements or other written mate-
rial. When a Fund's total return is advertised 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 establish-
ment of the Fund or its predecessor series of PIMCO Advisors
Funds, as more fully described in the Statement of Additional In-
formation. Consistent with Securities and Exchange Commission
rules and informal guidance, for periods prior to the initial of-
fering 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 re-
flect current sales charges (if any) of the newer class, but not
reflecting any higher operating expenses (such as 12b-1 distribu-
tion and servicing 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 re-
turn 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 ex-
penses, 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 (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). To-
tal return may be advertised using alternative methods that re-
flect 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 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 equivalent
yield of the Tax Exempt Fund's Class A, Class B and Class C shares
may also be advertised, 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 may also 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 a Fund has declared and paid to shareholders as of the
end of a specified period rather than the Fund's actual net in-
vestment income for that period.
November 1, 1997 Prospectus 37
<PAGE>
The Advisor 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 of the Trust are continuously offered through the
Trust's principal underwriter, PIMCO Funds Distribution Company
(the "Distributor"), 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
("introducing brokers"). Except to the extent described under
"Limited Offering of Shares of the Opportunity Fund to New Invest-
ors" below, the Opportunity Fund is closed to new investors. See
"Restrictions on Sales of and Exchanges for Shares of the Opportu-
nity Fund." The Opportunity Fund does not offer Class B shares.
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 (an "Account 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 dealer).
Each Fund (except the Opportunity Fund) currently offers and
sells three classes of shares in this Prospectus (Class A, Class B
and Class C). The Opportunity Fund does not offer Class B shares.
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 election 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 alterna-
tive"), or (iii) by the deduction of an ongoing asset based sales
charge in the case of Class C shares (the "asset based sales
charge alternative"). In certain circumstances, Class A and Class
C shares are also subject to a CDSC. See "Alternative Purchase Ar-
rangements." Purchase payments for Class B and Class C shares are
fully invested at the net asset value next determined after ac-
ceptance of the trade. Purchase payments for Class A shares, less
the applicable 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 9:30 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
38 PIMCO Funds: Multi-Manager Series
<PAGE>
dispose of their securities or to determine fairly the value of
their net assets, or during any other period as permitted by the
Securities and Exchange Commission for the protection of invest-
ors.
Except for purchases through the PIMCO Auto Invest plan, the
PIMCO Auto Exchange plan and tax-qualified and wrap programs re-
ferred to below under "Tax-Qualified Retirement Plans" and "Sales
at Net Asset Value," the minimum initial investment in Class A,
Class B or Class C shares of any Fund of the Trust or any series
of PIMCO Funds: Pacific Investment Management Series is $1,000,
and the minimum additional investment is $100 per Fund. For infor-
mation about dealer commissions, see "Alternative Purchase Ar-
rangements" below. Persons selling Fund shares may receive differ-
ent compensation for selling Class A, Class B or Class C shares.
Normally, Fund shares purchased through participating brokers are
held in the investor's account with that broker. No share certifi-
cates will be issued unless specifically requested 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. All
shareholders who open direct accounts with the Distributor will
receive from the Distributor individual confirmations of each pur-
chase, redemption, dividend 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 fea-
tures 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, proto-
November 1, 1997 Prospectus 39
<PAGE>
type documents 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 orga-
nizations.
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 investment for all tax qualified plans (except for 401(k)
plans, SIMPLE IRAs, SEPs and SAR/SEPs) is $250 per Fund and the
minimum initial investment for 401(k) plans, SIMPLE IRAs, SEPs and
SAR/SEPs and the minimum subsequent investment per Fund for all
tax-qualified plans is $25.
PIMCO AUTO The PIMCO Auto Invest plan provides for periodic investments into
INVEST 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 shares are purchased through the plan. Further information
regarding the PIMCO Auto Invest plan is available from the Dis-
tributor or participating brokers. You may enroll by completing
the appropriate section on the Account Application, or you may ob-
tain 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.
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."
PIMCOFUND 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 800-426-0107. 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
40 PIMCO Funds: Multi-Manager Series
<PAGE>
Fund Link Application signed by all owners of record of the ac-
count, with all signatures guaranteed. The Distributor, the Trans-
fer Agent and the Fund may rely on any telephone instructions be-
lieved 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, on January 27, 1997, the Opportunity
Fund began offering Class A shares and, subsequently, Class C
shares to new investors (the "Offering") on a limited basis.
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 Class C sharehold-
ers of other Funds of the Trust or series of PIMCO Funds: Pacific
Investment Management Series may, in addition to purchasing
shares, acquire Opportunity Fund shares during the Offering by ex-
changing their Class A or Class C shares for the same class of Op-
portunity Fund shares in the manner described under "Exchange
Privilege" below.
The Offering will continue in effect upon the terms described
above until it is modified or terminated at the sole discretion of
the Trust. Upon termination of the Offering, the Opportunity Fund
will again be closed to new investors.
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 upon termination of the Offering: (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 shares of the Fund; (ii) participants in any
self-directed qualified benefit 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 shares of
the Fund for any single plan participant; and (iii) shareholders
who acquired 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 continue to own shares of the Fund. Upon termination
of the Offering, 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 shareholder, or the partici-
pants 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.
Except pursuant to the Offering described above, shareholders
of other Funds are not permitted to exchange any of their shares
for Opportunity Fund shares unless the shareholders are indepen-
dently eligible to purchase Opportunity Fund shares because they
already owned such 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.
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.
November 1, 1997 Prospectus 41
<PAGE>
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-
REGISTRA- ing to the Transfer Agent. Signature guarantees may be required.
TION See "Signature Guarantee" above. All correspondence must include
CHANGES 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 800-927-4648.
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 CDSCs applicable to Class A, Class B and
Class C shares.
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
42 PIMCO Funds: Multi-Manager Series
<PAGE>
charges are deducted at the time of purchase, not all of the pur-
chase 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 con-
sider whether he or she anticipates redeeming shares in a time pe-
riod which will subject such shares to a CDSC as described below.
See "Initial Sales Charge Alternative--Class A Shares--Class A De-
ferred 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 B shares are not available for purchase by employer
sponsored retirement plans. The Opportunity Fund does not offer
Class B shares.
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 of the Trust and
series of PIMCO Funds: Pacific Investment Management Series ac-
cepted is $249,999. The maximum single purchase of Class C shares
of the Trust and series of PIMCO Funds: Pacific Investment Manage-
ment Series 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; (iii) any
complete redemption in connection with a distribution from a qual-
ified employer retirement plan in connection with termination 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 com-
plete 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 de-
ceased or disabled is named, provided the redemption is requested
within one year of the death or initial determina-
November 1, 1997 Prospectus 43
<PAGE>
tion of disability; (v) any redemption resulting from a return of
an excess contribution to a qualified employer retirement plan or
an IRA; (vi) up to 10% per year of the value of an account which
(a) has the value of at least $10,000 at the start of such year
and (b) is subject to an Automatic Withdrawal Plan; (vii) redemp-
tions by Trustees, officers and employees of the Trust, and by di-
rectors, officers and employees of the Distributor and the Advi-
sor; (viii) redemptions effected pursuant to a Fund's right to in-
voluntarily 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 redemptions caused by operation of law; (x) re-
demption 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 pe-
riodic 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 pur-
chases; (xii) redemptions effected by trustees or other fiducia-
ries who have purchased shares for employer sponsored plans, the
trustee, administrator, fiduciary, broker, trust company or regis-
tered investment adviser for which has an agreement with the Dis-
tributor with respect to such purchases; or (xiii) redemptions in
connection with IRA accounts established with Form 5305-SIMPLE un-
der the Code for which the Trust is the designated financial in-
stitution.
The CDSC applicable to Class B shares is currently waived for
any partial or complete redemption in each of the following cases:
(a) in connection with a distribution without penalty under Sec-
tion 72(t) of the Code from a 403(b)(7) plan or an IRA upon at-
taining age 59 1/2; (b) 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 re-
quested within one year of the death or initial determination of
disability; and (c) up to 10% per year of the value of an account
which (i) has a value of at least $100,000 at the start of such
year and (ii) is subject to an Automatic Withdrawal 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.
44 PIMCO Funds: Multi-Manager Series
<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 Charges" 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 0.50% 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 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.
November 1, 1997 Prospectus 45
<PAGE>
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 cur-
rent purchase) of all Class A shares of any eligible PIMCO
Fund held by the investor computed at the maximum offering
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).
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
46 PIMCO Funds: Multi-Manager Series
<PAGE>
the shares actually purchased in the event the full intended
amount is not purchased. If the full amount indicated is not pur-
chased, a sufficient amount of such escrowed shares will be invol-
untarily 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 escrow. When the full amount
indicated has been purchased, the escrow 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 Applica-
tion. If you are a current Class A shareholder desiring to do so
you may obtain a form of Letter of Intent by contacting the Dis-
tributor at 800-426-0107 or any broker participating in this pro-
gram.
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, a parent, brother or sister of any such
officer, trustee, director or employee or a spouse or child of any
of the foregoing persons, or any trust, profit sharing or pension
plan for the benefit of any such person and to any other person if
the Distributor anticipates that there will be minimal sales ex-
penses associated with the sale, (b) current or retired trustees
of PIMCO Funds: Pacific Investment Management Series and Cash Ac-
cumulation Trust, registered investment companies for which the
Advisor or an affiliate acts as investment adviser, (c) current
registered representatives and other full-time employees of par-
ticipating brokers or such persons' spouses or for trust or custo-
dial accounts for their minor children, (d) trustees or other fi-
duciaries purchasing shares for certain employer sponsored plans
that have at least 100 eligible participants or at least $1 mil-
lion in total plan assets, (e) trustees or other fiduciaries pur-
chasing shares for certain plans sponsored by employers, profes-
sional organizations or associations or charitable organizations,
the trustee, administrator, fiduciary, broker, trust company or
registered investment adviser for which has an agreement with the
Distributor with respect to such purchases, and to participants in
such plans and their spouses purchasing for their account(s) or
IRAs, (f) participants investing through accounts known as "wrap
accounts" established with brokers or dealers approved by the Dis-
tributor where such brokers or dealers are paid a single, inclu-
sive fee for brokerage and investment management services, (g)
client accounts of 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 or programs, and (h) accounts
for which a trust company affiliated with the Trust or the Advisor
serves as trustee or custodian. As described above, the Distribu-
tor 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.
November 1, 1997 Prospectus 47
<PAGE>
NOTIFICATION OF DISTRIBUTOR An investor or participating broker
must notify the Distributor whenever a quantity discount or re-
duced sales charge is applicable to a purchase and must provide
the Distributor with sufficient information at the time of pur-
chase to verify that each purchase qualifies for the privilege or
discount. Upon such notification, the investor will receive the
lowest 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 Distributor 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 transaction fees and/or
other additional amounts to their clients for such services, which
charges would reduce clients' return. Firms also may hold Fund
shares in nominee or street name as agent for and on behalf of
their customers. In such instances, 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 partici-
pate in a program allowing them access to their clients' accounts
for servicing including, without limitation, transfers of regis-
tration 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-
ALTERNATIVE chase payment will be invested in shares of the Fund(s) selected.
- -- CLASS B A CDSC will be imposed on Class B shares if an investor redeems an
SHARES amount which causes the current value of the investor's account
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.
48 PIMCO Funds: Multi-Manager Series
<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 purchase
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 distribu-
tions to $11,000. The investor then may redeem up to $1,000 from
that Fund ($11,000 minus $10,000) without incurring 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 4.00% of the purchase amount for each of the Funds.
During such periods as may from time to time be designated by the
Distributor, the Distributor will pay selected participating bro-
kers 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
participating broker which obtains purchase orders in amounts ex-
ceeding thresholds established from time to time by the Distribu-
tor.
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 Distributor at
800-426-0107.
ASSET BASED Class C shares are sold at their current net asset value without
SALES any initial sales charge. A CDSC is imposed on Class C shares if
CHARGE an investor redeems an amount which causes the current value of
ALTERNA- the investor's account for a Fund to fall below the total dollar
TIVE -- amount of purchase payments subject to the CDSC, except that no
CLASS C CDSC is imposed if the shares redeemed have been acquired through
SHARES the reinvestment of dividends or capital gains distributions or if
the
November 1, 1997 Prospectus 49
<PAGE>
amount redeemed is derived from increases in the value of the ac-
count 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 purchase
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 distribu-
tions to $11,000. The investor then may redeem up to $1,000 from
that Fund ($11,000 minus $10,000) without incurring 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 Distributor at
800-426-0107.
Exchange Privilege
Except with respect to exchanges for shares of the Opportunity
Fund (which are subject to certain restrictions), a shareholder
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 exchanges of
shares for shares of the Opportunity Fund, see "Limited Offering
of Shares of the Opportunity Fund to New Investors" and "Restric-
tions on Sales of and Exchanges for Shares of the Opportunity
50 PIMCO Funds: Multi-Manager Series
<PAGE>
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 Management
Series, an affiliated mutual fund family comprised primarily of
fixed income portfolios managed by Pacific Investment Management,
an affiliate of the Advisor. There are currently no exchange fees
or charges. Except with respect to tax-qualified programs and ex-
changes effected through the PIMCO Auto Exchange plan, exchanges
are subject to the $1,000 minimum initial purchase requirement 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 800-426-0107. 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.
Investors may also select the PIMCO Auto Exchange plan which
establishes automatic periodic exchanges. For further information
on automatic exchanges see "How to Buy Shares--PIMCO Auto Ex-
change" above.
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
November 1, 1997 Prospectus 51
<PAGE>
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 A shareholder's original Account Application permits the share-
REDEMPTION holder to redeem by written request and by telephone (unless the
shareholder specifically elects not to utilize telephone redemp-
tions) and to elect one or more of the additional redemption pro-
cedures described below. A shareholder may change the instructions
indicated on his original Account Application, or may request ad-
ditional redemption options, only by transmitting a written direc-
tion 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 To redeem shares in writing (whether or not represented by certif-
REQUESTS icates), a shareholder must send the following items to the Trans-
fer Agent, Shareholder Services, Inc., P.O. Box 5866, Denver, Col-
orado 80217-5866: (1) a written request for redemption signed by
all registered owners exactly as the account is registered on the
Transfer Agent's records, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of
shares to be redeemed; (2) for certain redemptions described be-
low, a guarantee of all signatures on the written request or on
the share certificate or accompanying stock power, 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 docu-
ments which may be required by the Transfer Agent for redemption
by corporations, partnerships or other organizations, executors,
administrators, trustees, custodians or guardians, or if the re-
demption is requested by anyone other than the shareholder(s) of
record. Transfers of shares are subject to the same requirements.
A signature guarantee is not required for redemptions of $50,000
or less, requested by and payable to all shareholders of record
for the account, to be sent to the address of record for that ac-
count. To avoid delay in redemption or transfer, shareholders hav-
ing 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 un-
til all required documents in the proper form have been received
by the Transfer Agent. This redemption option does not apply to
shares held in broker "street name" accounts.
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
52 PIMCO Funds: Multi-Manager Series
<PAGE>
the signature guarantee requirement for redemptions up to $2,500
by a trustee of a qualified retirement plan, the administrator for
which has an agreement with the Distributor.
TELEPHONE The Trust accepts telephone requests for redemption of
REDEMPTIONS uncertificated shares for amounts up to $50,000 within any 7 cal-
endar day period, except for investors who have specifically de-
clined telephone redemption privileges on the Account 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 account information
must be made in a written authorization with a signature guaran-
tee. See "How to Buy Shares--Signature Guarantee." Telephone re-
demptions will not be accepted during the 30-day period following
any change in an account's record address. This redemption option
does not apply to shares held in broker "street name" accounts.
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 800-426-0107 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 Ex-
change, 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 securities markets, the volume of calls may make it diffi-
cult to redeem by telephone, in which case a shareholder may wish
to send a written request for redemption as described under "Writ-
ten Requests" above. Telephone communications may be recorded by
the Distributor or the Transfer Agent.
FUND LINK If a shareholder has established Fund Link, the shareholder may
REDEMPTIONS 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 Ap-
plication by the Transfer Agent. To use Fund Link for redemptions,
call the Transfer Agent at 800-426-0107. Subject to the limita-
tions set forth above under "Telephone Redemptions," the Distribu-
tor, the Trust and the Transfer Agent may rely on instructions by
any registered owner believed to be genuine and will not be re-
sponsible to any shareholder for any loss, damage or expense aris-
ing out of such instructions. Requests received by the Transfer
Agent prior to the close of regular trading (normally 4:00 p.m.,
Eastern time) on the Exchange on a business day will be processed
at the net asset value on that day and the proceeds (less any
CDSC) will normally be sent to the designated 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 Exchange, 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 certificated 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
November 1, 1997 Prospectus 53
<PAGE>
"How to Buy Shares--PIMCO Fund Link" for information on establish-
ing the Fund Link privilege. The Trust may terminate the Fund Link
program at any time without notice to shareholders. This redemp-
tion option does not apply to shares held in broker "street name"
accounts.
PIMCO FUNDS PIMCO Funds Automated Telephone System ("ATS") is an automated
AUTOMATED telephone system that enables shareholders to perform a number of
TELEPHONE account transactions automatically using a touch-tone telephone.
SYSTEM ATS may be used on already-established Fund accounts after you ob-
tain a Personal Identification Number (PIN) by calling the special
ATS number: 1-800-223-2413.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by telephone by calling 1-800-223-2413. You must have es-
tablished ATS privileges to link your bank account with the Fund
to pay for these purchases.
Exchanging Shares. With the PIMCO Funds Exchange Privilege, you
can exchange shares automatically by telephone from your Fund Link
Account to another PIMCO Funds account you have already estab-
lished by calling 1-800-223-2413. Please refer to "Exchange Privi-
lege" for details.
Redemptions. You may redeem shares by telephone automatically by
calling 1-800-223-2413 and the Fund will send the proceeds di-
rectly to your Fund bank account. Please refer to "How to Redeem"
for details.
EXPEDITED If a shareholder has given authorization for expedited wire re-
WIRE demption, shares can be redeemed and the proceeds sent by federal
TRANSFER wire transfer to a single previously designated bank account. Re-
REDEMPTIONS quests received by the Trust prior to the close of the Exchange
will result in shares being redeemed that day at the next deter-
mined 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 de-
layed by the Trust for up to 7 days if the Distributor deems it
appropriate under then current market conditions. Once authoriza-
tion is on file, the Trust will honor requests by any person iden-
tifying himself as the owner of an account or the owner's broker
by telephone at 800-426-0107 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 cur-
rently charge for wire transfers. The shareholder is responsible
for any charges imposed by the shareholder's bank. The minimum
amount that may be wired is $2,500. The Trust reserves the right
to change this minimum or to terminate the wire redemption privi-
lege. Shares purchased by check may not be redeemed by wire trans-
fer until such shares have been owned (i.e., paid for) for at
least 15 days. Expedited wire transfer redemptions may be autho-
rized 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 account designated to re-
ceive wire redemption proceeds, it is necessary 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." This redemption option does not ap-
ply to shares held in broker "street name" accounts.
CERTIFI- To redeem shares for which certificates have been issued, the cer-
CATED tificates must be mailed to or deposited with the Trust, duly en-
SHARES dorsed or accompanied by a duly endorsed stock power or by a writ-
ten request for redemption. Signatures must be guaranteed as de-
scribed under "How to Buy Shares--Signature Guarantee." Further
documentation may be requested from institutions or fiduciary ac-
counts, such as corporations, custodians (e.g., under the Uniform
Gifts to Minors Act), executors, administrators, trustees or
guardians ("institutional account owners"). The redemption request
and stock power must be signed exactly as the account is regis-
tered, including indication of any special capacity of the regis-
tered owner.
AUTOMATIC An investor who owns or buys shares of a Fund having a net asset
WITHDRAWAL value of $10,000 or more may open an Automatic Withdrawal Plan and
PLAN 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
54 PIMCO Funds: Multi-Manager Series
<PAGE>
Application or you may obtain an Automatic Withdrawal Plan Appli-
cation from the Distributor or your broker. If an Automatic With-
drawal 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 address 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 ac-
count and all distributions 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 appli-
cable CDSC) to make each withdrawal payment. Any applicable CDSC
may be waived for certain redemptions under an Automatic With-
drawal 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 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
November 1, 1997 Prospectus 55
<PAGE>
accounts, the Trust pays the Distributor servicing fees up to the
annual rate of .25% (calculated as a percentage of each Fund's av-
erage daily net assets attributable 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.
56 PIMCO Funds: Multi-Manager Series
<PAGE>
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' shares of the same
class. In reporting its expenses to the Trustees, the Distributor
itemizes expenses that relate to the distribution 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 annu-
ally based on the relative sales of each class, except for any ex-
penses that relate only to the sale or servicing of a single
class. The Distributor may make payments to brokers (and with re-
spect to servicing fees only, to certain banks and other financial
intermediaries) of up to the following percentages 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 transactions 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.
November 1, 1997 Prospectus 57
<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 January 17, 1997 in respect of se-
ries of PIMCO Advisors Funds that were predecessors of certain
Funds listed below. The remaining Funds did not offer Class B or
Class C shares prior to January 17, 1997. As of June 30, 1997,
such expenses were approximately $12,674,000 in excess of payments
under the Class B Distribution and Servicing Plan and $2,163,000
in excess of payments under the Class C Distribution and Servicing
Plan. The allocation of such excess (on a pro rata basis) among
the Funds listed below (and where noted, their predecessees) as of
June 30, 1997 was as follows:
EXCESS EXPENSES
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------------------------------------------
(AS A PERCENTAGE (AS A PERCENTAGE
OF NET ASSETS OF NET ASSETS
($ IN THOUSANDS) AS OF 6/30/97) ($ IN THOUSANDS) AS OF 6/30/97)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Income Fund 97 4.00 4 .10
-----------------------------------------------------------------------------------------------------
Renaissance Fund* 1,533 4.00 170 .10
-----------------------------------------------------------------------------------------------------
Value Fund 658 4.00 35 .10
-----------------------------------------------------------------------------------------------------
Capital Appreciation Fund 94 4.00 7 .10
-----------------------------------------------------------------------------------------------------
Growth Fund* 2,966 4.00 821 .10
-----------------------------------------------------------------------------------------------------
Mid Cap Growth Fund 791 4.00 28 .10
-----------------------------------------------------------------------------------------------------
Target Fund* 3,198 4.00 526 .10
-----------------------------------------------------------------------------------------------------
Small Cap Value Fund 358 4.00 11 .10
-----------------------------------------------------------------------------------------------------
Opportunity Fund* N/A N/A 341 .10
-----------------------------------------------------------------------------------------------------
International Developed Fund 37 4.00 2 .10
-----------------------------------------------------------------------------------------------------
International Fund* 432 4.00 91 .10
-----------------------------------------------------------------------------------------------------
Emerging Markets Fund 9 4.00 2 .10
-----------------------------------------------------------------------------------------------------
Innovation Fund* 2,042 4.00 88 .10
-----------------------------------------------------------------------------------------------------
Precious Metals Fund* 272 4.00 14 .10
-----------------------------------------------------------------------------------------------------
Balanced Fund 35 4.00 1 .10
-----------------------------------------------------------------------------------------------------
Tax Exempt Fund* 152 4.00 22 .10
-----------------------------------------------------------------------------------------------------
</TABLE>
* For these Funds, the table includes excess expenses of predeces-
sor series of PIMCO Advisors Funds which reorganized as the listed
Funds of the Trust on January 17, 1997.
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. Net asset value will not be determined on days on which
the Exchange is closed.
Portfolio securities and other assets for which market quota-
tions are readily available are stated at market value. Fixed in-
come securities are normally valued on the basis of quotations ob-
tained from brokers and dealers or pricing services, which take
into account appropriate factors such as institutional-sized trad-
ing 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 quo-
tations 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
58 PIMCO Funds: Multi-Manager Series
<PAGE>
are valued at amortized cost, when the Board of Trustees deter-
mines that amortized cost is their fair value. Exchange-traded op-
tions, 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 de-
termined 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 Trust's procedures, the prices of foreign secu-
rities are determined using information derived from pricing serv-
ices and other sources. Information that becomes known to the
Trust or its agents after the time that net asset value is calcu-
lated 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 val-
ues of portfolio securities that occur between the time their
prices are determined and 4:00 p.m., Eastern time, may not be re-
flected in the calculation of net asset value. If events materi-
ally affecting the value of such securities occur during such pe-
riod, then these securities may be valued at fair value as deter-
mined by the Advisor 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
a particular Fund's classes.
Distributions
Shares begin earning dividends on the day after 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 investment income from
interest and dividends, if any, will be declared and paid at least
annually to shareholders of record by the Capital Appreciation,
Growth, Mid Cap Growth, Target, Small Cap Value, Opportunity,
International Developed, International, Emerging Markets,
Innovation and Precious Metals Funds. Any net capital gains from
the sale of portfolio securities will be distributed no less
frequently than once annually. Net short-term capital 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 or PIMCO Funds: Pacific
Investment Management Series as described below, at net asset val-
ue, unless the shareholder elects to receive cash (either paid to
shareholders directly or credited to their account with their par-
ticipating broker). If a shareholder has elected to receive divi-
dends and/or capital gain distributions in cash and the postal or
other delivery service is unable to deliver checks to the share-
holder's address of record, such shareholder's distributions will
automatically be invested in the Money Market Fund of PIMCO Funds:
Pacific Investment Management Series, until such shareholder is
located. 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
November 1, 1997 Prospectus 59
<PAGE>
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 dividends.
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-
426-0107. For further information on this option, contact your
broker or call the Distributor at 800-426-0107.
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. Under the
Taxpayer Relief Act of 1997, long-term capital gains will gener-
ally be taxed at a 28% or 20% rate, depending upon the holding pe-
riod of the portfolio security. 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, No-
vember 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 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
60 PIMCO Funds: Multi-Manager Series
<PAGE>
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 pre-
ceding 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 corporation's "adjusted current earnings" (which in-
cludes various items of tax exempt income) exceeds the amount oth-
erwise determined to be alternative minimum taxable income. Ac-
cordingly, an investment in the Tax Exempt Fund may cause share-
holders to be subject to (or result in an increased liability un-
der) 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 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, 1989 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."
November 1, 1997 Prospectus 61
<PAGE>
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 September 30, 1997 were approxi-
mately $130.6 billion. A portion of the units of the limited part-
ner interest in PIMCO Advisors is traded publicly on the Exchange.
The general partner of PIMCO Advisors is PIMCO Partners, G.P. Pa-
cific 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 gover-
nance powers of the general partner and serve as the functional
equivalent of a board of directors. Pacific Investment Management
and the Managing Directors, because of their ability to designate
a majority of the Members of the Operating Board, could be said to
control PIMCO Advisors, although they disclaim such authority.
PIMCO Advisors' address is 800 Newport Center Drive, Suite 100,
Newport Beach, California 92660. PIMCO Advisors is registered as
an investment adviser with the Securities and Exchange Commission.
PIMCO Advisors currently has six subsidiary partnerships, the fol-
lowing five of which manage one or more of the Funds: Blairlogie,
Cadence, Columbus Circle, NFJ and Pacific Investment Management.
PIMCO Advisors has entered into a Merger Agreement with Oppen-
heimer Group Inc. pursuant to which PIMCO Advisors will acquire
the managing general partnership in Oppenheimer Capital, the gen-
eral partnership in Oppenheimer Capital L.P. and 100% of the stock
of an Oppenheimer Group affiliate which manages eight closed-end
funds. Oppenheimer Capital is an investment management firm which
follows value-based investment disciplines and had more than $50
billion in assets under management as of September 30, 1997.
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 Pursuant to portfolio management agreements, PIMCO Advisors em-
MANAGERS 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 (and not the Funds or the Trust)
compensates the Portfolio Managers from its advisory fee. Under
these agreements, a Portfolio Manager has full investment discre-
tion 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 pur-
chase 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 September 30, 1997 of
approximately $11.5 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
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
62 PIMCO Funds: Multi-Manager Series
<PAGE>
stock price, and conversely, a company falling short of expecta-
tions 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 re-
sults that are better than anticipated.
Investment decisions made by Columbus Circle are generally made
by one or more committees, although the following individuals have
primary responsibility for the noted Columbus Circle Funds. Irwin
F. Smith is primarily responsible for the day-to-day management of
the Growth Fund. Mr. Smith, a Managing Director of Columbus Cir-
cle, has over 30 years of investment management experience. He re-
ceived his bachelor's degree and MBA from the University of Wis-
consin, and he is a Chartered Financial Analyst. Donald A.
Chiboucas is primarily responsible for the day-to-day management
of the Opportunity Fund. Mr. Chiboucas, a Managing Director of Co-
lumbus Circle, has 30 years of investment management experience.
He received his bachelor's degree and MBA from the University of
California, Berkeley, and he is a Chartered Financial Analyst. Amy
H. Hogan is primarily responsible for the day-to-day management of
the Target Fund. Ms. Hogan, a Managing Director of Columbus Cir-
cle, has 12 years of investment management experience. She re-
ceived her bachelor's degree and MBA from the University of Wis-
consin, and she is a Chartered Financial Analyst. Anthony Rizza is
primarily responsible for the day-to-day management of the Innova-
tion Fund. Mr. Rizza, a Managing Director of Columbus Circle, has
11 years of investment management experience. He received his
bachelor's degree from the University of Connecticut, and he is a
Chartered Financial Analyst. Clifford G. Fox is primarily respon-
sible for the day-to-day management of the Renaissance Fund. Mr.
Fox, a Managing Director of Columbus Circle, has 16 years of in-
vestment management experience. He received his bachelor's degree
from the University of Pennsylvania and his MBA from New York Uni-
versity, and he is a Chartered Financial Analyst. Jacob Navon is
primarily responsible for the day-to-day management of the Tax Ex-
empt Fund. Mr. Navon, a Senior Vice President of Columbus Circle,
has 13 years of investment management experience. He received his
bachelor's degree and MA from Cambridge University and his MBA
from Harvard Business School.
CADENCE manages the Capital Appreciation Fund, the Mid 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 Manage-
ment Corporation, the predecessor investment adviser to Cadence,
commenced operations in 1988. Accounts managed by Cadence had com-
bined assets as of September 30, 1997 of approximately $4.9 bil-
lion. Cadence's address is Exchange Place, 53 State Street, Bos-
ton, Massachusetts 02109. Cadence is registered as an investment
adviser with the Securities and Exchange Commission.
David B. Breed, William B. Bannick, Katherine A. Burdon and Pe-
ter B. McManus are primarily responsible for the day-to-day man-
agement of the Cadence Funds. Mr. Breed is a Managing Director,
the Chief Executive Officer, and a founding partner of Cadence,
and has 24 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 12 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
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 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. McManus is Director of Fund Management
of Cadence and has 20 years' investment management experience. He
previously
November 1, 1997 Prospectus 63
<PAGE>
served as a Vice President of Bank of Boston. Mr. McManus joined
Cadence in 1994. He graduated from the University of Massachu-
setts, and he 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 September 30, 1997 of approximately
$2.3 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 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 29 years' experi-
ence encompassing equity research and portfolio management. He re-
ceived his bachelor's degree and MBA from Southern Methodist Uni-
versity, and he is a Chartered Financial Analyst. Mr. Najork and
Paul A. Magnuson are primarily responsible for the day-to-day man-
agement of the Value Fund and the Small Cap Value Fund. Mr.
Magnuson, a research analyst at NFJ, has 12 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 Life Insurance
Company), and the limited partners of which are the principal ex-
ecutive 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 ad-
viser to Blairlogie, commenced operations in 1992. Accounts man-
aged by Blairlogie had combined assets as of September 30, 1997 of
approximately $875 million. 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 six 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.
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 $108.5 billion of assets under management as of September
30, 1997. Pacific Investment Management's address is 840 Newport
Center Drive,
64 PIMCO Funds: Multi-Manager Series
<PAGE>
Suite 360, Newport Beach, California 92660. Pacific Investment
Management is registered as an investment adviser with the Securi-
ties and Exchange Commission 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 Manage-
ment or its predecessor for more than 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 An-
geles Society 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 September 30, 1997 of approxi-
mately $1.5 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, has
served as the Portfolio Manager of the Precious Metals Fund since
the Fund commenced operations.
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, Pacific Investment Management and Van Eck
may provide, and currently are providing, investment management
services to other clients, including other investment companies.
FUND PIMCO Advisors also serves as administrator (the "Administrator")
ADMINI- to the Funds pursuant to an administration agreement with the
STRATOR 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 generally accepted
accounting principles; and (viii) any expenses allocated or allo-
cable to a specific class of shares, which include distribution
and/or service fees payable with respect to Class A, Class B and
Class C shares, and may include certain other expenses as permit-
ted 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.
November 1, 1997 Prospectus 65
<PAGE>
ADVISORY The Funds feature fixed advisory and administrative fees. For pro-
AND viding or arranging for the provision of investment advisory serv-
ADMINIST- ices to the Funds as described above, PIMCO Advisors receives
RATIVE monthly fees from each Fund at an annual rate based on the average
FEES daily net assets of the Fund as follows:
<TABLE>
<CAPTION>
ADVISORY
FUND FEE RATE
---------------------------------
<S> <C>
Tax Exempt Fund .30%
---------------------------------
Equity Income, Value,
Capital Appreciation,
Mid Cap Growth and
Balanced 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%
</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, Growth, Target, Op-
portunity, International, Innovation, Precious Metals, and Tax Ex-
empt Funds by a majority of the Trustees that are not interested
persons of the Trust, PIMCO Advisors, or Pacific Investment Man-
agement (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 Ad-
visor and each of the Portfolio Managers, PIMCO Advisors (and not
the Funds or the Trust) pays each Portfolio Manager a fee based on
a percentage of the average daily net assets of a Fund as follows:
Columbus Circle--.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 and .35% for the portion of the Common
Stock Segment of the Balanced Fund allocated to Cadence; NFJ--.35%
for the Equity 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 International Developed Fund, .40% for the International
Fund and .75% for the Emerging Markets Fund; Pacific Investment
Management--.25% for the Fixed Income Securities Segment of the
Balanced Fund; and Van Eck--.35% for the Precious Metals Fund.
66 PIMCO Funds: Multi-Manager Series
<PAGE>
PORTFOLIO Pursuant to the portfolio management agreements, a Portfolio Man-
TRANSAC- ager places orders for the purchase and sale of portfolio invest-
TIONS ments 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. Particularly when investing in less liquid or illiquid
securities of smaller capitalization companies, such allocation
may take into account the asset size of a Fund in determining
whether the allocation of an investment is suitable. As a result,
larger Funds may become more concentrated in more liquid securi-
ties than smaller Funds or private accounts of a Portfolio Manager
pursuing a small capitalization investment strategy, which could
adversely affect performance. A Portfolio Manager may aggregate
orders for the Funds with simultaneous transactions entered into
on behalf of its other clients so long as price and transaction
expense are averaged either for the particular transaction or for
that day.
Description of the Trust
CAPITALIZ- The Trust was organized as a Massachusetts business trust on Au-
ATION gust 24, 1990, and currently consists of twenty-three portfolios
that are operational, sixteen 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.
MULTIPLE In addition to Class A, Class B and Class C shares, certain Funds
CLASSES OF also offer Institutional and Administrative Class shares through a
SHARES separate prospectus, as described under "Alternative Purchase Ar-
rangements." This Prospectus relates only to Class A, Class B 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 each class has identical
dividend, liquidation and other rights and the same terms and con-
ditions, except 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 in-
cluding advisory or custodial fees or other expenses related to
the management of the Trust's assets, if these expenses are actu-
ally 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
November 1,1997 Prospectus 67
<PAGE>
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, 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 October 6, 1997,
the following were shareholders of record of at least 25% of the
outstanding voting securities of the indicated Fund: Charles
Schwab & Co., Inc. (San Francisco, California) with respect to the
Emerging Markets Fund. To the extent a shareholder is also the
beneficial owner of such shares, the shareholder may be deemed to
control (as that term is defined in the 1940 Act) the 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) pres-
ent at a meeting, if the holders of more than 50% of the outstand-
ing shares are present in person or by proxy; or (2) more than 50%
of the outstanding shares of the Fund (or the Trust).
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 reports, will be mailed to a shareholder's house-
hold (same surname, same address). A shareholder may call 800-426-
0107 if additional shareholder reports are desired.
68 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Funds:
Multi-Manager
Series
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR AND ADMINISTRATOR
PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA 92660
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
Columbus Circle Investors, Cadence Capital Management, NFJ Investment Group,
Blairlogie Capital Management, 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
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1055 Broadway, Kansas City, MO 64105
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
For further information about the PIMCO Funds, call 1-800-426-0107
- --------------------------------------------------------------------------------
<PAGE>
PIMCO Funds is on the Web
www.pimcofunds.com
<TABLE>
<S> <C>
A Partial List of What's Available: Daily Market Insight
Fund Manager Bios
Current and Historical Fund Performance
Lipper Rankings
Morningstar Ratings
Summaries of Fund Portfolios
Risk Analysis
Net Asset Values
Downloadable Literature Section
On-line Literature Requests
Resources for Investment Professionals
</TABLE>
PIMCO Funds is pleased to announce the launch of its Web site. You and your
financial advisor now have around-the-clock access to the most timely and
comprehensive information available on all of the PIMCO Funds. In addition, the
site includes daily market commentary from our fund managers, with insights on
the economy and other factors affecting the stock and bond markets.
[PICTURE APPEARS HERE]
You'll find the site to be informative and easy-to-use. It's divided into three
main sections: Investment Insight, Fund Information and Resources. And there are
several functions that can help you navigate your way around the site. We can be
found on the worldwide web at www.pimcofunds.com.
[PICTURE APPEARS HERE]
Investment Insight
The Investment Insight section provides an overview of the six investment
management firms under the PIMCO Advisors L.P. umbrella. You'll find an
explanation of each firm's investment process, biographies of the investment
team, manager updates and more.
[PICTURE APPEARS HERE]
Fund Information
In the Fund Information section you'll access detailed profiles of all the PIMCO
Funds, including current and historical performance, Lipper rankings and
Morningstar ratings. Additionally, we provide a summary of a fund's
portfolio--complete with risk analysis data. You can also obtain daily fund
share prices. Please read the relevant prospectus carefully before you invest in
any PIMCO Fund.
[PICTURE APPEARS HERE]
Resources
Our Resources section features a variety of useful information, including:
. an on-line document library that contains prospectuses, applications and
other forms that you can view and print
. a literature-by-mail "catalog", so you can order free materials, such as our
popular Investor Guide
. information about our convenient shareholder services, such as Auto-Invest,
Fund Link and our 24-Hour Telephone Information System
. a listing of the features and benefits of the retirement plans offered by
PIMCO Funds.
Questions?
We're sure you'll find the PIMCO Funds Web site to be an invaluable tool. If you
have any comments or questions about the site, please call us today at
1-800-426-0107. Or, use the e-mail feature of the site to contact us.
[LOGO OF PIMCO APPEARS HERE]
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated _________, 1997
to the
Prospectus for Class A, Class B and
Class C Shares dated November 1, 1997
Disclosure relating to:
PIMCO Enhanced Equity Fund
PIMCO Small Cap Growth Fund
PIMCO Micro Cap Growth Fund
PIMCO International Growth Fund
- --------------------------------------------------------------------------------
Note: This document supplements the PIMCO Funds: Multi-Manager Series (the
- ----
"Trust") Prospectus for Class A, Class B and Class C Shares dated November 1,
1997 (the "Retail Prospectus") which is included in Part A of this Registration
Statement.
- --------------------------------------------------------------------------------
The Trust intends to offer Class A, Class B and Class C Shares of the PIMCO
Enhanced Equity Fund, PIMCO Small Cap Growth Fund, PIMCO Micro Cap Growth Fund
and PIMCO International Growth Fund (together, the "Funds").
1. Schedule of Fees (applicable to all Funds).
Shareholder Transaction Expenses:
- --------------------------------
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------ ------ ------
<S> <C> <C> <C>
Maximum initial sales charge imposed on purchases 5.50% None None
(as a percentage of offering price at time of purchase)
Maximum sales charge imposed on reinvested dividends None None None
(as a percentage of offering price at time of purchase)
Maximum contingent deferred sales charge ("CDSC") 1%/(1)/ 5%/(2)/ 1%/(3)/
(as a percentage of original purchase price)
Exchange Fee None None None
- -----------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are purchased
without a front-end sales charge at the time of purchase. See "Alternative
Purchase Arrangements" in the Retail Prospectus.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For shares
held longer than one year, the CDSC declines according to the schedule set forth
under "Alternative Purchase Arrangements -- Deferred Sales Charge Alternative --
Class B Shares" in the Retail Prospectus.
(3) The CDSC on Class C shares is imposed only on shares redeemed in the first
year.
<PAGE>
<TABLE>
<CAPTION>
Example: You would pay the
following expenses on a Example: You would pay
Class A Shares Annual Fund $1,000 investment assuming the following expenses on a
Operating Expenses (1) 5% annual return and (2) $1,000 investment assuming
(As a percentage of average net redemption at the end of each (1) 5% annual return and (2)
assets): time period: no redemption:
- ----------------------------------------------------------------------------------------------------------------------------
Total
Admini- Fund
Fund Advisory strative 12b-1 Operating 1 3 5 10 1 3 5 10
Fees Fees/1/ Fees/2/ Expenses Year Years Years Years Year Years Years Years
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Enhanced Equity .45% .40% .25% 1.10% $66 $88 $112 $182 $66 $88 $112 $182
Small Cap Growth 1.00 .40 .25 1.65 $71 $104 $140 $240 $71 $104 $140 $240
Micro Cap Growth 1.25 .40 .25 1.90 $73 $111 $152 $265 $73 $111 $152 $265
International Growth .85 .65 .25 1.75 $72 $107 $145 $250 $72 $107 $145 $250
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Example: You would pay the
following expenses on a Example: You would pay
Class B Shares Annual Fund $1,000 investment assuming the following expenses on a
Operating Expenses (1) 5% annual return and (2) $1,000 investment assuming
(As a percentage of average net redemption at the end of each (1) 5% annual return and (2)
assets): time period: no redemption:
- ----------------------------------------------------------------------------------------------------------------------------
Total
Admini- Fund
Fund Advisory strative 12b-1 Operating 1 3 5 10 1 3 5 10
Fees Fees/1/ Fees/2/ Expenses Year Years Years Years Year Years Years Years
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Enhanced Equity .45% .40% 1.00% 1.85% $69 $88 $120 $188 $19 $58 $100 $188
Small Cap Growth 1.00 .40 1.00 2.40 $74 $105 $148 $246 $24 $75 $128 $246
Micro Cap Growth 1.25 .40 1.00 2.65 $77 $112 $161 $271 $27 $82 $141 $271
International Growth .85 .65 1.00 2.50 $75 $108 $153 $256 $25 $78 $133 $256
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Example: You would pay the
following expenses on a Example: You would pay
Class C Shares Annual Fund $1,000 investment assuming the following expenses on a
Operating Expenses (1) 5% annual return and (2) $1,000 investment assuming
(As a percentage of average net redemption at the end of each (1) 5% annual return and (2)
assets): time period: no redemption:
- ----------------------------------------------------------------------------------------------------------------------------
Total
Admini- Fund
Fund Advisory strative 12b-1 Operating 1 3 5 10 1 3 5 10
Fees Fees/1/ Fees/2/ Expenses Year Years Years Years Year Years Years Years
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Enhanced Equity .45% .40% 1.00% 1.85% $29 $58 $100 $217 $19 $58 $100 $217
Small Cap Growth 1.00 .40 1.00 2.40 $34 $75 $128 $274 $24 $75 $128 $274
Micro Cap Growth 1.25 .40 1.00 2.65 $37 $82 $141 $298 $27 $82 $141 $298
International Growth .85 .65 1.00 2.50 $35 $78 $133 $284 $25 $78 $133 $284
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 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."
-2-
<PAGE>
The purpose of the foregoing tables is to assist investors in understanding 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. The Examples for Class A
shares assume payment of the current maximum applicable 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 a Fund 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 Association of Securities
Dealers, Inc.
NOTE: The figures shown in the Examples are entirely hypothetical. They are not
representations of past or future performance or expenses; actual performance
and/or expenses may be more or less than shown.
2. Investment Objectives and Policies; Characteristics and Risks of Securities
and Investment Techniques.
The investment objective and general investment policies of the Funds and
related risks of securities and investment techniques are described in the
corresponding sections of the Trust's Prospectus for Institutional and
Administrative Class Shares, dated November 1, 1997 (the "Institutional
Prospectus"), which is included in Part A of this Registration Statement. The
relevant disclosure in the Institutional Prospectus is incorporated herein by
reference.
3. Distributions.
Disclosure relating to Fund distributions is incorporated herein by
reference to "Dividends, Distributions and Taxes" in the Institutional
Prospectus.
4. Management of the Trust.
Disclosure relating to the Investment Advisor and Portfolio Managers of the
Funds (including advisory and portfolio management fees) and the Administrator
for each of the Funds is incorporated herein by reference to the corresponding
sub-sections of "Management of the Trust" in the Institutional Prospectus.
Administrative Fees
- -------------------
For providing or procuring administrative services for the Funds as
described above, PIMCO Advisors L.P. (in its capacity as Administrator) receives
monthly Administrative Fees from the Funds at the following annual rates, each
based on the average daily net assets attributable in the aggregate to the
relevant Fund's Class A, Class B and Class C Shares: Enhanced Equity Fund -
.40%; Small Cap Growth Fund - .40%; Micro Cap Growth Fund - .40%; International
Growth Fund - .65%.
-3-
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated _______________
to the
Prospectus for Class A, Class B
and Class C Shares Dated November 1, 1997
Disclosure relating to
PIMCO Structured Emerging Markets Fund and
PIMCO Tax-Managed Structured Emerging Markets Fund
- --------------------------------------------------------------------------------
Note: This document supplements the PIMCO Funds: Multi-Manager Series (the
- ----
"Trust") Prospectus for Class A, Class B and Class C Shares dated November 1,
1997 (the "Retail Prospectus") which is included in Part A of this Registration
Statement.
- --------------------------------------------------------------------------------
The Trust intends to offer Class A, Class B and Class C Shares of PIMCO
Structured Emerging Markets Fund (the "Structured Emerging Markets Fund") and
PIMCO Tax-Managed Structured Emerging Markets Fund (the "Tax-Managed Structured
Emerging Markets Fund" and, together with the Structured Emerging Markets Fund,
the "Funds").
1. Schedule of Fees (applicable to both Funds).
Structured Emerging Markets Fund and
Tax-Managed Structured Emerging Markets Fund
--------------------------------------------
<TABLE>
<CAPTION>
Shareholder Transaction Expenses:
- --------------------------------
Class A Class B Class C
Shares Shares Shares
-------- ------- -------
<S> <C> <C> <C>
Maximum initial sales charge imposed on purchases 5.50% None None
(as a percentage of offering price at time of
purchase)
Maximum sales charge imposed on reinvested dividends None None None
(as a percentage of offering price at time of
purchase)
Maximum contingent deferred sales charge ("CDSC") 1%/(1)/ 5%/(2)/ 1%/(3)/
(as a percentage of original purchase price)
Exchange Fee None None None
- -----------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are purchased
without a front-end sales charge at the time of purchase. See "Alternative
Purchase Arrangements" in the Retail Prospectus.
(2) The maximum CDSC is imposed on shares redeemed in the first year. For shares
held longer than one year, the CDSC declines according to the schedule set forth
under "Alternative Purchase Arrangements -- Deferred Sales Charge Alternative --
Class B Shares" in the Retail Prospectus.
(3) The CDSC on Class C shares is imposed only on shares redeemed in the first
year.
<PAGE>
Annual Fund Operating Expenses (as a percentage of average daily net assets):
- ------------------------------
<TABLE>
<CAPTION>
Service/ Total Fund
Advisory Administrative 12b-1 Operating
Fees Fees/(1)/ Fees/(2)/ Expenses
--------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Class A Shares .45% .65% .25% 1.35%
Class B Shares .45% .65% 1.00% 2.10%
Class C Shares .45% .65% 1.00% 2.10%
- -----------------
</TABLE>
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 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."
Examples:
- --------
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
</TABLE>
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) no redemption:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A Shares
Class B Shares
Class C Shares
</TABLE>
The purpose of the foregoing tables is to assist investors in understanding
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. The
Examples for Class A shares assume payment of the current maximum applicable
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 a Fund 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
Association of Securities Dealers, Inc.
NOTE: The figures shown in the Examples are entirely hypothetical. They are not
representations of past or future performance or expenses; actual performance
and/or expenses may be more or less than shown.
-2-
<PAGE>
2. Investment Objectives and Policies.
The investment objective and general investment policies of the Funds are
described below. There can be no assurance that the investment objective of
either Fund will be achieved. Because the market value of the Funds' investments
will change, the net asset value per share of the Funds also will vary.
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 Morgan Stanley Capital International Emerging Markets
Free Index ("MSCI Free Index") or the Baring Emerging Markets Index (the "Baring
Index"). However, the Portfolio Manager has discretion in identifying other
countries that qualify as emerging markets on the basis of market capitalization
and liquidity, as well as their inclusion, or consideration for inclusion, as
emerging market countries in other broad-based market indexes. The Fund seeks to
achieve its objective by following a disciplined and systematic methodology for
selecting and weighting countries, industries, and stocks. Diversification and
consistent exposure to opportunity are emphasized over tactical timing decisions
with regard to countries, industries, or stocks. A disciplined methodology for
maintaining the allocation to countries, industries, and stocks is utilized in
portfolio composition, rather than discretionary shifting in country and
industry concentration levels. First, countries are selected based upon their
level of development and equity market institutions. GNP per capita, local
economic diversification, and freedom of investment flows are the primary
considerations in country selection decisions. Most countries are assigned an
equal weight in the Fund unless the size of their equity market is prohibitive;
countries with smaller markets (i.e., less than $5 billion of market
capitalization) are assigned one-half of the weight assigned to countries with
larger markets. 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. The Portfolio Manager for the
Structured Emerging Markets Fund is Parametric Portfolio Associates
("Parametric").
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 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
</TABLE>
-3-
<PAGE>
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, and 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.
Investing in securities of foreign issuers, and particularly emerging
market issuers, involves special risks and considerations not typically
associated with investing in U.S. companies. For a discussion of such risks, see
"Characteristics and Risks of Securities and Investment Techniques - Foreign
Securities" in the Retail Prospectus.
Tax-Managed Structured Emerging Markets Fund has the same investment
--------------------------------------------
objective and policies as the Structured Emerging Markets Fund, except that the
Fund seeks to achieve superior after-tax returns for its shareholders in part by
minimizing the taxes they incur in connection with the Fund's investment income
and realized capital gains. While the Fund seeks to minimize investor taxes
associated with the Fund's investment income and realized capital gains, the
Fund may have taxable investment income and may realize taxable gains from time
to time. The Portfolio Manager for the Fund is Parametric.
As specified above, the Fund seeks to achieve after-tax returns for its
shareholders in part by minimizing the taxes they incur in connection with the
Fund's investment income and realized capital gains. Taxes on realized capital
gains are minimized in part by maintaining relatively low portfolio turnover,
and by employing a variety of tax-efficient management strategies. The Fund will
generally seek to avoid realizing net short-term capital gains and, when
realizing gains, will attempt to realize long-term gains (i.e., gains on
securities held for more than 12 months) in such a manner as to maximize the net
gains from securities held for more than 18 months. The Fund intends to notify
each shareholder as to that portion of his or her capital gain dividends which
qualifies for a maximum tax rate of 28% in the hands of the shareholder and the
balance, if any, of such capital gain dividends eligible for a maximum tax rate
of 20%. Net short-term capital gains, when distributed, will be taxed as
ordinary income, at graduated rates of up to 39.6%. When the Fund decides to
sell a particular appreciated security, it will normally select for sale first
those share lots with holding periods exceeding 18 or 12 months and among those,
the share lots with the highest cost basis. The Fund may, when prudent, sell
securities to realize capital losses that can be used to offset realized capital
gains.
To protect against price declines in securities holdings with large
accumulated capital gains, the Fund may, to the extent permitted by law, use
hedging techniques such as short sales against-the-box of securities held, the
purchase of put options, the sale of stock index futures contracts, and equity
swaps. By using these techniques rather than selling such securities the Fund
can reduce its exposure to price declines in the securities without realizing
substantial capital gains. The usefulness of such practices have, however, been
substantially reduced in the Taxpayer Relief Act of 1997, effective for
transactions after June 8, 1997.
-4-
<PAGE>
The Fund follows the practice of distributing selected appreciated
securities to meet redemptions of certain investors and may, within certain
limits, use the selection of securities distributed to meet such redemptions as
a management tool. By distributing appreciated securities the Fund can reduce
its position in such securities without realizing capital gains. During periods
of net withdrawals by investors in the Fund, using distributions of securities
also enables the Fund to avoid the forced sale of securities to raise cash for
meeting redemptions.
It is expected that by employing the various tax-efficient management
strategies described, the Fund can minimize the extent to which shareholders
incur taxes as a result of realized capital gains. The Fund may nevertheless
realize gains and shareholders will incur tax liability from time to time.
Unless otherwise noted, the Fund's objective and its restrictions and
policies relating to the investment of its assets are non-fundamental and may be
changed without shareholder approval.
3. Characteristics and Risks of Securities and Investment Techniques.
The Funds may invest in the securities and utilize the investment
techniques described under the sub-headings "Investment in Companies with Small
and Medium Capitalizations," "Foreign Investments," "Foreign Currency
Transactions," "Money Market Instruments," "Convertible Securities," "Derivative
Instruments" (including "Options on Securities, Securities Indexes, Commodity
Indexes and Currencies," "Swap Agreements," and "Futures Contracts and Options
on Futures Contracts"), "Loans of Portfolio Securities," "Short Sales," "When-
Issued, Delayed Delivery and Forward Commitment Transactions," "Repurchase
Agreements," "Reverse Repurchase Agreements and Other Borrowings," "Illiquid
Securities," "Investment in Investment Companies," and "Credit and Market Risk
of Fixed Income Securities" under "Characteristics and Risks of Securities and
Investment Techniques" in the Prospectus.
The annual portfolio turnover rate for the Tax-Managed Structured Emerging
Markets Fund is expected to be less than 25%.
4. Management of the Trust.
Advisory and Administrative Fees
- --------------------------------
The Funds features fixed advisory and administrative fees. For providing or
arranging for the provision of investment advisory services to the Funds, PIMCO
Advisors L.P. receives monthly Advisory Fees from the Structured Emerging
Markets Fund at the annual rate of 0.45% and from the Tax-Managed Structured
Emerging Markets Fund at the annual rate of 0.45%, each based on the average
daily net assets of the relevant Fund. Pursuant to the portfolio management
agreement between PIMCO Advisors L.P. and Parametric, PIMCO Advisors L.P. (and
not the Funds or the Trust) pays Parametric fees at the annual rate of 0.35%
based on the average daily net assets of the Structured Emerging Markets Fund
and 0.35% based on the average daily net assets of the Tax-Managed Structured
Emerging Markets Fund.
For providing or procuring administrative services for the Funds as
described above, PIMCO Advisors L.P. (in its capacity as Administrator) receives
monthly Administrative Fees from the Structured Emerging Markets Fund at the
annual rate of 0.65% and from the Tax-Managed Structured Emerging Markets Fund
at the annual rate of 0.65%, each based on the average daily net assets
attributable in the aggregate to the relevant Fund's Class A, Class B and Class
C Shares.
-5-
<PAGE>
5. Distributions.
Net investment income from interest and dividends, if any, will be declared
and paid at least annually to shareholders of record by the Structured Emerging
Markets Fund. While the Tax-Managed Structured Emerging Markets Fund seeks to
minimize taxable distributions, the Fund may be expected to earn and distribute
taxable income and may also be expected to realize and distribute capital gains
from time to time. Net investment income from interest and dividends, if any,
will be declared and paid at least annually to shareholders of record by the
Tax-Managed Structured Emerging Markets Fund.
-6-
<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 Innovation Fund
PIMCO International Growth 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
MULTIPLE MANAGERS
PIMCO Balanced Fund
PROSPECTUS
- --------------------------------------------------------------------------------
November 1, 1997
<PAGE>
PIMCO Funds: Multi-Manager Series
Prospectus
November 1, 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 describes eighteen 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 November 1, 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.
November 1, 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...................................... 16
Investment Restrictions................................................. 27
Characteristics and Risks of Securities and Investment Techniques....... 30
Management of the Trust................................................. 42
Purchase of Shares...................................................... 48
Redemption of Shares.................................................... 51
Portfolio Transactions.................................................. 53
Net Asset Value......................................................... 54
Dividends, Distributions and Taxes...................................... 55
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 eighteen 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.
PORTFOLIO MANAGER
AND FUND INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS
- --------------------------------------------------------------------------------
BLAIRLOGIE CAPITAL
MANAGEMENT
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.
- --------------------------------------------------------------------------------
Innovation Seeks capital appreciation; invests primarily in common
stocks of technology-related companies.
- --------------------------------------------------------------------------------
International Seeks long-term capital appreciation; invests primarily
Growth in an international portfolio of equity and equity-
related securities.
(CONTINUED ON NEXT PAGE)
November 1, 1997 Prospectus 3
<PAGE>
(CONTINUED)
PORTFOLIO MANAGER
AND FUND INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS
- --------------------------------------------------------------------------------
NFJ INVESTMENT GROUP
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.
- --------------------------------------------------------------------------------
MULTIPLE MANAGERS
Balanced Seeks total return consistent with prudent investment
management; invests in common stocks, fixed income
securities and money market instruments.
- --------------------------------------------------------------------------------
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
Balanced Fund, all of the Funds invest primarily in common stock or other types
of equity securities (the "Equity Funds"). While each of the International,
Renaissance, Innovation, and International Growth 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 other 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 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.
4 PIMCO Funds: Multi-Manager Series
<PAGE>
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 September 30, 1997, PIMCO Advisors and its
subsidiary partnerships had over $130 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,
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").
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
reserves the right to allocate a portion of the Fund's assets for investment in
money market instruments and to manage the investment of such assets.
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 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
and/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.
November 1, 1997 Prospectus 5
<PAGE>
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 and Small
Cap Growth Fund are currently closed to new investors, although existing
shareholders may continue to invest in these Funds, subject to the Adviser's
and Cadence's right to suspend all new investments at their discretion,
depending upon market conditions and other factors. In addition, Institutional
Class and Administrative Class shares of the International, Renaissance,
Innovation, and Structured Emerging Markets Funds are not offered as of the
date of this Prospectus; however, investment opportunities in these Funds may
be available in the future. These restrictions 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 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)
November 1, 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
Innovation Fund............................. 0.65 0.25 0.90
International Growth Fund................... 0.85 0.50 1.35
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
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
Innovation Fund................... 0.65 0.25 0.25 1.15
International Growth Fund......... 0.85 0.50 0.25 1.60
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
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 and
Distribution 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
Innovation Fund.............................. 9 29 50 111
International Growth Fund.................... 14 43 74 162
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
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
Innovation Fund.............................. 12 37 63 140
International Growth Fund.................... 16 50 87 190
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
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. The information has been restated as appropriate to
reflect a Fund's current fees and expenses. 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.
November 1, 1997 Prospectus 9
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights set forth on the following pages present certain
information and ratios as well as performance information for the Funds. The
information provided below is included in the June 30, 1997 PIMCO Funds Annual
Report (relating to Institutional and Administrative Class shares) and has
been audited by Price Waterhouse LLP, independent accountants, whose report
thereon is also included in such Annual Report. The Annual Report is
incorporated by reference in the Statement of Additional Information and may
be obtained from the Trust without charge. Financial statements and related
notes are also incorporated by reference in the Statement of Additional
Information. The International, Renaissance, Innovation, International Growth,
and Structured Emerging Markets Funds did not offer Institutional or
Administrative Class Shares during the reporting periods. Prior to November 1,
1995, the fiscal year end for each Fund listed below was October 31.
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET NET REALIZED/ TOTAL DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
VALUE NET UNREALIZED INCOME FROM FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME CAPITAL GAINS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EMERGING MARKETS FUND
Institutional Class
06/30/97 $12.66 $ 0.06(a) $ 1.30(a) $ 1.36 $(0.06) $ 0.00 $ 0.00
11/01/95-06/30/96 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) 0.00 (0.72)
10/31/94 12.27 (0.01) 4.45 4.44 0.00 0.00 (0.18)
06/01/93-10/31/93 10.00 0.03 2.52 2.55 (0.02) 0.00 (0.26)
Administrative Class
06/30/97 12.63 0.00(a) 1.32(a) 1.32 0.00 0.00 0.00
11/01/95-06/30/96 11.24 0.02(a) 1.40(a) 1.42 (0.03) 0.00 0.00
10/31/95 16.95 0.00 (4.95) (4.95) (0.05) 0.00 (0.71)
INTERNATIONAL DEVELOPED FUND (i)
Institutional Class
06/30/97 $12.54 $ 0.10(a) $ 1.09(a) $ 1.19 $ 0.00 $ 0.00 $(0.61)
11/01/95-06/30/96 11.74 0.72 0.72 1.44 (0.07) (0.36) (0.21)
10/31/95 11.86 0.10 0.30 0.40 (0.09) 0.00 (0.43)
10/31/94 10.69 0.09 1.15 1.24 (0.03) 0.00 (0.04)
06/08/93-10/31/93 10.00 0.05 0.69 0.74 (0.04) 0.00 (0.01)
Administrative Class
06/30/97 12.51 0.06(a) 1.09(a) 1.15 0.00 0.00 (0.61)
11/01/95-06/30/96 11.73 0.69(a) 0.72(a) 1.41 (0.07) (0.35) (0.21)
11/30/94-10/31/95 11.21 0.02 1.01 1.03 (0.08) 0.00 (0.43)
CAPITAL APPRECIATION FUND
Institutional Class
06/30/97 $18.10 $ 0.24 $ 5.08 $ 5.32 $(0.10) $ 0.00 $(2.13)
11/01/95-06/30/96 16.94 0.35 1.99 2.34 (0.15) 0.00 (1.03)
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) 0.00 (0.04)
10/31/93 11.27 0.11 2.73 2.84 (0.11) 0.00 (0.50)
10/31/92 11.02 0.14 1.05 1.19 (0.14) 0.00 (0.72)
03/08/91-10/31/91 10.00 0.09 1.02 1.11 (0.09) 0.00 0.00
Administrative Class
07/31/96-06/30/97 17.19 0.16 6.03 6.19 (0.09) 0.00 (2.13)
MID CAP GROWTH FUND
Institutional Class
06/30/97 $19.44 $(0.07) $ 5.25 $ 5.18 $(0.05) $ 0.00 $(4.29)
11/01/95-06/30/96 18.16 0.32 1.53 1.85 (0.14) 0.00 (0.43)
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) 0.00 (0.01)
10/31/93 11.29 0.07 2.70 2.77 (0.07) 0.00 (0.02)
10/31/92 10.28 0.10 1.03 1.13 (0.10) 0.00 0.00
08/26/91-10/31/91 10.00 0.02 0.27 0.29 (0.01) 0.00 0.00
Administrative Class
06/30/97 19.44 (0.13) 5.25 5.12 (0.03) 0.00 (4.29)
11/01/95-06/30/96 18.17 0.28 1.53 1.81 (0.11) 0.00 (0.43)
11/30/94-10/31/95 13.31 0.03 4.85 4.88 (0.02) 0.00 0.00
</TABLE>
- -------
*Annualized
(a)Per share amounts based on average number of shares outstanding during the
period.
(i)Formerly the Blairlogie International Active Fund.
10 PIMCO Funds: Multi-Manager Series
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF
NET
DISTRIBUTIONS RATIO OF INVESTMENT
IN EXCESS OF DISTRIBUTIONS TAX BASIS NET ASSET NET ASSETS EXPENSES TO INCOME TO
NET REALIZED FROM RETURN OF TOTAL VALUE END END OF AVERAGE NET AVERAGE NET PORTFOLIO
CAPITAL GAINS EQUALIZATION CAPITAL DISTRIBUTIONS OF PERIOD TOTAL RETURN PERIOD (000S) ASSETS ASSETS TURNOVER RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $ 0.00 $0.00 $(0.06) $13.96 10.85% $ 52,703 1.45% 0.45% 74%
0.00 0.00 0.00 (0.04) 12.66 12.70 80,545 1.35* 0.84* 74
0.00 0.00 0.00 (0.78) 11.27 (27.70) 73,539 1.35 0.57 118
0.00 0.00 0.00 (0.18) 16.53 36.31 79,620 1.35 (0.06) 79
0.00 0.00 0.00 (0.28) 12.27 25.55 14,625 1.34* 0.64* 37
0.00 0.00 0.00 0.00 13.95 10.45 117 1.69 0.02 74
0.00 0.00 0.00 (0.03) 12.63 12.70 368 1.61* 0.18* 74
0.00 0.00 0.00 (0.76) 11.24 (27.96) 830 1.62 0.02 118
$0.00 $ 0.00 $0.00 $(0.61) $13.12 10.07% $ 94,044 1.13% 0.85% 77%
0.00 0.00 0.00 (0.64) 12.54 12.54 70,207 1.10* 0.81* 60
0.00 0.00 0.00 (0.52) 11.74 3.83 63,607 1.10 1.10 63
0.00 0.00 0.00 (0.07) 11.86 11.68 22,569 1.10 1.12 89
0.00 0.00 0.00 (0.05) 10.69 7.39 8,299 1.10* 0.91* 20
0.00 0.00 0.00 (0.61) 13.05 9.77 2,302 1.38 0.52 77
0.00 0.00 0.00 (0.63) 12.51 12.33 5,624 1.35* 1.04* 60
0.00 0.00 0.00 (0.51) 11.73 9.61 675 1.34* 0.50* 58
$0.00 $ 0.00 $0.00 $(2.23) $21.19 31.52% $536,187 0.71% 1.02% 87%
0.00 0.00 0.00 (1.18) 18.10 14.65 348,728 0.70* 1.33* 73
0.00 0.00 0.00 (0.18) 16.94 28.47 236,220 0.70 1.22 83
0.00 0.00 0.00 (0.18) 13.34 0.15 165,441 0.70 1.17 77
0.00 0.00 0.00 (0.61) 13.50 25.30 84,990 0.70 0.94 81
0.00 (0.08) 0.00 (0.94) 11.27 10.75 36,334 0.70 1.13 134
0.00 0.00 0.00 (0.09) 11.02 11.19 18,813 0.75* 1.55* 41
0.00 0.00 0.00 (2.22) 21.16 38.26 3,115 0.96* 0.66* 87
$0.00 $ 0.00 $0.00 $(4.34) $20.28 30.58% $291,374 0.71% 0.53% 82%
0.00 0.00 0.00 (0.57) 19.44 10.37 231,011 0.70* 1.11* 79
0.00 0.00 0.00 (0.07) 18.16 30.54 189,320 0.70 0.43 78
0.00 0.00 0.00 (0.07) 13.97 0.58 121,791 0.70 0.45 61
0.00 0.00 0.00 (0.09) 13.97 24.57 67,625 0.70 0.56 98
0.00 (0.02) 0.00 (0.12) 11.29 10.91 21,213 0.70 0.87 66
0.00 0.00 0.00 (0.01) 10.28 2.98 2,748 0.82* 0.92* 13
0.00 0.00 0.00 (4.32) 20.24 30.23 2,066 0.96 0.28 82
0.00 0.00 0.00 (0.54) 19.44 10.17 1,071 0.95* 0.89* 79
0.00 0.00 0.00 (0.02) 18.17 36.64 892 0.94* 0.23* 72
<CAPTION>
DISTRIBUTIONS
IN EXCESS OF AVERAGE
NET REALIZED COMMISSION
CAPITAL GAINS RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
$0.00 $0.00
0.00 0.01
0.00 0.03
0.00
0.00
0.00 0.00
0.00 0.01
0.00 N/A
$0.00 $0.03
0.00 0.02
0.00 0.03
0.00
0.00
0.00 0.03
0.00 0.02
0.00 N/A
$0.00 $0.06
0.00 0.04
0.00 0.05
0.00
0.00
0.00
0.00
0.00 0.06
$0.00 $0.06
0.00 0.04
0.00 0.04
0.00
0.00
0.00
0.00
0.00 0.06
0.00 0.04
0.00 N/A
</TABLE>
November 1, 1997 Prospectus 11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET NET REALIZED/ TOTAL DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
VALUE NET UNREALIZED INCOME FROM FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME CAPITAL GAINS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MICRO CAP GROWTH FUND
Institutional Class
06/30/97 $18.47 $ 0.00 $ 3.41 $ 3.41 $ 0.00 $0.00 $ (2.03)
11/01/95-06/30/96 15.38 0.00 3.43 3.43 0.00 0.00 (0.34)
10/31/95 11.87 (0.04) 3.55 3.51 0.00 0.00 0.00
10/31/94 11.06 (0.03) 0.84 0.81 0.00 0.00 0.00
06/25/93-10/31/93 10.00 0.00 1.07 1.07 0.00 0.00 0.00
Administrative Class
06/30/97 18.46 (0.06) 3.41 3.35 0.00 0.00 (2.03)
04/01/96-06/30/96 16.73 0.03 1.70 1.73 0.00 0.00 0.00
SMALL CAP GROWTH FUND
Institutional Class
06/30/97 $20.83 $(0.01)(a) $ 3.17(a) $ 3.16 $ 0.00 $0.00 $(10.59)
11/01/95-06/30/96 21.02 2.02 (0.61) 1.41 0.00 0.00 (1.60)
10/31/95 19.38 (0.05) 3.12 3.07 0.00 0.00 (1.43)
10/31/94 19.15 (0.02) 0.89 0.87 0.00 0.00 (0.64)
10/31/93 15.80 (0.06) 6.19 6.13 0.00 0.00 (2.78)
10/31/92 14.87 0.01 1.50 1.51 (0.01) 0.00 (0.57)
01/07/91-10/31/91 10.00 0.02 5.03 5.05 (0.02) 0.00 (0.16)
Administrative Class
06/30/97 20.82 (0.06)(a) 3.24(a) 3.18 0.00 0.00 (10.59)
11/01/95-06/30/96 21.01 2.02(a) (0.61)(a) 1.41 0.00 0.00 (1.60)
09/27/95-10/31/95 21.90 (0.02) (0.87) (0.89) 0.00 0.00 0.00
CORE EQUITY FUND
Institutional Class
06/30/97 $13.55 $ 0.03(a) $ 2.78(a) $ 2.81 $(0.02) $0.00 $ (0.79)
11/01/95-06/30/96 12.72 0.51 0.65 1.16 (0.04) (0.01) (0.28)
12/28/94-10/31/95 10.00 0.07 2.71 2.78 (0.06) 0.00 0.00
Administrative Class
06/30/97 13.56 0.00(a) 2.77(a) 2.77 (0.01) 0.00 (0.79)
11/01/95-06/30/96 12.73 0.49 0.65 1.14 (0.02) (0.01) (0.28)
05/31/95-10/31/95 11.45 0.02 1.28 1.30 (0.02) 0.00 0.00
MID CAP EQUITY FUND
Institutional Class
06/30/97 $14.66 $(0.06)(a) $ 1.31(a) $ 1.25 $ 0.00 $0.00 $ (1.87)
11/01/95-06/30/96 12.92 0.49 1.62 2.11 0.00 0.00 (0.37)
12/28/94-10/31/95 10.00 0.02 2.92 2.94 (0.02) 0.00 0.00
EQUITY INCOME FUND
Institutional Class
06/30/97 $14.36 $ 0.40 $ 3.17 $ 3.57 $(0.55) $0.00 $ (1.97)
11/01/95-06/30/96 13.09 0.78 1.31 2.09 (0.34) 0.00 (0.48)
10/31/95 11.75 0.46 1.67 2.13 (0.46) 0.00 (0.33)
10/31/94 11.95 0.42 (0.16) 0.26 (0.42) 0.00 (0.04)
10/31/93 10.92 0.40 1.40 1.80 (0.40) 0.00 (0.37)
10/31/92 10.77 0.45 0.93 1.38 (0.43) 0.00 (0.57)
03/08/91-10/31/91 10.00 0.24 0.92 1.16 (0.24) 0.00 (0.15)
Administrative Class
06/30/97 14.35 0.27 3.26 3.53 (0.51) 0.00 (1.97)
11/01/95-06/30/96 13.13 0.75 1.31 2.06 (0.36) 0.00 (0.48)
11/30/94-10/31/95 11.12 0.39 2.35 2.74 (0.40) 0.00 (0.33)
</TABLE>
- --------
*Annualized
(a)Per share amounts based on average number of shares outstanding during the
period.
12 PIMCO Funds: Multi-Manager Series
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF
NET
DISTRIBUTIONS RATIO OF INVESTMENT
IN EXCESS OF DISTRIBUTIONS TAX BASIS NET ASSET NET ASSETS EXPENSES TO INCOME TO
NET REALIZED FROM RETURN OF TOTAL VALUE END END OF AVERAGE NET AVERAGE NET PORTFOLIO
CAPITAL GAINS EQUALIZATION CAPITAL DISTRIBUTIONS OF PERIOD TOTAL RETURN PERIOD (000S) ASSETS ASSETS TURNOVER RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $ 0.00 $ 0.00 $ (2.03) $19.85 20.05% $164,139 1.52% (0.49)% 84%
0.00 0.00 0.00 (0.34) 18.47 22.64 83,973 1.50* (0.45)* 54
0.00 0.00 0.00 0.00 15.38 29.54 69,775 1.50 (0.37) 87
0.00 0.00 0.00 0.00 11.87 7.31 32,605 1.50 (0.25) 59
0.00 0.00 (0.01) (0.01) 11.06 10.81 10,827 1.50* (0.02)* 16
0.00 0.00 0.00 (2.03) 19.78 19.72 2,116 1.77 (0.74) 84
0.00 0.00 0.00 0.00 18.46 10.34 566 1.73* (0.74)* 54
$0.00 $ 0.00 $ 0.00 $(10.59) $13.40 22.82% $ 33,390 1.32% (0.05)% 129%
0.00 0.00 0.00 (1.60) 20.83 7.22 32,954 1.25* (0.20)* 59
0.00 0.00 0.00 (1.43) 21.02 17.39 73,977 1.25 (0.27) 86
0.00 0.00 0.00 (0.64) 19.38 4.62 50,425 1.25 (0.33) 66
0.00 0.00 0.00 (2.78) 19.15 38.80 43,308 1.25 (0.35) 62
0.00 0.00 0.00 (0.58) 15.80 10.20 33,734 1.25 0.09 66
0.00 0.00 0.00 (0.18) 14.87 50.68 33,168 1.29* 0.11* 48
0.00 0.00 0.00 (10.59) 13.41 23.12 1 1.54 (0.36) 129
0.00 0.00 0.00 (1.60) 20.82 7.18 112 1.50* (0.41)* 59
0.00 0.00 0.00 0.00 21.01 (5.34) 544 1.60* (0.82)* 9
$0.00 $ 0.00 $ 0.00 $ (0.81) $15.55 21.59% $ 6,444 0.87% 0.23% 139%
0.00 0.00 0.00 (0.33) 13.55 9.41 10,452 0.82* 0.53* 73
0.00 0.00 0.00 (0.06) 12.72 27.86 7,791 0.82* 0.79* 123
0.00 0.00 0.00 (0.80) 15.53 21.20 29,332 1.13 (0.03) 139
0.00 0.00 0.00 (0.31) 13.56 9.23 33,575 1.07* 0.28* 73
0.00 0.00 0.00 (0.02) 12.73 11.34 24,645 1.06* 0.34* 58
$0.00 $ 0.00 $ 0.00 $ (1.87) $14.04 9.61% $ 7,591 1.15% (0.43)% 202%
0.00 0.00 0.00 (0.37) 14.66 16.72 8,378 0.88* (0.32)* 97
0.00 0.00 0.00 (0.02) 12.92 29.34 8,357 0.88* 0.24* 132
$0.00 $ 0.00 $ 0.00 $ (2.52) $15.41 27.67% $121,138 0.72% 3.03% 45%
0.00 0.00 0.00 (0.82) 14.36 16.35 116,714 0.70* 3.41* 52
0.00 0.00 0.00 (0.79) 13.09 19.36 118,015 0.70 3.83 46
0.00 0.00 0.00 (0.46) 11.75 2.25 92,365 0.70 3.77 36
0.00 0.00 0.00 (0.77) 11.95 16.65 67,854 0.70 3.55 39
0.00 (0.23) 0.00 (1.23) 10.92 12.89 30,506 0.70 3.83 47
0.00 0.00 0.00 (0.39) 10.77 11.81 15,628 0.74* 4.18* 62
0.00 0.00 0.00 (2.48) 15.40 27.40 8,145 0.97 2.79 45
0.00 0.00 0.00 (0.84) 14.35 16.08 6,097 0.95* 3.19* 52
0.00 0.00 0.00 (0.73) 13.13 25.69 140 0.95* 3.43* 43
<CAPTION>
DISTRIBUTIONS
IN EXCESS OF AVERAGE
NET REALIZED COMMISSION
CAPITAL GAINS RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
$0.00 $0.05
0.00 0.02
0.00 0.03
0.00
0.00
0.00 0.05
0.00 0.02
$0.00 $0.05
0.00 0.02
0.00 0.02
0.00
0.00
0.00
0.00
0.00 0.05
0.00 0.02
0.00 N/A
$0.00 $0.06
0.00 0.04
0.00 0.03
0.00 0.06
0.00 0.04
0.00 N/A
$0.00 $0.06
0.00 0.03
0.00 0.04
$0.00 $0.06
0.00 0.06
0.00 0.06
0.00
0.00
0.00
0.00
0.00 0.06
0.00 0.06
0.00 N/A
</TABLE>
November 1, 1997 Prospectus 13
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET NET REALIZED/ TOTAL DIVIDENDS DIVIDENDS IN DISTRIBUTIONS
VALUE NET UNREALIZED INCOME FROM FROM NET EXCESS OF NET FROM NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME CAPITAL GAINS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
VALUE FUND (ii)
Institutional Class
06/30/97 $12.46 $1.05 $ 2.11 $ 3.16 $(0.31) $0.00 $(0.50)
11/01/95-06/30/96 12.53 0.25 1.62 1.87 (0.17) 0.00 (1.77)
10/31/95 11.55 0.30 2.18 2.48 (0.30) 0.00 (1.20)
10/31/94 11.92 0.30 (0.28) 0.02 (0.29) 0.00 (0.10)
10/31/93 10.05 0.28 2.36 2.64 (0.28) 0.00 (0.49)
12/30/91-10/31/92 10.00 0.24 0.23 0.47 (0.24) 0.00 (0.18)
SMALL CAP VALUE FUND
Institutional Class
06/30/97 $14.20 $0.46 $ 3.63 $ 4.09 $(0.13) $0.00 $(2.38)
11/01/95-06/30/96 13.10 0.56 1.49 2.05 (0.21) 0.00 (0.74)
10/31/95 12.07 0.28 1.92 2.20 (0.28) 0.00 (0.89)
10/31/94 12.81 0.29 (0.65) (0.36) (0.29) 0.00 (0.09)
10/31/93 10.98 0.24 2.33 2.57 (0.24) 0.00 (0.50)
10/31/92 10.09 0.22 1.17 1.39 (0.22) 0.00 (0.24)
10/01/91-10/31/91 10.00 0.02 0.10 0.12 (0.03) 0.00 0.00
Administrative Class
06/30/97 14.20 0.38 3.68 4.06 (0.12) 0.00 (2.38)
11/01/95-06/30/96 13.16 0.54 1.43 1.97 (0.19) 0.00 (0.74)
ENHANCED EQUITY FUND
Institutional Class
06/30/97 $15.91 $1.18 $ 3.10 $ 4.28 $(0.10) $0.00 $(3.63)
11/01/95-06/30/96 14.44 0.34 1.67 2.01 (0.16) 0.00 (0.38)
10/31/95 11.99 0.25 2.62 2.87 (0.25) 0.00 (0.17)
10/31/94 12.08 0.25 (0.04) 0.21 (0.25) 0.00 (0.05)
10/31/93 11.76 0.23 0.74 0.97 (0.23) 0.00 (0.42)
10/31/92 10.80 0.16 1.06 1.22 (0.16) 0.00 (0.04)
02/11/91-10/31/91 10.00 0.16 0.80 0.96 (0.16) 0.00 0.00
BALANCED FUND (iii)
Institutional Class
06/30/97 $11.64 $0.89 $ 1.21 $ 2.10 $(0.36) $0.00 $(1.96)
11/01/95-06/30/96 11.89 0.27 0.76 1.03 (0.27) 0.00 (1.01)
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) 0.00 (0.15)
10/31/93 10.42 0.35 0.68 1.03 (0.35) 0.00 (0.26)
06/25/92-10/31/92 10.00 0.12 0.52 0.64 (0.12) 0.00 (0.10)
</TABLE>
- --------
*Annualized
(ii) Formerly the NFJ Diversified Low P/E Fund.
(iii) NFJ and Cadence began serving as Portfolio Managers of the portion of
the Balanced Fund allocated for investment in common stocks on August
1, 1996. Prior to August 1, 1996, a different firm served as portfolio
manager.
14 PIMCO Funds: Multi-Manager Series
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
RATIO OF
NET
DISTRIBUTIONS RATIO OF INVESTMENT
IN EXCESS OF DISTRIBUTIONS TAX BASIS NET ASSET NET ASSETS EXPENSES TO INCOME TO
NET REALIZED FROM RETURN OF TOTAL VALUE END END OF AVERAGE NET AVERAGE NET PORTFOLIO
CAPITAL GAINS EQUALIZATION CAPITAL DISTRIBUTIONS OF PERIOD TOTAL RETURN PERIOD (000S) ASSETS ASSETS TURNOVER RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $ 0.00 $0.00 $(0.81) $14.81 26.38% $ 74,613 0.73% 2.02% 71%
0.00 0.00 0.00 (1.94) 12.46 16.24 52,727 0.70* 2.40* 29
0.00 0.00 0.00 (1.50) 12.53 24.98 14,443 0.70 2.50 71
0.00 0.00 0.00 (0.39) 11.55 0.15 15,442 0.70 2.34 44
0.00 0.00 0.00 (0.77) 11.92 26.35 22,930 0.70 2.43 28
0.00 0.00 0.00 (0.42) 10.05 4.68 18,083 0.70* 2.57* 73
$0.00 $ 0.00 $0.00 $(2.51) $15.78 31.99% $ 34,639 0.90% 1.92% 48%
0.00 0.00 0.00 (0.95) 14.20 16.35 29,017 0.85* 2.12* 35
0.00 0.00 0.00 (1.17) 13.10 19.88 35,093 0.85 2.25 50
0.00 0.00 0.00 (0.38) 12.07 (2.89) 31,236 0.85 2.23 48
0.00 0.00 0.00 (0.74) 12.81 23.60 46,523 0.85 2.05 42
0.00 (0.04) 0.00 (0.50) 10.98 13.75 18,261 0.85 2.16 27
0.00 0.00 0.00 (0.03) 10.09 1.19 5,060 1.09* 3.06* 0
0.00 0.00 0.00 (2.50) 15.76 31.70 5,916 1.16 1.68 48
0.00 0.00 0.00 (0.93) 14.20 15.64 4,433 1.10* 1.86* 35
$0.00 $ 0.00 $0.00 $(3.73) $16.46 31.45% $ 44,838 0.74% 1.31% 91%
0.00 0.00 0.00 (0.54) 15.91 14.21 83,425 0.70* 1.58* 53
0.00 0.00 0.00 (0.42) 14.44 24.46 73,999 0.70 1.91 21
0.00 0.00 0.00 (0.30) 11.99 1.83 65,915 0.70 2.20 44
0.00 0.00 0.00 (0.65) 12.08 8.20 46,724 0.70 1.89 15
0.00 (0.06) 0.00 (0.26) 11.76 11.46 36,515 0.70 1.81 17
0.00 0.00 0.00 (0.16) 10.80 9.59 4,451 0.73* 2.14* 0
$0.00 $ 0.00 $0.00 $(2.32) $11.42 20.37% $ 61,518 0.74% 3.33% 199%
0.00 0.00 0.00 (1.28) 11.64 9.07 82,562 0.70* 3.46* 140
0.00 0.00 0.00 (0.44) 11.89 19.47 72,638 0.70 3.73 43
0.00 0.00 0.00 (0.49) 10.35 0.08 130,694 0.70 3.25 47
0.00 0.00 0.00 (0.61) 10.84 10.06 126,410 0.70 3.10 19
0.00 0.00 0.00 (0.22) 10.42 6.40 99,198 0.70* 3.36* 39
<CAPTION>
DISTRIBUTIONS
IN EXCESS OF AVERAGE
NET REALIZED COMMISSION
CAPITAL GAINS RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
$0.00 $0.06
0.00 0.06
0.00 0.06
0.00
0.00
0.00
$0.00 $0.06
0.00 0.04
0.00 0.04
0.00
0.00
0.00
0.00
0.00 0.06
0.00 0.04
$0.00 $0.06
0.00 0.05
0.00 0.05
0.00
0.00
0.00
0.00
$0.00 $0.06
0.00 0.05
0.00 0.04
0.00
0.00
0.00
</TABLE>
November 1, 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 investment objective of
any Fund will be achieved. Because the market value of each Fund's investments
will change, the net asset value per share of each Fund also will vary.
Specific portfolio securities eligible for purchase by the Funds, investment
techniques that may be used by the Funds, and the risks associated with these
securities and techniques are described more fully under "Characteristics and
Risks of Securities and Investment Techniques" in this Prospectus and
"Investment Objectives and Policies" in the Statement of Additional
Information. For information on other investment policies of the Equity Funds,
see "Investment Objectives and Policies--Equity Funds."
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):
Argentina Hong Kong Mexico South Korea
Brazil Hungary Pakistan Sri Lanka
Chile India Peru Taiwan
China Indonesia Philippines Thailand
Colombia Israel Poland Turkey
Czech Republic Jordan Portugal Venezuela
Greece Malaysia South Africa Zimbabwe
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.
16 PIMCO Funds: Multi-Manager Series
<PAGE>
Investing in the securities of foreign issuers, and particularly emerging
market issuers, involves special risks and considerations not typically
associated with investing in U.S. companies. For a discussion of such risks,
see "Characteristics and Risks of Securities and Investment Techniques--
Foreign Securities." The Portfolio Manager for the Emerging Markets Fund is
Blairlogie.
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
a discussion of such risks, see "Characteristics and Risks of Securities and
Investment Techniques--Foreign Securities." 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.
November 1, 1997 Prospectus 17
<PAGE>
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 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, and particularly emerging
market issuers, involves special risks and considerations not typically
associated with investing in U.S. companies. For a discussion of such risks,
see "Characteristics and Risks of Securities and Investment Techniques--
Foreign Securities." 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. The
Portfolio Manager for the Capital Appreciation Fund is Cadence.
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
18 PIMCO Funds: Multi-Manager Series
<PAGE>
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. 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. 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. The Portfolio Manager for the Small Cap Growth Fund is
Cadence.
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 of similar quality) are
not considered to be of "investment grade" quality. These lesser rated debt
November 1, 1997 Prospectus 19
<PAGE>
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. For a discussion of
such risks, see "Characteristics and Risks of Securities and Investment
Techniques--Foreign Securities." 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. 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. For a discussion of such risks, see
"Characteristics and Risks of Securities and Investment Techniques--Foreign
Securities." 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. 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
20 PIMCO Funds: Multi-Manager Series
<PAGE>
involves special risks and considerations not typically associated with
investing in U.S. companies. For a discussion of such risks, see
"Characteristics and Risks of Securities and Investment Techniques--Foreign
Securities." 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. The Portfolio Manager for the Mid Cap Equity 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.
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. For a discussion of such risks, see "Characteristics and Risks of
Securities and Investment Techniques--Foreign Securities." 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. The
Portfolio Manager for the Innovation Fund is Columbus Circle.
INTERNATIONAL GROWTH FUND seeks long-term capital appreciation. The Fund
invests in an international portfolio of equity and equity-related securities
of companies the principal activities of which are in countries other than the
United States. The Fund will normally invest in securities traded in foreign
securities markets and in securities of foreign issuers traded on U.S.
securities markets. As noted below, except for temporary defensive
investments, the Fund will not invest in securities of U.S. issuers traded on
U.S. securities markets. Otherwise, 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. Under
certain adverse investment conditions, the Fund may restrict the number of
securities markets in which it invests, although under normal market
conditions, the Fund's investments will include securities principally traded
in at least three different countries (not including the U.S.). The Fund will
not limit its investments to any particular type or size of company. In
pursuing its investment objective, under normal market conditions, the Fund
will invest at least 65% of its assets in equity securities of issuers which
exhibit growth characteristics in accordance with the Portfolio Manager's
Positive Momentum & Positive Surprise investment discipline (see "Management
of the Trust--Portfolio Managers--Columbus Circle"). The Fund may also invest
in issuers which do not exhibit growth characteristics, but whose securities
are thought to be undervalued.
The Fund may invest in developed foreign securities markets and in emerging
markets, where markets may not fully reflect the potential of the developing
economy. The Fund may also invest in shares of companies which are not
presently listed but are in the process of being privatized by the government
and shares of companies that are traded in over-the-counter markets or other
types of unlisted securities markets.
The Fund will apply the Portfolio Manager's Positive Momentum & Positive
Surprise investment discipline to international markets (see "Management of
the Trust--Portfolio Managers--Columbus Circle"). Asset allocation decisions
("top down") and individual stock selections ("bottom up") result from
identification of positively surprising
November 1, 1997 Prospectus 21
<PAGE>
fundamental trends. Fundamental factors considered and their importance vary
by security, but include country factors (e.g., changes in the political
environment or funds flows); macroeconomic factors (e.g., GDP growth,
inflation and interest rates); global secular trends (e.g., global grain
shortages or growth in wireless communications); and industry and company
specific factors. Investments are made when the relevant factors are improving
(Positive Momentum) faster than expected (Positive Surprise). The relevant
factors can be country (top down) or company (bottom up) specific.
The Portfolio Manager believes that securities markets of many nations can
be expected to move relatively independently of one another, because business
cycles and other economic or political events that influence one country's
securities markets may have little effect on the securities markets of other
countries. By investing in an international portfolio, the Fund seeks to
reduce the risks associated with investing in the economy of only one country.
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 temporarily 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. The Fund will not invest in debt securities which are of less than
investment grade quality at the time of purchase (i.e., securities rated Ba or
below by Moody's or BB or below by S&P or, if unrated, considered by the
Portfolio Manager to be of comparable quality).
Investing in the securities of foreign issuers, and particularly emerging
market issuers, involves special risks not typically associated with investing
in U.S. companies. For a discussion of such risks, see "Characteristics and
Risks of Securities and Investment Techniques--Foreign Securities." The
Portfolio Manager for the International Growth 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
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. 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
22 PIMCO Funds: Multi-Manager Series
<PAGE>
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 holding. 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. 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
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. 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
November 1, 1997 Prospectus 23
<PAGE>
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.
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, and 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.
Investing in securities of foreign issuers, and particularly emerging market
issuers, involves special risks and considerations not typically associated
with investing in U.S. companies. For a discussion of such risks, see
"Characteristics and Risks of Securities and Investment Techniques--Foreign
Securities." The Portfolio Manager for the Structured Emerging Markets Fund is
Parametric.
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
24 PIMCO Funds: Multi-Manager Series
<PAGE>
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 Cadence and NFJ. The portion of the
Common Stock Segment allocated to Cadence will be managed in accordance with
the investment policies of the Capital Appreciation Fund; the portion
allocated to NFJ will be managed in accordance with the investment policies of
the Value Fund. Allocations of the Common Stock Segment to Cadence and NFJ
will vary from time to time as determined by the Adviser.
The portion of the assets of the Fund allocated by the Adviser for
investment in fixed income debt securities (the "Fixed Income Securities
Segment") will be managed by 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. Investing in securities denominated in foreign currencies and
securities of foreign issuers involves special risks and considerations not
typically associated with investing in U.S. securities. For a discussion of
such risks, see "Characteristics and Risks of Securities and Investment
Techniques--Foreign Securities."
November 1, 1997 Prospectus 25
<PAGE>
Each Portfolio Manager generally invests a portion of its allocation in
liquid securities to facilitate redemptions. In addition, PIMCO Advisors
reserves the right to allocate a portion of the Fund's assets (the "Money
Market Segment")
for investment in money market instruments and reserves the right to manage
the investment of such assets. 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. See "Portfolio
Transactions."
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.
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 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 International, Renaissance, Innovation, and International Growth 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. While attempting to identify suitable
investments, the Funds may hold assets in cash, short-term U.S. Government
Securities, and other money market instruments. 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
26 PIMCO Funds: Multi-Manager Series
<PAGE>
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, International Growth, and
Structured Emerging Markets 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 this
Prospectus and "Investment Objectives and Policies" in the Statement of
Additional Information.
DURATION
Under normal circumstances, the average portfolio duration of the Fixed
Income Securities Segment of the Balanced Fund will vary within a three- to
six-year time frame, based on the Portfolio Manager's forecast for interest
rates. Duration is a measure of the expected life of a fixed income security
that was developed as a more precise alternative to the concept of "term to
maturity." Traditionally, a fixed income security's "term to maturity" has
been used as proxy for the sensitivity of the security's price to changes in
interest rates (which is the "interest rate risk" or "volatility" of the
security). However, "term to maturity" measures only the time until a fixed
income security provides its final payment, taking no account of the pattern
of the security's payments prior to maturity. In contrast, duration
incorporates a bond's yield, coupon interest payments, final maturity and call
features into one measure of the average life of a fixed income security on a
present value basis. Duration management is one of the fundamental tools used
by the Portfolio Manager for the Fixed Income Securities Segment of the
Balanced Fund. For more information on 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, Innovation, and International Growth 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).
November 1, 1997 Prospectus 27
<PAGE>
(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.
(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; except that the Innovation Fund will concentrate more than 25% of
its assets in companies which use innovative technologies to gain a
strategic, competitive advantage in their industry as well as companies
that provide and service those technologies.
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 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
28 PIMCO Funds: Multi-Manager Series
<PAGE>
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, (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,
certain non-fundamental restrictions, set forth in the Statement of Additional
Information, 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.
November 1, 1997 Prospectus 29
<PAGE>
CHARACTERISTICS AND RISKS OF SECURITIES
AND INVESTMENT TECHNIQUES
The different types of securities and investment techniques used by the
individual Funds all have attendant risks of varying degrees. For example,
with respect to common stock, there can be no assurance of capital
appreciation, and there is a risk of market decline. With respect to debt
securities, including money market instruments, there is the risk that the
issuer of a security may not be able to meet its obligation to make scheduled
interest or principal payments. 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 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 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 in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. As a result of owning large
positions in this type of security, a Fund is subject to the additional risk
of possibly having to sell portfolio securities at disadvantageous times and
prices if redemptions require the Fund to liquidate its securities positions.
In addition, it may be prudent for a Fund with a relatively large asset size
to limit the number of relatively small positions it holds in securities
having limited liquidity in order to minimize its exposure to such risks, to
minimize transaction costs, and to maximize the benefits of research. As a
consequence, as a Fund's asset size increases, the Fund may reduce its
exposure to illiquid small capitalization securities, which could adversely
affect performance.
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.
30 PIMCO Funds: Multi-Manager Series
<PAGE>
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 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 may lend its portfolio
securities to brokers, dealers, and other financial institutions, provided:
(i) the loan is secured continuously by collateral consisting of U.S.
Government securities, cash or cash equivalents (negotiable certificates of
deposit, bankers' acceptances or letters of credit) maintained on a daily
mark-to-market basis in an amount at least equal to the current market value
of the securities loaned; (ii) the Fund may at any time call the loan and
obtain the return of the securities loaned; (iii) the Fund will receive any
interest or dividends paid on the loaned securities; and (iv) the aggregate
market value of securities loaned will not at any time exceed 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, International
Growth, 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
November 1, 1997 Prospectus 31
<PAGE>
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 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 in ADRs,
EDRs, and GDRs. The remaining Funds 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 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 (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. Individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, capital reinvestment, resources, self-sufficiency,
and balance of payments position. The securities markets, values of
securities, yields, and risks associated with securities markets may change
independently of each other. Additionally, foreign securities and dividends
and interest payable on those securities may be subject to foreign taxes,
including taxes withheld from payments on those securities. Foreign securities
often trade with less frequency and volume than domestic securities and
therefore may exhibit greater price volatility. Additional costs associated
with an investment in foreign securities may include higher custodial fees
than apply to domestic custodial arrangements and transaction costs of foreign
currency conversions. Changes in foreign exchange rates also will affect the
value of securities denominated or quoted in currencies other than the U.S.
dollar.
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
securities. 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
32 PIMCO Funds: Multi-Manager Series
<PAGE>
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. Also, any change in the leadership or politics of emerging market
countries, or the countries that exercise a significant influence over those
countries, may halt the expansion of or reverse the liberalization of foreign
investment policies now occurring and adversely affect existing investment
opportunities.
In addition, emerging securities markets may have different clearance and
settlement procedures, which may be unable to keep pace with the volume of
securities transactions or otherwise make it difficult to engage in such
transactions. Settlement problems may cause a Fund to miss attractive
investment opportunities, hold a portion of its assets in cash pending
investment, or delay in disposing of a portfolio security. Such a delay could
result in possible liability to a purchaser of the security.
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.
The Emerging Markets, International Developed, International, Renaissance,
Core Equity, Mid Cap Equity, Innovation, International Growth, Structured
Emerging Markets, 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, International Growth, Structured Emerging Markets, 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
November 1, 1997 Prospectus 33
<PAGE>
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, International Growth, 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, International Growth, 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 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. In addition, the Renaissance
Fund may invest up to 10% of its total assets in convertible securities rated
below B by Moody's or S&P (or, if unrated, considered 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 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
34 PIMCO Funds: Multi-Manager Series
<PAGE>
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*................. -- 1.08% 4.13% 1.55% 4.01% 3.67% -- -- -- --
</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*................. -- -- -- -- -- 6.41% -- -- -- -- 6.41%
</TABLE>
- --------
* Represents holdings of the Renaissance Fund for the period of October 1,
1996 through June 30, 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
To the extent permitted by the investment objective and policies of each
Fund, a Fund 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, Innovation,
International Growth, Structured Emerging Markets, 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 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, International Growth, 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 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 limit leveraging
of the Fund.
Derivative instruments are considered for these purposes 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 depends 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.
November 1, 1997 Prospectus 35
<PAGE>
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
otherwise, due to the possible inability of a Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable or the possible
need to sell a portfolio security at a disadvantageous time because the Fund
is required to maintain asset coverage or offsetting positions in connection
with transactions in derivative instruments, and the possible inability of a
Fund to close out or to liquidate its derivatives positions.
Options on Securities, Securities Indexes, and Currencies Certain Funds may
purchase put options on securities. One purpose of purchasing put options is
to protect holdings in an underlying or related security against a substantial
decline in market value. These Funds may also purchase call options on
securities. One purpose of purchasing call options is to protect against
substantial increases in prices of securities the Fund intends to purchase
pending its ability to invest in such securities in an orderly manner. A Fund
may sell put or call options it has previously purchased, which could result
in a net gain or loss depending on whether the amount realized on the sale is
more or less than the premium and other transaction costs paid on the put or
call option which is sold. A Fund may write a call or put option only if the
option is "covered" by the Fund holding a position in the underlying
securities or by other means which would permit immediate satisfaction of the
Fund's obligation as writer of the option. Prior to exercise or expiration, an
option may be closed out by an offsetting purchase or sale of an option of the
same series.
The purchase and writing of options involves certain risks. During the
option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying 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 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, Innovation, and International
Growth 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, International Growth, Structured Emerging Markets, 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
36 PIMCO Funds: Multi-Manager Series
<PAGE>
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 in which certain Funds may invest 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 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 Emerging
Markets, International Developed, International, Core Equity, Mid Cap Equity,
November 1, 1997 Prospectus 37
<PAGE>
International Growth, Enhanced Equity, Structured Emerging Markets, and
Balanced Funds may invest in stock index futures contracts and options
thereon. The Emerging Markets, International Developed, International, Core
Equity, Mid Cap Equity, International Growth, Structured Emerging Markets, and
Balanced Funds may invest in foreign exchange futures contracts and options
thereon ("futures options") that are traded on a U.S. or foreign exchange or
board of trade, or similar entity, or quoted on an automated quotation system.
These Funds may engage in such futures transactions as an adjunct to their
securities activities.
There are several risks associated with the use of futures and futures
options for hedging purposes. There can be no guarantee that there will be a
correlation between price movements in the hedging vehicle and in the
portfolio securities being hedged. An incorrect correlation could result in a
loss on both the hedged securities in a Fund and the hedging vehicle, so that
the portfolio return might have been greater had hedging not been attempted.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures contract or a futures option position. Most
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single day; once the daily limit
has been reached on a particular contract, no trades may be made that day at a
price beyond that limit. In addition, certain of these instruments are
relatively new and without a significant trading history. As a result, there
is no assurance that an active secondary market will develop or continue to
exist. Lack of a liquid market for any reason may prevent a Fund from
liquidating an unfavorable position, and the Fund would remain obligated to
meet margin requirements until the position is closed.
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.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT 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. Typically, no income accrues on securities a Fund has
committed to purchase 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.
38 PIMCO Funds: Multi-Manager Series
<PAGE>
MORTGAGE-RELATED AND OTHER ASSET-BACKED SECURITIES
All Funds that may purchase debt securities for investment purposes (and in
particular the Balanced Fund) may invest in mortgage-related securities, and
in other asset-backed securities (unrelated to mortgage loans) that are
offered to investors currently or in the future. The value of some mortgage-
related or asset-backed securities in which the Funds invest may be
particularly sensitive to changes in prevailing interest rates, and, like
other fixed income investments, 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.
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 a 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, on a monthly basis. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are
structured into multiple classes, with each class bearing a different stated
maturity. Monthly payments of principal, including prepayments, are first
returned to investors holding the shortest maturity class; investors holding
the longer maturity classes receive principal only after the first class has
been retired. CMOs that are issued or guaranteed by the U.S. Government or by
any of its agencies or instrumentalities will be considered U.S. Government
securities by a 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 a Fund's diversification tests.
November 1, 1997 Prospectus 39
<PAGE>
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 a Fund's yield to maturity from
these securities. For a discussion of the characteristics of some of these
instruments, see the Statement of Additional Information.
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 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.
40 PIMCO Funds: Multi-Manager Series
<PAGE>
INVESTMENT IN INVESTMENT COMPANIES
The Emerging Markets, International Developed, International, and
International Growth 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, these Funds may indirectly bear service
and other fees which are in addition to the fees the Funds pay their 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.
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 Fund may invest in securities that are illiquid so long as no more than
15% of the net assets of the Fund (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A Portfolio Manager may be subject to
significant delays in disposing of illiquid securities, and transactions in
illiquid securities may entail registration expenses and other transaction
costs that are higher than those for 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
November 1, 1997 Prospectus 41
<PAGE>
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 which legally or in the Adviser's or a Portfolio Manager's opinion
may be deemed illiquid (not including 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).
"FUNDAMENTAL" POLICIES
The investment objective of each of the International, Renaissance,
Innovation, and International Growth 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 September 30, 1997 were
approximately $130.6 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 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.
PIMCO Advisors has entered into a Merger Agreement with Oppenheimer Group
Inc. pursuant to which PIMCO Advisors will acquire the managing general
partnership in Oppenheimer Capital, the general partnership in Oppenheimer
Capital L.P., and 100% of the stock of an Oppenheimer Group affiliate which
manages eight closed-end funds. Oppenheimer Capital is an investment
management firm which follows value-based investment disciplines and had more
than $50 billion in assets under management as of September 30, 1997.
42 PIMCO Funds: Multi-Manager Series
<PAGE>
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. Each Portfolio Manager is an
affiliate of PIMCO Advisors. PIMCO Advisors (and not the Funds or the Trust)
compensates the Portfolio Managers from its advisory fee. 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.
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 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 September
30, 1997 of approximately $875 million. 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
six 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
September 30, 1997 of approximately $4.9 billion. Cadence's address is
Exchange Place, 53 State Street, Boston, Massachusetts 02109. Cadence is
registered as an investment adviser with the SEC.
November 1, 1997 Prospectus 43
<PAGE>
David B. Breed, William B. Bannick, Katherine A. Burdon, 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 24 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 12 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 Science degree from Northeastern
University. Ms. Burdon is a Chartered Financial Analyst and Certified Public
Accountant. Mr. McManus is Director of Fund Management of Cadence and has 20
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 he is certified as a Financial
Planner.
COLUMBUS CIRCLE manages the Renaissance Fund, the Core Equity Fund, the Mid
Cap Equity Fund, the Innovation Fund, and the International Growth 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 September 30, 1997 of approximately $11.5 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 with a view to investing in
growing companies that are surprising the market with business results that
are better than anticipated.
Investment decisions made by Columbus Circle are generally made by one or
more committees, although the following individuals have primary
responsibility for the noted Columbus Circle Funds. Clifford G. Fox is
primarily responsible for the day-to-day management of the Renaissance Fund.
Mr. Fox, a Managing Director of Columbus Circle, has 16 years of investment
management experience. He received his bachelor's degree from the University
of Pennsylvania and his MBA from New York University, and he is a Chartered
Financial Analyst. Irwin F. Smith is primarily responsible for the day-to-day
management of the Core Equity Fund. Mr. Smith, a Managing Director of Columbus
Circle, has over 30 years of investment management experience. He received his
bachelor's degree and MBA from the University of Wisconsin, and he is a
Chartered Financial Analyst. Amy H. Hogan is primarily responsible for the
day-to-day management of the Mid Cap Equity Fund. Ms. Hogan, a Managing
Director of Columbus Circle, has 12 years of investment management experience.
She received her bachelor's degree and MBA from the University of Wisconsin,
and she is a Chartered Financial Analyst. Anthony Rizza is primarily
responsible for the day-to-day management of the Innovation Fund. Mr. Rizza, a
Managing Director of Columbus Circle, has 11 years of investment
44 PIMCO Funds: Multi-Manager Series
<PAGE>
management experience. He received his bachelor's degree from the University
of Connecticut, and he is a Chartered Financial Analyst. Andrew Jacobson is
primarily responsible for the day-to-day management of the International
Growth Fund. Mr Jacobson, a Vice President of Columbus Circle, has 7 years of
investment management experience. He received his bachelor's degree from
Princeton University and his MBA from the Wharton School of Business, and he
is a Chartered Financial Analyst.
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 September 30, 1997 of approximately $2.3
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, 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 29 years' experience encompassing equity research and portfolio
management. He received his bachelor's degree and MBA from Southern Methodist
University, and he is a Chartered Financial Analyst. Mr. Najork and Paul A.
Magnuson are primarily responsible for the day-to-day management of the Value
Fund and the Small Cap Value Fund. Mr. Magnuson, a research analyst at NFJ,
has 12 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 Management, commenced
operations in 1971. Pacific Investment Management had approximately $108.5
billion of assets under management as of September 30, 1997. 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 more than 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 September 30, 1997 of
approximately $2.5 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.
November 1, 1997 Prospectus 45
<PAGE>
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 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.
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, and Pacific
Investment Management 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 and/or distribution 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>
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, Renaissance, and Small Cap Value Funds.... .60%
Mid Cap Equity Fund................................................ .63%
Innovation Fund.................................................... .65%
Emerging Markets and International Growth Funds.................... .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,
International Growth, and Structured Emerging Markets Funds. .50%
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,
Renaissance, and Innovation Funds 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 (and not the Funds or 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--.38% for the Renaissance Fund,
.38% for the Innovation Fund, .47% for the Core Equity Fund, .53% for the Mid
Cap Equity Fund, and .75% for the International Growth 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; and Parametric--.35% for the Enhanced
Equity Fund and .35% for the Structured Emerging Markets Fund.
November 1, 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 the Plans, 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 and
marketing of shares and/or the provision of certain shareholder services (in
the case of the Distribution Plan) or the administration of plans or programs
that use Fund shares as their funding medium (in the case of the
Administrative Services Plan), and to reimburse certain other 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 agents 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 and Mid Cap Equity 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
48 PIMCO Funds: Multi-Manager Series
<PAGE>
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.
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 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
days on which the Trust is open for business.
ADDITIONAL INVESTMENTS
Additional investments may be made at any time at the relevant net asset
value for that class by calling the Trust and wiring federal funds to the
Transfer Agent as outlined above.
November 1, 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. The Trust and
the Distributor may also waive the minimum initial investment for certain
investors.
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.
INVESTMENT LIMITATIONS
The Micro Cap Growth Fund and Small Cap Growth Fund are currently closed to
new investors, although existing shareholders may continue to invest in these
Funds subject to the Adviser's and Cadence's right to suspend all new
investments in their discretion depending upon market conditions and other
factors. In addition, Institutional and Administrative Class shares of the
International, Renaissance, Innovation, and Structured Emerging Markets Funds
are not offered as of the date of this Prospectus; however, investment
opportunities in these Funds may be available in the future. These
restrictions may be changed or eliminated at any time at the discretion of the
Trust's Board of Trustees.
RETIREMENT PLANS
Shares of the Funds are available for purchase by retirement and savings
plans, including Keogh plans, 401(k) plans, 403(b) plans, and Individual
Retirement Accounts. The administrator of a plan or employee benefits office
can provide participants or employees with detailed information on how to
participate in the plan and how to elect a Fund as an investment option.
Participants in a retirement or savings plan may be permitted to elect
different investment options, alter the amounts contributed to the plan, or
change how contributions are allocated among investment options in accordance
with the plan's specific provisions. The plan administrator or employee
benefits office should be consulted for details. For questions about
participant accounts, participants should contact their employee benefits
office, the plan administrator, or the organization that provides
recordkeeping services for the plan. Investors who purchase shares through
retirement plans should be aware that plan administrators may aggregate
purchase and redemption orders for participants in the plan. Therefore, there
may be a delay between the time the investor places an order with the plan
administrator and the time the order is forwarded to the Transfer Agent for
execution.
50 PIMCO Funds: Multi-Manager Series
<PAGE>
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 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
Redemption requests for Fund shares are effected at the net asset value per
share next determined after receipt in good order of the redemption request by
the Trust or its designee. A redemption request received by the Trust or its
November 1, 1997 Prospectus 51
<PAGE>
designee prior to 4:00 p.m., Eastern time, on a day the Trust is open for
business is effective on that day. A redemption request received after that
time becomes effective on the next business day.
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; 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.
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.
52 PIMCO Funds: Multi-Manager Series
<PAGE>
The Trust reserves the right to modify or revoke the exchange privilege of
any shareholder or to limit or reject any exchange. Although each Fund will
attempt to give shareholders prior notice whenever it is reasonably able to do
so, it may impose these restrictions at any time.
PORTFOLIO TRANSACTIONS
Pursuant to the portfolio management 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.
A change in the securities held by a Fund is known as "portfolio turnover."
The Portfolio Managers manage 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. 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. High portfolio turnover (e.g., over 100%)
involves correspondingly greater expenses to a Fund, including brokerage
commissions 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 "Dividends, Distributions and
Taxes." Portfolio turnover rates for each Fund for which financial highlights
are provided in this Prospectus is set forth under "Financial Highlights." The
Portfolio turnover rates for the past two fiscal years for the remaining
operational Funds were as follows (for the fiscal years ended June 30, 1997
and September 30, 1996, respectively): International--59% and 110%;
Renaissance--131% and 203%; and Innovation--80% and 123%.
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. Particularly when investing in less liquid or illiquid securities of
smaller capitalization companies, such allocation may take into account the
asset size of a Fund in determining whether the allocation of an investment is
suitable. As a result, larger Funds may become more concentrated in more
liquid securities than smaller Funds or private accounts of a Portfolio
Manager pursuing a small capitalization investment strategy, which could
adversely affect performance. A Portfolio Manager may aggregate orders for the
Funds with simultaneous transactions entered into on behalf of its other
clients so long as price and transaction expenses are averaged either for the
portfolio transaction or for that day.
November 1, 1997 Prospectus 53
<PAGE>
NET ASSET VALUE
The net asset values of Institutional and Administrative Class shares of
each Fund 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 Exchange. Net asset value will not be determined on days
on which the Exchange is closed.
Portfolio securities and other assets for which market quotations are
readily available are stated at market value. Fixed income securities are
normally valued on the basis of quotations obtained from brokers and dealers
or pricing services, which take into account appropriate factors such as
institutional-sized trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and other
market data. 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 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, International Growth, and Structured
Emerging Markets 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's 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 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/or 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 a particular Fund's classes.
54 PIMCO Funds: Multi-Manager Series
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
Shares begin earning dividends on the effective date of purchase, provided
notification deadlines are met. See "Purchase of Shares." Net investment
income from interest and dividends, if any, will be declared and paid
quarterly to shareholders of record by the 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
other Funds. Any net capital gains from the sale of portfolio securities will
be distributed no less frequently than once annually. Net 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/or 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 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 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 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.
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.
Under the Taxpayer Relief Act of 1997, long-term capital gains will generally
be taxed at a 28% or 20% rate, depending upon the holding period of the
portfolio security. 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.
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, 1989 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.
November 1, 1997 Prospectus 55
<PAGE>
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.
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-three portfolios that are operational,
eighteen 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 or was a shareholder is unable to meet its obligations,
and thus should be considered remote.
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. This Prospectus relates only to Institutional
Class and Administrative Class shares. The 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.
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/or shareholder servicing 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.
56 PIMCO Funds: Multi-Manager Series
<PAGE>
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 October 6, 1997, the following were
shareholders of record of at least 25% of the outstanding voting securities of
the indicated Funds: Charles Schwab & Co., Inc. (San Francisco, California)
with respect to the PIMCO Emerging Markets Fund; The Jewish Federation of
Metropolitan Chicago (Chicago, Illinois) with respect to the PIMCO Small Cap
Growth Fund; The Bank of New York as Trustee for Melville Corporation (New
York, New York) with respect to the PIMCO Core Equity Fund; Pacific Life
Insurance Company (Newport Beach, California) with respect to the PIMCO Mid
Cap Equity Fund; and Pacific Life Insurance Company (Newport Beach,
California) with respect to the PIMCO Enhanced Equity Fund. To the extent such
shareholders are also 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).
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.
The total return of Institutional Class and Administrative Class shares of
all Funds may be included in advertisements or other written material. When a
Fund's total return is advertised 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
November 1, 1997 Prospectus 57
<PAGE>
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 any higher 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). Total return may be advertised 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 Trust may also 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.
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 Reports contain
additional performance information for the Funds and are available upon
request, without charge, by calling (800) 927-4648 (Current Shareholders), or
(800) 800-0952 (New Accounts).
58 PIMCO Funds: Multi-Manager Series
<PAGE>
[LOGO OF PIMCO APPEARS HERE]
PIMCO FUNDS
- -----------
Multi-Manager Series
INVESTMENT ADVISER AND 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
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
PROSPECTUS
- --------------------------------------------------------------------------------
November 1, 1997
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated _________, 1997
to the
Prospectus for Institutional Class and Administrative
Class Shares Dated November 1, 1997
Disclosure relating to:
PIMCO Tax-Managed Structured Emerging Markets Fund
PIMCO Opportunity Fund
PIMCO Tax Exempt Fund
PIMCO Precious Metals Fund
- --------------------------------------------------------------------------------
Note: This document supplements the PIMCO Funds: Multi-Manager Series (the
- ----
"Trust") Prospectus for Institutional Class and Administrative Class shares
dated November 1, 1997 (the "Institutional Prospectus") which is included in
Part A of this Registration Statement.
- --------------------------------------------------------------------------------
The Trust intends to offer Institutional Class and Administrative Class
shares of PIMCO Tax-Managed Structured Emerging Markets Fund, PIMCO Opportunity
Fund, PIMCO Tax Exempt Fund, and PIMCO Precious Metals Fund (together, the
"Funds").
1. Expense Information.
Shareholder Transaction Expenses - All Funds (Institutional and Administrative
- --------------------------------
Class):
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fee None
Annual Fund Operating Expenses
- ------------------------------
<TABLE>
<CAPTION>
Example: You would pay the
following expenses on a
Institutional Class Annual Fund $1,000 investment assuming
Shares Operating Expenses (1) 5% annual return and (2)
(As a percentage of redemption at the end of each
average net assets): time period:
- -----------------------------------------------------------------------------------------------------
Admini-
Advisory strative Total
Fund Fee Fee Expenses 1 3 5 10
Year Years Years Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Managed Structured Emerging .45% .50% .95% $10 $30 $53 $117
Markets Fund
Opportunity Fund .65 .25 .90 $9 $29 $50 $111
Tax Exempt Fund .30 .25 .55 $6 $18 $31 $69
Precious Metals Fund .60 .30 .90 $9 $29 $50 $111
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Example: You would pay the
following expenses on a
Administrative Class Annual Fund $1,000 investment assuming
Shares Operating Expenses (1) 5% annual return and (2)
(As a percentage of average net redemption at the end of each
assets): time period:
- ------------------------------------------------------------------------------------------------------------
Admini- Service/
Fund Advisory strative 12b-1 Total 1 3 5 10
Fee Fee Fee Expenses Year Years Years Years
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Managed Structured Emerging .45% .50% .25% 1.20% $12 $38 $66 $145
Markets Fund
Opportunity Fund .65 .25 .25 1.15 $12 $37 $63 $140
Tax Exempt Fund .30 .25 .25 .80 $8 $26 $44 $99
Precious Metals Fund .60 .30 .25 1.15 $12 $37 $63 $140
- ------------------------------------------------------------------------------------------------------------
</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. The information has been restated as appropriate to
reflect a Fund's current fees and expenses. 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.
2. Investment Objectives and Policies.
The investment objective and general investment policies of the Funds are
described or incorporated 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.
Tax-Managed Structured Emerging Markets Fund has the same investment
--------------------------------------------
objective and policies as the Structured Emerging Markets Fund (see the
Institutional Prospectus), except that the Fund seeks to achieve superior
after-tax returns for its shareholders in part by minimizing the taxes they
incur in connection with the Fund's investment income and realized capital
gains. While the Fund seeks to minimize investor taxes associated with the
Fund's investment income and realized capital gains, the Fund may have taxable
investment income and may realize taxable gains from time to time. The Portfolio
Manager for the Fund is Parametric Portfolio Associates.
As specified above, the Fund seeks to achieve after-tax returns for its
shareholders in part by minimizing the taxes they incur in connection with the
Fund's investment income and realized capital gains. Taxes on realized capital
gains are minimized in part by maintaining relatively low portfolio turnover,
and by employing a variety of tax-efficient management strategies. The Fund will
generally seek to avoid realizing net short-term capital gains and, when
realizing gains, will attempt to realize long-term gains (i.e., gains on
securities held for more than 12 months) in such a manner as to maximize the net
gains from securities held for more than 18 months. The Fund intends to notify
each shareholder as to that portion of his or her capital gain dividends which
qualifies for a maximum tax rate of 28% in the hands of the shareholder and the
balance, if any, of such capital gain dividends eligible for a maximum tax rate
of 20%. Net short-term capital gains, when distributed, will be taxed as
ordinary income, at graduated rates of up to 39.6%. When the Fund decides to
sell a particular
-2-
<PAGE>
appreciated security, it will normally select for sale first those share lots
with holding periods exceeding 18 or 12 months and among those, the share lots
with the highest cost basis. The Fund may, when prudent, sell securities to
realize capital losses that can be used to offset realized capital gains.
To protect against price declines in securities holdings with large
accumulated capital gains, the Fund may, to the extent permitted by law, use
hedging techniques such as short sales against-the-box of securities held, the
purchase of put options, the sale of stock index futures contracts, and equity
swaps. By using these techniques rather than selling such securities the Fund
can reduce its exposure to price declines in the securities without realizing
substantial capital gains. The usefulness of such practices have, however, been
substantially reduced in the Taxpayer Relief Act of 1997, effective for
transactions after June 8, 1997.
The Fund follows the practice of distributing selected appreciated
securities to meet redemptions of certain investors and may, within certain
limits, use the selection of securities distributed to meet such redemptions as
a management tool. By distributing appreciated securities the Fund can reduce
its position in such securities without realizing capital gains. During periods
of net withdrawals by investors in the Fund, using distributions of securities
also enables the Fund to avoid the forced sale of securities to raise cash for
meeting redemptions.
It is expected that by employing the various tax-efficient management
strategies described, the Fund can minimize the extent to which shareholders
incur taxes as a result of realized capital gains. The Fund may nevertheless
realize gains and shareholders will incur tax liability from time to time.
Unless otherwise noted, the Fund's objective and its restrictions and
policies relating to the investment of its assets are non-fundamental and may be
changed without shareholder approval.
The Tax-Managed Structured Emerging Markets Fund may invest in the
securities and utilize the investment techniques described under the
sub-headings "Small and Medium Capitalization Stocks," "Repurchase Agreements,"
"Reverse Repurchase Agreements and Other Borrowings," "Loans of Fund
Securities," "Foreign Securities," "Foreign Currency Transactions," "Derivative
Instruments" (including "Options on Securities, Securities Indexes, and
Currencies," "Swap Agreements," and "Futures Contracts and Options on Futures
Contracts"), "Short Sales," "When-Issued, Delayed Delivery and Forward
Commitment Transactions," "Convertible Securities," "Investment in Investment
Companies," "Credit and Market Risk of Fixed Income Securities," "Money Market
Instruments," and "Illiquid Securities" under "Characteristics and Risks of
Securities and Investment Techniques" in the Institutional Prospectus.
The annual portfolio turnover rate for the Tax-Managed Structured Emerging
Markets Fund is expected to be less than 25%.
Opportunity, Tax Exempt and Precious Metals Funds
-------------------------------------------------
The investment objective and general investment policies of the
Opportunity, Tax Exempt and Precious Metals Funds and related risks of
securities and investment techniques are described in the corresponding sections
of the Trust's Prospectus for Class A, Class B and Class C shares, dated
November 1, 1997 (the " Retail Prospectus"), which is included in Part A of this
Registration Statement. The relevant disclosure in the Retail Prospectus is
incorporated herein by reference.
-3-
<PAGE>
3. Management of the Trust.
Disclosure relating to the Investment Adviser and Portfolio Managers of the
Funds (including advisory and portfolio management fees) and the Administrator
for each of the Funds is incorporated herein by reference to the corresponding
sub-sections of "Management of the Trust" in the Retail and Institutional
Prospectuses.
Administrative Fees
- -------------------
For providing or procuring administrative services for the Funds, PIMCO
Advisors L.P. (in its capacity as Administrator) receives monthly Administrative
Fees from the Funds at the following annual rates, each based on the average
daily net assets attributable in the aggregate to the relevant Fund's
Institutional Class and Administrative Class shares: Tax-Managed Structured
Emerging Markets Fund - .50%; Opportunity Fund - .25%; Tax Exempt Fund - .25%;
Precious Metals Fund - .30%.
4. Dividends, Distributions and Taxes.
Disclosure relating to dividends, distributions and taxes with respect to
the Funds is incorporated herein by reference to "Distributions" and "Taxes" in
the Retail Prospectus. While the Tax-Managed Structured Emerging Markets Fund
seeks to minimize taxable distributions, the Fund may be expected to earn and
distribute taxable income and may also be expected to realize and distribute
capital gains from time to time. Net investment income from interest and
dividends, if any, will be declared and paid at least annually to shareholders
of record by the Tax-Managed Structured Emerging Markets Fund.
-4-
<PAGE>
PIMCO Funds:
Multi-Manager Series
STATEMENT OF ADDITIONAL INFORMATION
November 1, 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-four separate diversified 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 International Growth Fund, the Emerging
Markets Fund, the Tax-Managed Structured 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, each dated November 1,
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 of certain Funds are offered through the "Retail Prospectus," and
Institutional and Administrative Class shares of certain Funds 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(s) listed below.
<TABLE>
<CAPTION>
Institutional Prospectus: Retail Prospectus:
------------------------ -----------------
<S> <C>
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) 987-4626 (PIMCO Infolink Audio
Response Network)
</TABLE>
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES............................................. 3
U.S. Government Securities............................................... 3
Inflation-Indexed Bonds.................................................. 3
Borrowing................................................................ 4
Preferred Stock.......................................................... 5
Corporate Debt Securities................................................ 5
High Yield Securities ("Junk Bonds")..................................... 5
Participation on Creditors Committees.................................... 7
Variable and Floating Rate Securities.................................... 7
Mortgage-Related and Asset-Backed Securities............................. 8
Foreign Securities....................................................... 12
Bank Obligations......................................................... 13
Commercial Paper......................................................... 14
Derivative Instruments................................................... 15
Forward Commitments, When-Issued and Delayed Delivery Transactions....... 20
Warrants to Purchase Securities.......................................... 21
Tax Exempt Bonds......................................................... 21
Metal-Indexed Notes and Precious Metals.................................. 22
Repurchase Agreements.................................................... 23
Securities Loans......................................................... 23
INVESTMENT RESTRICTIONS........................................................ 24
Fundamental Investment Restrictions...................................... 24
Non-Fundamental Investment Restrictions.................................. 26
MANAGEMENT OF THE TRUST........................................................ 28
Trustees................................................................. 28
Officers................................................................. 29
Trustees' Compensation................................................... 31
Investment Adviser....................................................... 33
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.............................................. 49
Purchases, Exchanges and Redemptions..................................... 51
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................... 52
Investment Decisions..................................................... 52
Brokerage and Research Services.......................................... 52
Portfolio Turnover....................................................... 55
NET ASSET VALUE................................................................ 55
TAXATION....................................................................... 56
Distributions............................................................ 57
Sales of Shares.......................................................... 58
Backup Withholding....................................................... 58
Options, Futures, Forward Contracts and Swap Agreements.................. 59
Passive Foreign Investment Companies..................................... 59
Foreign Currency Transactions............................................ 60
Foreign Taxation......................................................... 60
Original Issue Discount.................................................. 61
Other Taxation........................................................... 61
OTHER INFORMATION.............................................................. 62
Capitalization........................................................... 62
Performance Information.................................................. 62
Calculation of Yield..................................................... 63
Calculation of Total Return.............................................. 64
Voting Rights............................................................ 76
Certain Ownership of Trust Shares........................................ 76
Custodian................................................................ 96
Independent Accountants.................................................. 96
Registration Statement................................................... 97
Financial Statements..................................................... 97
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.
Inflation-Indexed Bonds
The Balanced Fund may invest in inflation-indexed bonds, which are fixed
income securities whose principal value is periodically adjusted according to
the rate of inflation. The interest rate on these bonds is generally fixed at
issuance at a rate lower than typical bonds. Over the life of an inflation-
indexed bond, however, interest will be paid based on a principal value which is
adjusted for inflation.
Inflation-indexed securities issued by the U.S. Treasury will initially
have maturities of five or ten years, al though it is anticipated that
securities with other maturities will be issued in the future. The securities
will pay interest on a semi-annual basis, equal to a fixed percentage of the
inflation-adjusted principal amount. For example, if an investor purchased an
inflation-indexed bond with a par value of $1,000 and a 3% real rate of return
coupon (payable 1.5% semi-annually), and inflation over the first six months
were 1%, the mid-year par value of the bond would be $1,010 and the first semi-
annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during
the second half of the year reached 3%, the end-of-year par value of the bond
would be $1,030 and the second semi-annual interest payment would be $15.45
($1,030 times 1.5%).
If the periodic adjustment rate measuring inflation falls, the principal
value of inflation-indexed bonds will be adjusted downward, and consequently the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal upon
maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury
inflation-indexed bonds, even during a period of deflation. However, the
current market value of the bonds is not guaranteed, and will fluctuate. The
Balanced Fund may also invest in other inflation-related bonds which may or may
not provide a similar guarantee. If such a guarantee of principal is not
provided, the adjusted principal value of the bond repaid at maturity may be
less than the original principal. The value of inflation-indexed bonds is
expected to change in response to changes in real interest rates. Real interest
rates in turn are tied to the relationship between nominal interest rates and
the rate of inflation. Therefore, if inflation were to rise at a faster rate
than nominal interest rates, real interest rates might decline, leading to an
increase in value of inflation-indexed bonds. In contrast, if nominal interest
rates increased
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at a faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds.
While these securities are expected to be protected from long-term
inflationary trends, short-term in creases in inflation may lead to a decline in
value. If interest rates rise due to reasons other than inflation (for example,
due to changes in currency exchange rates), investors in these securities may
not be protected to the extent that the increase is not reflected in the bond's
inflation measure.
The U.S. Treasury has only recently begun issuing inflation-indexed bonds.
As such, there is no trading history of these securities, and there can be no
assurance that a liquid market in these instruments will develop, although one
is expected. Lack of a liquid market may impose the risk of higher transaction
costs and the possibility a Fund may be forced to liquidate positions when it
would not be advantageous to do so. There also can be no assurance that the U.S.
Treasury will issue any particular amount of inflation-indexed bonds. Certain
foreign governments, such as the United Kingdom, Canada and Australia, have a
longer history of issuing inflation-indexed bonds, and there may be a more
liquid market in certain of these countries for these securities.
The periodic adjustment of U.S. inflation-indexed bonds is tied to the
Consumer Price Index for Urban Consumers ("CPI-U"), which is calculated
monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of
changes in the cost of living, made up of components such as housing, food,
transportation and energy. Inflation-indexed bonds issued by a foreign
government are generally adjusted to reflect a comparable inflation index,
calculated by that government. There can be no assurance that the CPI-U or any
foreign inflation index will accurately measure the real rate of inflation in
the prices of goods and services. Moreover, there can be no assurance that the
rate of inflation in a foreign country will be correlated to the rate of
inflation in the United States.
Any increase in the principal amount of an inflation-indexed bond will be
considered taxable ordinary income, even though investors do not receive their
principal until maturity.
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
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liquid by the Adviser or 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 and equal (on a daily mark-to-market basis)
to its 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 the
preferred stock 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, Tax-Managed 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.
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
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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, Growth, 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). The Growth Fund will generally
invest no more than 5% of its total assets in high yield securities. 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 as well as
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
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sell a high yield security, and could adversely affect the daily net asset value
of the shares. Lower liquidity in secondary 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 Fund may sell a
security and purchase another of comparable quality and maturity (usually, but
not always, of a different issuer) 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, but
generally do not allow the Fund to participate fully 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 generally will exhibit greater
price volatility than a fixed rate obligation of similar credit quality.
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See "Mortgage-Related and Asset-Backed Securities" below.
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). Certain debt securities are also secured with collateral
consisting of mortgage-related securities (see "Collateralized Mortgage
Obligations" below).
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 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.
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.
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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 services of the underlying mortgage loans as
well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in the former pools. However, timely
payment of interest and principal of these pools may be supported by various
forms of insurance or guarantees, including individual loan, title, pool and
hazard insurance and letters of credit. The insurance and guarantees are issued
by governmental entities, private insurers and the mortgage poolers. Such
insurance and guarantees, and the creditworthiness of the issuers thereof, will
be considered in determining whether a mortgage-related security meets the
Trust's investment quality standards. There can be no assurance that the
private insurers or guarantors can meet their obligations under the insurance
policies or guarantee arrangements. A 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. A 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 15% 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 a 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 Funds take 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 begin to be paid currently. With
some CMOs, the
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issuer serves as a conduit to allow loan originators (primarily builders or
savings and loan associations) to borrow against their loan portfolios.
FHLMC Collateralized Mortgage Obligations. FHLMC CMOs are debt obligations of
FHLMC issued in multiple classes having different maturity dates which are
secured by the pledge of a pool of conventional mortgage loans purchased by
FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are
made semi-annually, as opposed to monthly. The amount of principal payable on
each semi-annual payment date is determined in accordance with FHLMC's mandatory
sinking fund schedule, which in turn, is equal to approximately 100% of FHA
prepayment experience applied to the mortgage collateral pool. All sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payment of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum
sinking fund obligation for any payment date are paid to the holders of the CMOs
as additional sinking fund payments. Because of the "pass-through" nature of
all principal payments received on the collateral pool in excess of FHLMC's
minimum sinking fund requirement, the rate at which principal of the CMOs is
actually repaid is likely to be such that each class of bonds will be retired in
advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans
during any semi-annual payment period is not sufficient to meet FHLMC's minimum
sinking fund obligation on the next sinking fund payment date, FHLMC agrees to
make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC PCS. FHLMC has the right to substitute collateral
in the event of delinquencies and/or defaults.
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
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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 recently developed and CMO residuals currently may not
have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not,
have been registered under the Securities Act of 1933, as amended (the "1933
Act"). CMO residuals, whether or not registered under the 1933 Act, may be
subject to certain restrictions on transferability, and may be deemed "illiquid"
and subject to 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 a 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 and may be purchased by the Funds that may
invest in mortgage-related securities. 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.
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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, Tax-Managed Structured
Emerging Markets, International Developed, International Growth 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"). The Emerging Markets, Structured Emerging Markets, Tax-
Managed Structured Emerging Markets, International Developed, International
Growth, 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 developing (or ''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
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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, International Growth, Emerging Markets, Structured
Emerging Markets, Tax-Managed 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, Structured Emerging Markets, Tax-Managed Structured Emerging
Markets, International, International Developed, International Growth, 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, International Growth, Emerging
Markets, Structured Emerging Markets and Tax-Managed 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,
Structured Emerging Markets and Tax-Managed 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
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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 15% of its net assets would be
invested in such deposits, repurchase agreements maturing in more than seven
days and other illiquid assets. Each Fund may also hold funds on deposit with
its sub-custodian bank in an interest-bearing account for temporary purposes.
Each Fund limits its investments in United States bank obligations to
obligations of United States banks (including foreign branches) which have more
than $1 billion in total assets at the time of investment and are members of the
Federal Reserve System or are examined by the Comptroller of the Currency or
whose deposits are insured by the Federal Deposit Insurance Corporation. A Fund
also may invest in certificates of deposit of savings and loan associations
(federally or state chartered and federally insured) having total assets in
excess of $1 billion.
The Renaissance, Growth, Target, Core Equity, Mid Cap Equity, Opportunity,
Innovation, International, Emerging Markets, Structured Emerging Markets, Tax-
Managed Structured Emerging Markets, International Developed, International
Growth 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) are among the 75 largest
foreign banks in the world in terms of total assets; (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 relevant Portfolio Manager,
are of an investment quality comparable to obligations of United States banks in
which the Funds may invest. Subject to each Fund's limitation on concentration
of no more than 25% of its assets in the securities of issuers in a particular
industry, there is no limitation on the amount of a Fund's assets which may be
invested in obligations of foreign banks which meet the conditions set forth
above.
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, Tax-Managed Structured Emerging Markets, International, International
Developed and International Growth 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.
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Derivative Instruments
The following describes certain derivative instruments and products in
which the Funds may invest (to the extent described in the Prospectuses) and the
risks associated therewith.
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
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will realize a capital gain or, if it is less, the Fund will realize a capital
loss. The principal factors affecting the market value of a put or a call option
include supply and demand, interest rates, the current market price of the
underlying security or index in relation to the exercise price of the option,
the volatility of the underlying security or index, and the time remaining until
the expiration date.
The premium paid for a put or call option purchased by a Fund is an asset
of the Fund. The premium received for an option written by a Fund is recorded as
a deferred credit. The value of an option purchased or written is marked to
market daily and is valued at the closing price on the exchange on which it is
traded or, if not traded on an exchange or no closing price is available, at the
mean between the last bid and asked prices.
OTC Options. The Renaissance, Growth, Target, Opportunity, Innovation,
International, International Growth, 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, International Growth, 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.
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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 but not limited to: 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 holder acquires a short
position and the writer is assigned the opposite long position.
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 (i.e.,
with the same exchange, underlying security or index, and delivery month). If an
offsetting purchase price is less than the original sale price, the Fund
realizes a capital gain, or if it is more, the Fund realizes a capital loss.
Conversely, if an offsetting sale price is more than the original purchase
price, the Fund realizes a capital gain, or if it is less, the Fund realizes a
capital loss. Any transaction costs must also be included in these calculations.
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Limitations on Use of Futures and Futures Options. In general, the Funds
intend to enter into positions in futures contracts and related options only for
"bona fide hedging" purposes. With respect to positions in futures and related
options that do not constitute bona fide hedging positions, a Fund will not
enter into a futures contract or futures option contract if, immediately
thereafter, the aggregate initial margin deposits relating to such positions
plus premiums paid by it for open futures option positions, less the amount by
which any such options are "in-the-money," would exceed 5% of the Fund's net
assets. A call option is "in-the-money" if the value of the futures contract
that is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures contract
that is the subject of the option.
When purchasing a futures contract, a Fund will maintain with its custodian
(and mark-to-market on a daily basis) 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 total 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. In addition, there are significant differences between the
securities and futures markets that could result in an imperfect
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correlation between the markets, causing a given hedge not to achieve its
objectives. The degree of imperfection of correlation depends on circumstances
such as variations in speculative market demand for futures and futures options
on securities, including technical influences in futures trading and futures
options, and differences between the financial instruments being hedged and the
instruments underlying the standard contracts available for trading in such
respects as interest rate levels, maturities, and creditworthiness of issuers.
To 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. A decision as to whether, when and how to hedge involves
the exercise of skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of market behavior or unexpected interest
rate trends.
Futures 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, Tax-
Managed 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
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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 calculate the obligations of
the parties to the agreement on a "net basis." Consequently, a Fund's current
obligations (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's current obligations under a swap agreement will be accrued daily
(offset against any amounts owing to the Fund) and any accrued but unpaid net
amounts owed to a swap counter party 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 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. 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 counter parties that meet certain standards of
creditworthiness (generally, such counter parties would have to be eligible
counter parties 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
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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 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 Retail Prospectus, 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 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 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).
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Under the Internal Revenue Code, 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.
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 investment grade or are issued by issuers that have outstanding debt
obligations rated investment grade or commercial paper rated in the top rating
category by any NRSRO, 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,
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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-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 fairly 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.
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 counter parties.
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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 Markets, Structured
Emerging Markets, Tax-Managed Structured Emerging Markets and Balanced Funds may
make secured loans of its portfolio securities amounting to no more than 33 1/3%
of its total assets. Each of the Renaissance, Growth, Opportunity, Innovation,
International, International Growth, and Precious Metals Funds may make such
loans amounting to no more than 25% of their respective 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,
International Growth, 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;
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(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 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 technologies to gain a strategic, competitive advantage in
their industry as well as companies that provide and service those technologies.
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, Tax-Managed 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;
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(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 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
Each Fund is 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
26
<PAGE>
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 or has the right to acquire
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;
(5) purchase or sell commodities or commodity contracts except that a Fund
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) with respect to the Renaissance, Growth, Target, Opportunity,
Innovation, International, International Growth, Precious Metals and Tax Exempt
Funds, 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) with respect to the Renaissance, Growth, Target, Opportunity,
Innovation, International, International Growth, Precious Metals and Tax Exempt
Funds, and in each case with respect to 75% of such Fund's total assets, 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; 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;
(8) 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 15% of the
value of the net assets of the relevant Fund;
(9) write (sell) or purchase options except that (i) each 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 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 (c) each Fund may engage in 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; (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 Fund on all outstanding
options it has purchased do not exceed 5% of its total assets. Each Fund may
enter into closing sale transactions with respect to options it has purchased;
(10) invest more than 15% 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);
(11) borrow money (excluding reverse repurchase agreements which are
subject to such Fund's fundamental borrowing restriction), except for temporary
administrative purposes.
27
<PAGE>
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.
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. 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, Cash Accumulation Trust ("CAT");
2401 Claremont Lane Headmaster, St. John's School, Houston, Texas.
Houston, TX 77019 Formerly, General Partner, J.B. Poindexter & Co.,
Age 56 Houston, Texas (private partnership), and Partner,
Iberia Petroleum Company (oil and gas production).
Mr. Cannon was a director of WNS Inc., a retailing
company which filed a petition in bankruptcy
within the last five years.
- --------------------------------------------------------------------------------
Donald P. Carter Trustee, CAT; Formerly, Chairman, Executive Vice
434 Stable Lane President and Director, Cunningham & Walsh, Inc.,
Lake Forest, IL 60045 Chicago (advertising agency).
Age 70
- --------------------------------------------------------------------------------
Gary A. Childress Trustee, CAT; Chairman and Director, Bellefonte
11 Longview Terrace Lime Company, Inc.; Mr. Childress is a partner in
Madison, CT 06443 GenLime, L.P., a private limited partnership,
Age 63 which has filed a petition in bankruptcy within
the last five years.
- --------------------------------------------------------------------------------
(*) William D. Cvengros Trustee, CAT; Chairman of the Board of the Trust;
800 Newport Center Drive Chief Executive Officer, President, and member of
Newport Beach, CA 92660 the Operating Board, Operating Committee, and
Age 49 Equity Board, PIMCO Advisors; Director, PIMCO
Funds Distribution Company ("PFDCO"). Formerly,
President of the Trust, and Director, Vice
Chairman, and Chief Investment Officer, Pacific
Life Insurance Company ("Pacific Life").
- --------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Gary L. Light Trustee, CAT; President, E.V.A. Investors, Inc.
523 Cornwall Ct. (private investments); Director, The Somerset
Carmel, IN 46032 Group, Inc.; Consultant to and, prior to March,
Age 60 1987, Executive Vice President, Mayflower
Corporation (trucking and transportation); Vice
Chairman and Chief Financial Officer, Sofamor
Danek (medical devices).
- --------------------------------------------------------------------------------
Richard L. Nelson Trustee, CAT; President, Nelson Financial
8 Cherry Hills Lane Consultants; Director, Wynn's International, Inc.;
Newport Beach, CA 92660 Trustee, Pacific Select Fund. Formerly, Partner,
Age 67 Ernst & Young.
- --------------------------------------------------------------------------------
Lyman W. Porter Trustee, CAT; Professor of Management at the
2639 Bamboo Street University of California, Irvine; Trustee, Pacific
Newport Beach, CA 92660 Select Fund.
Age 67
- --------------------------------------------------------------------------------
(*) Robert A. Prindiville Trustee, CAT. Formerly, President and Director,
2187 Atlantic Street Thomson Advisory Group, Inc.; Director and
Stamford, CT 06903 Chairman, PFDCO; Executive Vice President, PIMCO
Age 62 Advisors.
- --------------------------------------------------------------------------------
Alan Richards Trustee, CAT; President, Alan Richards Consulting,
7381 Elegans Place Inc.; Trustee, Pacific Select Fund; Director,
Carlsbad, CA 92009 Western National Corporation. Formerly,
Age 67 President, Chief Executive Officer and Director,
E.F. Hutton Insurance Group, Inc.; Chairman of the
Board, Chief Executive Officer and President, E.F.
Hutton Life Insurance Company; Director, E.F.
Hutton & Company, Inc.
- --------------------------------------------------------------------------------
Joel Segall Trustee, CAT; Formerly, President and University
11 Linden Shores Professor, Bernard M. Baruch College, The City
Branford, CT 06405 University of New York; Deputy Under Secretary for
Age 74 International Affairs, United States Department of
Labor; Professor of Finance, University of
Chicago; Board of Managers, Coffee, Sugar and
Cocoa Exchange.
- --------------------------------------------------------------------------------
W. Bryant Stooks Trustee, CAT; President, Bryant Investments, Ltd.;
1530 E. Montebello Director, American Agritec LLC. Formerly,
Phoenix, AZ 85014 President, Senior Vice President, Director and
Age 57 Chief Executive Officer, Archirodon Group Inc.;
Partner, Arthur Andersen & Co.
- --------------------------------------------------------------------------------
Gerald M. Thorne Trustee, CAT; Director, UPI Inc., Kaytee Inc., and
5 Leatherwood Lane American Orthodontics Corp. Formerly, President
Savannah, GA 31414 and Director, Firstar National Bank of Milwaukee;
Age 59 Chairman, President and Director, Firstar National
Bank of Sheboygan; Director, Bando-McGlocklin.
- --------------------------------------------------------------------------------
(*) Stephen J. Treadway President and Chief Executive Officer of the
2187 Atlantic Street Trust; Trustee, President and Chief Executive
Stamford, CT 06902 Officer of CAT; Executive Vice President, PIMCO
Age 50 Advisors; Director, Chairman and President PFDCO.
Formerly, Executive Vice President, Smith Barney
Inc.
- --------------------------------------------------------------------------------
</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:
29
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name, Address and Age Position(s) with the Principal Occupation(s)
Trust During the Past Five Years
- --------------------------------------------------------------------------------
<S> <C> <C>
Stephen J. Treadway Trustee, President and President, CAT; Executive
2187 Atlantic Street Chief Executive Officer Vice President, PIMCO
Stamford, CT 06902 Advisors; Director and
Age 50 Chairman, PFDCO.
Formerly, Executive Vice
President, Smith Barney
Inc.
- --------------------------------------------------------------------------------
R. Wesley Burns Executive Vice Vice President of PAF and
Age 38 President CAT; President, PIMCO
Funds: Pacific Investment
Management Series;
Executive Vice President,
Pacific Investment
Management Company
("Pacific Investment
Management"); Trustee and
President, PIMCO Variable
Insurance Trust.
Formerly, Vice President,
Pacific Investment
Management.
- --------------------------------------------------------------------------------
Newton B. Schott, Jr. Vice President and Vice President and Clerk
2187 Atlantic Street Secretary of PAF and CAT; Director,
Stamford, CT 06902 Executive Vice President
Age 55 and Secretary, PFDCO.
Formerly, Senior Vice
President-Legal and
Secretary, PIMCO
Advisors; Executive Vice
President, Secretary and
General Counsel, Thomson
Advisory Group and PIMCO
Advisors.
- --------------------------------------------------------------------------------
Jeffrey M. Sargent Vice President Vice President and
Age 35 Manager of Fund
Shareholder Servicing,
Pacific Investment
Management; Vice
President of PIMCO Funds:
Pacific Investment
Management Series; Vice
President, PIMCO Variable
Insurance Trust.
Formerly, Project
Specialist, Pacific
Investment Management.
- --------------------------------------------------------------------------------
Richard M. Weil Vice President Senior Vice President -
Age 34 Legal, PIMCO Advisors.
Formerly, Vice President,
Bankers Trust Company;
Associate, Simpson,
Thatcher & Bartlett.
- --------------------------------------------------------------------------------
John P. Hardaway Treasurer Treasurer of PAF, CAT and
Age 40 PIMCO Funds: Pacific
Investment Management
Series; Treasurer, PIMCO
Variable Insurance Trust;
Vice President and
Manager of Fund
Operations, Pacific
Investment Management.
- --------------------------------------------------------------------------------
Joseph D. Hattesohl Assistant Treasurer Manager of Fund Taxation,
Age 34 Pacific Investment
Management; Assistant
Treasurer of PIMCO Funds:
Pacific Investment
Management Series;
Assistant Treasurer of
PIMCO Variable Insurance
Trust. Formerly, Director
of Financial Reporting,
Carl I. Brown & Co.; Tax
Manager, Price Waterhouse
LLP.
- --------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C>
Garlin G. Flynn Assistant Secretary Senior Fund
Age 51 Administrator, Pacific
Investment Management;
Secretary of PIMCO Funds:
Pacific Investment
Management Series;
Secretary, PIMCO Variable
Insurance Trust.
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
$45,000, plus $2,000 for each Board of Trustees meeting attended, and $500 for
each Audit and Performance Committee meeting attended, plus reimbursement of
related expenses. Each Audit and Performance Committee member receives an
additional annual retainer of $1,000, the Chairman of the Audit and Performance
Committees receives an additional annual retainer of $2,000, the Chairman of the
Independent Trustees receives an additional annual retainer of $6,000, and each
Vice Chairman of the entire Board receives an additional annual retainer of
$3,000. 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 PIMCO
Advisors Funds ("PAF") and CAT which was carried forward under the Trust's plan.
31
<PAGE>
The following table sets forth information regarding compensation received
by those Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust for the fiscal year ended June 30, 1997:
<TABLE>
<CAPTION>
----------------------------------------------------------------
(1) (2) (3)
Total
Aggregate Compensation
Name of Trustee Compensation from from Trust and
Trust/1/ Fund Complex/2/
----------------------------------------------------------------
<S> <C> <C>
E. Philip Cannon/3/ $24,750.00 $54,000.00
----------------------------------------------------------------
Donald P. Carter/3/ $28,800.00 $60,000.00
----------------------------------------------------------------
Gary A. Childress/3/ $24,750.00 $54,000.00
----------------------------------------------------------------
Gary L. Light/3/ $25,650.00 $56,000.00
----------------------------------------------------------------
Richard L. Nelson $43,150.00 $70,000.00
----------------------------------------------------------------
Lyman W. Porter $41,750.00 $71,500.00
----------------------------------------------------------------
Alan Richards $44,500.00 $67,500.00
----------------------------------------------------------------
Joel Segall/3/ $25,875.00 $56,750.00
----------------------------------------------------------------
W. Bryant Stooks/3/ $24,750.00 $54,000.00
----------------------------------------------------------------
Gerald M. Thorne/3/ $24,750.00 $54,000.00
----------------------------------------------------------------
</TABLE>
- ----------------
/1/ The Trust has adopted a deferred compensation plan (the "Plan")
which went into place during fiscal 1997. Aggregate deferred compensation earned
in prior years by certain Trustees under a deferred compensation plan for PAF
was carried forward under the Plan. Of the amounts listed in column (2), the
following Trustees elected to have the following amounts deferred from the Trust
and all investment companies in the Fund Complex, respectively: Cannon -$24,750,
$54,000; Carter - $0, $28,000; Segall - $25,875, $56,750; Thorne -$24,750,
$54,000; Porter - $24,750, $27,500.
/2/ The amounts listed in column (3) include total compensation paid to
the Trustees for their services as Trustees of the Trust (for all Trustees), PAF
(for Messrs. Cannon, Carter, Childress, Light, Segall, Stooks and Thorne), CAT
(for all Trustees), and Pacific Select Fund (for Messrs. Nelson, Porter, and
Richards) for the twelve-month period ended June 30, 1997. By virtue of having
PIMCO Advisors or an affiliate of PIMCO Advisors as investment adviser, the
Trust, PAF, CAT and Pacific Select Fund are considered to be part of the same
"Fund Complex" for these purposes. PAF ceased operations on January 17, 1997 and
did not pay compensation for services rendered after that date. Messrs. Nelson,
Porter and Richards became Trustees of CAT in February 1997 and did not receive
compensation from CAT prior thereto.
/3/ Messrs. Cannon, Carter, Childress, Light, Segall, Stooks and Thorne
became Trustees of the Trust in December 1997 and did not receive compensation
from the Trust prior thereto.
32
<PAGE>
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 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, Benjamin L. Trosky, William
R. Benz, II and Lee R. Thomas, III (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 $130.6 billion of
assets under management as of September 30, 1997.
PIMCO Advisors, subject to the supervision of the Board of Trustees, is
responsible for providing advice and guidance with respect to the Funds and for
managing, either directly or through others selected by the Adviser, the
investment of the Funds. PIMCO Advisors also furnishes to the Board of Trustees
periodic reports on the investment performance of each Fund. For all of the
Funds 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 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 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. 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 the following annual rates (based on the average daily net assets of the
particular Funds):
33
<PAGE>
<TABLE>
<CAPTION>
Fund Advisory
- ---- Fee Rate
--------
<S> <C>
Tax Exempt Fund..................................................... .30%
Equity Income, Value, Capital Appreciation,
Mid Cap Growth, Structured Emerging Markets,
Tax-Managed 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 and International Growth Funds..................... .85%
Small Cap Growth Fund............................................... 1.00%
Micro Cap Growth Fund............................................... 1.25%
</TABLE>
For the fiscal years ended June 30, 1997, June 30, 1996, and October 31,
1995 (the fiscal year ended June 30, 1996 being an eight-month period) the Funds
paid the Adviser (or its predecessor) the following amounts under the Advisory
Contract:
<TABLE>
<CAPTION>
Year Period Year
Ended Ended Ended
Fund 6/30/97 6/30/96 10/31/95
- ---- ------- ------- --------
<S> <C> <C> <C>
Equity Income Fund $555,146 $425,899 $445,739
Value Fund 463,869 65,873 60,686
Small Cap Value Fund 249,347 156,721 203,158
Core Equity Fund 234,333 145,931 73,930
Mid Cap Equity Fund 48,656 35,315 26,276
Capital Appreciation Fund 1,953,374 883,498 881,358
Mid Cap Growth Fund 1,219,531 617,546 650,017
Micro Cap Growth Fund 1,390,317 669,726 609,540
Small Cap Growth Fund 327,245 426,098 594,905
Enhanced Equity Fund 292,187 274,512 319,036
Emerging Markets Fund 568,277 440,978 638,097
International Developed Fund 525,817 294,777 282,055
Balanced Fund 306,756 235,529 417,190
Renaissance Fund* 913,256 N/A N/A
Growth Fund* 3,758,433 N/A N/A
Target Fund* 2,887,743 N/A N/A
Opportunity Fund* 2,324,663 N/A N/A
Innovation Fund* 750,414 N/A N/A
International Fund* 559,353 N/A N/A
Precious Metals Fund* 119,710 N/A N/A
Tax Exempt Fund* 66,977 N/A N/A
------- ------- --------
TOTAL 19,515,404 4,672,403 5,201,987
</TABLE>
- --------------
* For the period 1/18/97 through 6/30/97
34
<PAGE>
In addition, the predecessors of 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) paid the Adviser the following amounts for the fiscal
period ended January 17, 1997 and the fiscal years ended September 30, 1996 and
1995 under separate management contracts between the Adviser and PAF:
<TABLE>
<CAPTION>
10/1/96 Year Year
to Ended Ended
Fund 1/17/97 9/30/96 9/30/95
- ---- ------- ------- -------
<S> <C> <C> <C>
Renaissance Fund 653,744 $1,627,632 $1,371,809
Growth Fund 3,370,567 9,987,541 8,268,603
Target Fund 2,584,257 7,295,767 5,294,008
Opportunity Fund 1,898,337 6,183,575 5,000,057
Innovation Fund 545,586 1,063,584 265,836
International Fund 537,647 1,872,608 2,097,974
Precious Metals Fund 107,290 397,969 434,323
Tax Exempt Fund 99,023 333,349 369,918
--------- ---------- ----------
TOTAL 9,796,451 28,762,025 23,102,528
</TABLE>
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 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").
Pursuant to a Portfolio Management Agreement between the Adviser and
Pacific Investment Management, Pacific Investment Management provides investment
advice 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 the annual rate of .25% of the average daily net assets 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. The predecessor investment adviser to Pacific Investment Management
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 PIMCO Funds:
Pacific Investment Management Series, 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. Pacific
Investment Management also advises PIMCO Commercial Mortgage Securities Trust,
Inc. which is a closed-end management investment company, and managed accounts
consisting of proceeds from various pension
35
<PAGE>
and profit sharing plans. Pacific Investment Management had approximately $108.5
billion of assets under management as of September 30, 1997.
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, Structured Emerging Markets and Tax-Managed
Structured Emerging Markets Funds. For the services provided to each Fund, the
Adviser (not the Trust) pays Parametric a monthly fee for each Fund at the
following annual rates (based on the average daily net assets of the particular
Fund): .35% for the Enhanced Equity Fund, .35% for the Structured Emerging
Markets Fund, and .35% for the Tax-Managed 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. 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 institutional
accounts, including employee benefit plans, college endowment funds and
foundations. Accounts managed by Parametric had combined assets, as of September
30, 1997, of approximately $2.5 billion.
Pursuant to a Portfolio Management Agreement between the Adviser and
Cadence, Cadence 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 monthly fee for each Fund at the following annual rates
(based on the average daily net assets of the particular Fund): .35% for the
Capital Appreciation Fund, .35% for the Mid Cap Growth Fund, .35% for the
portion of the Balanced Fund's assets 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. 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 institutional accounts, including employee
benefit plans, college endowment funds and foundations. Accounts managed by
Cadence had combined assets, as of September 30, 1997, of approximately $4.9
billion.
Pursuant to a Portfolio Management Agreement between the Adviser and NFJ,
NFJ 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 monthly fee for each Fund at the following
annual rates (based on the average daily net assets of the particular Fund):
.35% for the Equity Income Fund, .35% for the Value Fund, .35% for 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. 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, including employee
benefit plans, college endowment funds and foundations. Accounts managed by NFJ
had combined assets, as of September 30, 1997, of approximately $2.3 billion.
36
<PAGE>
Pursuant to a Portfolio Management Agreement between the Adviser and
Columbus Circle, Columbus Circle provides investment advisory services to the
Renaissance, Growth, Target, Opportunity, Innovation, Tax Exempt, Core Equity,
Mid Cap Equity, and International Growth Funds. For the services provided, the
Adviser (not the Trust) pays Columbus Circle a monthly fee for each Fund at the
following annual rates (based on the average daily net assets of the particular
Fund): .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, .53% for the Mid Cap
Equity Fund, and .75% for the International Growth 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'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, including
corporate, government and union pension and profit-sharing plans, foundations
and educational institutions, as well as the Active Short-Term Fund and the
National Money Market Fund of CAT. Accounts managed by Columbus Circle had
combined assets, as of September 30, 1997, of $11.5 billion.
Pursuant to a Portfolio Management Agreement between the Adviser and
Blairlogie, Blairlogie 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 monthly fee for
each Fund at the following annual rates (based on the average daily net assets
of the particular Fund): .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, 1998. Blairlogie is located at 4th Floor,
125 Princes Street, Edinburgh EH2 4AD, Scotland. Blairlogie provides investment
management services to a number of institutional accounts, including employee
benefit plans, college endowment funds and foundations. Accounts managed by
Blairlogie had combined assets, as of September 30, 1997, of approximately $875
million.
Pursuant to a Portfolio Management Agreement between the Adviser and Van
Eck, Van Eck provides investment advisory services to the Precious Metals Fund.
For the Services provided, the Adviser (not the Trust) pays Van Eck a monthly
fee at the annual rate of .35% based on 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 and its affiliates advise 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 September 30, 1997 of approximately $1.5 billion.
PIMCO Advisors determines the allocation of the Balanced Fund's assets
among the various asset classes and types of securities in which the Fund
invests. PIMCO Advisors reserves the right to allocate a portion of the
37
<PAGE>
Fund's assets for investment in money market instruments and reserves the right
to manage the investment of such assets.
For the fiscal years ended June 30, 1997, June 30, 1996, and October 31,
1995 (the fiscal year ended June 30, 1996 being an eight-month period), the
amount of portfolio management fees paid by the Adviser (or its predecessor) to
the applicable Portfolio Manager (or its predecessor) for each of the Funds was
as follows:
<TABLE>
<CAPTION>
Year Period Year
Ended Ended Ended
Fund 06/30/97 06/30/96 10/31/95
- ---- -------- -------- --------
<S> <C> <C> <C>
Equity Income Fund $ 492,429 $ 425,899 $ 445,739
Value Fund 388,966 65,873 60,686
Small Cap Value Fund 224,788 156,721 203,158
Core Equity Fund 215,998 136,615 62,906
Mid Cap Equity Fund 45,074 23,814 13,832
Capital Appreciation Fund 1,714,191 883,498 881,358
Mid Cap Growth Fund 1,059,242 617,546 650,017
Micro Cap Growth Fund 1,325,695 669,726 609,540
Small Cap Growth Fund 311,280 426,098 594,905
Enhanced Equity Fund 268,021 274,512 319,036
Emerging Markets Fund 501,411 385,438 550,590
International Developed Fund 478,789 237,138 241,135
Balanced Fund 228,898 161,345 332,255
Renaissance Fund* 575,288 N/A N/A
Growth Fund* 2,544,364 N/A N/A
Target Fund* 1,869,073 N/A N/A
Opportunity Fund* 1,709,827 N/A N/A
Innovation Fund* 435,246 N/A N/A
International Fund* 348,938 N/A N/A
Precious Metal Fund* 66,070 N/A N/A
Tax Exempt Fund* 66,756 N/A N/A
---------- ---------- ---------
TOTAL $14,870,344 $4,464,223 $4,965,157
</TABLE>
- -----------------
*For the period 1/18/97 through 6/30/97.
38
<PAGE>
The Adviser paid the Portfolio Managers for the predecessors of 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 the fiscal period ended January 17, 1997 and the fiscal years ended
September 30, 1996 and 1995 under separate sub-adviser agreements between the
Adviser and the relevant Portfolio Manager:
<TABLE>
<CAPTION>
10/1/96 Year Year
to Ended Ended
Fund 1/17/97 09/30/96 09/30/95
- ---- ------- -------- --------
<S> <C> <C> <C>
Renaissance Fund $ 326,864 $ 813,816 $ 595,500
Growth Fund 1,685,284 4,993,770 3,634,403
Target Fund 1,292,168 3,647,884 2,353,106
Opportunity Fund 949,192 3,091,788 2,205,293
Innovation Fund 272,772 531,792 132,918
International Fund 268,824 936,304 889,339
Precious Metals Fund 53,837 198,985 217,162
Tax Exempt Fund 49,512 166,675 159,370
---------- ----------- -----------
TOTAL $4,898,453 $14,381,014 $10,187,091
</TABLE>
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"). PIMCO Advisors may also retain
other affiliates to provide such services. 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 Funds' 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):
39
<PAGE>
<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, Tax-Managed .60% of amounts in excess of $2.5 billion
Structured Emerging Markets,
International Developed,
International Growth 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>
* 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 Fund's Class A, Class B and Class C shares.
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 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 may be terminated by the Trust at any time by
vote of (1) a majority of the Trustees, (2) a majority of the outstanding voting
securities of the Trust, or (3) with respect to the Renaissance, Growth, Target,
Opportunity, Innovation, Tax Exempt, International and Precious Metals Funds, by
a majority of the Trustees who are not interested persons of the Trust or PIMCO
Advisors, on 60 days' written notice to PIMCO Advisers. Following its initial
term of two years, the Administration Agreement would continue from year to year
if approved by the Trustees, including a majority of the disinterested Trustees.
After an initial two-year term, the Sub-Administration Agreement will
continue from year to year upon the approval of the parties thereto. The Sub-
Administration Agreement may be terminated at any time by PIMCO Advisors or
Pacific Investment Management upon 60 days' written notice to the other party
and, with respect to the services rendered to the Trust, at any time by vote of
a majority of the disinterested Trustees of the Trust. The Sub-Administration
Agreement will also terminate upon termination of the Administration Agreement.
40
<PAGE>
For the fiscal years ended June 30, 1997, June 30, 1996, and October 31,
1995 (the fiscal year ended June 30, 1996 being an eight-month period), the
aggregate amount of the administration fees paid by the Funds was as follows
(Class A, Class B and Class C shares were not offered prior to January 17,
1997):
<TABLE>
<CAPTION>
Year Period Year
Ended Ended Ended
Fund 06/30/97 06/30/96 10/31/95
- ---- -------- -------- --------
<S> <C> <C> <C>
Equity Income Fund 311,798 $236,611 $247,633
Value Fund 318,624 36,596 33,714
Small Cap Value Fund 114,067 65,176 84,649
Core Equity Fund 102,634 63,942 32,425
Mid Cap Equity Fund 19,291 14,011 10,427
Capital Appreciation Fund 1,093,013 490,803 489,643
Mid Cap Growth Fund 729,997 342,880 361,121
Micro Cap Growth Fund 278,025 133,934 121,908
Small Cap Growth Fund 81,774 106,715 148,726
Enhanced Equity Fund 161,982 151,842 177,243
Emerging Markets Fund 312,540 259,300 375,351
International Developed Fund 437,490 244,350 235,046
Balanced Fund 170,134 130,017 231,772
Renaissance Fund* 605,566 N/A N/A
Growth Fund* 2,993,370 N/A N/A
Target Fund* 2,076,748 N/A N/A
Opportunity Fund* 1,424,856 N/A N/A
Innovation Fund* 458,154 N/A N/A
International Fund* 567,025 N/A N/A
Precious Metals Fund* 84,947 N/A N/A
Tax Exempt Fund* 89,008 N/A N/A
----------- ---------- ----------
TOTAL $12,431,043 $2,276,177 $2,549,658
</TABLE>
- ------------------------
* For the period from 1/17/97 through 6/30/97
The predecessor series of the Renaissance, Growth, Target, Opportunity,
Innovation, International, Precious Metals and Tax Exempt Funds (each a series
of PAF which reorganized as a Fund of the Trust on January 17, 1997) received
administrative services during fiscal 1997, 1996 and 1995 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 1997, 1996 and 1995.
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 (the "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
41
<PAGE>
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 entire Board of Trustees or by the majority of the outstanding shares of the
Fund or class, and (ii) by a majority of the Trustees who are not interested
persons (as defined in the 1940 Act) of the Trust and who have no direct or
indirect interest financial interest in the Distribution Contract or the
Distribution and/or Servicing Plans described below, by vote cast in person at a
meeting called for the purpose. If the Distribution Contract is terminated (or
not renewed) with respect to one or more Funds or classes, it may continue in
effect with respect to any Fund or class 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
Administrative Class shareholders.
Under the Trust's Multi-Class Plan, shares of each class of each Fund
represent an equal pro rata interest in the Fund and, generally, have identical
voting, dividend, liquidation, and other rights preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class has a different designation; (b) each class of shares bears any
class-specific expenses allocated to it; (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.
During the fiscal year ended June 30, 1997, the Distributor received an
aggregate of $40,456, $789,851, and $533,975, in contingent deferred sales
charges on, respectively, Class A shares, Class B shares and Class C shares of
the Funds.
The Funds did not offer Class A, B and C shares in prior fiscal years.
However, during the fiscal year ended September 30, 1996, the Distributor
received the following amounts in contingent deferred sales charges on shares of
series of PAF which reorganized as the following Funds of the Trust: Class A
-------
Shares: Growth -$9,168, Target - $14 and Opportunity - $4,190. Class B Shares:
- ------ --------------
Renaissance - $8,722, Growth - $37,445, Target - $31,670, Innovation - $36,477,
International - $6,359, Precious Metals - $1,179 and Tax Exempt -
42
<PAGE>
$4,055. Class C Shares: 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.
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 year ended June 30, 1997, the Distributor received an aggregate of
$2,927,636 and retained an aggregate of $369,546, in initial sales charges paid
by Class A shareholders of the Trust.
The Trust did not offer Class A shares in prior fiscal years. However,
during the fiscal year ended September 30, 1996, the Distributor received the
following amounts in initial sales charges paid by shareholders of PAF series
which reorganized as the following Funds of the Trust: 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, and 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.
During the fiscal year ended September 30, 1995, the Distributor received an
aggregate of $3,708,105 and retained an aggregate of $366,062 in initial sales
charges paid by shareholders of PAF.
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. 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 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 ("disinterested Retail Plan Trustees"), 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 Retail Plan Trustees, 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
43
<PAGE>
majority of the disinterested Retail Plan Trustees and (ii) by the vote of a
majority of the entire Board of Trustees cast in person at a meeting called for
the purpose of voting on such approval.
The Retail Plans went into effect for the Funds in January 1997. 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 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.
Payments Pursuant to Class A Plans
For the fiscal year ended June 30, 1997, the Trust paid the Distributor an
aggregate of $1,147,572 pursuant to the Class A Retail Plan. Such payments were
allocated among the operational Funds as follows:
<TABLE>
<CAPTION>
Year Ended
Fund 06/30/97
- ---- --------
<S> <C>
Equity Income Fund $938
Value Fund 14,876
Small Cap Value Fund 2,770
Core Equity Fund N/A
Mid Cap Equity Fund N/A
Capital Appreciation Fund 5,510
Mid Cap Growth Fund 12,246
Micro Cap Growth Fund N/A
Small Cap Growth Fund N/A
Enhanced Equity Fund N/A
Emerging Markets Fund 108
International Developed Fund 169
Balanced Fund 173
Renaissance 53,527
Growth 290,828
Target 288,012
Opportunity 320,127
Innovation 99,910
International 34,195
Precious Metals 14,218
Tax Exempt 9,965
</TABLE>
During the fiscal year ended June 30, 1997, the amounts collected pursuant
to the Class A Retail Plan and the contingent deferred sales charge imposed on
Class A shares were used as follows by the Distributor: sales commissions and
other compensation to sales personnel, $1,166,294; preparing, printing and
distributing sales material and advertising (including preparing, printing and
distributing prospectuses to non-shareholders), and
44
<PAGE>
other expenses (including data processing, legal and operations), $397,691. The
total, if allocated among the Funds, based on the net assets attributable to
their Class A shares at June 30, 1997, would have been as follows:
<TABLE>
<CAPTION>
Sales Material
and Other
Compensation Expenses Total
------------ -------------- --------
<S> <C> <C> <C>
Equity Income Fund $ 3,107 $ 1,059 $ 4,166
Value Fund 27,041 9,221 36,262
Small Cap Value Fund 11,241 3,833 15,074
Core Equity Fund N/A N/A N/A
Mid Cap Equity Fund N/A N/A N/A
Capital Appreciation Fund 11,288 3,849 15,137
Mid Cap Growth Fund 20,972 7,151 28,123
Micro Cap Growth Fund N/A N/A N/A
Small Cap Growth Fund N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund 356 121 477
International Developed Fund 549 187 736
Balanced Fund 632 216 848
Renaissance 58,097 19,810 77,907
Growth 256,697 87,530 344,227
Target 263,570 89,874 353,444
Opportunity 367,870 125,439 493,309
Innovation 94,778 32,318 127,096
International 33,683 11,485 45,168
Precious Metals 6,932 2,364 9,296
Tax Exempt 9,480 3,833 13,313
</TABLE>
The Trust did not offer Class A shares in prior fiscal years. For the
fiscal years ended September 30, 1996 and 1995, PAF paid the Distributor an
aggregate of $1,556,119 and $1,064,958, 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 Plan of the Trust. Such payments were
allocated among the predecessors of the following Funds (each of which was
formerly a series of PAF which reorganized as a series of the Trust on January
17, 1997) as follows (the remainders of such aggregate amounts were allocated
among other series of PAF which are not series of the Trust):
<TABLE>
<CAPTION>
Year Ended Year Ended
Sept. 30, 1996 Sept. 30, 1995
-------------- --------------
<S> <C> <C>
Renaissance $ 38,973 $ 33,249
Growth 351,506 289,263
Target 338,598 251,511
Opportunity 308,794 255,940
Innovation 88,089 28,918
International 42,411 49,788
Precious Metals 21,416 22,178
Tax Exempt 10,288 6,485
</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.
45
<PAGE>
Payments Pursuant to Class B Plans
For the fiscal year ended June 30, 1997, the Trust paid the
Distributor an aggregate of $1,670,623 pursuant to the Class B Retail Plan.
Such payments were allocated among the operational Funds as follows:
<TABLE>
<CAPTION>
Year Ended
Fund 06/30/97
- ---- ----------
<S> <C>
Equity Income Fund $ 5,019
Value Fund 101,067
Small Cap Value Fund 17,419
Core Equity Fund N/A
Mid Cap Equity Fund N/A
Capital Appreciation Fund 5,077
Mid Cap Growth Fund 104,374
Micro Cap Growth Fund N/A
Small Cap Growth Fund N/A
Enhanced Equity Fund N/A
Emerging Markets Fund 633
International Developed Fund 2,256
Balanced Fund 2,223
Renaissance 204,965
Growth 351,684
Target 450,009
Innovation 332,295
International 53,098
Precious Metals 21,713
Tax Exempt 18,818
</TABLE>
During the fiscal year ended June 30, 1997, the amounts collected pursuant to
the Class B Retail Plan and the contingent deferred sales charge imposed on
Class B shares were used as follows by the Distributor: sales commissions and
other compensation to sales personnel, $499,840; 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), $170,439. The total, if allocated among
the Funds, based on the net assets attributable to their Class B shares at June
30, 1997, would have been as follows:
<TABLE>
<CAPTION>
Sales Material
and Other
Compensation Expenses Total
------------ -------- -------
<S> <C> <C> <C>
Equity Income Fund $ 4,235 $ 1,444 $ 5,679
Value Fund 42,327 14,433 56,760
Small Cap Value Fund 18,336 6,252 24,588
Core Equity Fund N/A N/A N/A
Mid Cap Equity Fund N/A N/A N/A
Capital Appreciation Fund 5,026 1,714 6,740
Mid Cap Growth Fund 45,721 15,590 61,311
Micro Cap Growth Fund N/A N/A N/A
Small Cap Growth Fund N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund 514 175 689
International Developed Fund 1,836 626 2,462
Balanced Fund 1,872 638 2,510
</TABLE>
46
<PAGE>
<TABLE>
<S> <C> <C> <C>
Renaissance 62,109 21,178 83,287
Growth 92,401 31,507 123,908
Target 113,822 38,812 152,634
Innovation 85,939 29,304 115,243
International 14,406 4,912 19,318
Precious Metals 7,073 2,412 9,485
Tax Exempt 4,225 1,441 5,666
</TABLE>
The Trust did not offer Class B shares in prior fiscal years. 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 Plan of the Trust. Such payments were
allocated among the predecessors of the following Funds (each of which was
formerly a series of PAF which reorganized as a series of the Trust on January
17, 1997) as follows (the remainders of such aggregate amounts were allocated
among other series of PAF which are not series of the Trust):
<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>
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.
Payments Pursuant to Class C Plans
For the fiscal year ended June 30, 1997, the Trust paid the
Distributor an aggregate of $28,944,078 pursuant to the Class C Retail Plan.
Such payments were allocated among the operational Funds as follows:
<TABLE>
<CAPTION>
Year Ended
Fund 06/30/97
- ---- -----------
<S> <C>
Equity Income Fund $ 13,919
Value Fund 245,893
Small Cap Value Fund 39,558
Core Equity Fund N/A
Mid Cap Equity Fund N/A
Capital Appreciation Fund 28,078
Mid Cap Growth Fund 197,365
Micro Cap Growth Fund N/A
Small Cap Growth Fund N/A
Enhanced Equity Fund N/A
Emerging Markets Fund 5,070
International Developed Fund 4,936
Balanced Fund 1,876
</TABLE>
47
<PAGE>
<TABLE>
<S> <C>
Renaissance 2,024,245
Growth 11,107,219
Target 7,238,372
Opportunity 4,950,118
Innovation 1,149,018
International 1,354,452
Precious Metals 255,508
Tax Exempt 328,451
</TABLE>
During the fiscal year ended June 30, 1997, the amounts collected
pursuant to the Class C Retail Plan and the contingent deferred sales charge
imposed on Class C shares were used as follows by the Distributor: sales
commissions and other compensation to sales personnel, $6,664,535; 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), $2,272,518. The total, if
allocated among the Funds, based on the net assets attributable to their Class C
shares at June 30, 1997, would have been as follows:
<TABLE>
<CAPTION>
Sales Material
and Other
Compensation Expenses Total
------------ -------------- -----
<S> <C> <C> <C>
Equity Income Fund $ 10,972 $ 3,741 $ 14,713
Value Fund 106,994 36,484 143,478
Small Cap Value Fund 34,094 11,626 45,720
Core Equity Fund N/A N/A N/A
Mid Cap Equity Fund N/A N/A N/A
Capital Appreciation Fund 21,817 7,439 29,256
Mid Cap Growth Fund 89,419 30,491 119,910
Micro Cap Growth Fund N/A N/A N/A
Small Cap Growth Fund N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund 3,057 1,043 4,100
International Developed Fund 4,160 1,419 5,579
Balanced Fund 1,470 501 1,971
Renaissance 519,433 177,120 696,553
Growth 2,534,587 854,261 3,388,848
Target 1,618,653 551,939 2,170,592
Opportunity 1,049,063 357,717 1,406,780
Innovation 271,932 92,725 364,657
International 287,886 98,165 386,051
Precious Metals 41,949 14,304 56,253
Tax Exempt 69,048 23,544 92,592
</TABLE>
The Trust did not offer Class C shares in prior fiscal years. For the
fiscal years ended September 30, 1996 and 1995, PAF paid the Distributor an
aggregate of $41,704,155 and $34,667,013, respectively, pursuant to a
Distribution and Servicing Plan applicable to the Class C shares of PAF (the
"PAF Class C Plan"), which is similar to the Class C Plan of the Trust. Such
payments were allocated among the predecessors of the following Funds (each of
which was formerly a series of PAF Fund which reorganized as a series of the
Trust on January 17, 1997) as follows (the remainders of such aggregate amounts
were allocated among other series of PAF which are not series of the Trust):
48
<PAGE>
<TABLE>
Year Ended Year Ended
Sept. 30, 1996 Sept. 30, 1995
-------------- --------------
<S> <C> <C>
Renaissance $ 1,965,449 $ 1,694,012
Growth 13,593,775 11,397,447
Target 8,684,223 6,402,149
Opportunity 7,455,633 5,976,316
Innovation 899,377 229,411
International 1,858,512 2,422,761
Precious Metals 430,849 490,116
Tax Exempt 499,738 589,843
</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.
Distribution and Administrative Services Plans for Administrative Class Shares
The Trust has adopted an Administrative Services Plan with respect to
the Administrative Class shares of each Fund. The Trust also has adopted a
Distribution Plan (together with the Administrative Services Plan, the
"Administrative Plans") with respect to the Administrative Class shares of each
Fund except the Emerging Markets, Capital Appreciation and Mid Cap Growth Funds,
which are not subject to such Distribution Plan.
Under the terms of the Administrative Distribution Plan, the Trust is
permitted to reimburse, out of the assets attributable to the Administrative
Class Shares of each applicable Fund, in an amount up to 0.25% on an annual
basis of the average daily net assets of that class, financial intermediaries
for costs and expenses incurred in connection with the distribution and
marketing of Administrative Class Shares and/or the provision of certain
shareholder services to its customers that invest in Administrative Class Shares
of the Funds. Such 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; 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 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
certain administrative services for Administrative Class shareholders. Such
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
increase materially 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
49
<PAGE>
(ii) those Trustees ("disinterested Administrative Plan 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 Administrative 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 Administrative Plan Trustees. 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.
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 Administrative Plan Trustees. 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 Administrative 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.
Payments Pursuant to Administrative Distribution Plan
For the fiscal year ended June 30, 1997, the Trust made no payments
pursuant to the Administrative Distribution Plan. The Administrative
Distribution Plan was not in effect in prior fiscal years.
Payments Pursuant to Administrative Services Plan
For the fiscal year ended June 30, 1997, the Trust paid qualified
service providers an aggregate of $132,422 pursuant to the Administrative
Services Plan. Such payments were allocated among the operational Funds as
follows:
<TABLE>
<CAPTION>
Year Ended
Fund 06/30/97
- ---- ---------
<S> <C>
Equity Income Fund $ 16,938
Value Fund 0
Small Cap Value Fund 12,276
Core Equity Fund 79,366
Mid Cap Equity Fund 0
Capital Appreciation Fund 3,297
Mid Cap Growth Fund 4,723
Micro Cap Growth Fund 1,898
Small Cap Growth Fund 137
Enhanced Equity Fund 0
</TABLE>
50
<PAGE>
<TABLE>
<S> <C>
Emerging Markets Fund 582
International Developed Fund 13,205
Balanced Fund 0
Renaissance 0
Growth 0
Target 0
Opportunity 0
Innovation 0
International 0
Precious Metals 0
Tax Exempt 0
</TABLE>
All of these amounts constituted "service fees" under applicable NASD
rules. The Administrative Services Plan was not in effect in prior fiscal
years.
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
51
<PAGE>
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.
The Trust is committed to paying in cash all requests for redemptions
by any shareholder of record of the Funds, limited in amount with respect to
each shareholder during any 90-day period to the lesser of (i) $250,000, or (ii)
1% of the net asset value of the Trust at the beginning of such period. Although
the Trust will normally redeem all shares for cash, it may, in unusual
circumstances, redeem amounts in excess of the lesser of (i) or (ii) above by
payment in kind of securities held in the Funds' portfolios.
Due to the relatively high cost of maintaining smaller accounts, the
Trust reserves the right to redeem shares in any account for their then-current
value (which will be promptly paid to the investor) if at any time, due to
shareholder redemption, the shares in the account do not have a value of at
least a specified amount, currently set at $250 for Class A, Class B and Class C
shares, and $100,000 with respect to Institutional Class and Administrative
Class shares. 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 the specified amount 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
52
<PAGE>
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 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, 1997, June 30, 1996, and October 31,
1995 (the fiscal year ended June 30, 1996 being an eight-month period), the
following amounts of brokerage commissions were paid by the Funds:
<TABLE>
<CAPTION>
Year Period Year
Ended Ended Ended
Fund 6/30/97 6/30/96 10/31/95
- ---- ------- ------- --------
<S> <C> <C> <C>
Equity Income Fund $ 161,012 $ 221,694 $ 170,712
Value Fund 203,403 65,062 39,801
Small Cap Value Fund 146,551 74,170 74,739
Capital Appreciation Fund 889,931 467,569 411,595
Mid Cap Growth Fund 634,436 382,764 332,045
Micro Cap Growth Fund 315,009 124,194 202,678
Small Cap Growth Fund 113,103 76,333 111,918
Enhanced Equity Fund 196,460 114,363 47,226
Emerging Markets Fund 591,312 622,328 1,061,823
International Developed Fund 498,041 306,741 301,313
Balanced Fund 197,598 95,606 32,346
Core Equity Fund 114,173 57,047 40,203
Mid Cap Equity Fund 31,940 16,961 20,084
Renaissance Fund* 717,040 N/A N/A
Growth Fund* 2,632,126 N/A N/A
Target Fund* 2,584,198 N/A N/A
Opportunity Fund* 1,187,818 N/A N/A
Innovation Fund* 224,529 N/A N/A
International Fund* 748,412 N/A N/A
</TABLE>
53
<PAGE>
<TABLE>
<S> <C> <C> <C>
Precious Metals Fund* 81,251 N/A N/A
Tax Exempt Fund* 0 N/A N/A
----------- ---------- ----------
TOTAL $12,268,343 $2,624,832 $2,846,483
</TABLE>
- --------------------
* For the period 1/18/97 through 6/30/97
For the fiscal period ended January 17, 1997 and the fiscal years ended
September 30, 1996 and 1995, the following amounts of brokerage commissions were
paid by the predecessors of 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):
<TABLE>
<CAPTION>
10/1/96 Year Year
to Ended Ended
Fund 1/17/97 9/30/96 9/30/95
- ---- ------- ------- -------
<S> <C> <C> <C>
Renaissance Fund $ 363,501 $ 993,617 $ 605,124
Growth Fund 1,064,573 2,985,777 3,500,524
Target Fund 1,375,601 3,080,238 2,289,076
Opportunity Fund 505,221 1,757,263 1,728,282
Innovation Fund 105,556 228,473 84,173
International Fund 393,808 1,530,476 2,727,326
Precious Metals Fund 53,096 79,838 48,592
Tax Exempt Fund 0 0 0
---------- ----------- -----------
TOTAL $3,861,356 $10,655,682 $10,983,097
</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 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.
In reliance on the "safe harbor" provided by Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the Adviser or
Portfolio Manager may cause the Trust to pay a broker-dealer which provides
"brokerage and research services" (as defined in the 1934 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
54
<PAGE>
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. Proceeds from short sales and assets used to
cover short positions undertaken are included in the amounts of securities sold
and purchased, respectively, during the year.
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
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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), these securities will be valued at fair
value as determined by the Adviser or Portfolio Manager 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, securi ties or currencies ("Qualifying
Income Test"); (b) with respect to tax years beginning on or prior to August 5,
1997, 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; and (c) diversify its
holdings so that, at the end of each quarter of the taxable year, (i) at least
50% of the value of the Fund's total assets is represented by cash, cash items
(including receivables), 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. In order to
qualify for the special tax treatment accorded regulated investment companies, a
Fund must 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 qualifying as a regulated investment company, each Fund
will not be subject to federal income taxes to the extent that its net
investment income, net short-term capital gains and net long-term capital gains
are distributed. In addition, the Treasury Department is authorized to
promulgate regulations under which gains from foreign currencies (and options,
futures, and forward contracts on foreign currency) would not constitute
qualifying income for purposes of the Qualifying Income Test if such gains are
not directly related 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
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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) and 50% of the recipient's benefits,
exceeds a base amount. In addition, up to 85% of a recipient's benefits may be
subject to tax if the sum of the recipient's adjusted gross income (with certain
adjustments, including tax-exempt interest) and 50% of the recipient's benefits
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, 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
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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 (subject generally to a 46-day holding period requirement).
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. Under the Taxpayer Relief Act of 1997, long-term capital
gains will generally be taxed at a 28% or 20% rate depending upon the holding
period of the portfolio security. Any distributions that are not from a Fund's
investment company taxable income or net 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. Under the Taxpayer Relief Act of
1997, long-term capital gains will generally be taxed at a 28% or 20% rate
depending upon the holding period of the portfolio security. 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.
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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 there is relatively little guidance regarding the straddle
rules, 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. The 30%
limit will apply only until the start of a Fund's first tax year beginning after
August 5, 1997.
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
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Fund itself may be subject to tax on a portion of the excess distribution,
whether or not the corresponding income is distributed by the Fund to
stockholders.
In general, under the PFIC rules, an excess distribution is treated as
having been realized ratably over the period during which the Fund held the PFIC
stock. A Fund itself will be subject to a U.S. federal income tax (including
interest) on the portion, if any, of an excess distribution that is so allocated
to 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 its share of the
PFIC's income and net capital gain annually, 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 eligible 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 as a foreign tax credit
against his or her U.S. federal income tax liability, subject to certain
limitations. In particular, shareholders must hold their shares (without
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protection from risk of loss) on the ex-dividend date and for at least 15 more
days during the 30-day period surrounding the ex-dividend date to be eligible to
claim a foreign tax credit with respect to a gain dividend. No deduction for
foreign taxes may be claimed by a shareholder who does not itemize deductions.
Each shareholder will be notified within 60 days after the close of the Fund's
taxable year whether the foreign taxes paid by the Fund will "pass-through" for
that year.
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
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compute their taxable income in the same manner as an individual (thus, for
example, a qualified pension plan is not subject to this rule). The
shareholder's pro rata portion of such expenses will be treated as income to the
shareholder and will be deductible by the shareholder, subject to the 2% "floor"
on miscellaneous itemized deductions and other limitations on itemized
deductions set forth in the Code. A regulated investment company generally will
be classified as nonpublicly offered unless it either has 500 shareholders at
all times during a taxable year or continuously offers shares pursuant to a
public offering. However, because of a lack of guidance in this area, there can
be no assurance that the Internal Revenue Service will agree to treat the Micro
Cap Growth and Small Cap Growth Funds, which have limitations on contributed
capital with respect to purchases of their Institutional and Administrative
Class shares, as publicly offered regulated investment companies. 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 14, 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 SEC rules and
informal guidance, 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 distribution and servicing fees and administrative
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 (i.e., if they had been offered since the
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inception of the Fund) 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 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, 1997, the yields of the Balanced
Fund, Renaissance Fund and Tax Exempt Fund were as follows:
<TABLE>
<CAPTION>
Fund Institutional Class Administrative Class Class A Class B Class C
- ------------------ -------------------- --------------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balanced Fund 3.23% N/A 2.68% 2.10% 2.09%
Renaissance Fund N/A N/A 0.78% 0.10% 0.09%
Tax Exempt Fund N/A N/A 4.31% 3.77% 3.76%
</TABLE>
The yield of each such 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 for the Tax-Exempt Fund) should be considered
when comparing a 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 a 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
63
<PAGE>
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.
<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
dividends and distributions are reinvested when paid. Quotations of total return
may also be shown for other periods. The Funds may also, 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, 1997. 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 administrative fee charges
associated with Class A, Class B and Class C shares (a maximum differential of
.15% per annum).
64
<PAGE>
All other things being equal, such higher expenses would have adversely affected
(i.e., reduced) total return for the newer classes (i.e., if they had been
offered since the inception of the Fund) by the amount of such higher expenses,
compounded over the relevant period.
Total Return for Periods Ended June 30, 1997*
<TABLE>
<CAPTION>
Since
Inception Inception Inception
Fund Class** 1 Year 5 Years of Fund Date of Date of
(Annualized) Fund Class
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Institutional 27.67% 16.72% 16.81% 03/08/91 03/08/91
Administrative 27.40% 16.56% 16.68% 11/30/94
Class A 20.43% 15.36% 15.75% 1/17/97
Class B 22.08% 16.39% 16.74% 1/17/97
Class C 26.04% 16.60% 16.74% 1/17/97
- ----------------------------------------------------------------------------------------
Value Institutional 26.38% 19.01% 17.56% 12/30/91 12/30/91
Administrative 26.38% 19.01% 17.56% 1/17/97
Class A 19.17% 17.62% 16.33% 1/17/97
Class B 20.72% 18.69% 17.38% 1/17/97
Class C 24.73% 18.89% 17.47% 1/17/97
- ----------------------------------------------------------------------------------------
Small Cap Institutional 31.99% 18.19% 17.62% 10/1/91 10/1/91
Value Administrative 31.70% 18.10% 17.55% 11/1/95
Class A 24.49% 16.81% 16.45% 1/17/97
Class B 26.40% 17.87% 17.46% 1/17/97
Class C 30.40% 18.08% 17.55% 1/17/97
- ----------------------------------------------------------------------------------------
Capital Institutional 31.52% 20.97% 18.95% 3/8/91 3/8/91
Appreciation Administrative 31.31% 20.93% 18.92% 1/17/97
Class A 24.11% 19.57% 17.88% 1/17/97
Class B 25.96% 20.68% 18.89% 1/17/97
Class C 29.96% 20.87% 18.89% 1/17/97
- ----------------------------------------------------------------------------------------
Mid Cap Institutional 30.58% 20.18% 18.44% 8/26/91 8/26/91
Growth Administrative 30.23% 20.01% 18.30% 11/30/94
Class A 23.16% 18.78% 17.28% 1/17/97
Class B 24.88% 19.86% 18.27% 1/17/97
Class C 28.94% 20.06% 18.36% 1/17/97
- ----------------------------------------------------------------------------------------
Micro Cap Institutional 20.05% N/A 22.61% 6/25/93 6/25/93
Growth Administrative 19.72% N/A 22.51% 4/1/96
Class A N/A N/A N/A 1/17/97
Class B N/A N/A N/A 1/17/97
Class C N/A N/A N/A 1/17/97
- ----------------------------------------------------------------------------------------
Small Cap Institutional 22.82% 19.45% 22.50% 1/7/91 1/7/91
Growth Administrative 23.12% 19.50% 22.54% 9/27/95
Class A N/A N/A N/A 1/17/97
Class B N/A N/A N/A 1/17/97
Class C N/A N/A N/A 1/17/97
- ----------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enhanced Institutional 31.45% 17.12% 15.54% 2/11/91 2/11/91
Equity Administrative 31.45% 17.12% 15.54% 1/17/97
Class A N/A N/A N/A 1/17/97
Class B N/A N/A N/A 1/17/97
Class C N/A N/A N/A 1/17/97
- ----------------------------------------------------------------------------------------
Emerging Institutional 10.85% N/A 11.25% 6/1/93 6/1/93
Markets Administrative 10.45% N/A 11.04% 11/1/94
Class A 4.60% N/A 9.69% 1/17/97
Class B 5.29% N/A 10.77% 1/17/97
Class C 9.29% N/A 11.12% 1/17/97
- ----------------------------------------------------------------------------------------
International Institutional 10.07% N/A 11.26% 6/8/93 6/8/93
Developed Administrative 9.77% N/A 11.08% 11/30/94
Class A 3.70% N/A 9.64% 1/17/97
Class B 4.57% N/A 10.78% 1/17/97
Class C 8.57% N/A 11.14% 1/17/97
- ----------------------------------------------------------------------------------------
Balanced Institutional 20.37% 12.79% 12.90% 6/25/92 6/25/92
Administrative 20.37% 12.79% 12.90% 6/25/92
Class A 13.51% 11.47% 11.60% 1/17/97
Class B 14.82% 12.44% 12.68% 1/17/97
Class C 18.79% 12.68% 12.80% 1/17/97
- ----------------------------------------------------------------------------------------
Core Equity Institutional 21.59% N/A 23.61% 12/28/94 12/28/94
Administrative 21.20% N/A 23.36% 5/31/95
Class A N/A N/A N/A 1/17/97
Class B N/A N/A N/A 1/17/97
Class C N/A N/A N/A 1/17/97
- ----------------------------------------------------------------------------------------
Mid Cap Institutional 9.61% N/A 22.26% 12/28/94 12/28/94
Equity Administrative 9.61% N/A 22.25% 1/17/97
Class A N/A N/A N/A 1/17/97
Class B N/A N/A N/A 1/17/97
Class C N/A N/A N/A 1/17/97
- ----------------------------------------------------------------------------------------
</TABLE>
* Average annual total return presentations for a particular class of
shares assume payment of the 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
administrative 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 such higher expenses,
compounded over the relevant period.
66
<PAGE>
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
June 30, 1997. The table presents total return information from the inception
of the PAF predecessor series through June 30, 1997. 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 charges (if any) of the newer
class, but not reflecting possibly lower operating expenses such as 12b-1
distribution and servicing fees or administrative fee charges associated with
the newer class.
Total Return for Periods Ended June 30, 1997*
<TABLE>
<CAPTION>
Since
Inception Inception Inception
Fund Class*** 1 Year 5 Years 10 Years of Fund Date of Date of
(Annualized) Fund Class
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Renaissance** Class A 32.16% 17.76% N/A 12.85% 4/18/88 2/1/91
Class B 32.16% 17.76% N/A 12.85% 5/22/95
Class C 26.76% 17.31% N/A 12.76% 4/18/88
Institutional 27.19% 17.31% N/A 12.85% 1/17/97
Administrative 31.16% 17.76% N/A 12.85% 1/17/97
- ---------------------------------------------------------------------------------------------------
Growth Class A 13.88% 13.92% 12.47% 16.38% 2/24/84 10/26/90
Class B 14.64% 13.90% 12.57% 16.42% 5/23/95
Class C 18.59% 14.35% 12.57% 16.42% 2/24/84
- ---------------------------------------------------------------------------------------------------
Target Class A 4.53% N/A N/A 17.18% 12/17/92 12/17/92
Class B 4.79% N/A N/A 17.75% 5/22/95
Class C 8.72% N/A N/A 17.75% 12/17/92
- ---------------------------------------------------------------------------------------------------
Opportunity Class A -14.52% 19.00% 16.95% 17.92% 2/24/84 12/17/90
Class C -11.13% 19.45% 17.06% 18.00% 2/24/84
- ---------------------------------------------------------------------------------------------------
Innovation Class A 5.91% N/A N/A 26.50% 12/22/94 12/22/94
Class B 5.91% N/A N/A 26.50% 5/22/95
Class C 0.09% N/A N/A 23.70% 12/22/94
Institutional 0.12% N/A N/A 25.26% 1/17/97
Administrative 4.06% N/A N/A 25.54% 1/17/97
- ---------------------------------------------------------------------------------------------------
International** Class A 4.06% 8.81% 5.95% 7.33% 8/25/86 2/1/91
Class B 4.28% 8.78% 6.05% 7.43% 5/22/95
Class C 8.29% 9.22% 6.05% 7.43% 8/25/86
- ---------------------------------------------------------------------------------------------------
Precious Class A -33.77% 2.01% N/A -1.58% 10/10/88 2/1/91
Metals** Class B -33.83% 1.97% N/A -1.45% 6/15/95
Class C -30.97% 2.47% N/A -1.75% 10/10/88
- ---------------------------------------------------------------------------------------------------
Tax Exempt Class A 2.10% 5.08% 6.55% 7.37% 11/1/85 3/14/91
Class B 1.02% 5.11% 6.67% 7.48% 5/30/95
Class C 5.30% 5.27% 6.55% 7.49% 11/1/85
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Average annual total return presentations for a particular class of shares
assume payment of the current maximum sales charge (if any) applicable to that
class at the time of purchase and assume that the maximum
67
<PAGE>
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 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 relevant 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 administrative fee
charges associated with the newer class. For the Target (for Class B only)
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 than their predecessors had under the fee
structure for PAF (prior to January 17, 1997). 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 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
68
<PAGE>
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 September
30, 1997, approximately 22% of the 400 stocks were stocks listed on the National
Association of Securities Dealers Automated Quotations ("NASDAQ") system, 76%
were stocks listed on the New York Stock Exchange and 7% 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 $1.52 billion), 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.
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.
69
<PAGE>
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,
1996, the U.S. equity market capitalization represented approximately 35% 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 1972 through 1996 (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>
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
1996 23.1 5.2 3.3
- -----------------------------------------------------------------------------
Cumulative Return
1972-1996 1,826.8% 458.5% 285.9%
- -----------------------------------------------------------------------------
Average Annual Return
1972-1996 12.6% 7.1% 5.6%
- -----------------------------------------------------------------------------
</TABLE>
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
70
<PAGE>
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
P\\t\\ = ( 1 - rd )
( --- )
( 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 December 31, 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, distribution or
marketing of gold and other precious metals. The following table shows the
annual returns for each calendar year from 1972 through 1996 (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
71
<PAGE>
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.
<TABLE>
<CAPTION>
Stocks 45%
All All Bonds 45%
Period Stocks Bonds Gold Stocks 10%
- ----------------------- ------- ------ ---------------
<S> <C> <C> <C>
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 29.0
1996 23.1 1.4 10.5
- ---------------------------------------------------------
Cumulative Return
1972-1996 1819.9% 813.1% 1497.7%
- ---------------------------------------------------------
Average Annual Return
1972-1996 12.6% 9.3% 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
1996/1997 costs of college (using tuition and fees only) 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 3% 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 3% per
year and may 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.
72
<PAGE>
<TABLE>
<CAPTION>
Potential College Cost Table
Start Public Private Start Public Private
Year College College Year College College
- --------- --------- -------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
1997 $13,015 $57,165 2005 $16,487 $72,415
1998 $13,406 $58,880 2006 $16,982 $74,587
1999 $13,808 $60,646 2007 $17,491 $76,825
2000 $14,222 $62,466 2008 $18,016 $79,130
2001 $14,649 $64,340 2009 $18,557 $81,504
2002 $15,088 $66,270 2010 $19,113 $83,949
2003 $15,541 $68,258 2011 $19,687 $86,467
2004 $16,007 $70,306
</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 through 1996 was:
*Stocks: 12.5%
Bonds: 9.2%
T-Bills: 7.0%
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. Treasury
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 through 1996, 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 1996 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%
1974 -26.47% -3.06% 8.00% 12.26% -10.21%
</TABLE>
73
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
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%
1996 23.10% 1.40% 5.20% 3.30% 10.84%
</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. Treasury 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
74
<PAGE>
Series. 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 1996:
<TABLE>
<CAPTION>
% of Income for Individuals
Aged 65 Years and Older in 1996*
-------------------------------
Social Security
Year and Pension Plans Other
---- ----------------- -----
<S> <C> <C>
1996 43% 57%
</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 may develop, from time
to time, 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.
75
<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. Therefore, the
holders 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 October 6, 1997, 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. As of October 6, 1997, the following persons owned
of record or beneficially 5% or more of the noted class of shares of the
following Funds:
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
PIMCO Equity Income Fund
Institutional
-------------
Bank of New York Western Trust Co. 1,660,754.835 20.77%
as Trustee for
Pacific Life Insurance Company
R.I.S.P.
700 S. Flower Street, 2nd Floor
Los Angeles, California 90017
Northern Trust Company as Trustee for 1,604,341.821 20.06%
AM Castle & Company
P.O. Box 92956
Chicago, Illinois 60675-2956
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
Santa Barbara Foundation 650,348.222 8.13%
15 East Carrillo Street
Santa Barbara, California 93101-2780
Northern Trust Company as Trustee for 549,916.210 6.88%
Brush Wellman Inc.
P.O. Box 92956
Chicago, Illinois 60675-0001
Bank of America NT & SA as Trustee for 470,348.174 5.88%
Mazda Motor of America
P.O. Box 3577, Terminal Annex
Los Angeles, California 90051-1577
Administrative
--------------
First Union National Bank 556,306.865 96.22%*
1525 West WT Harris Boulevard NC 1151
Charlotte, North Carolina 28288-1151
Class A
-------
Khosrow B. Semnani 48,965.796 19.51%
P.O. Box 3508
Salt Lake City, Utah 84110-3508
PaineWebber FBO 29,696.897 11.83%
Little Sisters of the Poor Inc.
601 Maiden Choice Lane
Baltimore, Maryland 21228-3630
Merrill Lynch Pierce Fenner & Smith Inc. ** 22,300.343 8.88%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 37,087.241 12.71%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 41,915.647 7.11%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
PIMCO Value Fund
Institutional
-------------
Pacific Life Insurance Company 1,947,549.538 40.66%*
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
The Northern Trust Company as Trustee for 883,124.965 18.44%
Great Lakes Chemical Corporation
P.O. Box 92956
Chicago, Illinois 00006-0690
Pacific Life Insurance Company FBO 497,301.019 10.38%
CMTA-GMPP & Allied Workers Pension
700 Newport Center Drive
Newport Beach, California 92660
Pacific Life Foundation 320,413.478 6.69%
700 Newport Center Drive
Newport Beach, California 92660
BAC Local 19 Pension Trust Fund 294,119.248 6.14%
777 Davis Street
San Francisco, California 94126-2500
Administrative
--------------
Monte E. Golditch 14,538.148 7.20%
533 Vista Grande Drive
Colorado Springs, Colorado 80906
Class A
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 149,306.664 13.74%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 409,102.876 22.55%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
Class C
-------
Merrill Lynch Pierce Fenner & Smith Inc.** 477,081.456 10.50%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Small Cap Value Fund
Institutional
-------------
Pacific Life Insurance Company 437,434.847 18.44%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
Sheet Metal Workers' Local Unions 357,378.308 15.07%
and Council's Pension Fund
601 N. Fairfax Street, Suite 500
Alexandria, Virginia 22314-2054
FTC & Co.** 265,325.436 11.19%
P.O. Box 173736
Denver, Colorado 80217
Lucile Packard Foundation for Children 209,497.207 8.83%
725 Welch Road
Palo Alto, California 94304
Administrative
--------------
First Union National Bank 396,630.594 85.40%*
1525 West WT Harris Boulevard NC 1151
Charlotte, North Carolina 28288-1151
Class A
-------
Merrill Lynch Pierce Fenner & Smith Inc.** 171,126.499 15.45%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Khosrow B. Semnani 90,260.494 8.15%
P.O. Box 3508
Salt Lake City, Utah 84110-3508
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
Class B
-------
Merrill Lynch Pierce Fenner & Smith Inc.** 811,380.878 37.78%*
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner & Smith Inc.** 884,581.302 28.15%*
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Capital Appreciation Fund
Institutional
-------------
Donaldson Lufkin & Jenrette** 5,680,618.677 22.00%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Wendel & Co.** 3,258,632.044 12.62%
c/o Bank of New York
P.O. Box 1066
New York, New York 10268
Pacific Life Insurance Company 1,325,355.723 5.13%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
Administrative
--------------
FIIOC as Agent for 230,008.304 42.13%*
Certain Employee Benefits Plan
100 Magetian KWIC
Covington, Kentucky 41015
First Union National Bank 134,175.411 24.58%
1525 West WT Harris Boulevard NC 1151
Charlotte, North Carolina 28288-1151
Crippled Children's Foundation 53,566.498 9.81%
2501 West 26th Street
Sioux Falls, South Dakota 57105
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
Class A
-------
FTC & Co.** 150,808.057 38.01%*
Datalynx House Acct
P.O. Box 1731736
Denver, Colorado 80217-3736
Donaldson Lufkin Jenrette Securities
Corp., Inc.** 23,110.223 5.82%
P.O. Box 2052
Jersey City, New Jersey 07303-9998
PaineWebber FBO 20,920.502 5.27%
Little Sisters of the Poor Inc.
601 Maiden Choice Lane
Baltimore, Maryland 21228-3630
Donaldson Lufkin Jenrette Securities
Corp., Inc.** 19,924.702 5.02%
P.O. Box 2052
Jersey City, New Jersey 07303-9998
Class B
-------
Merrill Lynch Pierce Fenner & Smith Inc.** 39,390.322 13.60%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner & Smith Inc.** 106,782.110 10.33%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Mid Cap Growth Fund
Institutional
-------------
State Street Bank & Trust Co. as Trustee 3,140,398.359 20.80%
for Dayton Hudson Retirement Savings Plan
One Enterprise Drive
North Quincy, Massachusetts 02171
State Street Bank & Trust Company 1,551,923.292 10.28%
Caremark International, Inc.
One Enterprise Drive
Quincy, Massachusetts 02171-2126
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
Administrative
--------------
Wells Fargo as Trustee for 80,044.847 36.25%*
Choicemaster
P.O. Box 9800
Calabasas, California 91302-9800
FIIOC as Agent for 49,054.480 22.21%
Certain Employee Benefits Plan
100 Magetian KW1C
Covington, Kentucky 41015
New York Life Trust Company 23,391.462 10.59%
51 Madison Avenue, Room 117A
New York, New York 10010
First Union National Bank 19,345.814 8.76%
1525 West WT Harris Boulevard NC 1151
Charlotte, North Carolina 28288-1151
Susan Johnson 13,547.293 6.13%
490 Celtic Court
Colorado Springs, Colorado 80921
Class A
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 104,755.832 12.79%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 512,803.000 30.19%*
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner & Smith Inc. ** 597,338.793 19.12%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
82
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
PIMCO Micro Cap Growth Fund
Institutional
-------------
Charles Schwab & Co., Inc.** 2,050,746.061 22.60%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
Donald Lufkin & Jenrette** 1,285,990.109 14.17%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Bost & Co.** 954,701.588 10.52%
P.O. Box 9118
Boston, Massachusetts 02205-9118
University of Southern California 907,986.469 10.00%
Treasurer's Office
University Park, BKS 402
Los Angeles, California 90089
Mac & Co.** 606,761.440 6.69%
P.O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
First Bank NA 539,102.914 5.94%
St. Paul Foundation
P.O. Box 64010
St. Paul, Minnesota 55164-0010
Administrative
--------------
Northern Trust as Trustee for 106,583.282 84.61%*
Baptist Sunday School Board
P.O. Box 92956
Chicago, Illinois 60675
New York Life Trust Company 16,404.265 13.02%
51 Madison Avenue, Room 117A
New York, New York 10010
</TABLE>
83
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
PIMCO Small Cap Growth Fund
Institutional
-------------
The Jewish Federation of 852,226.776 34.61%*
Metropolitan Chicago
One South Franklin Street, Room 625
Chicago, Illinois 60606-4609
ESOR & Co. 397,527.447 16.15%
Associated Bank Green Bay
Trust Operations Department
P.O. Box 19006
Green Bay, Wisconsin 54307-9006
Auburn Theological Seminary 293,286.232 11.91%
3041 Broadway
New York, New York 10027-5710
Pacific Life Insurance Company 255,392.389 10.37%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
Bessemer Trust Company for 184,340.789 7.49%
Naidot & Co.
100 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Administrative
--------------
PIMCO Advisors L.P. 88.810 100.00%*
800 Newport Center Drive, Suite 100
Newport Beach, California 92660
PIMCO Core Equity Fund
Institutional
-------------
Pacific Life Foundation 152,887.691 47.57%*
700 Newport Center Drive
Newport Beach, California 92660
Union Bank as Trustee for 94,873.085 29.52%*
Pacific Corinthian Life Insurance
P.O. Box 109
San Diego, California 92112-4103
</TABLE>
84
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
----------- ------------
<S> <C> <C>
Mac & Co.** 18,379.330 5.72%
P.O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
Administrative
--------------
The Bank of New York as Trustee for 4,584,217.506 96.09%*
Melville Corporation
P.O. Box 1066, Wall Street Station
New York, New York 10286
PIMCO Mid Cap Equity Fund
Institutional
-------------
Pacific Life Insurance Company 361,856.905 71.42%*
700 Newport Center Drive
Newport Beach, California 92660
IFTC as Custodian for 59,999.929 11.84%
John W. Barnum
5175 Tilden Street, N.W.
Washington, D.C. 20016-1961
Pacific Life Foundation 39,736.188 7.84%
700 Newport Center Drive
Newport Beach, California 92660
Administrative
--------------
Monte E. Golditch 1,717.133 6.85%
533 Vista Grande Drive
Colorado Springs, Colorado 80906
PIMCO Enhanced Equity Fund
Institutional
-------------
Pacific Life Insurance Company 946,121.651 38.26%*
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
Pacific Life Insurance Company FBO 603,805.302 24.42%
CMTA-GMPP & Allied Workers Pension
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
85
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Bank of America as Trustee for 279,822.896 11.32%
Ameron, Inc.
P.O. Box 513577
Los Angeles, California 90051-1577
Pacific Life Foundation 155,664.226 6.29%
700 Newport Center Drive
Newport Beach, California 92660
BAC Local 19 141,687.623 5.73%
777 Davis Street
San Francisco, California 84126-2500
Administrative
--------------
Susan Johnson 12,901.037 10.98%
490 Celtic Court
Colorado Springs, Colorado 80921
PIMCO Emerging Markets Fund
Institutional
-------------
Charles Schwab & Co., Inc.** 1,698,471.711 45.73%*
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
Pacific Life Insurance Company 575,190.664 15.49%
700 Newport Center Drive
Newport Beach, California 92660
Pacific Life Insurance Company 434,344.899 11.69%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
Donaldson Lufkin & Jenrette** 258,699.671 6.96%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Administrative
--------------
Susan Johnson 13,397.052 25.05%*
490 Celtic Court
Colorado Springs, Colorado 80921
</TABLE>
86
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
FTC & Co.** 7,587.881 14.19%
P.O. Box 173736
Denver, Colorado 80217-3736
Class A
- -------
PaineWebber FBO 2,353.306 11.32%
Barry Michael Martin Trustee
Barry Michael Martin Trust
726 S. Tejon
Colorado Springs, Colorado 80903-4042
Smith Barney Inc.** 1,933.488 9.30%
388 Greenwich Street
New York, New York 10013
Lynn H. Eppey & Beverly J. Eppey 1,814.166 8.72%
2031 N. Euclid Avenue
Upland, California 91784-1408
Howard Nusbaum Trust 1,530.303 7.36%
Howard Nusbaum DDS PA
Profit Sharing Plan
1145 Bordentown Avenue
Parlin, New Jersey 08859-1851
Thomas F. Blueher Trust 1,061.773 5.10%
Oscar G. Blueher Credit Shelter Trust
6100 Uptown Boulevard N.E., Suite 500
Albuquerque, New Mexico 87110-4143
Class B
- -------
Merrill Lynch Pierce Fenner & Smith Inc.** 3,166.000 7.62%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PAF Sales Inc. 2,347.418 5.65%
Profit Sharing Plan
P.O. Box 307
Scarborough, New York 10510-0807
Carolyn Lecompte 2,180.233 5.25%
231 Lyles Street
Houma, Louisiana 70363-5443
</TABLE>
87
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Class C
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 28,680.549 21.98%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Raymond James & Assoc Inc. Custodian 24,940.178 19.12%
James F. Riopelle IRA
1 Foxhill Road
Englewood, Colorado 80110-4923
PIMCO International Developed Fund
Institutional
-------------
Charles Schwab & Co., Inc. ** 1,109,920.657 16.24%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
Wachovia Bank NA as Trustee for 1,069,185.946 15.64%
Atlanta Gas Light Company
301 N. Main Street - MC NC 31057
Winston-Salem, North Carolina 27150
Pacific Life Insurance Company 930,797.270 13.62%
700 Newport Center Drive
Newport Beach, California 92660
Pacific Life Insurance Company 899,152.128 13.16%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
FTC & Co.** 374,180.125 5.74%
P.O. Box 173736
Denver, Colorado 80217-3736
Bank of New York Western Trust Co. 346,621.584 5.07%
as Trustee for
Pacific Life Insurance Company
R.I.S.P.
700 S. Flower Street, 2nd Floor
Los Angeles, California 90017
</TABLE>
88
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Administrative
- --------------
FTC & Co.** 59,445.644 39.41%*
P.O. Box 173736
Denver, Colorado 80217-3736
Susan Johnson 21,348.269 14.15%
490 Celtic Court
Colorado Springs, Colorado 80921
Class A
- -------
Merrill Lynch Pierce Fenner & Smith Inc.** 5,074.000 11.65%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Smith Barney Inc.** 4,351.610 9.99%
388 Greenwich Street
New York, New York 10013
Tsighe Nemariam Trust 4,141.491 9.51%
Natural Resources Consulting Engineers Inc.
401K Profit Sharing Plan
131 East Lincoln Avenue, Suite 300
Fort Collins, Colorado 80524-2419
Columbus Circle Trust Company Trust 3,754.122 8.62%
Glen Manufacturing Key Comp Pl
FBO Key Comp Plan Participants
1 Station Place
Stamford, Connecticut 06902-6800
Smith Barney Inc.** 2,823.836 6.48%
388 Greenwich Street
New York, New York 10013
Class B
- -------
Merrill Lynch Pierce Fenner & Smith Inc.** 23,318.000 13.39%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
- -------
Merrill Lynch Pierce Fenner & Smith Inc.** 15,849.874 6.28%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Prudential Securities Inc. FBO 13,229.800 5.24%
Haroutune A. Mekhjian MD TF
TF Profit Sharing Plan & Trust
P.O. Box 355
Alpine, New Jersey 07620-0355
PIMCO Balanced Fund
Institutional
-------------
California Race Track Association 1,472,876.247 27.15%*
P.O. Box 60014
Arcadia, California 91006-6014
Bank of New York Western Trust Co. 1,157,229.319 21.33%
as Trustee for
Pacific Life Insurance Company
R.I.S.P.
700 S. Flower Street, 2nd Floor
Los Angeles, California 90017
Pacific Life Insurance Company FBO 764,750.000 14.10%
WESCOM Credit Union
700 Newport Center Drive
Newport Beach, California 92660
Trustees of the Redlands Community 715,746.151 13.19%
Hospital Retirement Plan
350 Terracina Blvd.
Redlands, California 92373-4850
Dominguez Services Corporation 558,927.632 10.30%
21718 South Alameda Street
Long Beach, California 90810
Bank of America as Trustee for 282,246.506 5.20%
Music Center Operating Co.
P.O. Box 2788
Los Angeles, California 90051-0788
Class A
-------
Merrill Lynch Trust Co. TTE FBO 398,098.759 88.76%*
Qualified Retirement Plans
Attn: Jerry Stone
265 Davidson Avenue
Somerset, New Jersey 08873-4120
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Class B
-------
Merrill Lynch Pierce Fenner & 40,831,718 26.24%*
Smith, Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Raymond James & Assoc Inc. Custodian 10,487.942 6.74%
Norman Wapnick IRA
7032 S.W. Brier Place
Portland, Oregon 97219-2260
Class C
-------
Merrill Lynch Pierce Fenner & 26,846.521 15.83%
Smith, Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
NFSC FEBO 10,106.845 5.96%
Phillip R. Neally
Annice I. Neally
1556 Aberdeen Court
Naperville, Illinois 60564
Raymond James & Assoc Inc. Custodian 9,123.497 5.38%
James Sements IRA
4533 Middle Ridge Road
Perry, Ohio 44081-9796
A. Lilley & D.S. Richards TRS 9,044.513 5.33%
Tech Electronic Inc. 401K Plan
FBO Bryan Tomlison
P.O. Box 166
Harlowton, Montana 59036-0166
PIMCO Target Fund
Class A
-------
Merrill Lynch Pierce Fenner & 1,594,915.452 17.01%
Smith, Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
J.C. Bradford & Company 498,303.457 5.31%
FBO RCIP Limited Partnership I
330 Commerce Street
Nashville, TN 37201-1899
</TABLE>
91
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Class B
-------
Merrill Lynch Pierce Fenner & 1,478,071.849 35.27%*
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner & 16,163,170.782 28.23%*
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Precious Metals Fund
Class A
-------
Merrill Lynch Pierce Fenner & 46,710.000 10.91%
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner & 39,111.060 6.55%
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner & 495,739.423 17.45%
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Renaissance Fund
Class A
-------
Merrill Lynch Pierce Fenner & 240,419.723 11.69%
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner & 535,578.287 22.56%
Smith Inc.**
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
92
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Class C
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 2,899,655.718 15.97%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Tax Exempt Fund
Class A
-------
BT Alex Brown Incorporated 159,994.490 33.38%*
P.O. Box 1346
Baltimore, Maryland 21203
Merrill Lynch Pierce Fenner &
Smith Inc.** 137,835.000 28.76%*
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Joseph R. White 32,544.102 6.79%
P.O. Box 572
Waltham, Massachusetts 02254-0572
Class B
-------
Dain Bosworth, Inc. FBO 48,167.954 20.16%
Kermit K. Kinsey
2801 NE 14th Street
Fort Lauderdale, Florida 33304
Merrill Lynch Pierce Fenner &
Smith Inc.** 35,358.000 14.80%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PaineWebber FBO 17,564.920 7.35%
William H. Hoehn
2906 S.W. 130th Terr.
Archer, Florida 32618-2124
Robert A. Fish & Susan Beville Fish 17,437.165 7.29%
Co-Trustees
The Fish Family Trust
300 Tolak Road
Aptos, California 95003-2737
</TABLE>
93
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
Herman Wertz Trust 14,909.045 6.24%
Herman Wertz
239 Franklin Avenue
Palmerton, Pennsylvania 18071-1509
Class C
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 431,645.000 13.27%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Growth Fund
Class A
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 346,594.647 6.65%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 691,441.578 31.03%*
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 7,506,810.722 13.16%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO Opportunity Fund
Class A
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 1,701,883.849 23.60%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 5,713,838.364 26.17%*
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
94
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------ -------------
<S> <C> <C>
PIMCO Innovation Fund
Class A
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 449,625.000 13.74%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class B
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 715,855.581 23.51%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
-------
Merrill Lynch Pierce Fenner &
Smith Inc.** 1,395,597.679 15.08%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO International Fund
Class A
-------
Society National Bank Trust 227,473.042 16.31%
FBO RPM Retirement Plan
P.O. Box 94870
Cleveland, Ohio 44101-4870
Merrill Lynch Pierce Fenner &
Smith Inc.** 128,642.000 9.22%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
American National Bank Trust 105,348.303 7.55%
FBO Emerald Investments
707 Lake Cook Road, Suite 303
Deerfield, Illinois 60015-4933
ORP1 94,625.450 6.78%
A Partnership
P.O. Box 5430
Incline Village, New York 89450-5430
PaineWebber FBO 94,007.980 6.74%
Bakerrubine LLC
575 Madison Avenue, 10th Floor
New York, New York 10022-2511
</TABLE>
95
<PAGE>
<TABLE>
<S> <C> <C>
Class B
- -------
Merrill Lynch Pierce Fenner & Smith Inc.** 164,824.000 24.83%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Class C
- -------
Merrill Lynch Pierce Fenner & Smith Inc.** 1,920,493.460 16.06%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 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.
Custodian
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, Missouri 64105, serves as custodian for assets of all Funds.
Pursuant to separate sub-custody agreements between IFTC and The Chase Manhattan
Bank, N.A. ("Chase") and IFTC and State Street Bank and Trust Company ("State
Street"), Chase and State Street serve as subcustodians of the Trust for the
custody of the foreign securities acquired by those Funds that invest in foreign
securities. Under the agreements, Chase and State Street may hold foreign
securities at their principal offices and their 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 currently 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, although the
Trustees reserve the right to delegate their selection responsibilities in light
of recent amendments to Rule 17f-5 under the 1940 Act, in which case the factors
for consideration would differ from those referenced above. Currently, the
Board of Trustees reviews annually the continuance of foreign custodial
arrangements for the Trust, but reserves the right to discontinue this practice
as permitted by the recent amendments to Rule 17f-5. 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 noted under "Financial Highlights" in the
Retail Prospectus, the Renaissance, Growth, Target, Opportunity, International,
Innovation, Precious Metals and Tax Exempt Funds were reorganized as series of
the Trust on January 17, 1997, and financial information for these funds
appearing in the Registration Statement for each of the five fiscal years ended
prior to October 1, 1996 was audited by Coopers & Lybrand LLP, the former
independent
96
<PAGE>
accountants for these Funds. Coopers & Lybrand LLP's opinion and consent to the
use of such information in the Registration Statement is included as an exhibit
to the Registration Statement.
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 the Funds, as of June 30, 1997, for the
fiscal year then ended, including notes thereto, and the reports of Price
Waterhouse LLP thereon, each dated August 15, 1997, are incorporated by
reference from the Trust's two June 30, 1997 Annual Reports. One Annual Report
(the "Retail Report") corresponds to the Retail Prospectus and the other (the
"Institutional Report") corresponds to the Institutional Prospectus. The
Trust's 1997 Annual Reports are on file with the SEC (Retail Report - filed on
September 3, 1997, Accession No. 0001017062-97-001680; Institutional Report -
filed on September 3, 1997, Accession No. 0001017062-97-001678).
97
<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 or Portfolio Manager's view of their comparability to rated
securities. A Fund's use of average quality criteria is intended to be a guide
for those 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 or a Portfolio Manager 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 requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating,
A-3
<PAGE>
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, 1997 are
incorporated by reference in the Statement of Additional
Information from the Funds' Annual Reports dated as of June
30, 1997 and include the following:
Schedule of Investments
Financial Highlights
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Report of Independent Accountants.
(b) Exhibits (the number of each exhibit relates to the exhibit
designation in Form N-1A):
(1) Form of Second Amendment and Restated Agreement and
Declaration of Trust (2)
(2) Form of First Amended and Restated Bylaws (4)
(3) Not Applicable
(4) (a) Article III (Shares) and Article V (Shareholders' Voting
Powers and Meetings) of the Second Amended and Restated
Agreement and Declaration of Trust (2)
(b) Article 9 (Issuance of Shares Certificates) and Article 11
(Shareholders' Voting Powers and Meetings) of the First
Amended and Restated Bylaws (4)
<PAGE>
(5) (a) (i) Form of Amended and Restated Investment Advisory
Agreement (4)
(ii) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add PIMCO International Growth
Fund and PIMCO Tax-Managed Structured Emerging
Markets Fund filed herewith
(b) (i) Form of Portfolio Management Agreement with Pacific
Investment Management Company filed herewith
(ii) Form of Portfolio Management Agreement, as amended,
with NFJ Investment Group (4)
(iii) Form of Portfolio Management Agreement, as amended,
with Cadence Capital Management (4)
(iv) Form of Portfolio Management Agreement, as amended,
with Parametric Portfolio Associates (4)
(v) Form of Addendum to Portfolio Management Agreement
with Parametric Portfolio Associates to add PIMCO
Tax-Managed Structured Emerging Markets Fund filed
herewith
(vi) Form of Amended and Restated Portfolio Management
Agreement with Blairlogic Capital Management (4)
(vii) Form of Amended and Restated Portfolio Management
Agreement with Columbus Circle Investors (4)
(viii) Form of Addendum to Portfolio Management Agreement
with Columbus Circle Investors to add PIMCO
International Growth Fund filed herewith
(ix) Form of Portfolio Management Agreement with Van Eck
Associates Corporation (4)
(6) (a) Form of Amended Distribution Contract (4)
(b) Form of Addendum to Distribution Contract to add PIMCO
International Growth Fund and PIMCO Tax-Managed Structured
Emerging Markets Fund filed herewith
-2-
<PAGE>
(7) Not Applicable
(8) (a) Form of Custody Agreement and Addenda (1)
(b) Form of Addendum to Custody Agreement (4)
(c) Form of Assignment of Custody Agreement (4)
(d) Form of Addendum to Custody Agreement filed herewith
(9) (a) Form of Amended Administration Agreement between the Trust
and PIMCO Advisors L.P. (4)
(b) Form of Administration Agreement between PIMCO Advisors L.P.
and Pacific Investment Management Company (4)
(c) Form of Agency Agreement and Addenda (1)
(d) Form of Addendum to Agency Agreement (4)
(e) Form of Assignment of Agency Agreement (4)
(f) Form of Addendum to Agency Agreement filed herewith
(g) Form of Transfer Agency Agreement with Shareholder Services,
Inc. (3)
(h) Form of Service Plan for Institutional Services Shares filed
herewith
(i) Form of Administrative Services Plan for Administrative Class
Shares (4)
(10) Opinion and Consent of Counsel filed herewith
(11) (a) Consent of Price Waterhouse LLP filed herewith
(b) Consent and Opinion of Coopers & Lybrand LLP filed herewith
(12) Not Applicable
(13) Initial Capital Agreement filed herewith
(14) Not Applicable
-3-
<PAGE>
(15) (a) Form of Distribution and Servicing Plan (Class A) (4)
(b) Form of Distribution and Servicing Plan (Class B) (4)
(c) Form of Distribution and Servicing Plan (Class C) (4)
(d) Form of Distribution Plan for Administrative Class Shares (4)
(16) Schedule of Computation of Performance filed herewith
(17) Financial Data Schedules filed herewith (filed as exhibit 27)
(18) Form of Amended and Restated Multi-Class Plan (4)
(19) (a) Powers of Attorney and Certificate of Secretary (1)
(b) Power of Attorney for Robert A. Prindiville, E. Philip
Cannon, Donald P. Carter, Gary A. Childress, William D.
Cvengros, John P. Hardaway, Gary L. Light, Joel Segall, W.
Bryant Stooks, Gerald M. Thorne, Richard L. Nelson, Lyman W.
Porter, Alan Richards and Stephen J. Treadway(5)
- -----------------
1 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.
2 Included in Definitive Proxy Statement (File No. 811-06161), as filed on
November 7, 1996.
3 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.
4 Included in Post-Effective Amendment No. 25 to the Registration Statement
on Form N-1A (File 33-36528), as filed on January 13, 1997.
5 Included in Post-Effective Amendment No. 27 to the Registration Statement
on Form N-1A (File 33-36528), as filed on October 10, 1997.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
-4-
<PAGE>
Item 26. Number of Holders of Securities.
As of July 31, 1997, the number of shareholders of each operational Fund was
as follows:
<TABLE>
<CAPTION>
Institutional Class Administrative Class Class A Class B Class C
Number of Number of Number of Number of Number of
Fund Record Holders Record Holders Record Holders Record Holders Record Holders
<S> <C> <C> <C> <C> <C>
Equity Income Fund.............. 107 6 182 303 719
Value Fund...................... 186 0 1,015 1,938 5,877
Small Cap Value Fund............ 221 2 655 1,321 2,554
Capital Appreciation Fund....... 288 9 238 394 1,309
Mid Cap Growth Fund............. 268 10 1,293 2,690 6,416
Micro Cap Growth Fund........... 85 5 0 0 0
Small Cap Growth Fund........... 36 2 0 0 0
Core Equity Fund................ 156 5 0 0 0
Mid Cap Equity Fund............. 157 0 0 0 0
Enhanced Equity Fund............ 170 0 0 0 0
Emerging Markets Fund........... 200 3 47 67 281
International Developed Fund.... 179 7 56 115 426
Balanced Fund................... 22 0 36 76 126
Renaissance Fund................ 0 0 2,060 2,608 21,423
Growth Fund..................... 0 0 9,195 4,662 101,527
Target Fund..................... 0 0 10,935 6,666 80,318
Opportunity Fund................ 0 0 12,248 0 40,738
Innovation Fund................. 0 0 5,825 6,316 19,226
International Fund.............. 0 0 1,701 896 21,077
Precious Metals Fund............ 0 0 643 568 4,367
Tax Exempt Fund................. 0 0 108 72 1,873
</TABLE>
Item 27. Indemnification.
Reference is made to Article VIII, Section 1 of the Registrant's Second
Amended and Restated Agreement and Declaration of Trust, which is incorporated
by reference herein.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the Trust's
Second Amended and Restated Agreement and Declaration of Trust, 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 trustees, officers or controlling
persons of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustees, officers or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
-5-
<PAGE>
Item 28. Business and Other Connections of Investment Advisor and Portfolio
Managers.
Unless otherwise stated, the principal business address of each
organization listed in 800 Newport Center Drive, Newport Beach, CA 92660.
<TABLE>
<CAPTION>
PIMCO Advisors L.P.
Position
Name with Advisor Other Affiliations
<S> <C> <C>
Walter E. Auch, Sr. Member of Equity Board Management 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 Operating Director, Managing
Board Director and Chief
Executive Officer,
Cadence Capital
Management, Inc.;
Managing Director and
Chief Executive Officer,
Cadence Capital
Management.
Christopher B. Burnham Member of Operating Director and President,
Board Columbus Circle Investors
Management, Inc.;
Managing Director,
President, and Chief
Executive Officer,
Columbus Circle Investors.
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C> <C>
Donald A. Chiboucas Member of Operating Director, Columbus Circle
Board Investors Management,
Inc.; Managing Director,
Columbus Circle Investors.
William D. Cvengros Chief Executive Trustee and Chairman of
Officer and President, the Trust; Trustee, Cash
Member of Operating Accumulation Trust;
Board, Operating Director, PIMCO Funds
Committee, and Equity Distribution Company.
Board
Walter B. Gerken Member of Equity Board Director, Mullin
Consulting Inc.;
Director, Executive
Services Corps. of
Southern California.
William H. Gross Member of Operating Director and Managing
Board and Equity Board Director, PIMCO
Management, Inc.;
Managing Director,
Pacific Investment
Management Company;
Senior Vice President,
PIMCO Funds, PIMCO
Variable Insurance Trust;
Director and Vice
President, StocksPLUS
Management, Inc.; Member
of PIMCO Partners LLC.
John L. Hague Member of Operating Director and Managing
Board Director, PIMCO
Management, Inc.; Member
of PIMCO Partners LLC.
</TABLE>
-7-
<PAGE>
<TABLE>
<S> <C> <C>
Brent R. Harris Member of Operating Director and Managing
Board Director, PIMCO
Management, Inc.;
Managing Director,
Pacific Investment
Management Company;
Director and Vice
President, StocksPLUS
Management, Inc.;
Chairman of the Board and
Trustee, PIMCO Funds,
PIMCO Variable Insurance
Trust and PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of PIMCO Partners
LLC.
Donald R. Kurtz Member of Equity Board Formerly, Vice President
of Internal Asset
Management, General
Motors Investment
Management Corp. and
Director, Thomson
Advisory Group L.P.
James F. McIntosh Member of Equity Board Executive Director, Allen
Matkins, Leck, Gamble &
Malloy. Formerly,
Director of Pacific
Investment Management
Company.
Donald K. Miller Member of Equity Board Chairman, Greylock
Financial Inc.; Director,
Huffy Corporation, RPM,
Inc., and Christensen
Boyles Corporation;
Director, President and
Chief Executive Officer,
TAG Inc.; Formerly,
Director and Vice
Chairman, Thomson
Advisory Group L.P.
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C> <C>
James F. Muzzy Member of Operating Director and Managing
Board Director, PIMCO
Management, Inc.;
Managing Director,
Pacific Investment
Management Company; Vice
President, PIMCO Funds;
Senior Vice President,
PIMCO Variable Insurance
Trust; Director and Vice
President, StocksPLUS
Management, Inc.; Member
of PIMCO Partners LLC.
William F. Podlich, III Member of Operating Director and Managing
Board and Equity Board Director, PIMCO
Management, Inc.;
Managing Director,
Pacific Investment
Management Company; Vice
President, PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of PIMCO Partners
LLC.
Glenn S. Schafer Member of Equity Board President and Director,
Pacific Mutual Holding
Company, Pacific
LifeCorp, Pacific Life
Insurance Company,
Pacific Financial Asset
Management Corp.,
PMRealty Advisors, Inc.;
Director, Pacific Mutual
Distributors, Inc.,
Mutual Service
Corporation, United
Planners' Group, Inc.
Irwin F. Smith Member of Operating Managing Director,
Board, Operating Columbus Circle
Committee and Equity Investors; Director,
Board Columbus Circle Investors
Management, Inc.
</TABLE>
-9-
<PAGE>
<TABLE>
<S> <C> <C>
Thomas C. Sutton Member of Equity Board Chairman, Chief Executive
Officer and Director,
Pacific Mutual Holding
Company, Pacific
LifeCorp, Pacific Life
Insurance Company,
Pacific Financial Asset
Management Corp.;
Director, Pacific Mutual
Distributors, Inc.,
Mutual Service
Corporation, United
Planners' Group, Inc.,
PMRealty Advisors, Inc.
William S. Thompson, Jr. Chairman and Member of Director, Managing
Operating Board, Director and Chief
Member of Operating Executive Officer, PIMCO
Committee and Equity Management, Inc.; Chief
Board Executive Officer and
Managing Director,
Pacific Investment
Management Company;
Director and President
StocksPLUS Management,
Inc.; Senior Vice
President, PIMCO Variable
Insurance Trust; Vice
President, PIMCO Funds
and PIMCO Commercial
Mortgage Securities
Trust, Inc.
Benjamin L. Trosky Member of Operating Managing Director, PIMCO
Board Management, Inc.; Senior
Vice President, PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of PIMCO Partners
LLC.
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C> <C>
Robert M. Fitzgerald Senior Vice President Chief Financial Officer
and Chief Financial and Treasurer, PIMCO
Officer Funds Distribution
Company, Columbus Circle
Investors, Columbus
Circle Investors
Management, Inc., Cadence
Capital Management, Inc.,
NFJ Investment Group, NFJ
Management, Inc.,
Parametric Portfolio
Associates, Parametric
Management, Inc., PIMCO
Management, Inc., Pacific
Investment Management
Company, and StocksPLUS
Management, Inc.;
Assistant Treasurer,
Cadence Capital
Management, Inc.
Kenneth M. Poovey General Counsel and Partner, Latham & Watkins.
Executive Vice
President
Stephen J. Treadway Executive Vice Director, Chairman,
President President, and Chief
Executive Officer, PIMCO
Funds Distribution
Company, and Trustee,
President and Chief
Executive Officer of the
Trust and Cash
Accumulation Trust.
Robert S. Venable Vice President None.
James Ward Senior Vice President None.
-Human Resources
</TABLE>
-11-
<PAGE>
<TABLE>
<S> <C> <C>
Richard M. Weil Senior Vice President Senior Vice President,
- Legal and Secretary Assistant Secretary,
PIMCO Management, Inc.;
Secretary, NFJ Investment
Group, NFJ Management,
Inc., Parametric
Portfolio Associates,
Parametric Management,
Inc., and StocksPLUS
Management, Inc.;
Assistant Secretary,
Columbus Circle
Investors, Columbus
Circle Investors
Management, Inc., Cadence
Capital Management, and
Pacific Management
Investment Company.
Mark J. Porterfield Vice President - None.
Compliance
Vinh T. Nguyen Vice President, Vice President,
Controller Controller, Columbus
Circle Investors
Management, Inc., Cadence
Capital Management, Inc.,
NFJ Management, Inc.,
Parametric Management,
Inc., StocksPLUS
Management, Inc., PIMCO
Funds Distribution
Company; Controller,
Pacific Investment
Management Company, PIMCO
Management, Inc.
</TABLE>
-12-
<PAGE>
Cadence Capital Management
Exchange Place, 53 State Street,
Boston, Massachusetts 02109
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliations
<S> <C> <C>
William B. Bannick Managing Director and Director and Managing
Executive Vice Director, Cadence Capital
President Management, Inc.
David B. Breed Managing Director and Member of Operating
Chief 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
Robert M. Fitzgerald Chief Financial See PIMCO Advisors L.P.
Officer and Assistant
Treasurer
Barbara M. Green Treasurer None
Richard M. Weil Assistant Secretary See PIMCO Advisors L.P.
Eric M. Wetlaufer Managing Director None
</TABLE>
-13-
<PAGE>
NFJ Investment Group
2121 San Jacinto, Suite 1440,
Dallas, Texas 75201
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliates
<S> <C> <C>
Benno J. Fischer Managing Director Director, Managing
Director, and
Co-Chairman, NFJ
Management, Inc.
Robert M. Fitzgerald Chief Financial See PIMCO Advisors L.P.
Officer and Treasurer
John L. Johnson Managing Director Director, and Co-Chairman
Managing Director, NFJ
Management, Inc.
Jack C. Najrok Managing Director Director, Managing
Director, Co-Chairman,
NFJ Management, Inc.
Richard M. Weil Secretary See PIMCO Advisors L.P.
</TABLE>
-14-
<PAGE>
Parametric Portfolio Associates
7310 Columbia Center, 701 Fifth Avenue,
Seattle, Washington 98104-7090
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliations
<S> <C> <C>
William E. Cornelius, Jr. Managing Director Director, Managing
Director, and Chief
Executive Officer,
Parametric Management,
Inc.
David M. Stein Managing Director Director and Managing
Director, Parametric
Management, Inc.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Treasurer
Richard M. Weil Secretary See PIMCO Advisors L.P.
</TABLE>
Pacific Investment Management Company ("PIMCO")
840 Newport Center Drive, Suite 360
Newport Beach, California 92660
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliations
<S> <C> <C>
George C. Allan Vice President Vice President, PIMCO
Management, Inc.
Tamara J. Arnold Vice President Vice President, PIMCO
Management, Inc.
Leslie A. Barbi Senior Vice President Senior Vice President,
PIMCO Management, Inc.
</TABLE>
-15-
<PAGE>
<TABLE>
<S> <C> <C>
William R. Benz II Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Member of PIMCO
Partners LLC.
Gregory Bishop Vice President Vice President, PIMCO
Management, Inc.
John B. Brynjolfson Vice President Vice President, PIMCO
Management, Inc.
R. Welsley Burns Executive Vice President Executive Vice
President, PIMCO
Management, Inc., the
Trust; President, PIMCO
Funds, PIMCO Commercial
Mortgage Securities
Trust, Inc.; President
and Trustee, PIMCO
Variable Insurance
Trust; Vice President,
Cash Accumulation Trust
Wendy W. Cupps Vice President Vice President, PIMCO
Management, Inc.
Charles M. Daniels, III Executive Vice President Executive Vice
President, PIMCO
Management, Inc.
Michael Dow Vice President Vice 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.;
Director, StocksPLUS
Management, Inc.;
Member of PIMCO
Partners, LLC.
A. Benjamin Ehlert Executive Vice President Executive Vice
President, PIMCO
Management, Inc.
</TABLE>
-16-
<PAGE>
<TABLE>
<S> <C> <C>
Robert A. Ettl Vice President and Chief Vice President, PIMCO
Operations Officer Management, Inc.
Anthony Faillace Vice President Vice President, PIMCO
Management, Inc.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Treasurer
Ursula T. Frisch Vice President Vice President, PIMCO
Management, Inc.
William H. Gross Managing Director See PIMCO Advisors L.P.
John L. Hague Managing Director See PIMCO Advisors L.P.
Gordon C. Hally Executive Vice President Executive Vice
President, PIMCO
Management, Inc.
Pasi M. Hamalainen Senior Vice President Senior 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.,
PIMCO Variable
Insurance Trust, and
Cash Accumulation Trust.
Brent R. Harris Managing Director See PIMCO Advisors L.P.
Joseph Hattesohl Vice President Vice President, PIMCO
Management, Inc.;
Assistant Treasurer,
the Trust, PIMCO Funds,
PIMCO Variable
Insurance Trust
Raymond C. Hayes Vice President Vice President, PIMCO
Management, Inc.
</TABLE>
-17-
<PAGE>
<TABLE>
<S> <C> <C>
David C. Hinman Vice President Vice President, PIMCO
Management, Inc.
Liza Hocson Vice President Vice President, PIMCO
Management, Inc.
Douglas M. Hodge Executive Vice President Executive Vice
President, PIMCO
Management, Inc.
Brent L. Holden Executive Vice President Executive Vice
President, PIMCO
Management, Inc.
Dwight F. Holloway, Jr. Vice President Vice President, PIMCO
Management, Inc.
Jane T. Howe Vice President Vice President, PIMCO
Management, Inc.
Mark Hudoff Vice President Vice President, PIMCO
Management, Inc.
Margaret E. Isberg Executive Vice President Executive Vice
President, PIMCO
Management, Inc.;
Senior Vice President,
PIMCO Funds.
James Keller Vice President Vice President, PIMCO
Management, Inc.
Raymond Kennedy Vice President Vice President, PIMCO
Management, Inc.
James Kociuba Vice President Vice President, PIMCO
Management, Inc.
John S. Loftus Executive Vice President Executive Vice
President, PIMCO
Management, Inc.; Vice
President and Assistant
Secretary, StocksPLUS
Management, Inc.
David Lown Vice President Vice President, PIMCO
Management, Inc.
</TABLE>
-18-
<PAGE>
<TABLE>
<S> <C> <C>
Dean S. Meiling Managing Director Director and Managing
Director, PIMCO
Management, Inc.; Vice
President, PIMCO Funds
and PIMCO Commercial
Mortgage Securities
Trust, Inc.; Member of
PIMCO Partners LLC.
James F. Muzzy Managing Director See PIMCO Advisors L.P.
Vinh T. Nguyen Controller See PIMCO Advisors L.P.
Douglas J. Ongaro Vice President Vice President, PIMCO
Management, Inc.
Thomas J. Otterbein Vice President Vice President, PIMCO
Management, Inc.
William F. Podlich, III Managing Director See PIMCO Advisors L.P.
William C. Powers Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Senior Vice President
PIMCO Commercial
Mortgage Securities
Trust, Inc.; Member of
PIMCO Partners LLC.
Frank B. Rabinovitch Managing Director Director and Managing
Director, PIMCO
Management, Inc.,
Member of PIMCO
Partners, LLC.
Edward P. Rennie Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Scott L. Roney Vice President Vice President, PIMCO
Management, Inc.
Michael J. Rosborough Senior Vice President Senior Vice President,
PIMCO Management, Inc.
</TABLE>
-19-
<PAGE>
<TABLE>
<S> <C> <C>
Jeffrey M. Sargent Vice President Vice President of the
Trust, PIMCO
Management, Inc., PIMCO
Funds, PIMCO Variable
Insurance Trust, and
PIMCO Commercial
Mortgage Securities
Trust, Inc.
Ernest L. Schmider Executive Vice Executive Vice
President, Secretary, President, Secretary,
Chief Administrative and Chief Administrative
Legal Officer and Legal Officer,
PIMCO Management, Inc.;
Director, Assistant
Secretary, Assistant
Treasurer, StocksPLUS
Management, Inc.;
Secretary, PIMCO
Partners LLC.
Leland T. Scholey Senior Vice President Senior Vice President,
PIMCO Management, Inc.,
and PIMCO Funds.
Richard W. Selby Senior Vice President None
and Chief Technology
Officer
Denise C. Seliga Vice President Vice President, PIMCO
Management, Inc.
Rita J. Seymour Vice President Vice President, PIMCO
Management, Inc.
Lee R. Thomas Managing Director Director and Managing
Director, PIMCO
Management, Inc.;
Member of PIMCO
Partners LLC.
William S. Thompson, Jr. Chief Executive Officer See PIMCO Advisors L.P.
and Managing Director
Benjamin L. Trosky Managing Director See PIMCO Advisors L.P.
</TABLE>
-20-
<PAGE>
<TABLE>
<S> <C> <C>
Marilyn Wegener Vice President Vice President, PIMCO
Management, Inc.
Richard M. Weil Assistant Secretary See PIMCO Advisors L.P.
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 Senior Vice President Senior Vice President,
PIMCO Management Inc.
Michael A. Yetter Vice President Vice President, PIMCO
Management, Inc.
David Young Vice President Vice President, PIMCO
Management, Inc.
</TABLE>
Columbus Circle Investors
Metro Center
One Station Place, 8th Floor
Stamford, Connecticut 06902
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliations
<S> <C> <C>
Irwin F. Smith Managing Director See PIMCO Advisors L.P.
Richard M. Weil Assistant Secretary See PIMCO Advisors L.P.
Louis P. Celentano Managing Director Director, Columbus Circle
Investors Management, Inc.
Donald A. Chiboucas Managing Director See PIMCO Advisors L.P.
Robert W. Fehrman Managing Director Director, Columbus Circle
Investors Management, Inc.
</TABLE>
-21-
<PAGE>
<TABLE>
<S> <C> <C>
Marc S. Felman Managing Director Director, Columbus Circle
Investors Management, Inc.
Mark Fishman Senior Vice None
President
Robert M. Fitgerald Chief Financial See PIMCO Advisors L.P.
Officer and
Treasurer
Clifford G. Fox Managing Director Director, Columbus Circle
Investors Management, Inc.
Winthrop S. Headley Senior Vice None
President
Amy M. Hogan Managing Director Director of Columbus Circle
Investors Management, Inc.
Jacob Navon Senior Vice None
President
Anthony Rizza Managing Director Director, Columbus Circle
Investors Management, Inc.
Newton B. Schott, Jr. Chief Legal Officer Director, Executive Vice
and Secretary President, Chief
Administrative/Legal
Officer, Secretary, PIMCO
Funds Distribution Company;
Chief Legal Officer and
Secretary, Columbus Circle
Investors Management, Inc.;
Senior Vice President,
Mutual Fund Division;
General Counsel, Secretary,
Columbus Circle Trust
Company; Vice President and
Secretary, the Trust and
Cash Accumulation Trust.
C. Paul Tyborowski Managing Director Director, Columbus Circle
Investors Management, Inc.
Nathaniel J. Belknap Vice President None
</TABLE>
-22-
<PAGE>
<TABLE>
<S> <C> <C>
Anne Maloney Vice President None
Paul Meeks Vice President None
Michele Montano Senior Vice None
President
Paul A. Pantalena Senior Vice None
President
Cecelia Pastore Vice President None
Harold R. Snedcof Vice President None
Sharon S. Weslow Vice President None
Christopher B. Burnham Managing Director, See PIMCO Advisors L.P.
President and Chief
Executive Officer
Andrew Jacobson Vice President - None
Portfolio Manager
Thomas Brophy Vice President None
Jennifer Kennedy Vice President None
Vinh T. Nguyen Vice President, See PIMCO Advisors L.P.
Controller
</TABLE>
Blairlogie Capital Management, Limited
4th Floor, 125 Princes Street
Edinburgh EH2 4AD, Scotland
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliations
<S> <C> <C>
Gavin R. Dobson Chief Executive Officer Director and Chief
and Managing Director Executive Officer,
Blairlogie Holdings
Limited (U.K.)
James G. S. Smith Chief Investment Director and Chief
Officer and Managing Investment Officer,
Director Blairlogie Holdings
Limited (U.K.)
</TABLE>
-23-
<PAGE>
Van Eck Associate Corporation
99 Park Avenue
New York, New York 10016
<TABLE>
<CAPTION>
Position
Name with Portfolio Manager Other Affiliations
<S> <C> <C>
Philip DeFeo Director, President and Trustee, Van Eck Funds
Chief Executive Officer ("VEF") and Van Eck
Worldwide Insurance
Trust ("WWIT")
John C. Van Eck Chairman of the Board Chairman of the Board
and President, 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,
President and Assistant Assistant Treasurer and
Treasurer Director of VESC
Jan Van Eck Director Director and Executive
Vice President of VESC
Derek M. Van Eck Director and Executive Director of VESC;
Vice President President Global Hard
Assets and World Trends
Series of the Van Eck
Funds
</TABLE>
-24-
<PAGE>
<TABLE>
<S> <C> <C>
Michael G. Doorley Vice President, Vice President,
Treasurer, Controller Treasurer, Controller
and Chief Financial and Chief Financial
Officer Officer of VESC; Vice
President, VEF and WWIT
Taddeus M. Leszcynski Vice President, Vice President and
Secretary and General Secretary of VEF and
Counsel WWIT; Vice President,
Secretary and General
Counsel of VESC.
William A. Trebilcock Director, Mining Vice President of VEF;
Research Formerly, Director
Corner Bay Explorations
Ltd. Formerly, Director,
Precambrian Explorations
Inc.
</TABLE>
Item 29. Principal Underwriters.
(a) PIMCO Funds Distribution Company (the "Distributor") serves as
Distributor of shares for the Registrant and also of PIMCO Funds:
Pacific Investment Management Series and Cash Accumulation Trust.
The Distributor is a wholly owned subsidiary of PIMCO Advisors
L.P., the Registrant's Adviser.
(b)
<TABLE>
<CAPTION>
Positions and Positions
Name and Principal Offices with and Offices
Business Address* Underwriter with Registrant
<S> <C> <C>
Jeffrey L. Booth Vice President None
James D. Bosch Regional Vice President None
Deborah P. Brennan Vice President None
Timothy R. Clark Senior Vice President None
William D. Cvengros Director Trustee
Jonathan P. Fessel Vice President None
</TABLE>
-25-
<PAGE>
<TABLE>
<S> <C> <C>
Robert M. Fitzgerald Chief Financial Officer and None
Treasurer
Michael J. Gallagher Vice President None
David S. Goldsmith Vice President None
Ronald H. Gray Vice President None
John B. Hussey Vice President None
Edward W. Janeczek Senior Vice President None
Stephen R. Jobe Vice President None
Jonathan C. Jones Vice President None
William E. Lynch Senior Vice President None
Jacqueline A. McCarthy Vice President None
Andrew J. Meyers Executive Vice President None
Fiora N. Moyer Regional Vice President None
Philip J. Neugebauer Vice President None
Vinh T. Nguyen Vice President, Controller None
Joffrey H. Pearlman Regional Vice President None
Glynne P. Pisapia Regional Vice President None
Matthew M. Russell Vice President None
Newton B. Schott, Jr. Director, Executive Vice Vice President; Clerk
President, Chief
Administrative Officer/Legal
Officer and Secretary
Robert M. Smith Vice President None
Ellen Z. Spear Vice President None
</TABLE>
-26-
<PAGE>
<TABLE>
<S> <C> <C>
David P. Stone Regional Vice President None
Daniel W. Sullivan Vice President None
William H. Thomas, Jr. Regional Vice President None
Stephen J. Treadway Director, Chairman, President
President and Chief
Executive Officer
Paul H. Troyer Senior Vice President None
Brian F. Trumbore Executive Vice President None
Timothy G. Uecker Vice President None
Richard M. Weil Assistant Secretary None
Glen A. Zimmerman Vice President None
</TABLE>
- -----------------
Principal business address for all individuals listed is 2187 Atlantic
Street, Stamford, CT 06902.
(c) The Registrant has no principal underwriter that is not an affiliated
person of the Registrant or an affiliated person of such an affiliated
person.
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.
-27-
<PAGE>
(b) Not Applicable.
(c) Registrant, if requested to do so by the holders of at least 10%
of the Registrants'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 annual
report(s) to shareholders, upon request and without charge.
-28-
<PAGE>
NOTICE
------
A copy of the Agreement and Declaration of Trust of PIMCO Funds: Multi-
Manager Series (the "Trust"), together with all amendments thereto, is on file
with the Secretary of State of The Commonwealth of Massachusetts and notice is
hereby given that this instrument is executed on behalf of the Trust by an
officer of the Trust as an officer and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees of
the Trust or shareholders of any series of the Trust individually but are
binding only upon the assets and property of the Trust or the respective series.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has met all of
the requirements for effectiveness of this Post-Effective Amendment No. 28 to
its Registration Statement (the "Amendment") pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused the Amendment to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Stamford, and
the State of Connecticut on the 27th day of October, 1997.
PIMCO FUNDS: MULTI-MANAGER SERIES
By: /s/ Stephen J. Treadway
--------------------------
Stephen J. Treadway,
President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 28 has been signed below by the following persons in the
capacities and on the dates indicated.
Name Capacity Date
- ---- -------- ----
/s/ Stephen J. Treadway Trustee and President October 27, 1997
- -------------------------
Stephen J. Treadway
John P. Hardaway* Treasurer and Principal
- -------------------------
John P. Hardaway Financial and Accounting
Officer
Robert A. Prindiville* Trustee
- -------------------------
Robert A. Prindiville
<PAGE>
William D. Cvengros* Trustee
- -------------------------
William D. Cvengros
Gary L. Light* Trustee
- -------------------------
Gary L. Light
Joel Segall* Trustee
- -------------------------
Joel Segall
Donald P. Carter* Trustee
- -------------------------
Donald P. Carter
E. Philip Cannon* Trustee
- -------------------------
E. Philip Cannon
Gary A. Childress* Trustee
- -------------------------
Gary A. Childress
Richard L. Nelson* Trustee
- -------------------------
Richard L. Nelson
Lyman W. Porter* Trustee
- -------------------------
Lyman W. Porter
Alan Richards* Trustee
- -------------------------
Alan Richards
W. Bryant Stooks* Trustee
- -------------------------
W. Bryant Stooks
Gerald M. Thorne* Trustee
- -------------------------
Gerald M. Thorne
* By: /s/ Stephen J. Treadway
----------------------------
Stephen J. Treadway,
Attorney-In-Fact
Date: October 27, 1997
----------------
-2-
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Name Page
- ----------- ------------ ----
5(a)(ii) Form of Addendum to Amended and Restated Advisory
Agreement
5(b)(i) Form of Portfolio Management Agreement
5(b)(v) Form of Addendum to Portfolio Management Agreement
5(b)(viii) Form of Addendum to Portfolio Management Agreement
6(b) Form of Supplement to Distribution Contract
8(d) Form of Addendum to Custody Agreement
9(f) Form of Addendum to Agency Agreement
9(h) Form of Service Plan for Institutional Services Shares
10 Opinion and Consent of Counsel
11(a) Consent of Price Waterhouse LLP
11(b) Consent and Opinion of Coopers & Lybrand L.L.P.
13 Initial Capital Agreement
16 Schedule of Computation of Performance
17 Financial Data Schedules
<PAGE>
EXHIBIT 5(a)(ii)
ADDENDUM TO INVESTMENT ADVISORY AGREEMENT
-----------------------------------------
PIMCO Funds: Multi-Manager Series
840 Newport Center Drive
Newport Beach, CA 92660
__________ __, 1997
PIMCO Advisors L.P.
800 Newport Center Drive, Suite 100
Newport Beach, CA 92660
RE: Tax-Managed Structured Emerging Markets Fund and
International Growth Fund
------------------------------------------------
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") and
PIMCO Advisors L.P. (the "Adviser") as follows:
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consisting of such separate investment
portfolios as have been or may be established by the Trustees of the Trust from
time to time. Up to five separate classes of shares of beneficial interest in
the Trust are offered to investors with respect to each investment portfolio.
The PIMCO Tax-Managed Structured Emerging Markets Fund and PIMCO International
Growth Fund (together, the "Funds") are separate investment portfolios of the
Trust.
2. The Trust and the Adviser have entered into an Amended and Restated
Investment Advisory Agreement dated November 15, 1994, as further amended and
restated as of January 14, 1997 (the "Agreement"), pursuant to which the Trust
has employed the Adviser to provide investment advisory and other services
specified in the Agreement, and the Adviser has accepted such employment.
3. As provided in paragraph 1 of the Agreement, the Trust hereby appoints
the Adviser to serve as Investment Adviser with respect to the Funds, and the
Adviser accepts such appointment, the terms and conditions of such employment to
be governed by the Agreement, which is hereby incorporated herein by reference.
<PAGE>
4. As provided in paragraph 9 of the Agreement and subject to further
conditions set forth therein, the Trust shall with respect to each Fund pay the
Adviser a monthly fee at the following annual rate based upon the average daily
net assets of the Fund:
Fund Fee Rate
---- --------
International Growth Fund 0.85%
Tax-Managed Structured Emerging Markets Fund 0.45%.
5. This Addendum and the Agreement shall take effect with respect to each
Fund on _______ ___, 1997, and shall remain in effect, unless sooner terminated
as provided in the Agreement and herein, with respect to each Fund for a period
of two years following such date. This Addendum and the 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 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 vote of a majority of the Board of Trustees of the Trust who are not parties
to this Addendum or the 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 Addendum and the 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 Addendum and the 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 the Addendum and the Agreement
with respect to such Fund notwithstanding (a) that this Addendum and the
Agreement has not been approved by the holders of a majority of the outstanding
shares of any other investment portfolio of the Trust or (b) that this Addendum
and the 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. The Agreement will terminate automatically
with respect to the services provided by the Adviser in the event of its
assignment, as that term in defined in the 1940 Act, by the Adviser.
This Addendum and the 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 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;
-2-
<PAGE>
(b) by the Adviser at any time, without the payment of any penalty,
upon 60 days' written notice to the Trust.
If the foregoing correctly sets forth the agreement between the Trust and
the Adviser, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
PIMCO Funds: Multi-Manager Series
By: ________________________________________
Title:
ACCEPTED:
PIMCO Advisors L.P.
By: ______________________
Title:
-3-
<PAGE>
EXHIBIT 5(b)(i)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of November, 1994 between PIMCO Advisors L.P.
("Adviser"), a limited partnership, and Pacific Investment Management Company
("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 Managed Bond and Income Fund, the Utility Stock Fund, the
Equity Income Fund, the Diversified Low P/E Fund, the Small Cap Value Fund, the
Capital Appreciation Fund, the Mid Cap Growth Fund, the Micro Cap Growth Fund,
the Small Cap Growth Fund, the Enhanced Equity Fund, the International Equity
Fund, the Emerging Markets Fund, the International Active Fund, the Balanced
Fund, the Core Equity Fund, the Small Cap Equity Fund and the Mid Cap Equity
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, 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 assets will vary from time to
time; and
WHEREAS, pursuant to the Investment Advisory Agreement, the Adviser will
allocate the Balanced Fund's assets among the asset classes of common stock,
fixed income securities, and money market instruments; and
WHEREAS, the Adviser desires to retain the Portfolio Manager to furnish
investment advisory services to one or more of the Funds of the Trust, and the
Portfolio Manager is willing to furnish such services to such Funds and the
Adviser in the manner and on the terms hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Adviser and the Portfolio
Manager as follows:
1. Appointment. The Adviser hereby appoints Pacific Investment Management
-----------
Company to act as Portfolio Manager to the Managed Bond and Income Fund and
the portion of the assets of the Balanced Fund allocated by the Adviser for
investment in fixed income securities (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
1
<PAGE>
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 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 of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Portfolio Manager determines in good
2
<PAGE>
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 confirmation, trade tickets, and other documents and information,
including, but not limited to, Cusip, Sedol, or other numbers that identify
securities to be purchased or sold on behalf of the Fund, as may be reasonably
necessary to enable the custodian to perform its administrative and
recordkeeping responsibilities with respect to the Fund, and, with respect to
portfolio securities to be purchased or sold through the Depository Trust
Company, will arrange for the automatic transmission of the confirmation of
such trades to the Trust's custodian.
(f) The Portfolio Manager will assist the custodian and recordkeeping
agent for the Trust in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the Trust,
the value of any portfolio securities or other assets of the Fund for which
the custodian and recordkeeping agent seeks assistance from the Portfolio
Manager or identifies for review by the Portfolio Manager.
(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 Funds 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
3
<PAGE>
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, 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 to 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, 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;
4
<PAGE>
(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
(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 Managed Bond and Income Fund and the
portion of the assets of the Balanced Fund allocated by the Adviser for
investment in fixed income securities at the annual rate of .25% of the average
daily net assets of the Managed Bond and Income 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 fixed income securities.
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
5
<PAGE>
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 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 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
6
<PAGE>
Portfolio Manager's obligations and duties under this Agreement.
13. Indemnification. The Portfolio Manager agrees to indemnify and hold
---------------
harmless, the Adviser, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if
any who, within the meaning of Section 15 of the 1933 Act, controls
("controlling person") the Adviser (collectively, "PM Indemnified Persons")
against any and all losses, claims, damages, liabilities or litigation
(including legal and other expenses), to which the Adviser or such affiliated
person or controlling person may become subject under the 1933 Act, 1940 Act,
the Advisers Act, under any other statute, at common law or otherwise, arising
out of the Portfolio Manager's responsibilities to the Trust which (i) may be
based upon any misfeasance, malfeasance, or nonfeasance by the Portfolio
Manager, any of its employees or representatives, or any affiliate of or any
person acting on behalf of the Portfolio Manager (other than a PM Indemnified
Person), or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering the Shares of the Trust or any Fund, or any amendment thereof or any
supplement thereto, or the omission or 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 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 November 15, 1994, and shall
7
<PAGE>
remain in effect for two years from such date and continue thereafter on an
annual basis with respect to a Fund; provided that such annual continuance is
specifically approved at least annually (a) by the vote of a majority of the
Board of Trustees of the Trust, or (b) by the vote of a majority of the
outstanding voting shares of that Fund, and provided that continuance is also
approved by the vote of a majority of the Board of Trustees of the Trust who are
not parties to this Agreement or "interested persons" (as such term is defined
in the 1940 Act) of the Trust, the Adviser, or the Portfolio Manager, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may not be materially amended without a majority vote of the
outstanding shares (as defined in the 1940 Act) of the Fund. This Agreement may
be terminated:
(a) by the Trust at any time with respect to the services provided by the
Portfolio Manager, without the payment of any penalty, by vote of a majority
of the entire Board of Trustees of the Trust or by a vote of a 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.
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
8
<PAGE>
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.
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:
PACIFIC INVESTMENT MANAGEMENT
COMPANY
- ---------------------- By:
Attest: ----------------------------
Title: Title:
9
<PAGE>
EXHIBIT 5(b)(v)
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
------------------------------------------
The Portfolio Management Agreement, made the 15th day of November, 1994 and
amended the 14th day of January, 1997 (the "Agreement"), between PIMCO Advisors
L.P. ("PIMCO Advisors" or "Adviser"), a limited partnership, and Parametric
Portfolio Associates ("Parametric" or "Portfolio Manager"), a general
partnership, is hereby amended by the addition of the provisions set forth in
this Addendum to the Agreement, which is made this ____________ day of __, 1997.
WITNESSETH:
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust") is authorized to
issue shares of beneficial interest in separate series, with each such series
representing interests in separate portfolios 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
Structures Emerging Markets Funds, PIMCO Tax-managed Structured Emerging Markets
Fund, PIMCO Emerging Markets Fund, PIMCO International Developed Fund, PIMCO
Balanced Fund, PIMCO Balanced Fund, PIMCO International Fund, PIMCO
International Growth 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 as of January
14, 1997 and further supplemented from time to time, 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 the PIMCO Structured Emerging
Markets Fund (together, the "Funds"); and
WHEREAS, the Adviser desires to retain Parametric to furnish investment
advisory services to the PIMCO Tax-Managed Structured Emerging Markets Fund (the
"New Fund") and Parametric desires to acknowledge and accept such retention
pursuant to this Addendum;
<PAGE>
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. The first sentence of Paragraph one (1) ("Appointment") of the
-----------
Agreement is hereby amended and restated as follows:
"1. Appointment. The Adviser hereby appoints Parametric Portfolio
------------
Associates to act as Portfolio Manager to the PIMCO Enhanced Equity
Fund, PIMCO Structured Emerging Markets Fund and PIMCO Tax-Managed
Structured Emerging Markets Fund."
2. Paragraph five (5) ("Compensation") of the Agreement is hereby 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 at the annual rate of .35% of the average daily net assets of
each of the PIMCO Enhanced Equity Fund, PIMCO Structured Emerging
Markets Fund and PIMCO Tax-Managed Structured Emerging Markets Fund.
3. This Addendum and the Agreement shall take effect with respect to the
New Fund on ________ ____, 1997, and shall remain in effect, unless sooner
terminated as provided in the Agreement and herein, with respect to the New Fund
for two years from such date and continue thereafter on an annual basis with
respect to the New 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 the New Fund, and provided that continuance is also approved by
the vote of a majority of the Board of Trustees of the Trust are not parties to
this Addendum or the 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
Addendum and the Agreement may not be materially amended without a majority vote
of the outstanding voting shares (as defined in the 1940 Act) of the New Fund.
This Addendum and the Agreement may be terminated:
(a) by the Trust at any time with respect to the services provided by
the Portfolio Manager, without the payment of any penalty, by vote of a majority
of the entire Board of Trustees of the Trust or by vote of a majority of the
outstanding voting shares of the Trust or by vote of a majority of the
outstanding voting shares of the New Fund, on 60 days' written notice to the
Portfolio Manager;
(b) by the Porfolio Manager at any time, without the payment of any
penalty, upon 60 days' written notice to the Trust;
-2-
<PAGE>
(c) by the Adviser any time, without the payment of any penalty, upon
60 days' written notice to the Porfolio Manager.
However, any approval of this Addendum and the Agreement by the holders of
a majority of the outstanding shares (as defined in the 1940 Act) of the New
Fund shall be effective to continue the Addendum and the Agreement with respect
to the New Fund notwithstanding (a) that this Addendum and the Agreement has not
been approved by the holders of a majority of the outstanding shares of any
other Fund or (b) that this Addendum and the 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. The
Agreement will terminate automatically with respect to the services provided by
the Portfolio Manager in the event of its assignment, as that term in defined in
the 1940 Act, by the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below.
PIMCO ADVISORS L.P.
By: _______________________________
Title:
Attest: ___________________________
Name:
Title:
PARAMETRIC PORTFOLIO ASSOCIATES
By: _______________________________
Title:
Attest: ___________________________
Name:
Title:
-3-
<PAGE>
EXHIBIT 5(b)(viii)
ADDENDUM TO PORTFOLIO MANAGEMENT AGREEMENT
------------------------------------------
The Amended and Restated Portfolio Management Agreement, made the 15th day
of November, 1994 and amended the 14th day of January, 1997 (the "Agreement"),
between PIMCO Advisors L.P. ("PIMCO Advisors" or "Adviser"), a limited
partnership, and Columbus Circle Investors ("Columbus Circle" or "Portfolio
Manager"), a general partnership, is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement, which is made this
____________ day of __, 1997.
WITNESSETH:
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust") is authorized to
issue shares of beneficial interest in separate series, with each such series
representing interests in separate portfolios 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 Tax-Managed Structured Emerging Markets
Fund, PIMCO Emerging Markets Fund, PIMCO International Developed Fund, PIMCO
Balanced Fund, PIMCO International Fund, PIMCO International Growth 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 as of January
14, 1997 and further supplemented from time to time, and such agreement
authorizes the Adviser to engage portfolio mangers to discharge the Adviser's
responsibilities with respect to the management of the Funds; and
WHEREAS, the Adviser has retained Columbus Circle to furnish investment
advisory services 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
(together, the "Funds"); and
WHEREAS, the Adviser desires to retain Columbus Circle to furnish
investment advisory services to the PIMCO International Growth Fund (the "New
Fund") and Columbus Circle desires to acknowledge and accept such retention
pursuant to this Addendum;
<PAGE>
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as follows:
1. The first sentence of Paragraph one (1) ("Appointment") of the
-----------
Agreement is hereby amended and restated 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, the PIMCO Tax Exempt Fund, and the PIMCO
International Growth Fund (the "Funds") for the periods and on the
terms set forth in this Agreement."
2. The Schedule attached to the Agreement to which Paragraph five (5)
("Compensation") of the Agreement refers is hereby amended to include the
------------
following:
Fund Fee Rate Effective Date
---- -------- --------------
PIMCO International
Growth Fund 0.75% __/__/97
3. This Addendum and the Agreement shall take effect with respect to the
New Fund on _______ ___, 1997, and shall remain in effect, unless sooner
terminated as provided in the Agreement and herein, with respect to the New Fund
for two years from such date and continue thereafter on an annual basis with
respect to the New 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 the New 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 Addendum or the 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 Addendum and the Agreement may not be materially amended without a majority
vote of the outstanding voting shares (as defined in the 1940 Act) of the New
Fund.
This Addendum and the 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 (i) a
majority of the Trustees of the Trust; (ii) a majority of the outstanding voting
shares of the Trust; or (iii) a majority of the outstanding voting shares of the
New Fund, on 60 days' written notice to the Portfolio Manager;
-2-
<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 any time, without the payment of any penalty, upon
60 days' written notice to the Portfolio Manager.
However, any approval of this Addendum and the Agreement by the holders of
a majority of the outstanding shares (as defined in the 1940 Act) of the New
Fund shall be effective to continue the Addendum and the Agreement with respect
to the New Fund notwithstanding (a) that this Addendum and the Agreement has not
been approved by the holders of a majority of the outstanding shares of any
other Fund or (b) that this Addendum and the 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. The
Agreement will terminate automatically with respect to the services provided by
the Portfolio Manager in the event of its assignment, as that term in defined in
the 1940 Act, by the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below.
PIMCO ADVISORS L.P.
By: ____________________________________
Title:
Attest: ____________________________
Name:
Title:
COLUMBUS CIRCLE INVESTORS
By: ____________________________________
Title:
Attest: ____________________________
Name:
Title:
-3-
<PAGE>
EXHIBIT 6(b)
SUPPLEMENT TO DISTRIBUTION CONTRACT
-----------------------------------
PIMCO Funds: Multi-Manager Series
840 Newport Center Drive
Newport Beach, CA 92660
__________ __, 1997
PIMCO Funds Distribution Company
2187 Atlantic Street
Stamford, Connecticut 06902
Re: Tax-Managed Structured Emerging Markets Fund and
International Growth Fund
------------------------------------------------
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") and
PIMCO Advisors Distribution Company (the "Distributor") as follows:
1. The Trust is an open-end management investment company organized as a
Massachusetts business trust and consisting of such separate investment
portfolios as have been or may be established by the Trustees of the Trust from
time to time. Up to five separate classes of shares of beneficial interest in
the Trust are offered to investors with respect to each investment portfolio.
The PIMCO Tax-Managed Structured Emerging Markets Fund and the PIMCO
International Growth Fund (together, the "Funds") are separate investment
portfolios of the Trust.
2. The Trust and the Distributor have entered into a Distribution
Contract (the "Contract") dated January 14, 1997, pursuant to which the
Distributor has agreed to be the distributor of shares of beneficial interest in
the Trust.
3. In accordance with paragraph 1 of the Contract, the Trust and the
Distributor hereby designate the Funds as additional investment portfolios to
which the Contract pertains and adopt the Contract with respect to the Funds,
the terms and conditions of the Contract being hereby incorporated herein by
reference.
4. This Supplement and the Contract shall become effective with respect
to the Funds on____________, 1997 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 of the Contract) 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
<PAGE>
(b) Automatically as to a 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 the Contract, whichever is later, if
the continuance of the 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 (as defined in the Contract) or the
Contract by vote cast in person at a meeting called for the purpose of voting on
such approval.
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 Addendum and the Contract pursuant to this section
shall be without the payment of any penalty.
If the Contract is terminated or not renewed with respect to a Fund or
other investment portfolios of the Trust 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).
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.
Very truly yours,
PIMCO Funds: Multi-Manager Series
By: _________________________________
Title:
ACCEPTED:
PIMCO Funds Distribution Company
By: _______________________
Title:
-2-
<PAGE>
EXHIBIT 8(d)
FORM OF 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 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 Tax-managed Structured Emerging Markets Fund, PIMCO Emerging Markets
Fund, PIMCO International Developed Fund, PIMCO International Fund, PIMCO
International Growth Fund, PIMCO Balanced Fund, and PIMCO Precious Metals Fund
(each a "Fund"); and
WHEREAS, the Trust intends to establish two additional series to be
designated as the PIMCO International Growth Fund and PIMCO Tax-Managed
Structured Emerging Markets Fund (the "New Funds"); and
WHEREAS, the Trust desires to appoint IFTC as Custodian for 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;
<PAGE>
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 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.
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
PIMCO ADVISORS L.P.
Attest: By:
______________________ _____________________________
Name: Name:
Title: Title:
INVESTORS FIDUCIARY
TRUST COMPANY
Attest: By:
______________________ _____________________________
Name: Name:
Title: Title:
-2-
<PAGE>
EXHIBIT 9(f)
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 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 (each a
"Fund"); and
<PAGE>
WHEREAS, the Trust intends to establish two additional series to be
designated as the PIMCO International Growth Fund and PIMCO Tax-Managed
Structured Emerging Markets 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 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 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.
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:
-2-
<PAGE>
PIMCO ADVISORS L.P.
Attest: By:
__________________________ __________________________
Name: Name:
Title: Title:
INVESTORS FIDUCIARY
TRUST COMPANY
Attest: By:
__________________________ __________________________
Name: Name:
Title: Title:
-3-
<PAGE>
Exhibit 9(h)
SERVICE PLAN
FOR INSTITUTIONAL SERVICES SHARES
WHEREAS, PFAMCo Funds (the "Trust") is an open-end management investment
company registered as such under the Investment Company Act of 1940, as amended
(the "Act");
WHEREAS, the Trust issues shares of beneficial interest ("shares") in
separate series ("Portfolios"), with each Portfolio representing interests in a
separate portfolio of securities and other assets;
WHEREAS, the Trust is authorized to issue shares of the Portfolios in
separate classes of shares, one of which is designated Institutional Services
Shares;
WHEREAS, Pacific Financial Asset Management Corporation ("PFAMCo") serves as
Administrator to the Fund pursuant to an Administration Agreement;
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 Fund's Portfolios;
WHEREAS, issuance and shares of the Portfolios in a class subject to a fee
for the Fund's cost of providing administrative, recordkeeping, and shareholder
services would allocate the Fund's expense of rendering such services to the
shareholders who receive such additional services;
WHEREAS, pursuant to a Class Addendum to the Administration Agreement with
PFAMCo will ask the Trust to enter into that PFAMCo simultaneously with the
initial consideration of this Plan, PFAMCo will agree to provide or procure such
services for the class of Institutional Services Shares as PFAMCo determines are
reasonably required by shareholders of the Institutional Services Shares;
WHEREAS, PFAMCo may enter into one or more agreements with banks, broker-
dealers, consultants, administrators, and other financial organizations
("Service Providers") pursuant to which PFAMCo would engage the Services
Providers to provide some or all of the services described herein; and
WHEREAS, prior to issuing shares of the Portfolios in separate classes, the
Fund will obtain an exemptive order from the Securities and Exchange Commission
granting exemptions from the Act to the extent necessary to permit the issuance
of shares in different classes, and a condition to the exemptive order is that
any shares described in the application for such exemption ("Application") as
Administrative Services Shares will render services in accordance with the
procedures set forth in paragraphs (b) through (f) of Rule 12b-1 under the Act;
and
<PAGE>
WHEREAS, the class of Institutional Services Shares is a class that meets the
description in the Application of Administrative Services Shares.
NOW, THERFORE, the Trust hereby adopts this Service Plan with respect to its
Institutional Services Shares, on the following terms and conditions:
1. This Plan shall be administered in accordance with the procedures set
forth in paragraphs (b) through (f) of Rule 12b-1 under the Act, as if the Plan
were subject to Rule 12b-1, except for the provisions of such paragraphs that
relate to shareholder voting rights.
2. The Trust shall pay to PFAMCo, as Administrator, a service fee at an
annual rate equal to 0.25% of the average daily value of the net assets
attributable to the Institutional Services Shares. Such fee shall be calculated
and accrued daily and paid at such intervals as the Board of Trustees shall
determine or as shall be contractually agreed upon.
3. The amount set forth in paragraph 2 of this Plan may be used by PFAMCo
for the expenses of rendering services directly or paying Service Providers for
providing some or all of the services described herein to the shareholders of
the Institutional Services Shares. Such services are limited to some or all of
the following services: 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 account 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.
4. This Plan shall take effect until it, together with any related
agreements, which shall include the Class Addendum, have been approved by votes
of a majority of both (a) the Trustees of the Trust and (b) those Trustees of
the Trust who are not "interested persons" of the Trust (as defined in the Act)
and who have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Independent Trustees"), cast in
person at a meeting (or meetings) called for the purpose of voting on this Plan
and such related agreements.
5. After approval as set forth in paragraph 4, this Plan shall take effect.
The Plan shall continue in full force and effect as to the Institutional
Services Shares for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 4.
6. PFAMCo shall provide to the Trustees of the Trust, and the Trustees shall
review, at least quarterly, a written report of the
<PAGE>
amounts so expended and the purposes for which such expenditures were made.
7. This Plan may be terminated as to the Trust at any time, without payment
of any penalty, by vote of the Trustees of the Trust, or by vote of a majority
of the Independent Trustees. However, after termination of the Plan, PFAMCo
would be entitled to receive payment, at the annual rate of .25% of the value of
the average daily net assets attributable to the Institutional Services Shares
as compensation for its services which had been earned at any time during which
the Plan was in effect and not reimbursed.
8. No material amendment to the Plan shall be made unless approved in the
manner provided for approval and annual renewal in paragraph 4 hereof.
9. While this 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 such interested persons.
10. The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 6 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
<PAGE>
EXHIBIT 10
LAW OFFICES OF
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, D.C. 20005
TELEPHONE: (202) 626-3300
TELEX: 897 122 . BARDEP WASH
TELECOPIER: (202) 626-3334
November 2, 1990
PFAMCo Fund
700 Newport Center Drive
Newport Beach, CA 92660
Dear Sirs:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of common stock of the Money Market Portfolio,
Managed Bond and Income Portfolio, Equity Income Portfolio, Diversified Low P/E
Portfolio, Index Plus Portfolio, Capital Appreciation Portfolio, Low Cap
Portfolio, Small Cap Portfolio, and International Equity Portfolio (each a
"Portfolio") of PFAMCo Fund (the "Fund"), we have examined such matters as we
have deemed necessary, as we are of the opinion that:
(i) The Fund is a trust duly organized and existing under the laws of the
Commonwealth of Massachusetts;
(ii) The authorized capital of the Fund consists of an unlimited number of
shares of beneficial interest of each Portfolio, par value of $0.001
per share, (the "Shares"); and
(iii) Assuming that the Fund or its agent receives consideration for such
Shares in accordance with the provisions of its Agreement and
Declaration of Trust, the Shares will be legally and validly issued,
will be fully paid, and will be non-assessable by the Fund.
We hereby consent to the use of this opinion as an exhibit to the Fund's
Registration Statement on Form N-1A filed with the Securities and Exchange
Commission (File No. 33-36528) for the registration under the Securities Act of
1933 of an indefinite number of the Fund's Shares, and to the use of our name in
the prospectus and statement of additional information contained therein, and
any amendments thereto.
Very truly yours,
/s/ Dechert Price & Rhoads
Dechert Price & Rhoads
<PAGE>
EXHIBIT 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 28 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated August 15, 1997, relating to the financial
statements and financial highlights appearing in the June 30, 1997 Annual
Reports to Shareholders of the PIMCO Funds: Multi-Manager Series, which are 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.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Kansas City, Missouri
October 28, 1997
<PAGE>
EXHIBIT 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the inclusion in this Post-Effective Amendment No. 28 to the
Registration Statement of PIMCO Funds: Multi-Manager Series on Form N-1A (File
No. 33-36528) of our report dated November 22, 1996 on our audit of the
financial statements and financial highlights of PIMCO Advisors Funds.
/s/ COOPERS & LYBRAND L.L.P
COOPERS & LYBRAND L.L.P.
New York, New York
October 29, 1997
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Trustees and Shareholders of PIMCO Advisors Funds:
We have audited the statements of changes in net assets of the PIMCO Advisors
Equity Income Fund, PIMCO Advisors Growth Fund, PIMCO Advisors Target Fund,
PIMCO Advisors Opportunity Fund, PIMCO Advisors Innovation Fund, PIMCO Advisors
International Fund, PIMCO Advisors Precious Metals Fund, and PIMCO Advisors Tax
Exempt Fund, collectively, the "Funds" (eight of the Funds constituting
PIMCO Advisors Funds) for the year ended September 30, 1996, and selected per
share data and ratios shown in the "Financial Highlights" for each of the five
years in the period then ended for PIMCO Advisors Equity Fund, PIMCO Advisors
Growth Fund, PIMCO Advisors Opportunity Fund, PIMCO Advisors International Fund,
PIMCO Advisors Precious Metals Fund and PIMCO Advisors Tax Exempt Fund; for the
period December 17, 1992 to September 30, 1993 and for each of the three years
in the period ended September 30, 1996 or the PIMCO Advisors Target Fund; and
for the period December 22, 1994 to September 30, 1995 and for the year ended
September 30, 1996 for the PIMCO Advisors Innovation Fund. The financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the changes in net assets and
financial highlights of each of the respective Funds of the PIMCO Advisors Funds
for the periods referred to above, in conformity with generally accepted
accounting principles.
/s/ COOPERS & LYBRAND, L.L.P.
COOPERS & LYBRAND, L.L.P.
New York, New York
November 22, 1996
-2-
<PAGE>
EXHIBIT 13
Pacific Financial Asset Management Corporation
700 Newport Center Drive
Newport Beach, California 92660
INITIAL CAPITAL AGREEMENT
October 26, 1990
PFAMCo Fund
700 Newport Center Drive
Newport Beach, California 92660
Dear Sirs:
It is our understanding that PFAMCo Fund (the "Fund") proposes to sell shares
of beneficial interest (the "Shares") of the various investment portfolios (the
"Portfolios") of the Fund pursuant to a registration statement on Form N1-A
filed with the Securities and Exchange Commission. In order to provide the Fund
with a net worth of at least $100,000 as required by Section 14 of the
Investment Company Act of 1940, as amended, we hereby offer to purchase the
number of Shares of each Portfolio as indicated below at the price per share
indicated ("Initial Capital").
<TABLE>
<CAPTION>
Portfolio No. of Shares Price Per Share
- --------- ------------- ---------------
<S> <C> <C>
Money Market Portfolio 99,200 $ 1.00
Managed Bond and Income Portfolio 10 $10.00
Equity Income Portfolio 10 $10.00
Diversified Low P/E Portfolio 10 $10.00
Index Plus Portfolio 10 $10.00
Capital Appreciation Portfolio 10 $10.00
Low Cap Portfolio 10 $10.00
Small Cap Portfolio 10 $10.00
International Equity Portfolio 10 $10.00
</TABLE>
We represent and warrant to the Fund that the Shares are being acquired by us
for investment and not with a view to the resale or further distribution thereof
and that we have no present intention to redeem or dispose of any Shares. We
hereby agree that any redemption of these Shares will be reduced by a pro rata
portion of any then unamortized organization expenses of the Fund. This
proration will be calculated by dividing the number of Shares to be redeemed by
the aggregate number of Shares held which represent the Initial Capital of the
Fund.
<PAGE>
Please confirm that the foregoing correctly sets forth our agreement with the
Fund.
Very truly yours,
PACIFIC FINANCIAL ASSET
MANAGEMENT CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Confirmed, as of the date
first above mentioned
PFAMCo FUND
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT 16
PERFORMANCE QUOTATION COMPUTATIONS
PFAMCo FUNDS
AVERAGE ANNUAL RETURN
FROM COMMENCEMENT OF OPERATIONS
THROUGH OCTOBER 31, 1994
AAR=(ERV/P)/\[1/(N/365)]-1
<TABLE>
<CAPTION>
Managed Diver- Capital Small
Money Bond and Equity sified Enhanced Appre- Mid Cap Cap
Market Income Income Low P/E Equity ciation Growth Value
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commencement 03/01/91 12/30/91 03/08/91 12/30/91 02/11/91 03/08/91 08/26/91 10/01/91
P (Payment) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
ERV (Ending
Redeemable Value) 1,147 1,180 1,506 1,327 1,346 1,545 1,431 1,382
----------------------------------------------------------------------------------------
T (Total Return) 14.74% 17.97% 50.55% 32.65% 34.58% 54.53% 43.09% 38.16%
N (Number of Days) 1,341 1,034 1,334 1,034 1,359 1,334 1,163 1,127
----------------------------------------------------------------------------------------
AAR (Average Annual
Return) 3.82% 6.00% 11.86% 10.47% 8.31% 12.66% 11.91% 11.05%
<CAPTION>
Small Inter- Micro Inter-
Cap national Cap Emerging national Utility
Growth Equity Balanced Growth Markets Active Stock*
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Commencement 01/07/91 12/17/90 06/25/92 06/25/93 06/08/93 06/01/93 01/03/94
P (Payment) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
ERV (Ending
Redeemable Value) 2,411 1,299 1,172 1,189 1,711 1,199 902
---------------------------------------------------------------------------
T (Total Return) 141.12% 29.88% 17.20% 18.91% 71.13% 19.94% -9.76%
N (Number of Days) 1,394 1,415 858 493 517 510
---------------------------------------------------------------------------
AAR (Average Annual
Return) 25.94% 6.98% 6.98% 13.68% 46.13% 13.90%
</TABLE>
*Return has not been annualized since the portfolio has less than one year of
operations through October 31, 1994.
<PAGE>
PERFORMANCE QUOTATION COMPUTATIONS
PFAMCo FUNDS
TOTAL RETURN
FOR THE YEAR ENDED OCTOBER 31, 1994
EVR=P(1+T)
<TABLE>
<CAPTION>
Managed Diver- Capital Small
Money Bond and Equity sified Enhanced Appre- Mid Cap Cap
Market Income Income Low P/E Equity ciation Growth Value
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commencement 03/01/91 12/30/91 03/08/91 12/30/91 02/11/91 03/08/91 08/26/91 10/01/91
P (Payment) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
ERV (Ending
Redeemable Value) 1,035 964 1,023 1,002 1,018 1,002 1,006 971
----------------------------------------------------------------------------------------
T (Total Return) 3.53% -3.58% 2.25% 0.15% 1.83% 0.15% 0.58% -2.89%
<CAPTION>
Small Inter- Micro Inter-
Cap national Cap Emerging national
Growth Equity Balanced Growth Markets Active
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commencement 01/07/91 12/17/90 06/25/92 06/25/93 06/01/93 06/08/93
P (Payment) $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
ERV (Ending
Redeemable Value) 1,046 1,078 1,001 1,073 1,363 1,117
-----------------------------------------------------------------
T (Total Return) 4.62% 7.83% 0.08% 7.31% 36.31% 11.68%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> BALANCED FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 64,592
<INVESTMENTS-AT-VALUE> 72,121
<RECEIVABLES> 4,248
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29
<TOTAL-ASSETS> 76,398
<PAYABLE-FOR-SECURITIES> 12,400
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 12,469
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,384
<SHARES-COMMON-STOCK> 5,387
<SHARES-COMMON-PRIOR> 7,096
<ACCUMULATED-NII-CURRENT> 2,860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,139
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,546
<NET-ASSETS> 63,929
<DIVIDEND-INCOME> 786
<INTEREST-INCOME> 1,972
<OTHER-INCOME> 0
<EXPENSES-NET> 506
<NET-INVESTMENT-INCOME> 2,252
<REALIZED-GAINS-CURRENT> 12,663
<APPREC-INCREASE-CURRENT> (3,065)
<NET-CHANGE-FROM-OPS> 11,850
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,191
<DISTRIBUTIONS-OF-GAINS> 10,060
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 926
<NUMBER-OF-SHARES-REDEEMED> 3,794
<SHARES-REINVESTED> 1,158
<NET-CHANGE-IN-ASSETS> (18,633)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,338
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 506
<AVERAGE-NET-ASSETS> 67,282
<PER-SHARE-NAV-BEGIN> 11.64
<PER-SHARE-NII> 0.89
<PER-SHARE-GAIN-APPREC> 1.21
<PER-SHARE-DIVIDEND> 0.36
<PER-SHARE-DISTRIBUTIONS> 1.96
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.42
<EXPENSE-RATIO> 0.74
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> BALANCE FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 64,592
<INVESTMENTS-AT-VALUE> 72,212
<RECEIVABLES> 4,248
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29
<TOTAL-ASSETS> 76,398
<PAYABLE-FOR-SECURITIES> 12,400
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 12,469
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,384
<SHARES-COMMON-STOCK> 32
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,139
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,546
<NET-ASSETS> 63,929
<DIVIDEND-INCOME> 786
<INTEREST-INCOME> 1,972
<OTHER-INCOME> 0
<EXPENSES-NET> 506
<NET-INVESTMENT-INCOME> 2,252
<REALIZED-GAINS-CURRENT> 12,663
<APPREC-INCREASE-CURRENT> (3,065)
<NET-CHANGE-FROM-OPS> 11,850
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (18,633)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,338
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 506
<AVERAGE-NET-ASSETS> 158
<PER-SHARE-NAV-BEGIN> 10.77
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 0.58
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.40
<EXPENSE-RATIO> 1.15
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 104
<NAME> BALANCED FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 64,592
<INVESTMENTS-AT-VALUE> 72,121
<RECEIVABLES> 4,248
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29
<TOTAL-ASSETS> 76,398
<PAYABLE-FOR-SECURITIES> 12,400
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 12,469
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,384
<SHARES-COMMON-STOCK> 99
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,139
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,546
<NET-ASSETS> 63,929
<DIVIDEND-INCOME> 786
<INTEREST-INCOME> 1,972
<OTHER-INCOME> 0
<EXPENSES-NET> 506
<NET-INVESTMENT-INCOME> 2,252
<REALIZED-GAINS-CURRENT> 12,663
<APPREC-INCREASE-CURRENT> (3,065)
<NET-CHANGE-FROM-OPS> 11,850
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 102
<NUMBER-OF-SHARES-REDEEMED> 4
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (18,633)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,338
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 506
<AVERAGE-NET-ASSETS> 506
<PER-SHARE-NAV-BEGIN> 10.77
<PER-SHARE-NII> 0.19
<PER-SHARE-GAIN-APPREC> 0.58
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.39
<EXPENSE-RATIO> 1.90
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 105
<NAME> BALANCE FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 64,592
<INVESTMENTS-AT-VALUE> 72,121
<RECEIVABLES> 4,248
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29
<TOTAL-ASSETS> 76,398
<PAYABLE-FOR-SECURITIES> 12,400
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 12,469
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,384
<SHARES-COMMON-STOCK> 81
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,139
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,546
<NET-ASSETS> 63,929
<DIVIDEND-INCOME> 786
<INTEREST-INCOME> 1,972
<OTHER-INCOME> 0
<EXPENSES-NET> 506
<NET-INVESTMENT-INCOME> 2,252
<REALIZED-GAINS-CURRENT> 12,663
<APPREC-INCREASE-CURRENT> (3,065)
<NET-CHANGE-FROM-OPS> 11,850
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89
<NUMBER-OF-SHARES-REDEEMED> 8
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (18,633)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,338
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 506
<AVERAGE-NET-ASSETS> 426
<PER-SHARE-NAV-BEGIN> 10.77
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 0.58
<PER-SHARE-DIVIDEND> 0.14
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.39
<EXPENSE-RATIO> 1.90
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 061
<NAME> CAPITAL APPRECIATION FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 454,675
<INVESTMENTS-AT-VALUE> 579,336
<RECEIVABLES> 7,238
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 586,574
<PAYABLE-FOR-SECURITIES> 24,092
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 531
<TOTAL-LIABILITIES> 24,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 405,396
<SHARES-COMMON-STOCK> 25,299
<SHARES-COMMON-PRIOR> 19,265
<ACCUMULATED-NII-CURRENT> 8,727
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,166
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,662
<NET-ASSETS> 561,951
<DIVIDEND-INCOME> 6,017
<INTEREST-INCOME> 1,470
<OTHER-INCOME> 0
<EXPENSES-NET> 3,138
<NET-INVESTMENT-INCOME> 4,349
<REALIZED-GAINS-CURRENT> 45,370
<APPREC-INCREASE-CURRENT> 74,013
<NET-CHANGE-FROM-OPS> 123,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,203
<DISTRIBUTIONS-OF-GAINS> 44,041
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,723
<NUMBER-OF-SHARES-REDEEMED> 4,708
<SHARES-REINVESTED> 2,018
<NET-CHANGE-IN-ASSETS> 213,223
<ACCUMULATED-NII-PRIOR> 3,922
<ACCUMULATED-GAINS-PRIOR> 27,208
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,138
<AVERAGE-NET-ASSETS> 427,044
<PER-SHARE-NAV-BEGIN> 18.10
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 5.08
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 2.13
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.19
<EXPENSE-RATIO> 0.71
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 062
<NAME> CAPITAL APPRECIATION FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 454,675
<INVESTMENTS-AT-VALUE> 579,336
<RECEIVABLES> 7,238
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 586,574
<PAYABLE-FOR-SECURITIES> 24,092
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 531
<TOTAL-LIABILITIES> 24,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 405,396
<SHARES-COMMON-STOCK> 147
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 8,727
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,166
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,662
<NET-ASSETS> 561,951
<DIVIDEND-INCOME> 6,017
<INTEREST-INCOME> 1,470
<OTHER-INCOME> 0
<EXPENSES-NET> 3,138
<NET-INVESTMENT-INCOME> 4,349
<REALIZED-GAINS-CURRENT> 45,370
<APPREC-INCREASE-CURRENT> 74,013
<NET-CHANGE-FROM-OPS> 123,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7
<DISTRIBUTIONS-OF-GAINS> 129
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 157
<NUMBER-OF-SHARES-REDEEMED> 17
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 213,223
<ACCUMULATED-NII-PRIOR> 3,922
<ACCUMULATED-GAINS-PRIOR> 27,208
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,138
<AVERAGE-NET-ASSETS> 1,420
<PER-SHARE-NAV-BEGIN> 17.19
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 6.03
<PER-SHARE-DIVIDEND> 0.09
<PER-SHARE-DISTRIBUTIONS> 2.13
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.16
<EXPENSE-RATIO> 0.96
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 063
<NAME> CAPITAL APPRECIATION FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 454,675
<INVESTMENTS-AT-VALUE> 579,336
<RECEIVABLES> 7,238
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 586,574
<PAYABLE-FOR-SECURITIES> 24,092
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 531
<TOTAL-LIABILITIES> 24,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 405,396
<SHARES-COMMON-STOCK> 309
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 8,727
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,166
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,662
<NET-ASSETS> 561,951
<DIVIDEND-INCOME> 6,017
<INTEREST-INCOME> 1,470
<OTHER-INCOME> 0
<EXPENSES-NET> 3,138
<NET-INVESTMENT-INCOME> 4,349
<REALIZED-GAINS-CURRENT> 45,370
<APPREC-INCREASE-CURRENT> 74,013
<NET-CHANGE-FROM-OPS> 123,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 330
<NUMBER-OF-SHARES-REDEEMED> 21
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 213,223
<ACCUMULATED-NII-PRIOR> 3,922
<ACCUMULATED-GAINS-PRIOR> 27,208
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,138
<AVERAGE-NET-ASSETS> 4,985
<PER-SHARE-NAV-BEGIN> 19.31
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.76
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.16
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 064
<NAME> CAPITAL APPRECIATION FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 454,675
<INVESTMENTS-AT-VALUE> 579,336
<RECEIVABLES> 7,238
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 586,574
<PAYABLE-FOR-SECURITIES> 24,092
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 531
<TOTAL-LIABILITIES> 24,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 405,396
<SHARES-COMMON-STOCK> 143
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 8,727
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,166
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,662
<NET-ASSETS> 561,951
<DIVIDEND-INCOME> 6,017
<INTEREST-INCOME> 1,470
<OTHER-INCOME> 0
<EXPENSES-NET> 3,138
<NET-INVESTMENT-INCOME> 4,349
<REALIZED-GAINS-CURRENT> 45,370
<APPREC-INCREASE-CURRENT> 74,013
<NET-CHANGE-FROM-OPS> 123,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 144
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 213,223
<ACCUMULATED-NII-PRIOR> 3,922
<ACCUMULATED-GAINS-PRIOR> 27,208
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,138
<AVERAGE-NET-ASSETS> 1,157
<PER-SHARE-NAV-BEGIN> 19.31
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 1.78
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.10
<EXPENSE-RATIO> 1.85
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 065
<NAME> CAPITAL APPRECIATION FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 454,675
<INVESTMENTS-AT-VALUE> 579,336
<RECEIVABLES> 7,238
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 586,574
<PAYABLE-FOR-SECURITIES> 24,092
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 531
<TOTAL-LIABILITIES> 24,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 405,396
<SHARES-COMMON-STOCK> 621
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 8,727
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,166
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,662
<NET-ASSETS> 561,951
<DIVIDEND-INCOME> 6,017
<INTEREST-INCOME> 1,470
<OTHER-INCOME> 0
<EXPENSES-NET> 3,138
<NET-INVESTMENT-INCOME> 4,349
<REALIZED-GAINS-CURRENT> 45,370
<APPREC-INCREASE-CURRENT> 74,013
<NET-CHANGE-FROM-OPS> 123,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 676
<NUMBER-OF-SHARES-REDEEMED> 55
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 213,223
<ACCUMULATED-NII-PRIOR> 3,922
<ACCUMULATED-GAINS-PRIOR> 27,208
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,138
<AVERAGE-NET-ASSETS> 6,376
<PER-SHARE-NAV-BEGIN> 19.31
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 1.77
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.10
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 161
<NAME> CORE EQUITY FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 30,700
<INVESTMENTS-AT-VALUE> 36,020
<RECEIVABLES> 584
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 67
<TOTAL-ASSETS> 36,671
<PAYABLE-FOR-SECURITIES> 859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36
<TOTAL-LIABILITIES> 895
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,893
<SHARES-COMMON-STOCK> 415
<SHARES-COMMON-PRIOR> 771
<ACCUMULATED-NII-CURRENT> 2,331
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,232
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,320
<NET-ASSETS> 35,776
<DIVIDEND-INCOME> 367
<INTEREST-INCOME> 86
<OTHER-INCOME> 0
<EXPENSES-NET> 439
<NET-INVESTMENT-INCOME> 14
<REALIZED-GAINS-CURRENT> 6,488
<APPREC-INCREASE-CURRENT> 1,191
<NET-CHANGE-FROM-OPS> 7,693
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20
<DISTRIBUTIONS-OF-GAINS> 616
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 116
<NUMBER-OF-SHARES-REDEEMED> 493
<SHARES-REINVESTED> 21
<NET-CHANGE-IN-ASSETS> (8,251)
<ACCUMULATED-NII-PRIOR> 1,498
<ACCUMULATED-GAINS-PRIOR> 58
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 234
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 439
<AVERAGE-NET-ASSETS> 9,262
<PER-SHARE-NAV-BEGIN> 13.55
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 2.78
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.79
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.55
<EXPENSE-RATIO> 0.87
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 162
<NAME> CORE EQUITY FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 30,700
<INVESTMENTS-AT-VALUE> 36,020
<RECEIVABLES> 584
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 67
<TOTAL-ASSETS> 36,671
<PAYABLE-FOR-SECURITIES> 859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36
<TOTAL-LIABILITIES> 895
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,893
<SHARES-COMMON-STOCK> 1,888
<SHARES-COMMON-PRIOR> 2,477
<ACCUMULATED-NII-CURRENT> 2,331
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,232
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,320
<NET-ASSETS> 35,776
<DIVIDEND-INCOME> 367
<INTEREST-INCOME> 86
<OTHER-INCOME> 0
<EXPENSES-NET> 439
<NET-INVESTMENT-INCOME> 14
<REALIZED-GAINS-CURRENT> 6,488
<APPREC-INCREASE-CURRENT> 1,191
<NET-CHANGE-FROM-OPS> 7,693
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17
<DISTRIBUTIONS-OF-GAINS> 1,861
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 671
<NUMBER-OF-SHARES-REDEEMED> 1,397
<SHARES-REINVESTED> 137
<NET-CHANGE-IN-ASSETS> (8,251)
<ACCUMULATED-NII-PRIOR> 1,498
<ACCUMULATED-GAINS-PRIOR> 58
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 234
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 439
<AVERAGE-NET-ASSETS> 31,793
<PER-SHARE-NAV-BEGIN> 13.56
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 2.77
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0.79
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.53
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 121
<NAME> EMERGING MARKETS FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 45,194
<INVESTMENTS-AT-VALUE> 53,112
<RECEIVABLES> 3,063
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 159
<TOTAL-ASSETS> 56,334
<PAYABLE-FOR-SECURITIES> 707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 452
<TOTAL-LIABILITIES> 1,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,673
<SHARES-COMMON-STOCK> 3,776
<SHARES-COMMON-PRIOR> 6,361
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 69
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10,347
<ACCUM-APPREC-OR-DEPREC> 7,918
<NET-ASSETS> 55,175
<DIVIDEND-INCOME> 1,132
<INTEREST-INCOME> 62
<OTHER-INCOME> 0
<EXPENSES-NET> 912
<NET-INVESTMENT-INCOME> 282
<REALIZED-GAINS-CURRENT> 3,040
<APPREC-INCREASE-CURRENT> 1,585
<NET-CHANGE-FROM-OPS> 4,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 310
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,007
<NUMBER-OF-SHARES-REDEEMED> 3,613
<SHARES-REINVESTED> 19
<NET-CHANGE-IN-ASSETS> (25,738)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 33
<OVERDIST-NET-GAINS-PRIOR> 13,517
<GROSS-ADVISORY-FEES> 568
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 912
<AVERAGE-NET-ASSETS> 61,471
<PER-SHARE-NAV-BEGIN> 12.66
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 1.30
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.96
<EXPENSE-RATIO> 1.45
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 122
<NAME> EMERGING MARKETS FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 45,194
<INVESTMENTS-AT-VALUE> 53,112
<RECEIVABLES> 3,063
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 159
<TOTAL-ASSETS> 56,334
<PAYABLE-FOR-SECURITIES> 707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 452
<TOTAL-LIABILITIES> 1,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,673
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 29
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 69
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10,347
<ACCUM-APPREC-OR-DEPREC> 7,918
<NET-ASSETS> 55,175
<DIVIDEND-INCOME> 1,132
<INTEREST-INCOME> 62
<OTHER-INCOME> 0
<EXPENSES-NET> 912
<NET-INVESTMENT-INCOME> 282
<REALIZED-GAINS-CURRENT> 3,040
<APPREC-INCREASE-CURRENT> 1,585
<NET-CHANGE-FROM-OPS> 4,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26
<NUMBER-OF-SHARES-REDEEMED> 46
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (25,738)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 33
<OVERDIST-NET-GAINS-PRIOR> 13,517
<GROSS-ADVISORY-FEES> 568
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 912
<AVERAGE-NET-ASSETS> 235
<PER-SHARE-NAV-BEGIN> 12.63
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 1.32
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.95
<EXPENSE-RATIO> 1.69
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 123
<NAME> EMERGING MARKETS FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 45,194
<INVESTMENTS-AT-VALUE> 53,112
<RECEIVABLES> 3,063
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 159
<TOTAL-ASSETS> 56,334
<PAYABLE-FOR-SECURITIES> 707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 452
<TOTAL-LIABILITIES> 1,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,673
<SHARES-COMMON-STOCK> 15
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 69
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10,347
<ACCUM-APPREC-OR-DEPREC> 7,918
<NET-ASSETS> 55,175
<DIVIDEND-INCOME> 1,132
<INTEREST-INCOME> 62
<OTHER-INCOME> 0
<EXPENSES-NET> 912
<NET-INVESTMENT-INCOME> 282
<REALIZED-GAINS-CURRENT> 3,040
<APPREC-INCREASE-CURRENT> 1,585
<NET-CHANGE-FROM-OPS> 4,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (25,738)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 33
<OVERDIST-NET-GAINS-PRIOR> 13,517
<GROSS-ADVISORY-FEES> 568
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 912
<AVERAGE-NET-ASSETS> 99
<PER-SHARE-NAV-BEGIN> 12.82
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.03
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.94
<EXPENSE-RATIO> 1.89
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 124
<NAME> EMERGING MARKETS FUNDS-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 45,194
<INVESTMENTS-AT-VALUE> 53,112
<RECEIVABLES> 3,063
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 159
<TOTAL-ASSETS> 56,334
<PAYABLE-FOR-SECURITIES> 707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 452
<TOTAL-LIABILITIES> 1,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,673
<SHARES-COMMON-STOCK> 22
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 69
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10,347
<ACCUM-APPREC-OR-DEPREC> 7,918
<NET-ASSETS> 55,175
<DIVIDEND-INCOME> 1,132
<INTEREST-INCOME> 62
<OTHER-INCOME> 0
<EXPENSES-NET> 912
<NET-INVESTMENT-INCOME> 282
<REALIZED-GAINS-CURRENT> 3,040
<APPREC-INCREASE-CURRENT> 1,585
<NET-CHANGE-FROM-OPS> 4,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28
<NUMBER-OF-SHARES-REDEEMED> 5
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (25,738)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 33
<OVERDIST-NET-GAINS-PRIOR> 13,517
<GROSS-ADVISORY-FEES> 568
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 912
<AVERAGE-NET-ASSETS> 145
<PER-SHARE-NAV-BEGIN> 12.85
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.04
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.89
<EXPENSE-RATIO> 2.62
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 125
<NAME> EMERGING MARKETS FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 45,194
<INVESTMENTS-AT-VALUE> 53,112
<RECEIVABLES> 3,063
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 159
<TOTAL-ASSETS> 56,334
<PAYABLE-FOR-SECURITIES> 707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 452
<TOTAL-LIABILITIES> 1,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,673
<SHARES-COMMON-STOCK> 132
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 69
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10,347
<ACCUM-APPREC-OR-DEPREC> 7,918
<NET-ASSETS> 55,175
<DIVIDEND-INCOME> 1,132
<INTEREST-INCOME> 62
<OTHER-INCOME> 0
<EXPENSES-NET> 912
<NET-INVESTMENT-INCOME> 282
<REALIZED-GAINS-CURRENT> 3,040
<APPREC-INCREASE-CURRENT> 1,585
<NET-CHANGE-FROM-OPS> 4,907
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153
<NUMBER-OF-SHARES-REDEEMED> 21
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (25,738)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 33
<OVERDIST-NET-GAINS-PRIOR> 13,517
<GROSS-ADVISORY-FEES> 568
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 912
<AVERAGE-NET-ASSETS> 1,152
<PER-SHARE-NAV-BEGIN> 12.82
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 1.03
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.89
<EXPENSE-RATIO> 2.63
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 051
<NAME> ENHANCED EQUITY FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 36,043
<INVESTMENTS-AT-VALUE> 44,816
<RECEIVABLES> 67
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 44,883
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45
<TOTAL-LIABILITIES> 45
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,136
<SHARES-COMMON-STOCK> 2,724
<SHARES-COMMON-PRIOR> 5,243
<ACCUMULATED-NII-CURRENT> 3,436
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,494
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,772
<NET-ASSETS> 44,838
<DIVIDEND-INCOME> 1,308
<INTEREST-INCOME> 21
<OTHER-INCOME> 0
<EXPENSES-NET> 479
<NET-INVESTMENT-INCOME> 850
<REALIZED-GAINS-CURRENT> 21,124
<APPREC-INCREASE-CURRENT> (4,893)
<NET-CHANGE-FROM-OPS> 17,081
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 613
<DISTRIBUTIONS-OF-GAINS> 16,690
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 761
<NUMBER-OF-SHARES-REDEEMED> 4,525
<SHARES-REINVESTED> 1,245
<NET-CHANGE-IN-ASSETS> (35,857)
<ACCUMULATED-NII-PRIOR> 954
<ACCUMULATED-GAINS-PRIOR> 10,860
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 292
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 479
<AVERAGE-NET-ASSETS> 64,793
<PER-SHARE-NAV-BEGIN> 15.91
<PER-SHARE-NII> 1.18
<PER-SHARE-GAIN-APPREC> 3.10
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 3.63
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.46
<EXPENSE-RATIO> 0.74
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> EQUITY INCOME FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 115,531
<INVESTMENTS-AT-VALUE> 139,521
<RECEIVABLES> 2,407
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 141,929
<PAYABLE-FOR-SECURITIES> 1,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172
<TOTAL-LIABILITIES> 1,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,898
<SHARES-COMMON-STOCK> 7,860
<SHARES-COMMON-PRIOR> 8,130
<ACCUMULATED-NII-CURRENT> 2,380
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,956
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,990
<NET-ASSETS> 140,224
<DIVIDEND-INCOME> 4,473
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> 931
<NET-INVESTMENT-INCOME> 3,710
<REALIZED-GAINS-CURRENT> 20,609
<APPREC-INCREASE-CURRENT> 6,318
<NET-CHANGE-FROM-OPS> 30,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,331
<DISTRIBUTIONS-OF-GAINS> 14,051
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,004
<NUMBER-OF-SHARES-REDEEMED> 2,573
<SHARES-REINVESTED> 1,299
<NET-CHANGE-IN-ASSETS> 17,413
<ACCUMULATED-NII-PRIOR> 3,782
<ACCUMULATED-GAINS-PRIOR> 7,778
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 931
<AVERAGE-NET-ASSETS> 114,269
<PER-SHARE-NAV-BEGIN> 14.36
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 3.17
<PER-SHARE-DIVIDEND> 0.55
<PER-SHARE-DISTRIBUTIONS> 1.97
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.41
<EXPENSE-RATIO> 0.72
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> EQUITY INCOME FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 115,531
<INVESTMENTS-AT-VALUE> 139,521
<RECEIVABLES> 2,407
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 141,929
<PAYABLE-FOR-SECURITIES> 1,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172
<TOTAL-LIABILITIES> 1,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,898
<SHARES-COMMON-STOCK> 529
<SHARES-COMMON-PRIOR> 425
<ACCUMULATED-NII-CURRENT> 2,380
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,956
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,990
<NET-ASSETS> 140,224
<DIVIDEND-INCOME> 4,473
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> 931
<NET-INVESTMENT-INCOME> 3,710
<REALIZED-GAINS-CURRENT> 20,609
<APPREC-INCREASE-CURRENT> 6,318
<NET-CHANGE-FROM-OPS> 30,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 249
<DISTRIBUTIONS-OF-GAINS> 853
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 142
<NUMBER-OF-SHARES-REDEEMED> 118
<SHARES-REINVESTED> 80
<NET-CHANGE-IN-ASSETS> 17,413
<ACCUMULATED-NII-PRIOR> 3,782
<ACCUMULATED-GAINS-PRIOR> 7,778
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 931
<AVERAGE-NET-ASSETS> 6,806
<PER-SHARE-NAV-BEGIN> 14.35
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 3.26
<PER-SHARE-DIVIDEND> 0.51
<PER-SHARE-DISTRIBUTIONS> 1.97
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.40
<EXPENSE-RATIO> 0.97
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> EQUITY INCOME FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 115,531
<INVESTMENTS-AT-VALUE> 139,521
<RECEIVABLES> 2,407
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 141,929
<PAYABLE-FOR-SECURITIES> 1,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172
<TOTAL-LIABILITIES> 1,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,898
<SHARES-COMMON-STOCK> 114
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,380
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,956
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,990
<NET-ASSETS> 140,224
<DIVIDEND-INCOME> 4,473
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> 931
<NET-INVESTMENT-INCOME> 3,710
<REALIZED-GAINS-CURRENT> 20,609
<APPREC-INCREASE-CURRENT> 6,318
<NET-CHANGE-FROM-OPS> 30,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 118
<NUMBER-OF-SHARES-REDEEMED> 5
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 17,413
<ACCUMULATED-NII-PRIOR> 3,782
<ACCUMULATED-GAINS-PRIOR> 7,778
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 931
<AVERAGE-NET-ASSETS> 851
<PER-SHARE-NAV-BEGIN> 13.94
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 1.48
<PER-SHARE-DIVIDEND> 0.18
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.39
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 034
<NAME> EQUITY INCOME FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 115,531
<INVESTMENTS-AT-VALUE> 139,521
<RECEIVABLES> 2,407
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 141,929
<PAYABLE-FOR-SECURITIES> 1,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172
<TOTAL-LIABILITIES> 1,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,898
<SHARES-COMMON-STOCK> 167
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,380
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,956
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,990
<NET-ASSETS> 140,224
<DIVIDEND-INCOME> 4,473
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> 931
<NET-INVESTMENT-INCOME> 3,710
<REALIZED-GAINS-CURRENT> 20,609
<APPREC-INCREASE-CURRENT> 6,318
<NET-CHANGE-FROM-OPS> 30,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 213
<NUMBER-OF-SHARES-REDEEMED> 47
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 17,413
<ACCUMULATED-NII-PRIOR> 3,782
<ACCUMULATED-GAINS-PRIOR> 7,778
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 931
<AVERAGE-NET-ASSETS> 1,136
<PER-SHARE-NAV-BEGIN> 13.94
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 1.48
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.37
<EXPENSE-RATIO> 1.87
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 035
<NAME> EQUITY INCOME FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 115,531
<INVESTMENTS-AT-VALUE> 139,521
<RECEIVABLES> 2,407
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 141,929
<PAYABLE-FOR-SECURITIES> 1,533
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172
<TOTAL-LIABILITIES> 1,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,898
<SHARES-COMMON-STOCK> 431
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,380
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,956
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,990
<NET-ASSETS> 140,224
<DIVIDEND-INCOME> 4,473
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> 931
<NET-INVESTMENT-INCOME> 3,710
<REALIZED-GAINS-CURRENT> 20,609
<APPREC-INCREASE-CURRENT> 6,318
<NET-CHANGE-FROM-OPS> 30,637
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 47
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 488
<NUMBER-OF-SHARES-REDEEMED> 60
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 17,413
<ACCUMULATED-NII-PRIOR> 3,782
<ACCUMULATED-GAINS-PRIOR> 7,778
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,158
<AVERAGE-NET-ASSETS> 3,381
<PER-SHARE-NAV-BEGIN> 13.94
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 1.48
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.37
<EXPENSE-RATIO> 1.87
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 203
<NAME> GROWTH FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,438,379
<INVESTMENTS-AT-VALUE> 1,728,249
<RECEIVABLES> 60,056
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,720
<TOTAL-ASSETS> 1,793,025
<PAYABLE-FOR-SECURITIES> 53,939
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21,752
<TOTAL-LIABILITIES> 75,691
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,254,333
<SHARES-COMMON-STOCK> 5,449
<SHARES-COMMON-PRIOR> 5,686
<ACCUMULATED-NII-CURRENT> 37,051
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 134,859
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 291,091
<NET-ASSETS> 1,717,334
<DIVIDEND-INCOME> 10,052
<INTEREST-INCOME> 5,800
<OTHER-INCOME> 0
<EXPENSES-NET> 22,711
<NET-INVESTMENT-INCOME> (6,859)
<REALIZED-GAINS-CURRENT> 209,267
<APPREC-INCREASE-CURRENT> 38,690
<NET-CHANGE-FROM-OPS> 241,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 19,626
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,519
<NUMBER-OF-SHARES-REDEEMED> 5,755
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 78,759
<ACCUMULATED-NII-PRIOR> 5,470
<ACCUMULATED-GAINS-PRIOR> 188,061
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,711
<AVERAGE-NET-ASSETS> 155,624
<PER-SHARE-NAV-BEGIN> 26.58
<PER-SHARE-NII> 0.69
<PER-SHARE-GAIN-APPREC> 3.27
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.51
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.03
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 204
<NAME> GROWTH FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,438,379
<INVESTMENTS-AT-VALUE> 1,728,249
<RECEIVABLES> 60,056
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,720
<TOTAL-ASSETS> 1,793,025
<PAYABLE-FOR-SECURITIES> 53,939
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21,752
<TOTAL-LIABILITIES> 75,691
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,254,333
<SHARES-COMMON-STOCK> 2,174
<SHARES-COMMON-PRIOR> 1,463
<ACCUMULATED-NII-CURRENT> 37,051
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 134,859
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 291,091
<NET-ASSETS> 1,717,334
<DIVIDEND-INCOME> 10,052
<INTEREST-INCOME> 5,800
<OTHER-INCOME> 0
<EXPENSES-NET> 22,711
<NET-INVESTMENT-INCOME> (6,859)
<REALIZED-GAINS-CURRENT> 209,267
<APPREC-INCREASE-CURRENT> 38,690
<NET-CHANGE-FROM-OPS> 241,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 5,682
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 923
<NUMBER-OF-SHARES-REDEEMED> 213
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 78,759
<ACCUMULATED-NII-PRIOR> 5,470
<ACCUMULATED-GAINS-PRIOR> 188,061
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,711
<AVERAGE-NET-ASSETS> 47,143
<PER-SHARE-NAV-BEGIN> 25.46
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 3.29
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.51
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 25.59
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 205
<NAME> GROWTH FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,438,379
<INVESTMENTS-AT-VALUE> 1,728,249
<RECEIVABLES> 60,056
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,720
<TOTAL-ASSETS> 1,793,025
<PAYABLE-FOR-SECURITIES> 53,939
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21,752
<TOTAL-LIABILITIES> 75,691
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,254,333
<SHARES-COMMON-STOCK> 59,197
<SHARES-COMMON-PRIOR> 56,968
<ACCUMULATED-NII-CURRENT> 37,051
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 134,859
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 291,091
<NET-ASSETS> 1,717,334
<DIVIDEND-INCOME> 10,052
<INTEREST-INCOME> 5,800
<OTHER-INCOME> 0
<EXPENSES-NET> 22,711
<NET-INVESTMENT-INCOME> (6,859)
<REALIZED-GAINS-CURRENT> 209,267
<APPREC-INCREASE-CURRENT> 38,690
<NET-CHANGE-FROM-OPS> 241,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 198,720
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,754
<NUMBER-OF-SHARES-REDEEMED> 15,525
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 78,759
<ACCUMULATED-NII-PRIOR> 5,470
<ACCUMULATED-GAINS-PRIOR> 188,601
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,711
<AVERAGE-NET-ASSETS> 1,486,720
<PER-SHARE-NAV-BEGIN> 25.46
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 3.18
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.51
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 25.58
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 153
<NAME> INNOVATION FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 220,107
<INVESTMENTS-AT-VALUE> 266,900
<RECEIVABLES> 5,193
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 539
<TOTAL-ASSETS> 272,632
<PAYABLE-FOR-SECURITIES> 382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,674
<TOTAL-LIABILITIES> 2,056
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221,921
<SHARES-COMMON-STOCK> 3,226
<SHARES-COMMON-PRIOR> 2,900
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,862
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,793
<NET-ASSETS> 270,576
<DIVIDEND-INCOME> 305
<INTEREST-INCOME> 826
<OTHER-INCOME> 0
<EXPENSES-NET> 3,528
<NET-INVESTMENT-INCOME> (2,397)
<REALIZED-GAINS-CURRENT> 3,357
<APPREC-INCREASE-CURRENT> 2,593
<NET-CHANGE-FROM-OPS> 3,553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 776
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,118
<NUMBER-OF-SHARES-REDEEMED> 4,792
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 48,979
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,096
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,528
<AVERAGE-NET-ASSETS> 53,558
<PER-SHARE-NAV-BEGIN> 17.26
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.36
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.26
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.43
<EXPENSE-RATIO> 1.28
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 154
<NAME> INNOVATION FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 220,107
<INVESTMENTS-AT-VALUE> 266,900
<RECEIVABLES> 5,193
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 539
<TOTAL-ASSETS> 272,632
<PAYABLE-FOR-SECURITIES> 382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,674
<TOTAL-LIABILITIES> 2,056
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221,921
<SHARES-COMMON-STOCK> 3,011
<SHARES-COMMON-PRIOR> 1,982
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,862
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,793
<NET-ASSETS> 270,576
<DIVIDEND-INCOME> 305
<INTEREST-INCOME> 826
<OTHER-INCOME> 0
<EXPENSES-NET> 3,528
<NET-INVESTMENT-INCOME> (2,397)
<REALIZED-GAINS-CURRENT> 3,357
<APPREC-INCREASE-CURRENT> 2,593
<NET-CHANGE-FROM-OPS> 3,553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 599
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,700
<NUMBER-OF-SHARES-REDEEMED> 672
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 48,979
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,096
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,528
<AVERAGE-NET-ASSETS> 44,536
<PER-SHARE-NAV-BEGIN> 17.04
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.26
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.10
<EXPENSE-RATIO> 2.03
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 155
<NAME> INNOVATION FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 220,107
<INVESTMENTS-AT-VALUE> 266,900
<RECEIVABLES> 5,193
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 539
<TOTAL-ASSETS> 272,632
<PAYABLE-FOR-SECURITIES> 382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,674
<TOTAL-LIABILITIES> 2,056
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221,921
<SHARES-COMMON-STOCK> 9,529
<SHARES-COMMON-PRIOR> 8,086
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,862
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,793
<NET-ASSETS> 270,576
<DIVIDEND-INCOME> 305
<INTEREST-INCOME> 826
<OTHER-INCOME> 0
<EXPENSES-NET> 3,528
<NET-INVESTMENT-INCOME> (2,397)
<REALIZED-GAINS-CURRENT> 3,357
<APPREC-INCREASE-CURRENT> 2,593
<NET-CHANGE-FROM-OPS> 3,553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,217
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,804
<NUMBER-OF-SHARES-REDEEMED> 4,360
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 48,979
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,096
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,296
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,528
<AVERAGE-NET-ASSETS> 153,857
<PER-SHARE-NAV-BEGIN> 17.04
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.26
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.09
<EXPENSE-RATIO> 2.03
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 131
<NAME> INTERNATIONAL DEVELOPED FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 90,981
<INVESTMENTS-AT-VALUE> 101,936
<RECEIVABLES> 1,061
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 210
<TOTAL-ASSETS> 103,207
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,894
<TOTAL-LIABILITIES> 2,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86,123
<SHARES-COMMON-STOCK> 7,171
<SHARES-COMMON-PRIOR> 5,600
<ACCUMULATED-NII-CURRENT> 1,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,928
<NET-ASSETS> 100,313
<DIVIDEND-INCOME> 1,508
<INTEREST-INCOME> 231
<OTHER-INCOME> 0
<EXPENSES-NET> 1,010
<NET-INVESTMENT-INCOME> 729
<REALIZED-GAINS-CURRENT> 3,808
<APPREC-INCREASE-CURRENT> 4,764
<NET-CHANGE-FROM-OPS> 9,301
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 4,189
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,568
<NUMBER-OF-SHARES-REDEEMED> 2,294
<SHARES-REINVESTED> 296
<NET-CHANGE-IN-ASSETS> 24,482
<ACCUMULATED-NII-PRIOR> 1,936
<ACCUMULATED-GAINS-PRIOR> 1,214
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 526
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010
<AVERAGE-NET-ASSETS> 81,181
<PER-SHARE-NAV-BEGIN> 12.54
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 1.09
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> .61
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.12
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 132
<NAME> INTERNATIONAL DEVELOPED FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 90,981
<INVESTMENTS-AT-VALUE> 101,936
<RECEIVABLES> 1,061
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 210
<TOTAL-ASSETS> 103,207
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,894
<TOTAL-LIABILITIES> 2,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86,123
<SHARES-COMMON-STOCK> 176
<SHARES-COMMON-PRIOR> 450
<ACCUMULATED-NII-CURRENT> 1,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,928
<NET-ASSETS> 100,313
<DIVIDEND-INCOME> 1,508
<INTEREST-INCOME> 231
<OTHER-INCOME> 0
<EXPENSES-NET> 1,010
<NET-INVESTMENT-INCOME> 729
<REALIZED-GAINS-CURRENT> 3,808
<APPREC-INCREASE-CURRENT> 4,764
<NET-CHANGE-FROM-OPS> 9,301
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 255
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 140
<NUMBER-OF-SHARES-REDEEMED> 435
<SHARES-REINVESTED> 22
<NET-CHANGE-IN-ASSETS> 24,482
<ACCUMULATED-NII-PRIOR> 1,936
<ACCUMULATED-GAINS-PRIOR> 1,214
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 526
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010
<AVERAGE-NET-ASSETS> 5,289
<PER-SHARE-NAV-BEGIN> 12.51
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 1.09
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> .61
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.05
<EXPENSE-RATIO> 1.38
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 133
<NAME> INTERNATIONAL DEVELOPED FUND-CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 90,981
<INVESTMENTS-AT-VALUE> 101,936
<RECEIVABLES> 1,061
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 210
<TOTAL-ASSETS> 103,207
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,894
<TOTAL-LIABILITIES> 2,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86,123
<SHARES-COMMON-STOCK> 24
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,928
<NET-ASSETS> 100,313
<DIVIDEND-INCOME> 1,508
<INTEREST-INCOME> 231
<OTHER-INCOME> 0
<EXPENSES-NET> 1,010
<NET-INVESTMENT-INCOME> 729
<REALIZED-GAINS-CURRENT> 3,808
<APPREC-INCREASE-CURRENT> 4,764
<NET-CHANGE-FROM-OPS> 9,301
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 39
<NUMBER-OF-SHARES-REDEEMED> 15
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,482
<ACCUMULATED-NII-PRIOR> 1,936
<ACCUMULATED-GAINS-PRIOR> 1,214
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 526
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010
<AVERAGE-NET-ASSETS> 154
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.08
<EXPENSE-RATIO> 1.54
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 134
<NAME> INTERNATIONAL DEVELOPED FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 90,981
<INVESTMENTS-AT-VALUE> 101,936
<RECEIVABLES> 1,061
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 210
<TOTAL-ASSETS> 103,207
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,894
<TOTAL-LIABILITIES> 2,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86,123
<SHARES-COMMON-STOCK> 86
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,928
<NET-ASSETS> 100,313
<DIVIDEND-INCOME> 1,508
<INTEREST-INCOME> 231
<OTHER-INCOME> 0
<EXPENSES-NET> 1,010
<NET-INVESTMENT-INCOME> 729
<REALIZED-GAINS-CURRENT> 3,808
<APPREC-INCREASE-CURRENT> 4,764
<NET-CHANGE-FROM-OPS> 9,301
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 87
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,482
<ACCUMULATED-NII-PRIOR> 1,936
<ACCUMULATED-GAINS-PRIOR> 1,214
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 526
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010
<AVERAGE-NET-ASSETS> 512
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 1.29
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.06
<EXPENSE-RATIO> 2.28
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 135
<NAME> INTERNATIONAL DEVELOPED FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 90,981
<INVESTMENTS-AT-VALUE> 101,936
<RECEIVABLES> 1,061
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 210
<TOTAL-ASSETS> 103,207
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,894
<TOTAL-LIABILITIES> 2,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86,123
<SHARES-COMMON-STOCK> 193
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,129
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,133
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,928
<NET-ASSETS> 100,313
<DIVIDEND-INCOME> 1,508
<INTEREST-INCOME> 231
<OTHER-INCOME> 0
<EXPENSES-NET> 1,010
<NET-INVESTMENT-INCOME> 729
<REALIZED-GAINS-CURRENT> 3,808
<APPREC-INCREASE-CURRENT> 4,764
<NET-CHANGE-FROM-OPS> 9,301
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 228
<NUMBER-OF-SHARES-REDEEMED> 35
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,482
<ACCUMULATED-NII-PRIOR> 1,936
<ACCUMULATED-GAINS-PRIOR> 1,214
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 526
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010
<AVERAGE-NET-ASSETS> 1,122
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 1.29
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.06
<EXPENSE-RATIO> 2.28
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> INTERNATIONAL FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,794
<INVESTMENTS-AT-VALUE> 188,952
<RECEIVABLES> 12,707
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 6,460
<TOTAL-ASSETS> 208,119
<PAYABLE-FOR-SECURITIES> 5,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,723
<TOTAL-LIABILITIES> 12,710
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,445
<SHARES-COMMON-STOCK> 1,283
<SHARES-COMMON-PRIOR> 1,539
<ACCUMULATED-NII-CURRENT> 2,463
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,141
<NET-ASSETS> 195,409
<DIVIDEND-INCOME> 3,029
<INTEREST-INCOME> 151
<OTHER-INCOME> 0
<EXPENSES-NET> 3,424
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 11,683
<APPREC-INCREASE-CURRENT> 11,771
<NET-CHANGE-FROM-OPS> 23,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 597
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,707
<NUMBER-OF-SHARES-REDEEMED> 9,963
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (34,084)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,696
<OVERDISTRIB-NII-PRIOR> 407
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,097
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,424
<AVERAGE-NET-ASSETS> 18,231
<PER-SHARE-NAV-BEGIN> 13.03
<PER-SHARE-NII> 0.29
<PER-SHARE-GAIN-APPREC> 1.33
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> .39
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.26
<EXPENSE-RATIO> 1.51
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 024
<NAME> INTERNATIONAL FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,794
<INVESTMENTS-AT-VALUE> 188,952
<RECEIVABLES> 12,707
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 6,460
<TOTAL-ASSETS> 208,119
<PAYABLE-FOR-SECURITIES> 5,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,723
<TOTAL-LIABILITIES> 12,710
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,445
<SHARES-COMMON-STOCK> 640
<SHARES-COMMON-PRIOR> 472
<ACCUMULATED-NII-CURRENT> 2,463
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,141
<NET-ASSETS> 195,409
<DIVIDEND-INCOME> 3,029
<INTEREST-INCOME> 151
<OTHER-INCOME> 0
<EXPENSES-NET> 3,424
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 11,683
<APPREC-INCREASE-CURRENT> 11,771
<NET-CHANGE-FROM-OPS> 23,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 203
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 224
<NUMBER-OF-SHARES-REDEEMED> 56
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (34,084)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,696
<OVERDISTRIB-NII-PRIOR> 407
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,097
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,424
<AVERAGE-NET-ASSETS> 7,118
<PER-SHARE-NAV-BEGIN> 12.48
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> .39
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.56
<EXPENSE-RATIO> 2.26
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 025
<NAME> INTERNATIONAL FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 164,794
<INVESTMENTS-AT-VALUE> 188,952
<RECEIVABLES> 12,707
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 6,460
<TOTAL-ASSETS> 208,119
<PAYABLE-FOR-SECURITIES> 5,987
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,723
<TOTAL-LIABILITIES> 12,710
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,445
<SHARES-COMMON-STOCK> 12,436
<SHARES-COMMON-PRIOR> 16,320
<ACCUMULATED-NII-CURRENT> 2,463
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,360
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,141
<NET-ASSETS> 195,409
<DIVIDEND-INCOME> 3,029
<INTEREST-INCOME> 151
<OTHER-INCOME> 0
<EXPENSES-NET> 3,424
<NET-INVESTMENT-INCOME> (244)
<REALIZED-GAINS-CURRENT> 11,683
<APPREC-INCREASE-CURRENT> 11,771
<NET-CHANGE-FROM-OPS> 23,210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 6,105
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,983
<NUMBER-OF-SHARES-REDEEMED> 10,866
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (34,084)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,696
<OVERDISTRIB-NII-PRIOR> 407
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,097
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,424
<AVERAGE-NET-ASSETS> 181,038
<PER-SHARE-NAV-BEGIN> 12.47
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 1.29
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> .39
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.55
<EXPENSE-RATIO> 2.25
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 141
<NAME> MICRO CAP GROWTH FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 129,307
<INVESTMENTS-AT-VALUE> 166,709
<RECEIVABLES> 1,454
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 168,163
<PAYABLE-FOR-SECURITIES> 1,330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578
<TOTAL-LIABILITIES> 1,908
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,121
<SHARES-COMMON-STOCK> 8,269
<SHARES-COMMON-PRIOR> 4,546
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,732
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37,402
<NET-ASSETS> 166,255
<DIVIDEND-INCOME> 710
<INTEREST-INCOME> 455
<OTHER-INCOME> 0
<EXPENSES-NET> 1,699
<NET-INVESTMENT-INCOME> (544)
<REALIZED-GAINS-CURRENT> 10,317
<APPREC-INCREASE-CURRENT> 15,151
<NET-CHANGE-FROM-OPS> 24,924
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 11,397
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,050
<NUMBER-OF-SHARES-REDEEMED> 899
<SHARES-REINVESTED> 572
<NET-CHANGE-IN-ASSETS> 81,716
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 8,934
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,390
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,699
<AVERAGE-NET-ASSETS> 110,011
<PER-SHARE-NAV-BEGIN> 18.47
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 3.41
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.85
<EXPENSE-RATIO> 1.52
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 142
<NAME> MICRO CAP GROWTH FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 129,307
<INVESTMENTS-AT-VALUE> 166,709
<RECEIVABLES> 1,454
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 168,163
<PAYABLE-FOR-SECURITIES> 1,330
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578
<TOTAL-LIABILITIES> 1,908
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,121
<SHARES-COMMON-STOCK> 107
<SHARES-COMMON-PRIOR> 31
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,732
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 37,402
<NET-ASSETS> 166,255
<DIVIDEND-INCOME> 710
<INTEREST-INCOME> 455
<OTHER-INCOME> 0
<EXPENSES-NET> 1,699
<NET-INVESTMENT-INCOME> (544)
<REALIZED-GAINS-CURRENT> 10,317
<APPREC-INCREASE-CURRENT> 15,151
<NET-CHANGE-FROM-OPS> 24,924
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 122
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135
<NUMBER-OF-SHARES-REDEEMED> 66
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> 81,716
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 8,934
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,390
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,699
<AVERAGE-NET-ASSETS> 1,205
<PER-SHARE-NAV-BEGIN> 18.46
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 3.41
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.03
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.78
<EXPENSE-RATIO> 1.77
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 111
<NAME> MID CAP GROWTH FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 289,754
<INVESTMENTS-AT-VALUE> 371,796
<RECEIVABLES> 3,716
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,391
<TOTAL-ASSETS> 388,903
<PAYABLE-FOR-SECURITIES> 611
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 723
<TOTAL-LIABILITIES> 1,334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,286
<SHARES-COMMON-STOCK> 14,370
<SHARES-COMMON-PRIOR> 11,881
<ACCUMULATED-NII-CURRENT> 513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,728
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,042
<NET-ASSETS> 387,569
<DIVIDEND-INCOME> 2,806
<INTEREST-INCOME> 576
<OTHER-INCOME> 0
<EXPENSES-NET> 2,305
<NET-INVESTMENT-INCOME> 1,077
<REALIZED-GAINS-CURRENT> 30,855
<APPREC-INCREASE-CURRENT> 50,902
<NET-CHANGE-FROM-OPS> 82,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 604
<DISTRIBUTIONS-OF-GAINS> 43,528
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,798
<NUMBER-OF-SHARES-REDEEMED> 3,791
<SHARES-REINVESTED> 2,481
<NET-CHANGE-IN-ASSETS> 155,487
<ACCUMULATED-NII-PRIOR> 2,129
<ACCUMULATED-GAINS-PRIOR> 28,839
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,220
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,305
<AVERAGE-NET-ASSETS> 234,464
<PER-SHARE-NAV-BEGIN> 19.44
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 5.25
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 4.29
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.28
<EXPENSE-RATIO> 0.71
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 112
<NAME> MID CAP GROWTH FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 289,754
<INVESTMENTS-AT-VALUE> 371,796
<RECEIVABLES> 3,716
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,391
<TOTAL-ASSETS> 388,903
<PAYABLE-FOR-SECURITIES> 611
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 723
<TOTAL-LIABILITIES> 1,334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,286
<SHARES-COMMON-STOCK> 102
<SHARES-COMMON-PRIOR> 55
<ACCUMULATED-NII-CURRENT> 513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,728
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,042
<NET-ASSETS> 387,569
<DIVIDEND-INCOME> 2,806
<INTEREST-INCOME> 576
<OTHER-INCOME> 0
<EXPENSES-NET> 2,305
<NET-INVESTMENT-INCOME> 1,077
<REALIZED-GAINS-CURRENT> 30,855
<APPREC-INCREASE-CURRENT> 50,902
<NET-CHANGE-FROM-OPS> 82,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2
<DISTRIBUTIONS-OF-GAINS> 258
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47
<NUMBER-OF-SHARES-REDEEMED> 15
<SHARES-REINVESTED> 15
<NET-CHANGE-IN-ASSETS> 155,487
<ACCUMULATED-NII-PRIOR> 2,129
<ACCUMULATED-GAINS-PRIOR> 28,839
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,220
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,305
<AVERAGE-NET-ASSETS> 1,433
<PER-SHARE-NAV-BEGIN> 19.44
<PER-SHARE-NII> (0.13)
<PER-SHARE-GAIN-APPREC> 5.25
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 4.29
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.24
<EXPENSE-RATIO> 0.96
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 113
<NAME> MID CAP GROWTH FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 289,754
<INVESTMENTS-AT-VALUE> 371,796
<RECEIVABLES> 3,716
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,391
<TOTAL-ASSETS> 388,903
<PAYABLE-FOR-SECURITIES> 611
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 723
<TOTAL-LIABILITIES> 1,334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,286
<SHARES-COMMON-STOCK> 602
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,728
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,042
<NET-ASSETS> 387,569
<DIVIDEND-INCOME> 2,806
<INTEREST-INCOME> 576
<OTHER-INCOME> 0
<EXPENSES-NET> 2,305
<NET-INVESTMENT-INCOME> 1,077
<REALIZED-GAINS-CURRENT> 30,855
<APPREC-INCREASE-CURRENT> 50,902
<NET-CHANGE-FROM-OPS> 82,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 751
<NUMBER-OF-SHARES-REDEEMED> 149
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 155,487
<ACCUMULATED-NII-PRIOR> 2,129
<ACCUMULATED-GAINS-PRIOR> 28,839
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,220
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,305
<AVERAGE-NET-ASSETS> 10,574
<PER-SHARE-NAV-BEGIN> 18.14
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 2.14
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.24
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 114
<NAME> MID CAP GROWTH FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 289,754
<INVESTMENTS-AT-VALUE> 371,796
<RECEIVABLES> 3,716
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,391
<TOTAL-ASSETS> 388,903
<PAYABLE-FOR-SECURITIES> 611
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 723
<TOTAL-LIABILITIES> 1,334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,286
<SHARES-COMMON-STOCK> 1,401
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,728
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,042
<NET-ASSETS> 387,569
<DIVIDEND-INCOME> 2,806
<INTEREST-INCOME> 576
<OTHER-INCOME> 0
<EXPENSES-NET> 2,305
<NET-INVESTMENT-INCOME> 1,077
<REALIZED-GAINS-CURRENT> 30,855
<APPREC-INCREASE-CURRENT> 50,902
<NET-CHANGE-FROM-OPS> 82,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,500
<NUMBER-OF-SHARES-REDEEMED> 99
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 155,487
<ACCUMULATED-NII-PRIOR> 2,129
<ACCUMULATED-GAINS-PRIOR> 28,839
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,220
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,305
<AVERAGE-NET-ASSETS> 22,542
<PER-SHARE-NAV-BEGIN> 18.14
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 2.14
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.17
<EXPENSE-RATIO> 1.85
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 115
<NAME> MID CAP GROWTH FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 289,754
<INVESTMENTS-AT-VALUE> 371,796
<RECEIVABLES> 3,716
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 13,391
<TOTAL-ASSETS> 388,903
<PAYABLE-FOR-SECURITIES> 611
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 723
<TOTAL-LIABILITIES> 1,334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 292,286
<SHARES-COMMON-STOCK> 2,661
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,728
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 82,042
<NET-ASSETS> 387,569
<DIVIDEND-INCOME> 2,806
<INTEREST-INCOME> 576
<OTHER-INCOME> 0
<EXPENSES-NET> 2,305
<NET-INVESTMENT-INCOME> 1,077
<REALIZED-GAINS-CURRENT> 30,855
<APPREC-INCREASE-CURRENT> 50,902
<NET-CHANGE-FROM-OPS> 82,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,054
<NUMBER-OF-SHARES-REDEEMED> 392
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 155,487
<ACCUMULATED-NII-PRIOR> 2,129
<ACCUMULATED-GAINS-PRIOR> 28,839
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,220
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,305
<AVERAGE-NET-ASSETS> 42,636
<PER-SHARE-NAV-BEGIN> 18.14
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> 2.14
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.18
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 213
<NAME> OPPORTUNITY FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 707,475
<INVESTMENTS-AT-VALUE> 868,657
<RECEIVABLES> 4,789
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,295
<TOTAL-ASSETS> 874,741
<PAYABLE-FOR-SECURITIES> 23,454
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,357
<TOTAL-LIABILITIES> 31,811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 676,315
<SHARES-COMMON-STOCK> 7,274
<SHARES-COMMON-PRIOR> 3,610
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,066
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 159,549
<NET-ASSETS> 842,930
<DIVIDEND-INCOME> 478
<INTEREST-INCOME> 5,998
<OTHER-INCOME> 0
<EXPENSES-NET> 11,333
<NET-INVESTMENT-INCOME> (4,857)
<REALIZED-GAINS-CURRENT> 7,066
<APPREC-INCREASE-CURRENT> (90,676)
<NET-CHANGE-FROM-OPS> (88,467)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 17,083
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,683
<NUMBER-OF-SHARES-REDEEMED> 4,019
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 92,180
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 126,974
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,223
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,333
<AVERAGE-NET-ASSETS> 171,204
<PER-SHARE-NAV-BEGIN> 37.36
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> (3.10)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 4.91
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 29.35
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 215
<NAME> OPPORTUNITY FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 707,475
<INVESTMENTS-AT-VALUE> 868,657
<RECEIVABLES> 4,789
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,295
<TOTAL-ASSETS> 874,741
<PAYABLE-FOR-SECURITIES> 23,454
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,357
<TOTAL-LIABILITIES> 31,811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 676,315
<SHARES-COMMON-STOCK> 22,987
<SHARES-COMMON-PRIOR> 22,619
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,066
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 159,549
<NET-ASSETS> 842,930
<DIVIDEND-INCOME> 478
<INTEREST-INCOME> 5,998
<OTHER-INCOME> 0
<EXPENSES-NET> 11,333
<NET-INVESTMENT-INCOME> (4,857)
<REALIZED-GAINS-CURRENT> 7,066
<APPREC-INCREASE-CURRENT> (90,676)
<NET-CHANGE-FROM-OPS> (88,467)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 109,891
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,251
<NUMBER-OF-SHARES-REDEEMED> 20,883
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 92,180
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 126,974
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,223
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,333
<AVERAGE-NET-ASSETS> 661,829
<PER-SHARE-NAV-BEGIN> 35.38
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (3.05)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 4.91
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.38
<EXPENSE-RATIO> 1.97
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 223
<NAME> PRECIOUS METALS FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 43,968
<INVESTMENTS-AT-VALUE> 36,866
<RECEIVABLES> 713
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,579
<PAYABLE-FOR-SECURITIES> 3,993
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 209
<TOTAL-LIABILITIES> 4,202
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,506
<SHARES-COMMON-STOCK> 455
<SHARES-COMMON-PRIOR> 515
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 17
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,012
<ACCUM-APPREC-OR-DEPREC> (7,100)
<NET-ASSETS> 33,377
<DIVIDEND-INCOME> 407
<INTEREST-INCOME> 177
<OTHER-INCOME> 0
<EXPENSES-NET> 677
<NET-INVESTMENT-INCOME> (93)
<REALIZED-GAINS-CURRENT> 87
<APPREC-INCREASE-CURRENT> (11,122)
<NET-CHANGE-FROM-OPS> (11,128)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 98
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,209
<NUMBER-OF-SHARES-REDEEMED> 21,276
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> (12,695)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 401
<GROSS-ADVISORY-FEES> 227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 677
<AVERAGE-NET-ASSETS> 7,703
<PER-SHARE-NAV-BEGIN> 12.12
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> (3.29)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.17
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.83
<EXPENSE-RATIO> 1.37
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 224
<NAME> PRECIOUS METALS FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 43,968
<INVESTMENTS-AT-VALUE> 36,866
<RECEIVABLES> 713
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,579
<PAYABLE-FOR-SECURITIES> 3,993
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 209
<TOTAL-LIABILITIES> 4,202
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,506
<SHARES-COMMON-STOCK> 505
<SHARES-COMMON-PRIOR> 191
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 17
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 1,012
<ACCUM-APPREC-OR-DEPREC> (7,100)
<NET-ASSETS> 33,377
<DIVIDEND-INCOME> 407
<INTEREST-INCOME> 177
<OTHER-INCOME> 0
<EXPENSES-NET> 677
<NET-INVESTMENT-INCOME> (93)
<REALIZED-GAINS-CURRENT> 87
<APPREC-INCREASE-CURRENT> (11,122)
<NET-CHANGE-FROM-OPS> (11,128)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 36
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 423
<NUMBER-OF-SHARES-REDEEMED> 112
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> (12,695)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 401
<GROSS-ADVISORY-FEES> 227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 677
<AVERAGE-NET-ASSETS> 2,907
<PER-SHARE-NAV-BEGIN> 11.62
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> (3.03)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.17
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.42
<EXPENSE-RATIO> 2.13
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 225
<NAME> PRECIOUS METALS FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 43,968
<INVESTMENTS-AT-VALUE> 36,866
<RECEIVABLES> 713
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,579
<PAYABLE-FOR-SECURITIES> 3,993
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 209
<TOTAL-LIABILITIES> 4,202
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,506
<SHARES-COMMON-STOCK> 2,980
<SHARES-COMMON-PRIOR> 3,237
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 17
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,012)
<ACCUM-APPREC-OR-DEPREC> (7,100)
<NET-ASSETS> 33,377
<DIVIDEND-INCOME> 407
<INTEREST-INCOME> 177
<OTHER-INCOME> 0
<EXPENSES-NET> 677
<NET-INVESTMENT-INCOME> (93)
<REALIZED-GAINS-CURRENT> 87
<APPREC-INCREASE-CURRENT> (11,122)
<NET-CHANGE-FROM-OPS> (11,128)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 575
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,931
<NUMBER-OF-SHARES-REDEEMED> 9,238
<SHARES-REINVESTED> 49
<NET-CHANGE-IN-ASSETS> (12,695)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 401
<GROSS-ADVISORY-FEES> 227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 677
<AVERAGE-NET-ASSETS> 34,096
<PER-SHARE-NAV-BEGIN> 11.62
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> (2.99)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.17
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.43
<EXPENSE-RATIO> 2.15
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 093
<NAME> RENAISSANCE FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 328,467
<INVESTMENTS-AT-VALUE> 389,953
<RECEIVABLES> 6,222
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 330
<TOTAL-ASSETS> 396,505
<PAYABLE-FOR-SECURITIES> 10,927
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,493
<TOTAL-LIABILITIES> 12,420
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 284,654
<SHARES-COMMON-STOCK> 1,895
<SHARES-COMMON-PRIOR> 1,283
<ACCUMULATED-NII-CURRENT> 28,688
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,258
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,485
<NET-ASSETS> 384,085
<DIVIDEND-INCOME> 4,327
<INTEREST-INCOME> 973
<OTHER-INCOME> 0
<EXPENSES-NET> 4,636
<NET-INVESTMENT-INCOME> 664
<REALIZED-GAINS-CURRENT> 42,917
<APPREC-INCREASE-CURRENT> 33,883
<NET-CHANGE-FROM-OPS> 77,464
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 221
<DISTRIBUTIONS-OF-GAINS> 3,107
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,108
<NUMBER-OF-SHARES-REDEEMED> 509
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 117,702
<ACCUMULATED-NII-PRIOR> 21,658
<ACCUMULATED-GAINS-PRIOR> 12,473
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,567
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,636
<AVERAGE-NET-ASSETS> 27,397
<PER-SHARE-NAV-BEGIN> 16.08
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 3.90
<PER-SHARE-DIVIDEND> 0.12
<PER-SHARE-DISTRIBUTIONS> 2.25
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.73
<EXPENSE-RATIO> 1.23
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 094
<NAME> RENAISSANCE FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 328,467
<INVESTMENTS-AT-VALUE> 389,953
<RECEIVABLES> 6,222
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 330
<TOTAL-ASSETS> 396,505
<PAYABLE-FOR-SECURITIES> 10,927
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,493
<TOTAL-LIABILITIES> 12,420
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 284,654
<SHARES-COMMON-STOCK> 2,097
<SHARES-COMMON-PRIOR> 974
<ACCUMULATED-NII-CURRENT> 28,688
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,258
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,485
<NET-ASSETS> 384,085
<DIVIDEND-INCOME> 4,327
<INTEREST-INCOME> 973
<OTHER-INCOME> 0
<EXPENSES-NET> 4,636
<NET-INVESTMENT-INCOME> 664
<REALIZED-GAINS-CURRENT> 42,917
<APPREC-INCREASE-CURRENT> 33,883
<NET-CHANGE-FROM-OPS> 77,464
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 82
<DISTRIBUTIONS-OF-GAINS> 2,821
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,321
<NUMBER-OF-SHARES-REDEEMED> 203
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 117,702
<ACCUMULATED-NII-PRIOR> 21,658
<ACCUMULATED-GAINS-PRIOR> 12,473
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,567
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,636
<AVERAGE-NET-ASSETS> 27,253
<PER-SHARE-NAV-BEGIN> 16.12
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 3.92
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 2.25
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.77
<EXPENSE-RATIO> 1.97
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 095
<NAME> RENAISSANCE FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 328,467
<INVESTMENTS-AT-VALUE> 389,953
<RECEIVABLES> 6,222
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 330
<TOTAL-ASSETS> 396,505
<PAYABLE-FOR-SECURITIES> 10,927
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,493
<TOTAL-LIABILITIES> 12,420
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 284,654
<SHARES-COMMON-STOCK> 17,711
<SHARES-COMMON-PRIOR> 14,336
<ACCUMULATED-NII-CURRENT> 28,688
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,258
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,485
<NET-ASSETS> 384,085
<DIVIDEND-INCOME> 4,327
<INTEREST-INCOME> 973
<OTHER-INCOME> 0
<EXPENSES-NET> 4,636
<NET-INVESTMENT-INCOME> 664
<REALIZED-GAINS-CURRENT> 42,917
<APPREC-INCREASE-CURRENT> 33,883
<NET-CHANGE-FROM-OPS> 77,464
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 670
<DISTRIBUTIONS-OF-GAINS> 32,865
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,139
<NUMBER-OF-SHARES-REDEEMED> 3,802
<SHARES-REINVESTED> 39
<NET-CHANGE-IN-ASSETS> 117,702
<ACCUMULATED-NII-PRIOR> 21,658
<ACCUMULATED-GAINS-PRIOR> 12,473
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,567
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,636
<AVERAGE-NET-ASSETS> 267,563
<PER-SHARE-NAV-BEGIN> 16.05
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 3.90
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 2.25
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.69
<EXPENSE-RATIO> 1.97
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 081
<NAME> SMALL CAP GROWTH FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 26,413
<INVESTMENTS-AT-VALUE> 33,552
<RECEIVABLES> 1,314
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 34,867
<PAYABLE-FOR-SECURITIES> 388
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,088
<TOTAL-LIABILITIES> 1,476
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,242
<SHARES-COMMON-STOCK> 2,491
<SHARES-COMMON-PRIOR> 1,582
<ACCUMULATED-NII-CURRENT> 272
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,738
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,139
<NET-ASSETS> 33,391
<DIVIDEND-INCOME> 327
<INTEREST-INCOME> 87
<OTHER-INCOME> 0
<EXPENSES-NET> 431
<NET-INVESTMENT-INCOME> (17)
<REALIZED-GAINS-CURRENT> 4,368
<APPREC-INCREASE-CURRENT> 2,170
<NET-CHANGE-FROM-OPS> 6,521
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 17,212
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 688
<NUMBER-OF-SHARES-REDEEMED> 835
<SHARES-REINVESTED> 1,056
<NET-CHANGE-IN-ASSETS> 325
<ACCUMULATED-NII-PRIOR> 3,202
<ACCUMULATED-GAINS-PRIOR> 12,658
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 431
<AVERAGE-NET-ASSETS> 32,656
<PER-SHARE-NAV-BEGIN> 20.83
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 3.17
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 10.59
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.40
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 082
<NAME> SMALL CAP GROWTH FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 26,413
<INVESTMENTS-AT-VALUE> 33,552
<RECEIVABLES> 1,314
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 34,867
<PAYABLE-FOR-SECURITIES> 388
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,088
<TOTAL-LIABILITIES> 1,476
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,242
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 5
<ACCUMULATED-NII-CURRENT> 272
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,738
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,139
<NET-ASSETS> 33,391
<DIVIDEND-INCOME> 327
<INTEREST-INCOME> 87
<OTHER-INCOME> 0
<EXPENSES-NET> 431
<NET-INVESTMENT-INCOME> (17)
<REALIZED-GAINS-CURRENT> 4,368
<APPREC-INCREASE-CURRENT> 2,170
<NET-CHANGE-FROM-OPS> 6,521
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 10
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 6
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 325
<ACCUMULATED-NII-PRIOR> 3,202
<ACCUMULATED-GAINS-PRIOR> 12,658
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 431
<AVERAGE-NET-ASSETS> 55
<PER-SHARE-NAV-BEGIN> 20.82
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 3.24
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 10.59
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.41
<EXPENSE-RATIO> 1.54
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 071
<NAME> SMALL CAP VALUE FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 68,114
<INVESTMENTS-AT-VALUE> 78,726
<RECEIVABLES> 1,663
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 56
<TOTAL-ASSETS> 80,445
<PAYABLE-FOR-SECURITIES> 1,534
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79
<TOTAL-LIABILITIES> 1,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63,775
<SHARES-COMMON-STOCK> 2,195
<SHARES-COMMON-PRIOR> 2,044
<ACCUMULATED-NII-CURRENT> 1,920
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,612
<NET-ASSETS> 78,832
<DIVIDEND-INCOME> 1,055
<INTEREST-INCOME> 145
<OTHER-INCOME> 0
<EXPENSES-NET> 458
<NET-INVESTMENT-INCOME> 742
<REALIZED-GAINS-CURRENT> 5,616
<APPREC-INCREASE-CURRENT> 6,732
<NET-CHANGE-FROM-OPS> 13,090
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 302
<DISTRIBUTIONS-OF-GAINS> 4,690
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 395
<NUMBER-OF-SHARES-REDEEMED> 612
<SHARES-REINVESTED> 368
<NET-CHANGE-IN-ASSETS> 45,382
<ACCUMULATED-NII-PRIOR> 837
<ACCUMULATED-GAINS-PRIOR> 2,963
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 249
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 458
<AVERAGE-NET-ASSETS> 29,786
<PER-SHARE-NAV-BEGIN> 14.20
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 3.63
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 2.38
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.73
<EXPENSE-RATIO> 0.90
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 072
<NAME> SMALL CAP VALUE FUND-ADMINISTRATIVE CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 68,114
<INVESTMENTS-AT-VALUE> 78,726
<RECEIVABLES> 1,663
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 56
<TOTAL-ASSETS> 80,445
<PAYABLE-FOR-SECURITIES> 1,534
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79
<TOTAL-LIABILITIES> 1,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63,775
<SHARES-COMMON-STOCK> 375
<SHARES-COMMON-PRIOR> 312
<ACCUMULATED-NII-CURRENT> 1,920
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,612
<NET-ASSETS> 78,832
<DIVIDEND-INCOME> 1,055
<INTEREST-INCOME> 145
<OTHER-INCOME> 0
<EXPENSES-NET> 458
<NET-INVESTMENT-INCOME> 742
<REALIZED-GAINS-CURRENT> 5,616
<APPREC-INCREASE-CURRENT> 6,732
<NET-CHANGE-FROM-OPS> 13,090
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 41
<DISTRIBUTIONS-OF-GAINS> 700
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 90
<NUMBER-OF-SHARES-REDEEMED> 82
<SHARES-REINVESTED> 55
<NET-CHANGE-IN-ASSETS> 45,382
<ACCUMULATED-NII-PRIOR> 837
<ACCUMULATED-GAINS-PRIOR> 2,963
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 249
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 458
<AVERAGE-NET-ASSETS> 4,894
<PER-SHARE-NAV-BEGIN> 14.20
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 3.68
<PER-SHARE-DIVIDEND> 0.12
<PER-SHARE-DISTRIBUTIONS> 2.38
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.76
<EXPENSE-RATIO> 1.16
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 073
<NAME> SMALL CAP VALUE FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 68,114
<INVESTMENTS-AT-VALUE> 78,726
<RECEIVABLES> 1,663
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 56
<TOTAL-ASSETS> 80,445
<PAYABLE-FOR-SECURITIES> 1,534
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79
<TOTAL-LIABILITIES> 1,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63,775
<SHARES-COMMON-STOCK> 417
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,920
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,612
<NET-ASSETS> 78,832
<DIVIDEND-INCOME> 1,055
<INTEREST-INCOME> 145
<OTHER-INCOME> 0
<EXPENSES-NET> 458
<NET-INVESTMENT-INCOME> 742
<REALIZED-GAINS-CURRENT> 5,616
<APPREC-INCREASE-CURRENT> 6,732
<NET-CHANGE-FROM-OPS> 13,090
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 422
<NUMBER-OF-SHARES-REDEEMED> 5
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 45,382
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 249
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 458
<AVERAGE-NET-ASSETS> 2,514
<PER-SHARE-NAV-BEGIN> 14.02
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 1.63
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.75
<EXPENSE-RATIO> 1.30
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 074
<NAME> SMALL CAP VALUE FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 68,114
<INVESTMENTS-AT-VALUE> 78,726
<RECEIVABLES> 1,663
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 56
<TOTAL-ASSETS> 80,445
<PAYABLE-FOR-SECURITIES> 1,534
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79
<TOTAL-LIABILITIES> 1,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63,775
<SHARES-COMMON-STOCK> 705
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,920
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,612
<NET-ASSETS> 78,832
<DIVIDEND-INCOME> 1,055
<INTEREST-INCOME> 145
<OTHER-INCOME> 0
<EXPENSES-NET> 458
<NET-INVESTMENT-INCOME> 742
<REALIZED-GAINS-CURRENT> 5,616
<APPREC-INCREASE-CURRENT> 6,732
<NET-CHANGE-FROM-OPS> 13,090
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 743
<NUMBER-OF-SHARES-REDEEMED> 38
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 45,382
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 249
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 458
<AVERAGE-NET-ASSETS> 3,959
<PER-SHARE-NAV-BEGIN> 14.02
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 1.61
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.71
<EXPENSE-RATIO> 2.04
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 075
<NAME> SMALL CAP VALUE FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 68,114
<INVESTMENTS-AT-VALUE> 78,726
<RECEIVABLES> 1,663
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 56
<TOTAL-ASSETS> 80,445
<PAYABLE-FOR-SECURITIES> 1,534
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79
<TOTAL-LIABILITIES> 1,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63,775
<SHARES-COMMON-STOCK> 1,314
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,920
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,612
<NET-ASSETS> 78,832
<DIVIDEND-INCOME> 1,055
<INTEREST-INCOME> 145
<OTHER-INCOME> 0
<EXPENSES-NET> 458
<NET-INVESTMENT-INCOME> 742
<REALIZED-GAINS-CURRENT> 5,616
<APPREC-INCREASE-CURRENT> 6,732
<NET-CHANGE-FROM-OPS> 13,090
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,351
<NUMBER-OF-SHARES-REDEEMED> 37
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 45,382
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 249
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 458
<AVERAGE-NET-ASSETS> 8,974
<PER-SHARE-NAV-BEGIN> 14.02
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 1.61
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.71
<EXPENSE-RATIO> 2.05
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 183
<NAME> TARGET FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,068,627
<INVESTMENTS-AT-VALUE> 1,205,598
<RECEIVABLES> 35,785
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 421
<TOTAL-ASSETS> 1,241,804
<PAYABLE-FOR-SECURITIES> 43,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,264
<TOTAL-LIABILITIES> 54,267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 909,592
<SHARES-COMMON-STOCK> 8,960
<SHARES-COMMON-PRIOR> 9,120
<ACCUMULATED-NII-CURRENT> 72,458
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 68,516
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136,971
<NET-ASSETS> 1,187,537
<DIVIDEND-INCOME> 3,656
<INTEREST-INCOME> 4,174
<OTHER-INCOME> 0
<EXPENSES-NET> 16,401
<NET-INVESTMENT-INCOME> (8,571)
<REALIZED-GAINS-CURRENT> 188,697
<APPREC-INCREASE-CURRENT> (60,110)
<NET-CHANGE-FROM-OPS> 120,016
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 19,003
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,398
<NUMBER-OF-SHARES-REDEEMED> 34,558
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,711
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 107,360
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,472
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,401
<AVERAGE-NET-ASSETS> 154,386
<PER-SHARE-NAV-BEGIN> 17.11
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 1.82
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.07
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.82
<EXPENSE-RATIO> 1.20
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 184
<NAME> TARGET FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,068,627
<INVESTMENTS-AT-VALUE> 1,205,598
<RECEIVABLES> 35,785
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 421
<TOTAL-ASSETS> 1,241,804
<PAYABLE-FOR-SECURITIES> 43,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,264
<TOTAL-LIABILITIES> 54,267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 909,592
<SHARES-COMMON-STOCK> 4,185
<SHARES-COMMON-PRIOR> 3,007
<ACCUMULATED-NII-CURRENT> 72,458
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 68,516
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136,971
<NET-ASSETS> 1,187,537
<DIVIDEND-INCOME> 3,656
<INTEREST-INCOME> 4,174
<OTHER-INCOME> 0
<EXPENSES-NET> 16,401
<NET-INVESTMENT-INCOME> (8,571)
<REALIZED-GAINS-CURRENT> 188,697
<APPREC-INCREASE-CURRENT> (60,110)
<NET-CHANGE-FROM-OPS> 120,016
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 6,747
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,754
<NUMBER-OF-SHARES-REDEEMED> 575
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,711
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,073,60
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,472
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,401
<AVERAGE-NET-ASSETS> 60,302
<PER-SHARE-NAV-BEGIN> 16.58
<PER-SHARE-NII> (0.12)
<PER-SHARE-GAIN-APPREC> 1.75
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.07
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.14
<EXPENSE-RATIO> 1.94
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 185
<NAME> TARGET FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1,068,627
<INVESTMENTS-AT-VALUE> 1,205,508
<RECEIVABLES> 35,785
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 421
<TOTAL-ASSETS> 1,241,804
<PAYABLE-FOR-SECURITIES> 43,003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,264
<TOTAL-LIABILITIES> 54,267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 909,592
<SHARES-COMMON-STOCK> 60,086
<SHARES-COMMON-PRIOR> 58,811
<ACCUMULATED-NII-CURRENT> 72,458
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 68,516
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 136,971
<NET-ASSETS> 1,187,537
<DIVIDEND-INCOME> 3,656
<INTEREST-INCOME> 4,174
<OTHER-INCOME> 0
<EXPENSES-NET> 16,401
<NET-INVESTMENT-INCOME> (8,571)
<REALIZED-GAINS-CURRENT> 188,697
<APPREC-INCREASE-CURRENT> (60,110)
<NET-CHANGE-FROM-OPS> 120,016
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 120,762
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,148
<NUMBER-OF-SHARES-REDEEMED> 17,874
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,711
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 107,360
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,472
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,401
<AVERAGE-NET-ASSETS> 968,462
<PER-SHARE-NAV-BEGIN> 16.58
<PER-SHARE-NII> (0.12)
<PER-SHARE-GAIN-APPREC> 1.74
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.07
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.13
<EXPENSE-RATIO> 1.94
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 171
<NAME> MID CAP EQUITY FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 6,888
<INVESTMENTS-AT-VALUE> 7,685
<RECEIVABLES> 237
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29
<TOTAL-ASSETS> 7,951
<PAYABLE-FOR-SECURITIES> 355
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5
<TOTAL-LIABILITIES> 360
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,617
<SHARES-COMMON-STOCK> 541
<SHARES-COMMON-PRIOR> 571
<ACCUMULATED-NII-CURRENT> 474
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 703
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 797
<NET-ASSETS> 7,591
<DIVIDEND-INCOME> 33
<INTEREST-INCOME> 22
<OTHER-INCOME> 0
<EXPENSES-NET> 89
<NET-INVESTMENT-INCOME> (34)
<REALIZED-GAINS-CURRENT> 1,820
<APPREC-INCREASE-CURRENT> (1,109)
<NET-CHANGE-FROM-OPS> 677
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,083
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42
<NUMBER-OF-SHARES-REDEEMED> 92
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> (787)
<ACCUMULATED-NII-PRIOR> 280
<ACCUMULATED-GAINS-PRIOR> 173
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 49
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 89
<AVERAGE-NET-ASSETS> 7,717
<PER-SHARE-NAV-BEGIN> 14.66
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 1.31
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.87
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.04
<EXPENSE-RATIO> 1.15
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 193
<NAME> TAX EXEMPT FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 44,715
<INVESTMENTS-AT-VALUE> 47,711
<RECEIVABLES> 1,964
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 112
<TOTAL-ASSETS> 49,787
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 278
<TOTAL-LIABILITIES> 278
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,860
<SHARES-COMMON-STOCK> 460
<SHARES-COMMON-PRIOR> 494
<ACCUMULATED-NII-CURRENT> 189
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 536
<ACCUM-APPREC-OR-DEPREC> 2,996
<NET-ASSETS> 49,509
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,264
<OTHER-INCOME> 0
<EXPENSES-NET> 680
<NET-INVESTMENT-INCOME> 1,584
<REALIZED-GAINS-CURRENT> 528
<APPREC-INCREASE-CURRENT> (23)
<NET-CHANGE-FROM-OPS> 2,089
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 195
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 171
<NUMBER-OF-SHARES-REDEEMED> 213
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> (5,695)
<ACCUMULATED-NII-PRIOR> 231
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1064
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 680
<AVERAGE-NET-ASSETS> 5,348
<PER-SHARE-NAV-BEGIN> 11.87
<PER-SHARE-NII> (0.42)
<PER-SHARE-GAIN-APPREC> 0.11
<PER-SHARE-DIVIDEND> 0.43
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.97
<EXPENSE-RATIO> 1.09
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 194
<NAME> TAX EXEMPT FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 44,715
<INVESTMENTS-AT-VALUE> 47,711
<RECEIVABLES> 1,964
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 112
<TOTAL-ASSETS> 49,787
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 278
<TOTAL-LIABILITIES> 278
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,860
<SHARES-COMMON-STOCK> 212
<SHARES-COMMON-PRIOR> 190
<ACCUMULATED-NII-CURRENT> 189
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 536
<ACCUM-APPREC-OR-DEPREC> 2,996
<NET-ASSETS> 49,509
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,264
<OTHER-INCOME> 0
<EXPENSES-NET> 680
<NET-INVESTMENT-INCOME> 1,584
<REALIZED-GAINS-CURRENT> 528
<APPREC-INCREASE-CURRENT> (23)
<NET-CHANGE-FROM-OPS> 2,089
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 78
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46
<NUMBER-OF-SHARES-REDEEMED> 26
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> (5,695)
<ACCUMULATED-NII-PRIOR> 231
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1,064
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 680
<AVERAGE-NET-ASSETS> 2,518
<PER-SHARE-NAV-BEGIN> 11.89
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> 0.37
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.97
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 195
<NAME> TAX EXEMPT FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 44,715
<INVESTMENTS-AT-VALUE> 47,711
<RECEIVABLES> 1,964
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 112
<TOTAL-ASSETS> 49,787
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 278
<TOTAL-LIABILITIES> 278
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,860
<SHARES-COMMON-STOCK> 3,464
<SHARES-COMMON-PRIOR> 3,971
<ACCUMULATED-NII-CURRENT> 189
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 536
<ACCUM-APPREC-OR-DEPREC> 2,996
<NET-ASSETS> 49,509
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,264
<OTHER-INCOME> 0
<EXPENSES-NET> 680
<NET-INVESTMENT-INCOME> 1,584
<REALIZED-GAINS-CURRENT> 528
<APPREC-INCREASE-CURRENT> (23)
<NET-CHANGE-FROM-OPS> 2,089
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,353
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 184
<NUMBER-OF-SHARES-REDEEMED> 756
<SHARES-REINVESTED> 64
<NET-CHANGE-IN-ASSETS> (5,695)
<ACCUMULATED-NII-PRIOR> 231
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1,064
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 680
<AVERAGE-NET-ASSETS> 43,951
<PER-SHARE-NAV-BEGIN> 11.86
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 0.11
<PER-SHARE-DIVIDEND> 0.36
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.97
<EXPENSE-RATIO> 1.83
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> VALUE FUND-INSTITUTIONAL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 155,748
<INVESTMENTS-AT-VALUE> 178,501
<RECEIVABLES> 7,493
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 185,995
<PAYABLE-FOR-SECURITIES> 5,721
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 470
<TOTAL-LIABILITIES> 6,191
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,228
<SHARES-COMMON-STOCK> 5,039
<SHARES-COMMON-PRIOR> 4,232
<ACCUMULATED-NII-CURRENT> 6,824
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,999
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,753
<NET-ASSETS> 179,804
<DIVIDEND-INCOME> 2,697
<INTEREST-INCOME> 175
<OTHER-INCOME> 0
<EXPENSES-NET> 1,170
<NET-INVESTMENT-INCOME> 1,702
<REALIZED-GAINS-CURRENT> 13,315
<APPREC-INCREASE-CURRENT> 19,593
<NET-CHANGE-FROM-OPS> 34,610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,517
<DISTRIBUTIONS-OF-GAINS> 2,344
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,317
<NUMBER-OF-SHARES-REDEEMED> 803
<SHARES-REINVESTED> 293
<NET-CHANGE-IN-ASSETS> 127,077
<ACCUMULATED-NII-PRIOR> 348
<ACCUMULATED-GAINS-PRIOR> 752
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,170
<AVERAGE-NET-ASSETS> 62,555
<PER-SHARE-NAV-BEGIN> 12.46
<PER-SHARE-NII> 1.05
<PER-SHARE-GAIN-APPREC> 2.11
<PER-SHARE-DIVIDEND> 0.31
<PER-SHARE-DISTRIBUTIONS> 0.50
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.81
<EXPENSE-RATIO> 0.73
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 043
<NAME> VALUE FUND-CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 155,748
<INVESTMENTS-AT-VALUE> 178,501
<RECEIVABLES> 7,493
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 185,995
<PAYABLE-FOR-SECURITIES> 5,721
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 470
<TOTAL-LIABILITIES> 6,191
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,228
<SHARES-COMMON-STOCK> 1,057
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,824
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,999
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,753
<NET-ASSETS> 179,804
<DIVIDEND-INCOME> 2,697
<INTEREST-INCOME> 175
<OTHER-INCOME> 0
<EXPENSES-NET> 1,170
<NET-INVESTMENT-INCOME> 1,702
<REALIZED-GAINS-CURRENT> 13,315
<APPREC-INCREASE-CURRENT> 19,593
<NET-CHANGE-FROM-OPS> 34,610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 105
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,192
<NUMBER-OF-SHARES-REDEEMED> 142
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> 127,077
<ACCUMULATED-NII-PRIOR> 348
<ACCUMULATED-GAINS-PRIOR> 752
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,170
<AVERAGE-NET-ASSETS> 12,972
<PER-SHARE-NAV-BEGIN> 13.17
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> 1.26
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.80
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 044
<NAME> VALUE FUND-CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 155,748
<INVESTMENTS-AT-VALUE> 178,501
<RECEIVABLES> 7,493
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 185,995
<PAYABLE-FOR-SECURITIES> 5,721
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 470
<TOTAL-LIABILITIES> 6,191
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,228
<SHARES-COMMON-STOCK> 1,719
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,824
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,999
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,753
<NET-ASSETS> 179,804
<DIVIDEND-INCOME> 2,697
<INTEREST-INCOME> 175
<OTHER-INCOME> 0
<EXPENSES-NET> 1,170
<NET-INVESTMENT-INCOME> 1,702
<REALIZED-GAINS-CURRENT> 13,315
<APPREC-INCREASE-CURRENT> 19,593
<NET-CHANGE-FROM-OPS> 34,610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 99
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,824
<NUMBER-OF-SHARES-REDEEMED> 112
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> 127,077
<ACCUMULATED-NII-PRIOR> 348
<ACCUMULATED-GAINS-PRIOR> 752
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,170
<AVERAGE-NET-ASSETS> 22,005
<PER-SHARE-NAV-BEGIN> 13.16
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> 1.26
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.80
<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 ANNUAL
REPORT DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 045
<NAME> VALUE FUND-CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 155,748
<INVESTMENTS-AT-VALUE> 178,501
<RECEIVABLES> 7,493
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 185,995
<PAYABLE-FOR-SECURITIES> 5,721
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 470
<TOTAL-LIABILITIES> 6,191
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,228
<SHARES-COMMON-STOCK> 4,333
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6,824
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,999
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,753
<NET-ASSETS> 179,804
<DIVIDEND-INCOME> 2,697
<INTEREST-INCOME> 175
<OTHER-INCOME> 0
<EXPENSES-NET> 1,170
<NET-INVESTMENT-INCOME> 1,702
<REALIZED-GAINS-CURRENT> 13,315
<APPREC-INCREASE-CURRENT> 19,593
<NET-CHANGE-FROM-OPS> 34,610
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 247
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,231
<NUMBER-OF-SHARES-REDEEMED> 913
<SHARES-REINVESTED> 16
<NET-CHANGE-IN-ASSETS> 127,077
<ACCUMULATED-NII-PRIOR> 348
<ACCUMULATED-GAINS-PRIOR> 752
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,170
<AVERAGE-NET-ASSETS> 53,555
<PER-SHARE-NAV-BEGIN> 13.15
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.80
<EXPENSE-RATIO> 1.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
