<PAGE>
PIMCO Funds
Prospectus
---------------------------------------------------------------
Multi-Manager STOCK FUNDS
Series
Equity Income Fund Growth Fund
March 5, 1997 Renaissance Fund Mid Cap Growth Fund
Value Fund Target Fund
Capital Appreciation Fund
---------------------------------------------------------------
AGGRESSIVE STOCK FUNDS
Small Cap Value Fund Opportunity Fund
---------------------------------------------------------------
INTERNATIONAL STOCK FUNDS
International Developed Fund Emerging Markets Fund
International FUnd
---------------------------------------------------------------
SPECIALIZED STOCK FUNDS
Innovation Fund Precious Metals Fund
---------------------------------------------------------------
STOCK & BOND FUNDS
Balanced Fund
---------------------------------------------------------------
BOND FUNDS
Tax Exempt Fund
PIMCO
<PAGE>
PIMCO Funds: Multi-Manager Series
Prospectus
March 5, 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 January 14, 1997, as
amended or supplemented from time to time, is available free of
charge by writing to PIMCO Funds Distribution Company (the "Dis-
tributor"), 2187 Atlantic Street, Stamford, Connecticut 06902, or
by telephoning 800-426-0107. The Statement of Additional Informa-
tion, which contains more detailed information about the Trust,
has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SE-
CURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OF-
FENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARAN-
TEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, AND THE SHARES ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORA-
TION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PIMCO Funds Overview..................3 Exchange Privilege.................49
Schedule of Fees......................4 How to Redeem......................50
Financial Highlights..................7 Distributor and Distribution and
Servicing Plans....................54
Investment Objectives and Policies...15 How Net Asset Value Is Determined..56
Characteristics and Risks of Securities Distributions......................57
and Investment Techniques...........24 Taxes..............................58
Performance Information..............35 Management of the Trust............59
How to Buy Shares....................37 Description of the Trust...........65
Alternative Purchase Arrangements ...41 Mailings to Shareholders...........66
</TABLE>
PIMCO Funds: Multi-Manager Series
2
<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 November 30,
1996, PIMCO Advisors and its subsidiary partnerships had over $111
billion in assets under management. Each of the Funds also has a
sub-adviser (each a "Portfolio Manager") responsible for portfolio
investment decisions. All of the Funds' Portfolio Managers are af-
filiates of PIMCO Advisors except for Van Eck Associates Corpora-
tion ("Van Eck"), an independent Portfolio Manager that advises
the Precious Metals Fund. The affiliated Portfolio Managers are
listed below.
<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>
<TABLE>
<CAPTION>
FUND NAME INVESTMENT OBJECTIVE PRIMARY INVESTMENTS /(1)/ PORTFOLIO MANAGER
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FUND STOCK FUNDS Equity Current income as a Common stocks with below- NFJ
PROFILES 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."
March 5, 1997 Prospectus
3
<PAGE>
Schedule of Fees
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES/(1)/ SHARES
---------------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER MAXIMUM INITIAL SALES CHARGE
TRANSACTION IMPOSED ON PURCHASES
EXPENSES (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>
CLASS A
SHARES
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."
PIMCO Funds: Multi-Manager Series
4
<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."
March 5, 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. Class A, Class B and Class C shares of
the Funds were not offered prior to the date of this Prospectus,
although Class A, Class B (except for the Opportunity Fund) and
Class C shares were previously offered by the predecessor of each
of the Renaissance, Growth, Target, Opportunity, International,
Innovation, Precious Metals and Tax Exempt Funds, each of which
was a series of PIMCO Advisors Funds that reorganized as a Fund of
the Trust on January 17, 1997. The information provided above for
each of these Funds reflects the Fund's current fees and expenses
and not the fees and expenses of its predecessor. 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 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 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 EX-
PENSES; ACTUAL PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS
THAN SHOWN.
PIMCO Funds: Multi-Manager Series
6
<PAGE>
Financial Highlights
The financial highlights set forth on the following pages present
certain information and ratios as well as performance information
for Funds whose predecessors offered Class A, Class B, or Class C
shares prior to the date of this Prospectus as series of PIMCO Ad-
visors Funds, each of which reorganized as a series of the Trust
on January 17, 1997. The expense ratios provided in the financial
highlights for these Funds reflect fee arrangements in effect for
PIMCO Advisors Funds which differ from the fee arrangements appli-
cable to the Funds of the Trust. The information provided below,
which is included in the PIMCO Advisors Funds' Annual Report dated
September 30, 1996, has been audited by the former independent ac-
countants for the predecessors to such Funds for the periods list-
ed, whose report thereon is also included in such Annual Report.
The PIMCO Advisors Funds' Annual Report is incorporated by refer-
ence 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 State-
ment of Additional Information. The remaining Funds did not offer
Class A, Class B or Class C shares prior to the date of this Pro-
spectus.
The following schedule of financial highlights for the Renais-
sance Fund is for shares outstanding throughout the periods list-
ed. The information provided reflects results of operations under
the Fund's former investment objective and policies through Janu-
ary 31, 1992; such results would not necessarily have been
achieved had the Fund's current objective and policies then been
in effect.
RENAISSANCE FUND/(1)/
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------------- ----------------
2/1/91- 5/22/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------- ---------------
Net Asset
Value,
Beginning of
Period $14.14 $12.50 $12.88 $10.57 $9.92 $8.38 $14.13 $12.55
------------------------------------------------- ---------------
Income From
Investment
Operations:
Net Investment
Income 0.23 0.36 0.34 0.33 0.34 0.28 0.09 0.11
Net Gains or
Losses on
Securities
(both realized
and unrealized) 2.79 1.61 (0.17) 2.30 0.71 1.54 2.83 1.55
------------------------------------------------- ---------------
Total From
Investment
Operations 3.02 1.97 0.17 2.63 1.05 1.82 2.92 1.66
------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income) (0.23) (0.33) (0.33) (0.32) (0.40) (0.28) (0.11) (0.08)
Dividends (in
excess of net
investment
income) (0.07) 0.00 0.00 0.00 0.00 0.00 (0.04) 0.00
Distributions
(from
capital gain) (0.78) 0.00 (0.22) 0.00 0.00 0.00 (0.78) 0.00
------------------------------------------------- ---------------
Total
Distributions (1.08) (0.33) (0.55) (0.32) (0.40) (0.28) (0.93) (0.08)
------------------------------------------------- ---------------
Net Asset
Value,
End of Period $16.08 $14.14 $12.50 $12.88 $10.57 $9.92 $16.12 $14.13
================================================= ===============
TOTAL RETURN
(without
sales charge) 22.37% 16.1% 1.4% 25.3% 10.7% 34.8% 21.54% 13.3%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $20,631 $12,933 $14,942 $6,328 $2,593 $15 $15,693 $1,760
Ratio of
Expenses to
Average Net
Assets 1.25% 1.3% 1.3% 1.3% 1.4% 1.6%* 2.00% 2.1%*
Ratio of Net
Investment
Income to
Average
Net Assets 1.60% 2.9% 2.7% 2.9% 3.3% 4.4%* 0.85% 2.2%*
Portfolio
Turnover Rate 203.07% 176.9% 174.9% 167.9% 149.0% 142.7% 203.07% 176.9%
Average
Commission
Rate $0.06 $0.06
<CAPTION>
Class C
-----------------------------------------------------------------------------------
4/18/88-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
Net Asset
Value,
Beginning of
Period $14.09 $12.47 $12.85 $10.56 $9.91 $8.16 $11.17 $10.05 $10.00
-----------------------------------------------------------------------------------
Income From
Investment
Operations:
Net Investment
Income 0.12 0.27 0.24 0.25 0.29 0.36 0.49 0.55 0.24
Net Gains or
Losses on
Securities
(both realized
and unrealized) 2.78 1.59 (0.16) 2.29 0.68 1.75 (2.32) 1.19 (0.05)
-----------------------------------------------------------------------------------
Total From
Investment
Operations 2.90 1.86 0.08 2.54 0.97 2.11 (1.83) 1.74 0.19
-----------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) (0.13) (0.24) (0.24) (0.25) (0.32) (0.36) (0.49) (0.62) (0.14)
Dividends (in
excess of net
investment
income) (0.03) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) (0.78) 0.00 (0.22) 0.00 0.00 0.00 (0.69) 0.00 0.00
-----------------------------------------------------------------------------------
Total
Distributions (0.94) (0.24) (0.46) (0.25) (0.32) (0.36) (1.18) (0.62) (0.14)
-----------------------------------------------------------------------------------
Net Asset
Value,
End of Period $16.05 $14.09 $12.47 $12.85 $10.56 $9.91 $8.16 $11.17 $10.05
===================================================================================
TOTAL RETURN
(without
sales charge) 21.52% 15.2% 0.7% 24.4% 9.9% 26.5% (18.0%) 17.9% 4.3%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $230,058 $174,316 $178,892 $94,247 $45,101 $22,651 $25,758 $45,168 $47,118
Ratio of
Expenses to
Average Net
Assets 2.00% 2.1% 2.0% 2.1% 2.1% 2.2% 2.0% 1.9% 2.0%*
Ratio of Net
Investment
Income to
Average
Net Assets 0.85% 2.1% 2.0% 2.2% 2.7% 4.2% 5.1% 5.2% 5.4%*
Portfolio
Turnover Rate 203.07% 176.9% 174.9% 167.9% 149.0% 142.7% 70.2% 84.8% 22.9%
Average
Commission
Rate $0.06
</TABLE>
1. Formerly, the PIMCO Advisors Equity Income Fund.
*Annualized
March 5, 1997 Prospectus
7
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Growth Fund
is for shares outstanding throughout the periods listed.
GROWTH FUND
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------------------- ----------------
10/26/90- 5/23/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
------------------------------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $25.73 $22.01 $23.64 $20.76 $20.63 $16.99 $24.94 $22.63
------------------------------------------------------- ---------------
Income From
Investment
Operations:
Net Investment
Income (Loss) 0.06 0.12 0.12 0.09 0.14 0.21 (0.07) (0.03)
Net Gains or
Losses on
Securities
(both realized
and unrealized) 3.72 4.79 0.12 3.53 1.38 5.28 3.52 2.34
------------------------------------------------------- ---------------
Total From
Investment
Operations 3.78 4.91 0.24 3.62 1.52 5.49 3.45 2.31
------------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 (0.14) (0.19) 0.00 0.00
Distributions
(from
capital gain) (2.93) (1.19) (1.87) (0.74) (1.25) (1.66) (2.93) 0.00
------------------------------------------------------- ---------------
Total
Distributions (2.93) (1.19) (1.87) (0.74) (1.39) (1.85) (2.93) 0.00
------------------------------------------------------- ---------------
Net Asset Value,
End of Period $26.58 $25.73 $22.01 $23.64 $20.76 $20.63 $25.46 $24.94
======================================================= ===============
TOTAL RETURN
(without
sales charge) 16.11% 23.7% 1.3% 17.7% 7.7% 38.6% 15.22% 10.2%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End of
Period (in 000s) $151,103 $134,819 $107,269 $97,509 $71,209 $17,064 $37,256 $7,671
Ratio of
Expenses to
Average Net
Assets 1.11% 1.1% 1.1% 1.1% 1.1% 1.2%* 1.86% 1.9%*
Ratio of Net
Investment
Income to
Average
Net Assets 0.24% 0.5% 0.6% 0.4% 0.7% 0.9%* (0.51)% (0.4)%*
Portfolio
Turnover Rate 104.07% 110.6% 115.3% 109.9% 92.3% 95.3% 104.07% 110.6%
Average
Commission Rate $0.07 $0.07
</TABLE>
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 99/30/87
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $24.94 $21.52 $23.32 $20.64 $20.54 $16.93 $19.71 $13.93 $18.04 $14.76
---------------------------------------------------------------------------------------------------------------
Income From
Investment
Operations:
Net Investment
Income (Loss) (0.12) (0.04) (0.04) (0.07) (0.01) 0.12 0.19 0.11 0.09 0.14
Net Gains or
Losses on
Securities
(both realized
and unrealized) 3.57 4.65 0.11 3.49 1.37 5.32 (1.67) 5.77 (2.96) 5.24
---------------------------------------------------------------------------------------------------------------
Total From
Investment
Operations 3.45 4.61 0.07 3.42 1.36 5.44 (1.48) 5.88 (2.87) 5.38
---------------------------------------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 (0.01) (0.17) (0.18) (0.10) (0.11) (0.18)
Distributions
(from
capital gain) (2.93) (1.19) (1.87) (0.74) (1.25) (1.66) (1.12) 0.00 (1.13) (1.92)
---------------------------------------------------------------------------------------------------------------
Total
Distributions (2.93) (1.19) (1.87) (0.74) (1.26) (1.83) (1.30) (0.10) (1.24) (2.10)
---------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $25.46 $24.94 $21.52 $23.32 $20.64 $20.54 $16.93 $19.71 $13.93 $18.04
===============================================================================================================
TOTAL RETURN
(without
sales charge) 15.22% 22.8% 0.5% 16.9% 6.9% 35.1% (8.0)% 42.4% (14.8)% 41.5%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End of
Period (in 000s) $1,450,216 $1,290,152 $1,085,427 $1,077,490 $853,121 $564,398 $314,075 $373,490 $338,493 $509,348
Ratio of
Expenses to
Average Net
Assets 1.86% 1.9% 1.9% 1.9% 1.9% 1.8% 1.7% 1.7% 1.8% 1.6%
Ratio of Net
Investment
Income to
Average
Net Assets (0.51)% (0.2)% (0.2)% (0.3)% (0.1)% 0.6% 1.0% 0.7% 0.6% 0.8%
Portfolio
Turnover Rate 104.07% 110.6% 115.3% 109.9% 92.3% 95.3% 88.7% 82.5% 103.6% 128.1%
Average
Commission Rate $0.07
</TABLE>
*Annualized
PIMCO Funds: Multi-Manager Series
8
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Target Fund
is for shares outstanding throughout the periods listed.
TARGET FUND
<TABLE>
<CAPTION>
Class A Class B Class C
-------------------------------------- --------------- --------------------------------------
12/17/92- 5/22/95- 12/17/92-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/96 9/30/95 9/30/96 9/30/95 9/30/94 9/30/93
-------------------------------------- --------------- --------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $16.40 $13.13 $12.72 $10.00 $16.06 $13.93 $16.05 $12.95 $12.65 $10.00
-------------------------------------- --------------- --------------------------------------
Income From
Investment
Operations:
Net Investment
Loss (0.05) (0.02) (0.04) (0.02) (0.09) (0.05) (0.16) (0.12) (0.14) (0.09)
Net Gains or
Losses on
Securities
(both realized
and unrealized) 2.54 3.45 0.57 2.74 2.39 2.18 2.47 3.38 0.56 2.74
-------------------------------------- --------------- --------------------------------------
Total From
Investment
Operations 2.49 3.43 0.53 2.72 2.30 2.13 2.31 3.26 0.42 2.65
-------------------------------------- --------------- --------------------------------------
Less
Distributions:
Distributions
(from
capital gain) (1.78) (0.16) (0.12) 0.00 (1.78) 0.00 (1.78) (0.16) (0.12) 0.00
-------------------------------------- --------------- --------------------------------------
Net Asset Value,
End of Period $17.11 $16.40 $13.13 $12.72 $16.58 $16.06 $16.58 $16.05 $12.95 $12.65
====================================== =============== ======================================
TOTAL RETURN
(without
sales charge) 16.50% 26.5% 4.2% 27.2% 15.58% 15.3% 15.66% 25.6% 3.4% 26.5%
RATIOS /
SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s)$156,027 $121,915 $90,527 $48,787 $49,851 $7,554 $974,948 $780,355 $556,043 $298,238
Ratio of
Expenses to
Average Net
Assets 1.18% 1.2% 1.2% 1.3%* 1.93% 2.0%* 1.93% 2.0% 2.0% 2.0%*
Ratio of Net
Investment
Income to
Average
Net Assets (0.34)% (0.1)% (0.3)% (0.3)%* (1.09)% (0.9)%* (1.09)% (0.9)% (1.1)% (1.0)%*
Portfolio
Turnover Rate 140.51% 128.3% 103.5% 76.0% 140.51% 128.3% 140.51% 128.3% 103.5% 76.0%
Average
Commission Rate $0.06 $0.06 $0.06
</TABLE>
*Annualized
March 5, 1997 Prospectus
9
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Opportunity
Fund is for shares outstanding throughout the periods listed.
OPPORTUNITY FUND
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
12/17/90-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of Period $39.08 $28.87 $33.43 $19.84 $17.95 $11.78
------------------------------------------------------
Income From
Investment Operations:
Net Investment
Loss (0.11) (0.11) (0.17) (0.15) (0.04) (0.03)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 6.12 11.19 (2.02) 14.00 3.61 6.20
------------------------------------------------------
Total From
Investment
Operations 6.01 11.08 (2.19) 13.85 3.57 6.17
------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income)
0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) (7.73) (0.87) (2.26) (0.26) (1.68) 0.00
Return of
capital
distribution 0.00 0.00 (0.11) 0.00 0.00 0.00
------------------------------------------------------
Total
Distributions (7.73) (0.87) (2.37) (0.26) (1.68) 0.00
------------------------------------------------------
Net Asset
Value,
End of Period $37.36 $39.08 $28.87 $33.43 $19.84 $17.95
======================================================
TOTAL RETURN
(without
sales charge) 18.35% 39.7% (6.7)% 70.4% 21.6% 70.9%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $134,859 $120,830 $95,261 $106,666 $22,454 $1,623
Ratio of
Expenses to
Average Net
Assets 1.13% 1.2% 1.1% 1.2% 1.3% 1.4%*
Ratio of Net
Investment
Income to
Average
Net Assets (0.32)% (0.4)% (0.6)% (0.6)% (0.2)% (0.5)%*
Portfolio
Turnover Rate 91.23% 101.6% 78.4% 105.4% 93.8% 144.6%
Average
Commission
Rate $0.07
<CAPTION>
Class C
----------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of Period $37.64 $28.04 $32.77 $19.60 $17.87 $11.93 $15.78 $11.84 $16.73 $13.18
----------------------------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Loss (0.35) (0.34) (0.38) (0.34) (0.18) (0.11) (0.01) (0.03) 0.03 0.02
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 5.82 10.81 (1.98) 13.77 3.59 6.42 (2.13) 3.97 (2.34) 4.80
----------------------------------------------------------------------------------------------
Total From
Investment
Operations 5.47 10.47 (2.36) 13.43 3.41 6.31 (2.14) 3.94 (2.31) 4.82
----------------------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.03) 0.00
Distributions
(from
capital gain) (7.73) (0.87) (2.26) (0.26) (1.68) (0.37) (1.71) 0.00 (2.55) (1.27)
Return of
capital
distribution 0.00 0.00 (0.11) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------------
Total
Distributions (7.73) (0.87) (2.37) (0.26) (1.68) (0.37) (1.71) 0.00 (2.58) (1.27)
----------------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $35.38 $37.64 $28.04 $32.77 $19.60 $17.87 $11.93 $15.78 $11.84 $16.73
==============================================================================================
TOTAL RETURN
(without
sales charge) 17.47% 38.6% (7.4)% 69.1% 20.8% 54.4% (14.8)% 33.3% (9.0)% 40.2%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of
Period (in 000s) $800,250 $715,191 $553,460 $618,193 $179,081 $58,656 $33,472 $51,680 $51,062 $74,235
Ratio of
Expenses to
Average Net
Assets 1.88% 1.9% 1.9% 2.0% 2.0% 2.0% 1.9% 1.9% 2.0% 1.7%
Ratio of Net
Investment
Income to
Average
Net Assets (1.07)% (1.1)% (1.4)% (1.3)% (1.0)% (0.8)% (0.1)% (0.2)% 0.3% 0.1%
Portfolio
Turnover Rate 91.23% 101.6% 78.4% 105.4% 93.8% 144.6% 106.2% 153.4% 124.9% 188.7%
Average
Commission
Rate $0.07
</TABLE>
*Annualized
10
PIMCO Funds: Multi-Manager Series
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Interna-
tional Fund is for shares outstanding throughout the periods list-
ed. The information provided reflects results of operations of the
Fund's former investment objective and policies through August 31,
1992; such results would not necessarily have been achieved had
the Fund's current objective and policies been in effect. On No-
vember 15, 1994, Blairlogie became the Portfolio Manager of the
Fund.
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------- --------------------
2/1/91- 5/22/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
-------------------------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period $12.19 $12.92 $12.17 $10.04 $10.54 $9.48 $11.75 $11.30
-------------------------------------------------- -------------------
Income From
Investment Operations:
Net Investment
Income (Loss) 0.07 0.07 0.04 0.07 0.05 0.02 0.00(/1/) 0.00
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 0.77 (0.56) 0.94 2.80 (0.37) 1.04 0.73(/1/) 0.45
-------------------------------------------------- -------------------
Total From
Investment
Operations 0.84 (0.49) 0.98 2.87 (0.32) 1.06 0.73 0.45
-------------------------------------------------- -------------------
Less
Distributions:
Distributions
(from
capital gain) 0.00 (0.24) (0.23) (0.74) (0.18) 0.00 0.00 0.00
-------------------------------------------------- -------------------
Net Asset
Value,
End of Period $13.03 $12.19 $12.92 $12.17 $10.04 $10.54 $12.48 $11.75
================================================== ===================
TOTAL RETURN
(without
sales charge) 6.89% (3.7)% 8.2% 30.4% (3.1)% 17.3% 6.21% 4.0%
RATIOS /
SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $20,056 $17,951 $23,289 $11,992 $471 $22 $5,893 $503
Ratio of
Expenses to
Average Net
Assets 1.41% 1.5% 1.4% 1.4% 1.9% 1.9%* 2.16% 2.3%*
Ratio of Net
Investment
Income to
Average
Net Assets 0.49% 0.6% 0.3% 0.6% 0.5% 0.7%* (0.26)% (0.1)%*
Portfolio
Turnover Rate 109.58% 169.8% 55.1% 67.6% 159.6% 107.1% 109.58% 169.8%
Average
Commission
Rate $0.00 $0.00
<CAPTION>
Class C
----------------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period $11.75 $12.56 $11.92 $9.92 $10.49 $10.04 $13.33 $10.07 $12.87 $9.70
----------------------------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Income (Loss) (0.05) (0.02) (0.06) (0.01) (0.06) (0.08) (0.10) (0.18) (0.10) (0.10)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 0.77 (0.55) 0.93 2.75 (0.33) 1.76 (2.02) 3.44 (1.83) 3.27
----------------------------------------------------------------------------------------------
Total From
Investment
Operations 0.72 (0.57) 0.87 2.74 (0.39) 1.68 (2.12) 3.26 (1.93) 3.17
----------------------------------------------------------------------------------------------
Less
Distributions:
Distributions
(from
capital gain) 0.00 (0.24) (0.23) (0.74) (0.18) (1.23) (1.17) 0.00 (0.87) 0.00
----------------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $12.47 $11.75 $12.56 $11.92 $9.92 $10.49 $10.04 $13.33 $10.07 $12.87
==============================================================================================
TOTAL RETURN
(without
sales charge) 6.13% (4.5)% 7.4% 29.4% (3.8)% 18.3% (17.4)% 32.4% (14.0)% 32.7%
RATIOS /
SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $203,544 $215,349 $294,492 $147,194 $28,299 $33,594 $36,282 $56,150 $60,394 $107,584
Ratio of
Expenses to
Average Net
Assets 2.16% 2.2% 2.2% 2.2% 2.6% 2.6% 2.3% 2.3% 2.4% 2.4%
Ratio of Net
Investment
Income to
Average
Net Assets (0.26)% (0.2)% (0.5)% (0.1)% (0.6)% (0.2)% (0.3)% (0.7)% (0.5)% (0.9)%
Portfolio
Turnover Rate 109.58% 169.8% 55.1% 67.6% 159.6% 107.1% 93.0% 83.6% 94.9% 134.0%
Average
Commission
Rate $0.00
</TABLE>
1. Per share amounts based on average number of shares outstanding during the
period 10/1/95-9/30/96.
*Annualized
March 5, 1997 Prospectus
11
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Innovation
Fund is for shares outstanding throughout the periods listed.
INNOVATION FUND
<TABLE>
<CAPTION>
Class A Class B Class C
---------------- --------------- -----------------
12/22/94- 5/22/95- 12/22/94-
9/30/96 9/30/95 9/30/96 9/30/95 9/30/96 9/30/95
---------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $14.74 $10.00 $14.66 $11.81 $14.65 $10.00
---------------- --------------- -----------------
Income From
Investment Operations:
Net Investment Loss (0.07) (0.06) (/1/) (0.11) (0.08) (0.15) (0.13) (/1/)
Net Gains or Losses on
Securities (both
realized and
unrealized) 2.94 4.80 2.84 2.93 2.89 4.78
---------------- --------------- -----------------
Total From Investment
Operations 2.87 4.74 2.73 2.85 2.74 4.65
---------------- --------------- -----------------
Less Distributions:
Distributions (from
capital gain) (0.35) 0.00 (0.35) 0.00 (0.35) 0.00
---------------- --------------- -----------------
Net Asset Value,
End of Period $17.26 $14.74 $17.04 $14.66 $17.04 $14.65
================ =============== =================
TOTAL RETURN (without
sales charge) 19.86% 47.4% 18.99% 24.1% 19.08% 46.5%
RATIOS / SUPPLEMENTAL
DATA
Net Assets, End of
Period (in 000s) $50,067 $28,239 $33,778 $6,509 $137,752 $63,952
Ratio of Expenses to
Average Net Assets 1.31% 1.4%* 2.06% 2.3%* 2.06% 2.2%*
Ratio of Net Investment
Income to Average Net
Assets (0.61)% (0.6)%* (1.36)% (1.7)%* (1.36)% (1.4)%*
Portfolio Turnover Rate 123.14% 86.1% 123.14% 86.1% 123.14% 86.1%
Average Commission Rate $0.06 $0.06 $0.06
</TABLE>
1. Reflecting voluntary waiver of investment advisory fee of
$4,666 (0.00 per share) by the Advisor as more fully described in
Note 3(a) to the Financial Statements in the PIMCO Advisors Funds'
1996 Annual Report.
*Annualized
12
PIMCO Funds: Multi-Manager Series
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Precious
Metals Fund is for shares outstanding throughout the periods list-
ed. The information provided reflects results of operations under
the Fund's former investment objective and policies through Novem-
ber 14, 1994; such results would not necessarily have been
achieved had the Fund's current objective and policies been in ef-
fect.
PRECIOUS METALS FUND
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------------- ---------------
2/1/91- 6/15/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
------------------------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period $12.33 $14.14 $10.32 $7.54 $7.51 $7.19 $11.90 $11.61
------------------------------------------------- ---------------
Income From
Investment Operations:
Net Investment
Income (Loss) 0.03 0.07 0.08 0.06 (0.01) (0.07) (0.03) (0.01)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) (0.24) (1.88) 3.74 2.72 0.04 0.39 (0.25) 0.30
------------------------------------------------- ---------------
Total From
Investment
Operations (0.21) (1.81) 3.82 2.78 0.03 0.32 (0.28) 0.29
------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income)
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------- ---------------
Total
Distributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------- ---------------
Net Asset
Value,
End of Period $12.12 $12.33 $14.14 $10.32 $7.54 $7.51 $11.62 $11.90
================================================= ===============
TOTAL RETURN
(without
sales charge) (1.70)% (12.8)% 37.0% 36.9% 0.4% 6.8% (2.35)% 2.5%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $6,245 $7,670 $11,229 $3,425 $668 $514 $2,218 $251
Ratio of
Expenses to
Average Net
Assets 1.32% 1.4% 1.3% 1.4% 1.9% 2.1%* 2.07% 2.2%*
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets 0.19% 0.6% 0.6% 0.6% (0.1)% (1.4)%* (0.56)% (0.2)%*
Portfolio
Turnover Rate 35.27% 8.7% 11.0% 10.0% 29.6% 19.4% 35.27% 8.7%
Average
Commission
Rate $0.02 $0.02
<CAPTION>
Class C
------------------------------------------------------------------------
10/10/88-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period $11.90 $13.75 $10.11 $7.44 $7.46 $9.40 $9.86 $10.00
------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Income (Loss) (0.07) (0.02) (0.02) (0.02) (0.06) (0.05) (0.05) (0.05)
Net Gains or
Losses on
Securities
(both realized
and
unrealized) (0.21) (1.83) 3.66 2.69 0.04 (1.89) (0.41) (0.08)
------------------------------------------------------------------------
Total From
Investment
Operations (0.28) (1.85) 3.64 2.67 (0.02) (1.94) (0.46) (0.13)
------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.01)
Distributions
(from
capital gain) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------
Total
Distributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.01)
------------------------------------------------------------------------
Net Asset
Value,
End of Period $11.62 $11.90 $13.75 $10.11 $7.44 $7.46 $9.40 $9.86
========================================================================
TOTAL RETURN
(without
sales charge) (2.35)% (13.5)% 36.0% 35.9% (0.3)% (20.6)% (4.7)% (1.3)%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $37,609 $42,341 $62,825 $23,884 $6,633 $ 6,995 $9,918 $6,630
Ratio of
Expenses to
Average Net
Assets 2.07% 2.2% 2.1% 2.2% 2.6% 2.4% 2.4% 2.5%*
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (0.56)% (0.2)% (0.2)% (0.2)% (0.8)% (0.8)% (0.8)% (0.6)%*
Portfolio
Turnover Rate 35.27% 8.7% 11.0% 10.0% 29.6% 19.4% 22.5% 8.8%
Average
Commission
Rate $0.02
</TABLE>
*Annualized
March 5, 1997 Prospectus
13
<PAGE>
Financial Highlights
The following schedule of financial highlights for the Tax Exempt
Fund is for shares outstanding throughout the periods listed.
TAX EXEMPT FUND
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------- ---------------
3/14/91- 5/30/95-
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/96 9/30/95
--------------------------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period $11.83 $11.21 $12.74 $11.94 $11.53 $11.30 $11.84 $11.90
--------------------------------------------------- ---------------
Income From
Investment Operations:
Net Investment
Income 0.62 0.57 0.56 0.61 0.65 0.38 0.53 0.16
Net Gains or
Losses on
Securities
(both realized
and
unrealized) (0.01) 0.63 (1.31) 1.02 0.42 0.23 0.00 (0.07)
--------------------------------------------------- ---------------
Total From
Investment
Operations 0.61 1.20 (0.75) 1.63 1.07 0.61 0.53 0.09
--------------------------------------------------- ---------------
Less
Distributions:
Dividends (from
net investment
income)
(0.52) (0.58) (0.58) (0.64) (0.66) (0.38) (0.44) (0.15)
Dividends (in
excess of net
investment
income) (0.05) 0.00 0.00 0.00 0.00 0.00 (0.04) 0.00
Distributions
(from
capital gain) 0.00 0.00 (0.20) (0.19) 0.00 0.00 0.00 0.00
--------------------------------------------------- ---------------
Total
Distributions (0.57) (0.58) (0.78) (0.83) (0.66) (0.38) (0.48) (0.15)
--------------------------------------------------- ---------------
Net Asset
Value,
End of Period $11.87 $11.83 $11.21 $12.74 $11.94 $11.53 $11.89 $11.84
=================================================== ===============
TOTAL RETURN
(without
sales charge) 5.22% 11.0% (6.1)% 14.2% 9.5% 10.4% 4.54% 0.8%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $5,864 $2,701 $2,726 $2,852 $2,295 $321 $2,258 $228
Ratio of
Expenses to
Average Net
Assets 1.07% 1.1% 1.1% 1.1% 1.1% 1.1%* 1.82% 1.9%*
Ratio of Net
Investment
Income to
Average
Net Assets 5.12% 5.0% 4.7% 5.0% 5.6% 5.8%* 4.37% 4.0%*
Portfolio
Turnover Rate 49.33% 35.0% 63.2% 55.9% 107.4% 119.0% 49.33% 35.0%
<CAPTION>
Class C
-----------------------------------------------------------------------------------------
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period $11.82 $11.21 $12.73 $11.94 $11.53 $10.97 $11.10 $10.82 $10.23 $11.51
-----------------------------------------------------------------------------------------
Income From
Investment Operations:
Net Investment
Income 0.52 0.48 0.47 0.52 0.58 0.62 0.63 0.65 0.65 0.66
Net Gains or
Losses on
Securities
(both realized
and
unrealized) 0.00 0.62 (1.30) 1.01 0.41 0.56 (0.13) 0.28 0.59 (0.84)
-----------------------------------------------------------------------------------------
Total From
Investment
Operations 0.52 1.10 (0.83) 1.53 0.99 1.18 0.50 0.93 1.24 (0.18)
-----------------------------------------------------------------------------------------
Less
Distributions:
Dividends (from
net investment
income) (0.44) (0.49) (0.49) (0.55) (0.58) (0.62) (0.63) (0.65) (0.65) (0.66)
Dividends (in
excess of net
investment
income) (0.04) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions
(from
capital gain) 0.00 0.00 (0.20) (0.19) 0.00 0.00 0.00 0.00 0.00 (0.44)
-----------------------------------------------------------------------------------------
Total
Distributions (0.48) (0.49) (0.69) (0.74) (0.58) (0.62) (0.63) (0.65) (0.65) (1.10)
-----------------------------------------------------------------------------------------
Net Asset
Value,
End of Period $11.86 $11.82 $11.21 $12.73 $11.94 $11.53 $10.97 $11.10 $10.82 $10.23
=========================================================================================
TOTAL RETURN
(without
sales charge) 4.46% 10.1% (6.7)% 13.3% 8.8% 11.0% 4.5% 8.8% 12.4% (2.1)%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End
of Period (in
000s) $47,082 $54,224 $68,214 $81,475 $52,113 $46,663 $46,630 $60,609 $63,261 $66,610
Ratio of
Expenses to
Average Net
Assets 1.82% 1.8% 1.8% 1.8% 1.8% 1.8% 1.7% 1.7% 1.8% 1.8%
Ratio of Net
Investment
Income to
Average
Net Assets 4.37% 4.3% 4.0% 4.2% 4.9% 5.5% 5.6% 5.9% 6.1% 5.9%
Portfolio
Turnover Rate 49.33% 35.0% 63.2% 55.9% 107.4% 119.0% 77.5% 203.6% 211.3% 204.4%
</TABLE>
*Annualized
14
PIMCO Funds: Multi-Manager Series
<PAGE>
Investment Objectives and Policies
The investment objective and general investment policies of each
Fund are described below. There can be no assurance that the in-
vestment objective of any Fund will be achieved. Because the mar-
ket value of each Fund's investments will change, the net asset
value per share of each Fund will also vary.
FUND EQUITY INCOME FUND seeks current income as a primary investment
DESCRIP- objective, and long-term growth of capital as a secondary objec-
TIONS tive. The Fund invests primarily in common stocks characterized by
having below-average price to earnings ("P/E") ratios and higher
dividend yields relative to their industry groups. In selecting
securities, the Portfolio Manager classifies a universe of approx-
imately 2,000 stocks by industry, each of which has a minimum mar-
ket capitalization of $200 million at the time of investment. The
universe is then screened to find the lowest P/E ratios in each
industry, subject to application of quality and price momentum
screens. From this group, approximately 25 stocks with the highest
yields are chosen for the Fund. The universe is then rescreened to
find the highest yielding stock in each industry, subject to ap-
plication of quality and price momentum screens. From this group,
approximately 25 stocks with the lowest P/E ratios are added to
the Fund. Although quarterly rebalancing is a general rule, re-
placements are made whenever an alternative stock within the same
industry has a significantly lower P/E ratio or higher dividend
yield than the current Fund holding. For information on other in-
vestment policies, see "Investment Objectives and Policies--Equity
Funds." See "Characteristics and Risks of Securities and Invest-
ment Techniques" in this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more de-
tails on investment practices and related risks. The Portfolio
Manager for the Equity Income Fund is NFJ.
RENAISSANCE FUND seeks long-term growth of capital and income. The
Fund invests primarily in a variety of income-producing equity se-
curities. Income-producing equity securities include common stocks
that pay dividends, preferred stocks and securities (including
debt securities) that are convertible into common stocks ("con-
vertible securities").
The Fund may invest a portion of its assets in preferred stocks
and convertible securities rated at least B by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P")
(or similarly rated by another Nationally Recognized Statistical
Rating Organization ("NRSRO"), or unrated but determined by the
Portfolio Manager to be of comparable quality), and may invest up
to 10% of its total assets in convertible securities rated below B
by Moody's or S&P (or similarly rated by another NRSRO or unrated
but determined by the Portfolio Manager to be of comparable quali-
ty). Securities rated Ba or below by Moody's or BB or below by S&P
(or of similar quality) are not considered to be of "investment
grade" quality. These lesser rated debt securities may involve
special risks. See "Characteristics and Risks of Securities and
Investment Techniques--Risks of High Yield Securities ("Junk
Bonds")." Although the Fund may invest in such securities, it nei-
ther invests nor has the present intention of investing 35% or
more of its net assets in securities that are not considered to be
of "investment grade" quality. The Fund will not invest in con-
vertible securities that are in default at the time of acquisi-
tion.
The non-convertible debt securities in which the Fund may in-
vest include corporate or government debt securities of any matu-
rity, including zero coupon securities. These non-convertible debt
securities may be rated B or higher by Moody's or S&P (or simi-
larly rated by another NRSRO or unrated and determined by the
Portfolio Manager to be of comparable quality). The Fund may in-
vest a portion of its assets in securities of foreign issuers
traded in foreign securities markets (not including Eurodollar
certificates of deposit), which will not exceed 15% of the Fund's
assets at the time of investment. Investing in the securities of
foreign issuers involves special risks and considerations not typ-
ically associated with investing in U.S. companies. The Fund may
also purchase and write call and put options on securities and se-
curities indexes; enter into futures contracts and use options on
futures contracts; buy or sell foreign currencies; and enter into
forward foreign currency contracts. For information on other in-
vestment policies, see "Investment Objectives and Policies--Equity
Funds." See "Characteristics and Risks of Securities and Invest-
ment Techniques" in this Prospectus and "Investment Objectives and
Policies" in the Statement of Additional Information for more de-
tails on investment practices and related risks. The Portfolio
Manager for the Renaissance Fund is Columbus Circle.
15
March 5, 1997 Prospectus
<PAGE>
VALUE FUND seeks long-term growth of capital and income. The Fund
invests primarily in common stocks characterized by having below-
average P/E ratios relative to their industry group. In selecting
securities, the Portfolio Manager classifies a universe of approx-
imately 2,000 stocks by industry, each of which has a minimum mar-
ket capitalization of $200 million at the time of investment. The
universe is then screened to find the stocks with the lowest P/E
ratios in each industry, subject to application of quality and
price momentum screens. The stocks in each industry with the low-
est P/E ratios that pass the quality and price momentum screens
are then selected for the Fund. The Fund usually invests in ap-
proximately 50 stocks. Although quarterly rebalancing is a general
rule, replacements are made whenever an alternative stock within
the same industry has a significantly lower P/E ratio than the
current Fund holdings. For information on other investment poli-
cies, see "Investment Objectives and Policies--Equity Funds." See
"Characteristics and Risks of Securities and Investment Tech-
niques" in this Prospectus and "Investment Objectives and Poli-
cies" in the Statement of Additional Information for more details
on investment practices and related risks. The Portfolio Manager
for the Value Fund is NFJ.
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. For information on other investment policies,
see "Investment Objectives and Policies--Equity Funds." See "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Capital
Appreciation Fund is Cadence.
GROWTH FUND seeks long-term growth of capital. Income is an inci-
dental consideration. The Fund invests primarily in common stocks
of companies with medium to large market capitalizations. The Fund
may invest a portion of its assets in securities of foreign is-
suers traded in foreign securities markets (not including Eurodol-
lar certificates of deposit), which will not exceed 15% of the
Fund's assets at the time of investment. Investing in the securi-
ties of foreign issuers involves special risks and considerations
not typically associated with investing in U.S. companies. The
Fund may also purchase and write call and put options on securi-
ties and securities indexes; enter into futures contracts and use
options on futures contracts; buy or sell foreign currencies; and
enter into forward foreign currency contracts. For information on
other investment policies, see "Investment Objectives and Poli-
cies--Equity Funds." See "Characteristics and Risks of Securities
and Investment Techniques" in this Prospectus and "Investment Ob-
jectives and Policies" in the Statement of Additional Information
for more details on investment practices and related risks. The
Portfolio Manager for the Growth Fund is Columbus Circle.
MID CAP GROWTH FUND seeks growth of capital. The Fund invests pri-
marily in common stocks of middle capitalization companies that
have improving fundamentals (such as growth of earnings and divi-
dends) and whose stock is reasonably valued by the market. Stocks
for the Fund are selected from a universe of companies with market
capitalizations in excess of $500 million at the time of invest-
ment, excluding the 200 companies with the highest market capital-
ization. The Fund usually invests in approximately 60 to 100 com-
mon stocks. Each issue is screened and ranked using five distinct
computerized models, including: (i) a dividend growth screen, (ii)
an equity growth screen, (iii) an earnings
16
PIMCO Funds: Multi-Manager Series
<PAGE>
growth screen, (iv) an earnings momentum screen, and (v) an earn-
ings surprise screen. The Portfolio Manager believes that the mod-
els identify the stocks in the universe exhibiting growth charac-
teristics with reasonable valuations. Stocks are replaced when
they score worse-than-median screen ranks, have negative earnings
surprises, or show poor relative price performance. The universe
is rescreened frequently to obtain a favorable composition of
growth and value characteristics for the entire Fund. For informa-
tion on other investment policies, see "Investment Objectives and
Policies--Equity Funds." 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 for more details on investment practices and related risks.
The Portfolio Manager for the Mid Cap Growth Fund is Cadence.
TARGET FUND seeks capital appreciation. No consideration is given
to income. The Fund invests primarily in common stocks of compa-
nies with medium market capitalizations. The Fund may invest a
portion of its assets in securities of foreign issuers traded in
foreign securities markets (not including Eurodollar certificates
of deposit), which will not exceed 15% of the Fund's assets at the
time of investment. Investing in the securities of foreign issuers
involves special risks and considerations not typically associated
with investing in U.S. companies. The Fund may also purchase and
write call and put options on securities and securities indexes;
enter into futures contracts and use options on futures contracts;
buy or sell foreign currencies; and enter into forward foreign
currency contracts. For information on other investment policies,
see "Investment Objectives and Policies--Equity Funds." See "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Target
Fund is Columbus Circle.
SMALL CAP VALUE FUND seeks long-term growth of capital and income.
The Fund invests primarily in common stocks of companies with mar-
ket capitalizations between $50 million and $1 billion at the time
of investment. In selecting securities, the Portfolio Manager di-
vides a universe of up to approximately 2,000 stocks into quar-
tiles based upon P/E ratio. The lowest quartile in P/E ratio is
screened for market capitalizations between $50 million and $1
billion, subject to application of quality and price momentum
screens. Approximately 100 stocks with the lowest P/E ratios are
combined in the Fund, subject to limits on the weighting for any
one industry. Although quarterly rebalancing is a general rule,
replacements are made whenever a holding achieves a higher P/E ra-
tio than the S&P 500's P/E ratio or its industry average P/E ra-
tio, or when an alternative stock within the same industry has a
significantly lower P/E ratio than the current Fund holding. The
Fund is intended for aggressive investors seeking above-average
gains and willing to accept the greater risks associated there-
with. For information on other investment policies, see "Invest-
ment Objectives and Policies--Equity Funds." See "Characteristics
and Risks of Securities and Investment Techniques" in this Pro-
spectus and "Investment Objectives and Policies" in the Statement
of Additional Information for more details on investment practices
and related risks. The Portfolio Manager for the Small Cap Value
Fund is NFJ.
OPPORTUNITY FUND seeks capital appreciation. No consideration is
given to income. Except to the extent described under "How to Buy
Shares--Limited Offering of Shares of the Opportunity Fund to New
Investors," the Fund is closed to new investors. The Fund invests
primarily in common stocks of companies with market capitaliza-
tions of less than $1 billion. The Fund is intended for aggressive
investors seeking above-average gains and willing to accept the
greater risks associated therewith.
The Fund may invest a portion of its assets in securities of
foreign issuers traded in foreign securities markets (not includ-
ing Eurodollar certificates of deposit), which will not exceed 15%
of the Fund's assets at the time of investment. Investing in the
securities of foreign issuers involves special risks and consider-
ations not typically associated with investing in U.S. companies.
The Fund may also purchase and write call and put options on secu-
rities and securities indexes; enter into futures contracts and
use options on futures contracts; buy or sell foreign currencies;
and enter into forward foreign currency contracts. For information
on other investment policies, see "Investment Objectives and Poli-
cies--Equity Funds." See "Characteristics and Risks of Securities
and Investment Techniques" in this Prospectus and
17
March 5, 1997 Prospectus
<PAGE>
"Investment Objectives and Policies" in the Statement of Addi-
tional Information for more details on investment practices and
related risks. The Portfolio Manager for the Opportunity Fund is
Columbus Circle.
INTERNATIONAL DEVELOPED FUND seeks long-term growth of capital.
The Fund invests primarily in a diversified portfolio of interna-
tional equity securities. The Morgan Stanley Capital International
EAFE (Europe, Australasia, Far East) Index ("EAFE Index") is used
as a basis for choosing the countries in which the Fund invests.
However, the Fund is not limited to the countries and weightings
of the EAFE Index. Under normal market conditions, the Fund will
invest no more than 35% of its assets in securities issued by com-
panies located in countries that the Portfolio Manager determines,
on the basis of market capitalization, liquidity, and other con-
siderations, to have underdeveloped securities markets. The Port-
folio Manager applies two levels of screening in selecting invest-
ments for the Fund. First, an active country selection model ana-
lyzes world markets and assigns a relative value ranking, or
"favorability weighting," to each country in the relevant country
universe to determine markets which are relatively undervalued.
Second, at the stock selection level, quality analysis and value
analysis are applied to each security, assessing variables such as
balance sheet strength and earnings growth (quality factors) and
performance relative to the industry, price to earnings ratios and
price to book ratios (value factors). This two-level screening
method identifies undervalued securities for purchase and also
provides a sell discipline for fully valued securities. In select-
ing securities, the Portfolio Manager considers, to the extent
practicable and on the basis of information available to it for
research, a company's environmental business practices.
For purposes of allocating the Fund's investments, a company is
considered to be located in the country in which it is domiciled,
in which it is primarily traded, from which it derives a signifi-
cant portion of its revenues, or in which a significant portion of
its goods or services are produced.
Most of the international equity securities in which the Fund
invests will be traded in foreign currencies. The Fund may engage
in foreign currency transactions to protect itself against fluctu-
ations in currency exchange rates in relation to the U.S. dollar
or to the weighting of a particular foreign currency on the EAFE
Index. Such foreign currency transactions may include forward for-
eign currency contracts, foreign exchange futures contracts, and
options thereon, currency exchange transactions on a spot (i.e.,
cash) basis, and put and call options on foreign currencies. Up to
10% of the Fund's assets may be invested in the securities of
other investment companies. The Fund may invest in stock index
futures contracts, and options thereon, and may sell (write) call
and put options. The Fund also may engage in equity index swap
transactions.
Investing in the securities of foreign issuers involves special
risks and considerations not typically associated with investing
in U.S. companies. For information on other investment policies,
see "Investment Objectives and Policies--Equity Funds." See "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Inter-
national Developed Fund is Blairlogie.
INTERNATIONAL FUND seeks capital appreciation through investments
in an international portfolio. Income is an incidental considera-
tion. Under normal market conditions, at least 65% of the Fund's
total assets will be invested in common stocks, which may or may
not pay dividends, as well as convertible bonds, convertible pre-
ferred stocks, warrants, rights or other equity securities, for a
combination of capital appreciation and income. Convertible secu-
rities may include securities convertible only by certain classes
of investors (which may not include the Fund). The Fund may not
invest in convertible securities which are of less than investment
grade quality at the time of purchase.
The Fund will normally invest in securities traded in developed
foreign securities markets. Particular consideration is given to
investments principally traded in developed North American (other
than United States), Japanese, European, Pacific and Australian
securities markets, and in securities of foreign issuers traded on
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
18
PIMCO Funds: Multi-Manager Series
<PAGE>
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 of the world, the Portfolio Man-
ager will consider such factors as the condition and growth poten-
tial of the various economies and securities markets, currency and
taxation 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 traded in the U.S., including money market
instruments, obligations issued or guaranteed by the U.S. or a
foreign government or their respective agencies, authorities or
instrumentalities, or corporate bonds and sponsored American De-
pository Receipts.
Investing in the securities of foreign issuers involves special
risks and considerations not typically associated with investing
in U.S. companies. For information on other investment policies,
see "Investment Objectives and Policies--Equity Funds." See "Char-
acteristics and Risks of Securities and Investment Techniques" in
this Prospectus and "Investment Objectives and Policies" in the
Statement of Additional Information for more details on investment
practices and related risks. The Portfolio Manager for the Inter-
national Fund is Blairlogie.
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
March 5, 1997 Prospectus
19
<PAGE>
For purposes of allocating the Fund's investments, a company is
considered to be located in the country in which it is domiciled,
in which it is primarily traded, from which it derives a signifi-
cant portion of its revenues, or in which a significant portion of
its goods or services are produced.
Most of the foreign securities in which the Fund invests will
be denominated in foreign currencies. The Fund may engage in for-
eign currency transactions to protect itself against fluctuations
in currency exchange rates in relation to the U.S. dollar or to
the weighting of a particular foreign currency on the MSCI Free
Index or the IFC Index. Such foreign currency transactions may in-
clude forward foreign currency contracts, foreign exchange futures
contracts, and options thereon, currency exchange transactions on
a spot (i.e., cash) basis, and put and call options on foreign
currencies. Up to 10% of the Fund's assets may be invested in the
securities of other investment companies. The Fund may invest in
stock index futures contracts, and options thereon, and may sell
(write) call and put options. The Fund may also engage in equity
index swap transactions.
For information on other investment policies, see "Investment
Objectives and Policies--Equity Funds." For a discussion of cer-
tain risks posed by investing in emerging market countries, see
"Characteristics and Risks of Securities and Investment Tech-
niques--Foreign Securities." See "Characteristics and Risks of Se-
curities and Investment Techniques" in this Prospectus and "In-
vestment Objectives and Policies" in the Statement of Additional
Information for more details on investment practices and related
risks. The Portfolio Manager for the Emerging Markets Fund is
Blairlogie.
INNOVATION FUND seeks capital appreciation. No consideration is
given to income. The Fund invests primarily (i.e., at least 65% of
its assets) in common stocks of companies which utilize innovative
technologies to gain a strategic competitive advantage in their
industry as well as companies that provide and service those tech-
nologies. Securities will be selected 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.
The Fund may also purchase and write call and put options on secu-
rities and securities indexes; enter into futures contracts and
use options on futures contracts; buy or sell foreign currencies;
and enter into forward foreign currency contracts. For information
on other investment policies, see "Investment Objectives and Poli-
cies--Equity Funds." See "Characteristics and Risks of Securities
and Investment Techniques" in this Prospectus and "Investment Ob-
jectives and Policies" in the Statement of Additional Information
for more details on investment practices and related risks. The
Portfolio Manager for the Innovation Fund is Columbus Circle.
PRECIOUS METALS FUND seeks capital appreciation. No consideration
is given to income. The Fund concentrates investments in a global
portfolio of common stocks of companies principally engaged in
precious metals-related activities, which include companies prin-
cipally engaged in the extraction, processing, distribution or
marketing of precious metals (the "precious metals industry"). A
particular company is deemed to be "principally engaged" in the
precious metals industry if at the time of investment the Portfo-
lio Manager considers that at least 50% of the company's assets,
revenues or profits are derived from the precious metals industry.
Normally, at least 65% of the assets of the Fund will be invested
in the precious metals industry and in securities the value of
which is linked to the price of a precious metal. See "Character-
istics and Risks of Securities and Investment Techniques--Precious
Metals."
20
PIMCO Funds: Multi-Manager Series
<PAGE>
The Fund will seek to identify securities of companies which,
based upon the Portfolio Manager's evaluation of their fundamental
investment characteristics, are undervalued in comparison to the
present or anticipated value of the precious metals relevant to
them. Examples of precious metals include gold, silver and plati-
num. To the extent permitted by federal tax law, the Fund may in-
vest directly in gold bullion and other precious metals. The Fund
has no present intention of investing directly in precious metals
other than gold.
The Fund does not presently intend to invest more than 10% of
its assets in either precious metals such as gold bullion or in
futures on precious metals, such as gold futures, and options
thereon. The Fund may invest up to 100% of its assets in securi-
ties principally traded on foreign securities markets and in secu-
rities of foreign issuers that are traded on U.S. securities mar-
kets, and may invest up to 100% of its assets in securities of
companies whose assets, revenues or profits are derived from a
single precious metal. At the present time, the Fund has no inten-
tion of investing more than 5% of its assets in securities the
value of which is linked to the price of a single precious metal.
The Fund may invest without limit in securities of foreign is-
suers traded in foreign securities markets. Investing in the secu-
rities of foreign issuers involves special risks and considera-
tions not typically associated with investing in U.S. companies.
The Fund may also purchase and write call and put options on secu-
rities, securities indexes, commodity indexes, and on foreign cur-
rencies; enter into futures contracts and use options on futures
contracts, including futures contracts on stock indexes, foreign
currencies, and precious metals; buy or sell foreign currencies;
and enter into forward foreign currency contracts.
The Fund, because of its emphasis on one industrial sector,
should be considered as one aspect of a diversified portfolio and
may not be suitable by itself as a balanced investment program.
For information on other investment policies, see "Investment Ob-
jectives and Policies--Equity Funds." See "Characteristics and
Risks of Securities and Investment Techniques" in this Prospectus
and "Investment Objectives and Policies" in the Statement of Addi-
tional Information for more details on investment practices and
related risks. The Portfolio Manager for the Precious Metals Fund
is Van Eck.
BALANCED FUND seeks total return consistent with prudent invest-
ment management. The Fund attempts to achieve this objective
through a management policy of investing in the following asset
classes: common stock, fixed income securities, and money market
instruments. The proportion of the Fund's total assets allocated
among common stocks, fixed income securities, and money market in-
struments will vary from time to time and will be determined by
the Advisor. In determining the allocation of the Fund's assets
among the three asset classes, the Advisor will employ asset allo-
cation principles which take into account certain economic fac-
tors, market conditions, and the expected relative total return
and risk of the various asset classes. Under normal circumstances,
it is anticipated that the Fund will generally maintain a balance
among the types of securities in which it invests. Thus, the Fund
will normally maintain 40% to 65% of its assets in common stock,
at least 25% of its assets in fixed income securities, and less
than 10% of its assets in money market instruments. However, in no
event would the Fund invest in any common stock if, at the time of
investment, more than 80% of the Fund's assets would be invested
in common stock; in no event would the Fund invest in a fixed in-
come security (other than a short-term instrument) if, at the time
of investment, more than 80% of the Fund's assets would be in-
vested in fixed income securities; nor would the Fund invest in a
money market instrument if, at the time of investment, more than
60% of its assets would be invested in money market instruments.
In managing the Fund, the Advisor uses a specialist approach
and has engaged three of the Trust's Portfolio Managers to manage
certain portions of the Fund's assets. The portion of the assets
of the Fund allocated by the Advisor for investment in common
stock (the "Common Stock Segment") will be further allocated by
the Advisor for investment by NFJ and Cadence. The portion of the
Common Stock Segment allocated to NFJ will be managed in accor-
dance with the investment policies of the Value Fund; the portion
allocated to Cadence will be managed in accordance with the in-
vestment policies of the Capital Appreciation Fund. Allocations of
the Common Stock Segment to NFJ and Cadence will vary from time to
time as determined by the Advisor.
March 5, 1997 Prospectus
21
<PAGE>
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.
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. See "Characteris-
tics and Risks of Securities and Investment Techniques" in this
Prospectus and "Investment Objectives and Policies" in the State-
ment of Additional Information for more details on investment
practices and related risks.
TAX EXEMPT FUND seeks high current income exempt from federal in-
come tax, consistent with preservation of capital, by investing in
debt securities whose interest is, in the opinion of bond counsel
for the issuer at the time of issuance, exempt from federal income
tax ("Tax Exempt Bonds"). Tax Exempt Bonds generally are issued by
states and local governments and their agencies, authorities and
other instrumentalities. It is a policy of the Fund that, under
normal market conditions, at least 80% of its net assets will be
invested in Tax Exempt Bonds rated Baa or higher by Moody's or BBB
or higher by S&P, or which are similarly rated by another NRSRO,
or if unrated, determined by the Portfolio
22
PIMCO Funds: Multi-Manager Series
<PAGE>
Manager to be of quality comparable to obligations so rated. Tax
Exempt Bonds rated in the fourth highest rating category (e.g.,
Baa by Moody's) may be considered to possess some speculative
characteristics by certain NRSROs.
The Fund may invest up to 20% of its net assets, under normal
market conditions, in any combination of (1) Tax Exempt Bonds
which are rated at least Ba by Moody's or BB by S&P (or similarly
rated by another NRSRO or, if unrated, determined by the Portfolio
Manager to be of comparable quality) and (2) U.S. Government 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 Fund from the use of such instruments will be
treated as a combination of short-term and long-term capital gain
and, if not offset by realized capital losses incurred by the
Fund, will be distributed to shareholders and will be taxable to
shareholders as a combination of ordinary income and long-term
capital gain. See "Characteristics and Risks of Securities and In-
vestment Techniques" in this Prospectus and "Investment Objectives
and Policies" in the Statement of Additional Information for more
details on investment practices and related risks. The Portfolio
Manager for the Tax Exempt Fund is Columbus Circle.
EQUITY 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 (together with the Funds
listed in the preceding paragraph, the "Equity Funds") will each
invest primarily (normally at least 65% of its assets) in equity
securities (income-producing equity securities in the case of the
Renaissance Fund), including common stocks, preferred stocks and
securities (including debt securities and warrants) convertible
into or exercisable for common stocks. Each of these Funds may in-
vest a portion 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. Any
of the Equity Funds may
March 5, 1997 Prospectus
23
<PAGE>
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 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 payment,
taking no account of the pattern of the security's payments prior
to maturity. In contrast, duration incorporates a bond's yield,
coupon interest payments, final maturity and call features into
one measure of the average life of a fixed income security on a
present value basis. Duration management is one of the fundamental
tools used by the Portfolio Managers for the Fixed Income Securi-
ties Segment of the Balanced Fund and the Tax Exempt Fund. For
more information on investments in fixed income securities, see
"Characteristics and Risks of Securities and Investment Tech-
niques" in this Prospectus and "Investment Objectives and Poli-
cies" in the Statement of Additional Information.
Characteristics and Risks of
Securities and Investment Techniques
The different types of securities and investment techniques used
by the individual Funds all have attendant risks of varying de-
grees. For example, with respect to common stock, there can be no
assurance of capital appreciation, and there is a risk of market
decline. With respect to debt securities, including money market
instruments, there is the risk that the issuer of a security may
not be able to meet its obligation to make scheduled interest or
principal payments. Because each Fund seeks a different investment
objective and has different investment policies, each is subject
to varying degrees of financial, market and credit risks. There-
fore, investors should carefully consider the investment objec-
tive, investment policies, and potential risks of any Fund or
Funds before investing.
The following describes potential risks associated with differ-
ent types of investment techniques that may be used by the indi-
vidual Funds. For more detailed information on these investment
techniques, as well as information on the types of securities in
which some or all of the Funds may invest, see the Statement of
Additional Information.
INVESTMENTS Certain of the Funds may invest in common stock of companies with
IN COM- market capitalizations that are small compared to other publicly
PANIES WITH traded companies. Generally, small market capitalization is con-
SMALL AND sidered to be less than $1 billion and large market capitalization
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
24
PIMCO Funds: Multi-Manager Series
<PAGE>
extensive research and development, manufacturing, marketing and
service capabilities, and more stability and greater depth of man-
agement and technical personnel. Investments in smaller, less sea-
soned 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 compa-
nies may be subject to more abrupt or erratic market movements
than larger, more established companies. These companies may have
limited product lines, markets or financial resources, or they may
be dependent upon a limited management group. Their securities may
be traded only in the over-the-counter market or on a regional se-
curities exchange. As a result, the disposition of securities to
meet redemptions may require a Fund to sell these securities at a
disadvantageous time, or at disadvantageous prices, or to make
many small sales over a lengthy period of time.
Many of the Funds may also invest in stocks of companies with
medium market capitalizations. The Target Fund may invest primar-
ily in such securities. Whether a U.S. issuer's market capitaliza-
tion is medium is determined by reference to the capitalization
for all issuers whose equity securities are listed on a United
States national securities exchange or which are reported on
NASDAQ. Issuers with market capitalizations within the range of
capitalization of companies included in the S&P Mid Cap 400 Index
may be regarded as being issuers with medium market capitaliza-
tions. Such investments share some of the risk characteristics of
investments in stocks of companies with small market capitaliza-
tions described above, although such companies tend to have longer
operating histories, broader product lines and greater financial
resources and their stocks tend to be more liquid and less vola-
tile than those of smaller capitalization issuers.
FOREIGN The International Developed, International and Emerging Markets
INVEST- Funds may invest directly in foreign equity securities; U.S. dol-
MENTS 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. 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
March 5, 1997 Prospectus
25
<PAGE>
higher custodial fees than apply to domestic custodial arrange-
ments 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 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 stocks. Repatriation of investment
income, capital, and the proceeds of sales by foreign investors
may require governmental registration and/or approval in some
emerging market countries. A number of the currencies of emerging
market countries have experienced significant declines against the
U.S. dollar in recent years, and devaluation may occur subsequent
to investments in these currencies by a Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to
have, negative effects on the economies and securities markets of
certain emerging market countries. Many of the emerging securities
markets are relatively small, have low trading volumes, suffer pe-
riods of relative illiquidity, and are characterized by signifi-
cant price volatility. There is a risk in emerging market coun-
tries that a future economic or political crisis could lead to
price controls, forced mergers of companies, expropriation or con-
fiscatory taxation, seizure, nationalization, or creation of gov-
ernment monopolies, any of which may have a detrimental effect on
a Fund's investment.
Additional risks of investing in emerging market countries may
include: currency exchange rate fluctuations; greater social, eco-
nomic and political uncertainty and instability (including the
risk of war); more substantial governmental involvement in the
economy; less governmental supervision and regulation of the secu-
rities markets and participants in those markets; unavailability
of currency hedging techniques in certain emerging market coun-
tries; the fact that companies in emerging market countries may be
newly organized and may be smaller and less seasoned companies;
the difference in, or lack of, auditing and financial reporting
standards, which may result in unavailability of material informa-
tion about issuers; the risk that it may be more difficult to ob-
tain and/or enforce a judgment in a court outside the United
States; and significantly smaller market capitalization of securi-
ties markets.
FOREIGN Foreign currency exchange rates may fluctuate significantly over
CURRENCY short periods of time. They generally are determined by the forces
TRANSAC- of supply and demand in the foreign exchange markets and the rela-
TIONS 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
26
PIMCO Funds: Multi-Manager Series
<PAGE>
between the currency it will deliver and the currency it will re-
ceive for the duration of the contract. As a result, a Fund re-
duces 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 currency. 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 success-
ful and may eliminate any chance for a Fund to benefit from favor-
able fluctuations in relevant foreign currencies. The Interna-
tional Developed, International and Emerging Markets Funds may
also enter into hedging contracts for purposes of increasing expo-
sure to a foreign currency or to shift exposure to foreign cur-
rency 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 antici-
pated by the particular Fund's Portfolio Manager. These Funds may
use one currency (or a basket of currencies) to hedge against ad-
verse 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 obli-
gations") or foreign branches of U.S. banks ("Eurodollar obli-
gations");
(3) commercial paper rated in the two highest rating categories
by at least two NRSROs, or, if rated by only one NRSRO, in such
agency's two highest grades, or, if unrated, determined to be
of comparable quality by the Advisor or a Portfolio Manager;
(4) corporate obligations with a remaining maturity of 397 days
or less whose issuers have outstanding short-term debt obliga-
tions rated in the highest rating category by at least two
NRSROs, or, if rated by only one NRSRO, in such agency's high-
est grade, or, if unrated, determined to be of comparable qual-
ity by the Advisor or a Portfolio Manager; and
(5) repurchase agreements with domestic commercial banks or
registered broker-dealers.
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 in the
SECURITIES future. The value of some mortgage-related or asset-backed securi-
ties in which the Funds invest may be particularly sensitive to
changes in prevailing interest rates, and, like the other fixed
income investments, the ability of a Fund to successfully utilize
these instruments may depend in part upon the ability of the Port-
folio Manager to forecast interest rates and other economic fac-
tors 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
27
March 5, 1997 Prospectus
<PAGE>
foreclosure, net of fees and costs which may be incurred) may ex-
pose a Fund to a lower rate of return upon reinvestment of princi-
pal. 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 vol-
atility of a mortgage-related security, and may have the effect of
shortening or extending the effective maturity of the security be-
yond what was anticipated at the time of purchase. To the extent
that unanticipated rates of prepayment on underlying mortgages in-
crease the effective maturity of a mortgage-related security, the
volatility of such security can be expected to increase.
Payment of principal and interest on some mortgage pass-through
securities (but not the market value of the securities themselves)
may be guaranteed by the full faith and credit of the U.S. Govern-
ment (in the case of securities guaranteed by the Government Na-
tional Mortgage Association ("GNMA")); or guaranteed by agencies
or instrumentalities of the U.S. Government (in the case of secu-
rities guaranteed by the Federal National Mortgage Association
("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"),
which are supported only by the discretionary authority of the
U.S. Government to purchase the agency's obligations). Mortgage-
related securities created by non-governmental issuers (such as
commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market
issuers) may be supported by various forms of insurance or guaran-
tees, including individual loan, title, pool and hazard insurance
and letters of credit, which may be issued by governmental enti-
ties, private insurers or the mortgage poolers.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOs") are hybrid mortgage-
related instruments. Similar to a bond, interest and pre-paid
principal on a CMO are paid, in most cases, semi-annually. CMOs
may be collateralized by whole mortgage loans but are more typi-
cally collateralized by portfolios of mortgage pass-through secu-
rities guaranteed by GNMA, FHLMC, or FNMA. CMOs are structured
into multiple classes, with each class bearing a different stated
maturity. Monthly payments of principal, including prepayments,
are first returned to investors holding the shortest maturity
class; investors holding the longer maturity classes receive prin-
cipal only after the first class has been retired. CMOs that are
issued or guaranteed by the U.S. Government or by any of its agen-
cies or instrumentalities will be considered U.S. Government secu-
rities by 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 the Fund's di-
versification 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
28
PIMCO Funds: Multi-Manager Series
<PAGE>
all of the principal (the principal-only, or "PO" class). The
yield to maturity on an IO class is extremely sensitive to the
rate of principal payments (including prepayments) on the related
underlying mortgage assets, and a rapid rate of principal payments
may have a material adverse effect on the Fund's yield to maturity
from these securities. The Balanced Fund has adopted a policy un-
der which it will not invest more than 5% of its net assets in any
combination of IO, PO, or inverse floater securities. For a dis-
cussion 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. 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 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
March 5, 1997 Prospectus
29
<PAGE>
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 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* 5.06 -- -- -- 2.94 4.16 -- -- -- --
UNRATED BUT CONSIDERED EQUIVALENT TO
<CAPTION>
TOTAL
1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH 9TH 10TH UNRATED
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Renaissance* -- -- -- -- -- 1.58 -- -- -- -- 1.58
</TABLE>
*Represents holdings of the PIMCO Advisors Equity Income Fund for
its fiscal year ended September 30, 1996. The Equity Income Fund
reorganized as the Renaissance Fund of the Trust on January 17,
1997.
For additional discussion of the characteristics of lower rated
fixed income securities, see the Statement of Additional Informa-
tion. Ratings assigned to fixed income securities are described in
the Appendix to the Statement of Additional Information.
DERIVATIVE Certain Funds may purchase and write call and put options on secu-
INSTRUMENTS rities, securities indexes and foreign currencies, and enter into
futures contracts and use options on futures contracts as further
described below. In pursuit of their investment objectives, the
Renaissance, Growth, Target, Opportunity, International Developed,
International, Emerging Markets, Innovation, Precious Metals and
Balanced Funds may engage in the purchase and writing of call and
put options on securities and may engage in the purchase and writ-
ing of options on securities indexes. The Tax Exempt Fund may pur-
chase call or put options on U.S. Government securities, Tax Ex-
empt Bonds and Tax Exempt Bond indexes. The Precious Metals Fund
may purchase and write options on commodities indexes. The Funds
that may invest in foreign-currency denominated securities may en-
gage in the purchase and writing of call and put options on for-
eign 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 enter into swap
agreements with respect to foreign currencies and interest rates.
The Funds may use these techniques to hedge against changes in in-
terest rates, foreign currency exchange rates or securities pric-
es; and for the International Developed, International and Emerg-
ing Markets Funds, to increase exposure to a foreign currency, to
shift exposure to foreign currency fluctuations from one country
to another, or as part of their overall investment strategies.
Each Fund will maintain a segregated account consisting of assets
determined to be liquid by the Advisor or a Portfolio Manager in
accordance with procedures
30
PIMCO Funds: Multi-Manager Series
<PAGE>
established by the Board of Trustees (or, as permitted by applica-
ble regulation, enter into certain offsetting positions) to cover
its obligations under options, futures, and swaps to avoid
leveraging of the Fund.
For these purposes, derivative instruments are deemed to con-
sist of securities or other instruments whose value is derived
from or related to the value of some other instrument or asset,
and not to include those securities whose payment of principal
and/or interest depend upon cash flows from underlying assets,
such as mortgage-related or asset-backed securities. See "Mort-
gage-Related and Other Asset-Backed Securities." The value of some
derivative instruments in which the Funds invest may be particu-
larly sensitive to changes in prevailing interest rates, and, like
the other investments of the Funds, the ability of a Fund to suc-
cessfully utilize these instruments may depend in part upon the
ability of the Portfolio Manager to forecast interest rates and
other economic factors correctly. If the Portfolio Manager incor-
rectly forecasts such factors and has taken positions in deriva-
tive instruments contrary to prevailing market trends, the Funds
could be exposed to the risk of loss.
The Funds might not employ any of the strategies described be-
low, and no assurance can be given that any strategy used will
succeed. If the Portfolio Manager incorrectly forecasts interest
rates, market values or other economic factors in utilizing a de-
rivatives strategy for a Fund, the Fund might have been in a bet-
ter position if it had not entered into the transaction at all.
The use of these strategies involves certain special risks, in-
cluding a possible imperfect correlation, or even no correlation,
between price movements of derivative instruments and price move-
ments of related investments. While some strategies involving de-
rivative instruments can reduce the risk of loss, they can also
reduce the opportunity for gain or even result in losses by off-
setting favorable price movements in related investments, or due
to the possible inability of a Fund to purchase or sell a portfo-
lio security at a time that otherwise would be favorable for it to
do so, or the possible need for a Fund to sell a portfolio secu-
rity at a disadvantageous time, because the Fund is required to
maintain asset coverage or offsetting positions in connection with
transactions in derivative instruments, and the possible inability
of a Fund to close out or to liquidate its derivatives positions.
OPTIONS ON SECURITIES, SECURITIES INDEXES, COMMODITY INDEXES AND
CURRENCIES Certain Funds may purchase put options on securities.
One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in
market value. These Funds may also purchase call options on secu-
rities. One purpose of purchasing call options is to protect
against substantial increases in prices of securities the Fund in-
tends to purchase pending its ability to invest in such securities
in an orderly manner. A Fund may sell put or call options it has
previously purchased, which could result in a net gain or loss de-
pending on whether the amount realized on the sale is more or less
than the premium and other transaction costs paid on the put or
call option which is sold. A Fund may write a call or put option
only if the option is "covered" by the Fund holding a position in
the underlying securities or by other means which would permit im-
mediate satisfaction of the Fund's obligation as writer of the op-
tion. Prior to exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series.
The purchase and writing of options involves certain risks.
During the option period, the covered call writer has, in return
for the premium on the option, given up the opportunity to profit
from a price increase in the underlying 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.
March 5, 1997 Prospectus
31
<PAGE>
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 Renaissance, Growth, Target, Opportunity, In-
ternational, Innovation, and Precious Metals Funds, in the case of
a written call option on a securities index, the Fund will own
corresponding securities whose historic volatility correlates with
that of the index.
The International Developed, International, Emerging Markets,
Precious Metals and Balanced Funds may buy or sell put and call
options on foreign currencies as a hedge against changes in the
value of the U.S. dollar (or another currency) in relation to a
foreign currency in which a Fund's securities may be denominated.
Currency options traded on U.S. or other exchanges may be subject
to position limits which may limit the ability of a Fund to reduce
foreign currency risk using such options. Over-the-counter options
differ from traded options in that they are two-party contracts,
with price and other terms negotiated between buyer and seller,
and generally do not have as much market liquidity as exchange-
traded options. The Funds may be required to treat as illiquid
over-the-counter options purchased and securities being used to
cover certain written over-the-counter options.
SWAP AGREEMENTS The International Developed and Emerging Markets
Funds may enter into equity index swap agreements for purposes of
gaining exposure to the stocks making up an index of securities in
a foreign market without actually purchasing those stocks. The
Balanced Fund may enter into swap agreements to hedge against
changes in interest rates, foreign currency exchange rates or se-
curities prices. Swap agreements are two-party contracts entered
into primarily by institutional investors for periods ranging from
a few weeks to more than one year. In a standard swap transaction,
two parties agree to exchange the returns (or differentials in
rates of return) earned or realized on particular predetermined
investments or instruments, which may be adjusted for an interest
factor. The gross returns to be exchanged or "swapped" between the
parties are generally calculated with respect to a "notional
amount," i.e., the return on or increase in value of a particular
dollar amount invested at a particular interest rate, or in a
"basket" of securities representing a particular index.
Most swap agreements entered into by the Funds calculate the
obligations of the parties to the agreement on a "net basis." Con-
sequently, a Fund's current obligations (or rights) under a swap
agreement will generally be equal only to the net amount to be
paid or received under the agreement based on the relative values
of the positions held by each party to the agreement (the "net
amount"). A Fund's current obligations under a swap agreement will
be accrued daily (offset against amounts owed to the Fund), and
any accrued but unpaid net amounts owed to a swap counterparty
will be covered by the maintenance of a segregated account con-
sisting of assets determined to be liquid by the Portfolio Manager
in accordance with procedures established by the Board of 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.
32
PIMCO Funds: Multi-Manager Series
<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 fee, if the collateral is U.S. Govern-
ment securities. Securities lending involves the risk of loss of
rights in the collateral or delay in recovery of
March 5, 1997 Prospectus
33
<PAGE>
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. No income accrues to the purchaser of
such securities prior to delivery.
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. Such
sales may result in realization of taxable capital gains. See
"Taxes." The portfolio turnover rate for each Fund which offered
Class A, Class B or Class C shares prior to the date of this Pro-
spectus is set forth under "Financial Highlights." Portfolio turn-
over for the remaining Funds which offered Institutional or Admin-
istrative Class shares prior to the date of this Prospectus is in-
corporated by reference in the Statement of Additional Informa-
tion.
34
PIMCO Funds: Multi-Manager Series
<PAGE>
ILLIQUID Each of the Equity Income, Value, Capital Appreciation, Mid Cap
SECURITIES Growth, Small Cap Value and Balanced Funds may invest in securi-
ties that are illiquid, but will not acquire such securities if
they would compose more than 10% of the value of the Fund's net
assets (taken at market value at the time of investment), and will
not invest in securities that are illiquid because they are sub-
ject to legal or contractual restrictions on resale if such secu-
rities would compose more than 5% of the value of the Fund's net
assets (taken at market value at the time of investment). Each of
the Renaissance, Growth, Target, Opportunity, International Devel-
oped, International, Emerging Markets, Innovation, Precious Metals
and Tax Exempt Funds may invest in securities that are illiquid so
long as no more than 15% of the value of the Fund's net assets
(taken at market value at the time of investment) would be in-
vested in such securities. Certain illiquid securities may require
pricing at fair value as determined in good faith under the super-
vision of the Board of Trustees. A Portfolio Manager may be sub-
ject 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 transac-
tions 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
whose disposition is restricted under the federal securities laws
(other than securities issued pursuant to Rule 144A under the Se-
curities Act of 1933 and certain commercial paper that the Advisor
or a Portfolio Manager has determined to be liquid under proce-
dures approved by the Board of Trustees).
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-
MENTAL" 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.
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
35
March 5, 1997 Prospectus
<PAGE>
predecessor's) record to a recent date and is not intended to in-
dicate future performance. Performance information is computed
separately for each Fund's Class A, Class B and Class C shares in
accordance with the formulas 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) alternatives and certain other expenses, it is expected
that, under normal 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.
Current distribution information may also be provided to the
Trust's 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 in-
come), 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 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 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
36
PIMCO Funds: Multi-Manager Series
<PAGE>
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 10:00 a.m.
Eastern time on the next business day. Purchase orders received on
other than a regular business day will be executed on the next
succeeding regular business day. The Distributor, in its sole dis-
cretion, may accept or reject any order for purchase of Fund
shares. The sale of shares will be suspended during any period in
which the Exchange is closed for other than weekends or holidays,
or if permitted by the rules of the Securities and Exchange Com-
mission, when trading on the Exchange is restricted or during an
emergency which makes it impracticable for the Funds to dispose of
their securities or to determine fairly the value of their net as-
sets, or during any other period as permitted by the Securities
and Exchange Commission for the protection of investors.
March 5, 1997 Prospectus
37
<PAGE>
Except for gifts to minors or purchases through the PIMCO Auto
Invest plan, the PIMCO Auto Exchange plan and tax-qualified pro-
grams referred to below, the minimum initial investment in Class
A, Class B or Class C shares of the Trust and series of PIMCO
Funds: Pacific Investment Management Series is $1,000 and in any
Fund is $250, and the minimum additional investment is $100 per
Fund. The minimum initial investment for gifts to minors is $250
per Fund. For information about dealer commissions, see "Alterna-
tive Purchase Arrangements" below. Persons selling Fund shares may
receive different compensation for selling Class A, Class B or
Class C shares. Normally, Fund shares purchased through partici-
pating brokers are held in the investor's account with that bro-
ker. No share certificates will be issued unless specifically re-
quested in writing by an investor or broker-dealer.
DIRECT Investors who wish to invest in Class A, Class B or Class C shares
INVESTMENT of the Trust directly, rather than through a participating broker,
may do so by opening an account with the Distributor. To open an
account, an investor should complete the Account Application. 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, prototype 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 organizations.
38
PIMCO Funds: Multi-Manager Series
<PAGE>
The Distributor also makes available prototype documents for
establishing Money Purchase and/or Profit Sharing Plans and 401(k)
Retirement Savings Plans. Investors should call the Distributor at
800-426-0107 for further information about these plans and should
consult with their own tax advisers before establishing any re-
tirement plan. Investors who maintain their accounts with partici-
pating brokers should consult their broker about similar types of
accounts that may be offered through the broker. The minimum ini-
tial and subsequent investment in any Fund for tax-qualified plans
is $25.
PIMCO AUTO 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 800-852-8457. All such calls will be recorded. Fund
Link is normally established within 45 days of receipt of a Fund
Link Application by Shareholder Services, Inc. (the "Transfer
Agent"). The minimum investment by Fund Link is $50 per Fund.
Shares will be purchased on the regular business day the Distribu-
tor receives the funds through the ACH system, provided the funds
are received before the close of regular trading on the Exchange.
If the funds are received after the close of regular trading, the
shares will be purchased on the next regular business day.
Fund Link privileges must be requested on the Account Applica-
tion. To establish Fund Link on an existing account, complete a
Fund Link Application, which is available from the Distributor or
your broker, with signatures guaranteed from all shareholders of
record for the account. See "Signature Guarantee" below. Such
privileges apply to each shareholder of record for the account un-
less and until the Distributor receives written instructions from
a shareholder of record canceling such privileges. Changes of bank
account information must be made by completing a new Fund Link Ap-
plication signed by all owners of record of the account, with all
signatures guaranteed. The Distributor, the Transfer Agent and the
Fund may rely on any telephone instructions believed to be genuine
and will not be responsible to shareholders for any damage, loss
or expenses arising out of such instructions. The Fund reserves
the right
March 5, 1997 Prospectus
39
<PAGE>
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 as de-
scribed below.
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 close (and the Opportunity Fund will again be
closed to new investors) at the close of business on the day (the
"Closing Date") on which an aggregate gross amount of $250 million
of the Fund's Class A and Class C shares has been sold to new in-
vestors (including shares acquired through exchanges as described
above). Shares purchased and subsequently redeemed during the Of-
fering will not be resold during the Offering. All purchase orders
for the Opportunity Fund's shares received on the Closing Date
will be honored even if the result would be to exceed the $250
million limit.
For additional information regarding the terms of the Offering,
please contact the Distributor (at 800-426-0107) or your broker.
RESTRICTIONS ON SALES OF AND EXCHANGES FOR SHARES OF THE OPPORTU-
NITY FUND Except to the extent described under "Limited Offering
of Shares of the Opportunity Fund to New Investors" above, shares
of the Opportunity Fund are not available for purchase by new in-
vestors in the Fund. The following categories of existing share-
holders will still be permitted to purchase additional shares of
the Fund: (i) shareholders who owned shares of the Opportunity
Fund on December 31, 1992 will be permitted to purchase additional
shares of the Fund for as long as they continue to own some shares
of the Fund; (ii) participants in any self-directed qualified ben-
efit plan (for example, 401(k), 403(b) and Keogh Plans, but not
IRAs or SEP IRAs) that owned Opportunity Fund shares on March 1,
1993 for any single plan participant will be eligible to direct
the purchase of the Fund's shares by their plan account for so
long as the plan continues to own some shares of the Fund for any
single plan participant; and (iii) shareholders who 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 some shares of the Fund. In the event a
shareholder redeems all of his or her shares of the Opportunity
Fund, or all participants in a self-directed qualified benefit
plan described above redeem their shares of the Opportunity Fund,
such shareholder, or the participants in such plan, will no longer
be eligible to purchase shares of the Opportunity Fund. The Oppor-
tunity Fund does not offer Class B shares to new or existing in-
vestors.
Shareholders of other Funds are not permitted to exchange any
of their shares for Opportunity Fund shares unless the sharehold-
ers are independently eligible to purchase Opportunity Fund shares
because they already owned such shares of the Fund on December 31,
1992 (March 1, 1993, in the case of the self-directed qualified
benefit plans described above) or acquired such shares during the
Offering described under "Limited Offering of Shares of the Oppor-
tunity Fund to New Investors" above.
The Trust reserves the right at any time to modify these re-
strictions, including the suspension of all sales of Opportunity
Fund shares or the lifting of restrictions on different classes of
investors and/or transactions.
40
PIMCO Funds: Multi-Manager Series
<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 800-426-0107.
The alternative purchase arrangements offered in this Prospec-
tus are designed to enable a retail investor to choose the method
of purchasing Fund shares that is most beneficial to the investor
based on all factors to be considered, which include: the amount
and intended length of the investment; the particular Fund; and
whether the investor intends to exchange shares for shares of
other Funds. Generally, when making an investment decision, in-
vestors should consider the anticipated life of an intended in-
vestment in the Funds, the accumulated distribution and servicing
fees plus CDSCs on Class B or Class C shares, the initial sales
charge plus accumulated servicing fees on Class A shares (plus a
CDSC in certain circumstances), the possibility that the antici-
pated higher return on Class A shares due to the lower ongoing
charges will offset the initial sales charge paid on such shares,
the automatic conversion of Class B shares to Class A shares and
the difference in the 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 charges are deducted at the time of purchase, not all
of the purchase payment for Class A shares is invested initially.
Class B and Class C shares might be preferable to investors who
wish to have all purchase payments invested initially, although
remaining subject to higher distribution and servicing fees and,
for certain periods, being subject to a CDSC. An
41
March 5, 1997 Prospectus
<PAGE>
investor who qualifies for an elimination of the Class A initial
sales charge should also consider whether he or she anticipates
redeeming shares in a time period which will subject such shares
to a CDSC as described below. See "Initial Sales Charge Alterna-
tive--Class A Shares--Class A Deferred Sales Charge" below.
CLASS B Class B shares might be preferred by investors who intend
to invest in the Funds for longer periods and who do not intend to
purchase shares of sufficient aggregate value to qualify for sales
charge reductions applicable to Class A shares. Both Class B and
Class C shares can be purchased at net asset value without an ini-
tial sales charge. However, unlike Class C shares, Class B shares
convert into Class A shares after the shares have been held for
seven years. After the conversion takes place, the shares will no
longer be subject to a CDSC, and will be subject to the servicing
fees charged for Class A shares which are lower than the distribu-
tion and servicing fees charged on either Class B or Class C
shares. See "Deferred Sales Charge Alternative -- Class B Shares"
below.
CLASS C Class C shares might be preferred by investors who intend
to purchase shares which are not of sufficient aggregate value to
qualify for Class A sales charges of 1% or less and who wish to
have all purchase payments invested initially. Class C shares are
preferable to Class B shares for investors who intend to maintain
their investment for intermediate periods and therefore may also
be preferable for investors who are unsure of the intended length
of their investment. Unlike Class B shares, Class C shares are not
subject to a CDSC after they have been held for one year and are
subject to only a 1% CDSC during the first year. However, because
Class C shares do not convert into Class A shares, Class B shares
are preferable to Class C shares for investors who intend to main-
tain their investment in the Funds for long periods. See "Asset
Based Sales Charge Alternative--Class C Shares" below.
In determining which class of shares to purchase, an investor
should always consider whether any waiver or reduction of a sales
charge or a CDSC is available. See generally "Initial Sales Charge
Alternative--Class A Shares" and "Waiver of Contingent Deferred
Sales Charges" below.
The maximum single purchase of Class B shares 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 determination of disabili-
ty; (v) any redemption resulting from a return of an excess con-
tribution to a qualified employer retirement plan or an IRA; (vi)
certain periodic redemptions under an Automatic Withdrawal Plan
from an account meeting certain minimum balance requirements, in
amounts meeting certain maximums established from time to time by
the Distributor; (vii) redemptions by Trustees, officers and em-
ployees of the Trust, and by directors, officers and employees of
the Distributor and the Advisor; (viii) redemptions effected pur-
suant to a Fund's right to involuntarily redeem a
42
PIMCO Funds: Multi-Manager Series
<PAGE>
shareholder's account if the aggregate net asset value of shares
held in such shareholder's account is less than a minimum account
size specified in such Fund's prospectus; (ix) involuntary redemp-
tions caused by operation of law; (x) redemption of shares of any
Fund that is combined with another Fund, investment company, or
personal holding company by virtue of a merger, acquisition or
other similar reorganization transaction; (xi) redemptions by a
shareholder who is a participant making periodic purchases of not
less than $50 through certain employer sponsored savings plans
that are clients of a broker-dealer with which the Distributor has
an agreement with respect to such purchases; (xii) redemptions ef-
fected by trustees or other fiduciaries who have purchased shares
for employer sponsored plans, the trustee, administrator, fiducia-
ry, broker, trust company or registered investment adviser for
which has an agreement with the Distributor with respect to such
purchases; or (xiii) redemptions in connection with IRA accounts
established with Form 5305-SIMPLE under the Code for which the
Trust is the designated financial institution.
The CDSC applicable to Class B shares is currently waived for
any partial or complete redemption (a) in connection with a dis-
tribution without penalty under Section 72(t) of the Code from a
403(b)(7) plan or an IRA upon attaining age 59 1/2; (b) following
death or disability (as defined in the Code) of a shareholder (in-
cluding one who owns the shares as joint tenant with his or her
spouse) from an account in which the deceased or disabled is
named, provided the redemption is requested within one year of the
death or initial determination of disability; and (c) of up to 10%
per year of the value of an account subject to an Automatic With-
drawal Plan. See "How to Redeem--Automatic Withdrawal Plan."
The Distributor may require documentation prior to waiver of
the CDSC for any class, including distribution letters, certifica-
tion by plan administrators, applicable tax forms, death certifi-
cates, physicians' certificates, etc.
March 5, 1997 Prospectus
43
<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.
44
PIMCO Funds: Multi-Manager Series
<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
current 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 the shares actually purchased in the event
the full intended amount is not purchased. If the full amount in-
dicated is not purchased, a sufficient amount of such escrowed
shares will be involuntarily redeemed to pay the additional sales
charge
March 5, 1997 Prospectus
45
<PAGE>
applicable to the amount actually purchased, if necessary. Divi-
dends 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 can 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 to a spouse or child of
any of the foregoing persons, or to any trust, profit sharing or
pension plan for the benefit of any such person, (b) current or
retired trustees of PIMCO Funds: Pacific Investment Management Se-
ries and Cash Accumulation Trust, registered investment companies
for which the Advisor or an affiliate acts as investment adviser,
(c) current registered representatives and other full-time employ-
ees of participating brokers or such persons' spouses, (d) trust-
ees or other fiduciaries purchasing shares for certain employer
sponsored plans that have at least 100 eligible participants or at
least $1 million in total plan assets, (e) trustees or other fidu-
ciaries purchasing shares for certain employer-sponsored plans,
the trustee, administrator, fiduciary, broker, trust company or
registered investment adviser for which has an agreement with the
Distributor with respect to such purchases, (f) participants in-
vesting through accounts known as "wrap accounts" established with
brokers or dealers approved by the Distributor where such brokers
or dealers are paid a single, inclusive fee for brokerage and in-
vestment management services, (g) broker-dealers or registered in-
vestment advisers affiliated with such broker-dealers with which
the Distributor has an agreement for the use of PIMCO Funds: Mul-
ti-Manager Series in particular investment products for which a
fee is charged, and (h) trust accounts for which trust companies
affiliated with the Trust or the Advisor serve as trustee. As de-
scribed above, the Distributor will not pay any initial commission
to dealers upon the sale of Class A shares to the purchasers de-
scribed in this paragraph except for sales to purchasers described
under (d) or (e) in this paragraph.
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.
46
PIMCO Funds: Multi-Manager Series
<PAGE>
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 additional amounts to
their clients for such services, which charges would reduce cli-
ents' return. Firms also may hold Fund shares in nominee or street
name as agent for and on behalf of their customers. In such in-
stances, the Trust's transfer agent will have no information with
respect to or control over accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information
about their accounts only from their broker. In addition, certain
privileges with respect to the purchase and redemption of shares
or the reinvestment of dividends may not be available through such
firms. Some firms may participate in a program allowing them ac-
cess to their clients' accounts for servicing including, without
limitation, transfers of registration and dividend payee changes;
and may perform functions such as generation of confirmation
statements and disbursement of cash dividends. This Prospectus
should be read in connection with such firms' material regarding
their fees and services.
DEFERRED Class B shares are sold at their current net asset value without
SALES any initial sales charge. The full amount of an investor's pur-
CHARGE chase payment will be invested in shares of the Fund(s) selected.
ALTERNA- A CDSC will be imposed on Class B shares if an investor redeems an
TIVE -- amount which causes the current value of the investor's account
CLASS B for a Fund to fall below the total dollar amount of purchase pay-
SHARES ments subject to the CDSC, except that no CDSC is imposed if the
shares redeemed have been acquired through the reinvestment of
dividends or capital gains distributions or if the amount redeemed
is derived from increases in the value of the account above the
amount of purchase payments subject to the CDSC. Class B shares
are not available for purchase by employer sponsored retirement
plans. The Opportunity Fund does not offer Class B shares.
March 5, 1997 Prospectus
47
<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% of the purchase amount for each of the Funds. During
such periods as may from time to time be designated by the Dis-
tributor, the Distributor will pay selected participating brokers
an additional amount of up to .50% of the purchase price on sales
of Class B shares of all or selected Funds purchased to each par-
ticipating broker which obtains purchase orders in amounts exceed-
ing thresholds established from time to time by the Distributor.
The Class B CDSC is currently waived in connection with certain
redemptions as described above under "Alternative Purchase Ar-
rangements --Waiver of Contingent Deferred Sales Charges." For
more information about the Class B CDSC, call the Distributor at
800-426-0107.
ASSET Class C shares are sold at their current net asset value without
BASED any initial sales charge. A CDSC is imposed on Class C shares if
SALES an investor redeems an amount which causes the current value of
CHARGE the investor's account for a Fund to fall below the total dollar
ALTERNA- amount of purchase payments subject to the CDSC, except that no
TIVE -- CDSC is imposed if the shares redeemed have been acquired through
CLASS C the reinvestment of dividends or capital gains distributions or if
SHARES the
48
PIMCO Funds: Multi-Manager Series
<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 currently 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 ac-
count 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 "Lim-
ited Offering of Shares of the Opportunity Fund to New Investors"
and "Restrictions on Sales of and Exchanges for Shares of the Op-
portunity Fund" under "How to Buy Shares" above. Class A, Class B
and Class C shares of each Fund may also be exchanged for shares
March 5, 1997 Prospectus
49
<PAGE>
of the same class of a series of PIMCO Funds: Pacific Investment
Management Series, an affiliated mutual fund family comprised pri-
marily 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 exchanges effected through the PIMCO Auto Exchange
plan, exchanges are subject to the $250 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 800-852-8457. The Trust will employ reasonable proce-
dures to confirm that instructions communicated by telephone are
genuine, and may be liable for any losses due to unauthorized or
fraudulent instructions if it fails to employ such procedures. The
Trust will require a form of personal identification prior to act-
ing on a caller's telephone instructions, will provide written
confirmations of such transactions and will record telephone in-
structions. Exchange forms are available from the Distributor at
800-426-0107 and may be used if there will be no change in the
registered name or address of the shareholder. Changes in regis-
tration information or account privileges may be made in writing
to the Transfer Agent, Shareholder Services, Inc., P.O. Box 5866,
Denver, Colorado 80217-5866, or by use of forms which are avail-
able from the Distributor. A signature guarantee is required. See
"How to Buy Shares--Signature Guarantee." Telephone exchanges may
be made between 9:00 a.m. Eastern time and the close of regular
trading (normally 4:00 p.m. Eastern time) on the Exchange on any
day the Exchange is open (generally weekdays other than normal
holidays). The Trust reserves the right to refuse exchange pur-
chases if, in the judgment of the Advisor, the purchase would ad-
versely affect the Fund and its shareholders. In particular, a
pattern of exchanges characteristic of "market-timing" strategies
may be deemed by the Advisor to be detrimental to the Trust or a
particular Fund. Although the Trust has no current intention of
terminating or modifying the exchange privilege, it reserves the
right to do so at any time. Except as otherwise permitted by Secu-
rities and Exchange Commission regulations, the Trust will give 60
days' advance notice to shareholders of any termination or mate-
rial modification of the exchange privilege. For further informa-
tion about exchange privileges, contact your participating broker
or call the Transfer Agent at 800-426-0107.
With respect to Class B and Class C shares, or Class A shares
subject to a CDSC, if less than all of an investment is exchanged
out of a Fund, any portion of the investment attributable to capi-
tal appreciation and/or reinvested dividends or capital gains dis-
tributions will be exchanged first, and thereafter any portions
exchanged will be from the earliest investment made in the Fund
from which the exchange was made. Shareholders should take into
account the effect of any exchange on the applicability of any
CDSC that may be imposed upon any subsequent redemption.
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 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."
50
PIMCO Funds: Multi-Manager Series
<PAGE>
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 the signature guarantee requirement for redemptions up to
$2,500 by a trustee of a qualified retirement plan, the adminis-
trator for which has an agreement with the Distributor.
51
March 5, 1997 Prospectus
<PAGE>
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 800-852-8457 and state (i) the name of the
shareholder as it appears on the Transfer Agent's records, (ii)
his account number with the Trust, (iii) the amount to be with-
drawn and (iv) the name of the person requesting the redemption.
Usually the proceeds are sent to the investor on the next Trust
business day after the redemption is effected, provided the re-
demption request is received prior to the close of regular trading
(normally 4:00 p.m. Eastern time) on the Exchange that day. If the
redemption request is received after the close of the Exchange,
the redemption is effected on the following Trust business day at
that day's net asset value and the proceeds are usually sent to
the investor on the second following Trust business day. The Trust
reserves the right to terminate or modify the telephone redemption
service at any time. During times of severe disruptions in the se-
curities markets, the volume of calls may make it difficult to re-
deem by telephone, in which case a shareholder may wish to send a
written request for redemption as described under "Written Re-
quests" above. Telephone communications may be recorded by the
Distributor or the Transfer Agent.
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 800-852-8457. 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 "How to Buy Shares--PIMCO Fund Link" for
information on establishing the Fund Link privilege. The Trust may
terminate the Fund Link program at any time without notice to
shareholders. This redemption option does not apply to shares held
in broker "street name" accounts.
52
PIMCO Funds: Multi-Manager Series
<PAGE>
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 800-852-8457 or by written instructions. The Trust
cannot be responsible for the efficiency of the Federal Reserve
wire system or the shareholder's bank. The Trust does not 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.
CERTIFICAT- To redeem shares for which certificates have been issued, the cer-
ED SHARES tificates must be mailed to or deposited with the Trust, duly en-
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 Application or you may obtain an Automatic Withdrawal
Plan Application from the Distributor or your broker. If an Auto-
matic Withdrawal Plan is set up after the account is established
providing for payment to a person other than the record share-
holder or to an address other than the address of record, a signa-
ture guarantee is required. See "How to Buy Shares--Signature
Guarantee." Class A, Class B and Class C shares of any Fund are
deposited in a plan account and all 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 as-
set value (less any applicable CDSC) to make each withdrawal pay-
ment. Any applicable CDSC may be waived for certain redemptions
under an Automatic Withdrawal Plan. See "Alternative Purchase Ar-
rangements--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
53
March 5, 1997 Prospectus
<PAGE>
Automatic Withdrawal Plan concurrently with purchases of addi-
tional shares of the Fund would be disadvantageous 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 rea-
son, the minimum investment accepted for a Fund while an Automatic
Withdrawal Plan is in effect for that Fund is $1,000, and an in-
vestor may not maintain a plan for the accumulation of shares of
the Fund (other than through reinvestment of distributions) and an
Automatic Withdrawal Plan at the same time. The Trust or the Dis-
tributor may terminate or change the terms of the Automatic With-
drawal 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 accounts, the Trust pays the
Distributor servicing fees up to the annual rate of .25% (calcu-
lated as a percentage of each Fund's average daily net assets at-
tributable to Class A shares).
CLASS B AND CLASS C DISTRIBUTION AND SERVICING FEES: As compensa-
tion for services rendered and expenses borne by the Distributor
in connection with the distribution of Class B and Class C shares
of the Trust, and in connection with personal services rendered to
Class B and Class C shareholders of the Trust and the maintenance
of Class B and Class C shareholder accounts, the Trust pays the
Distributor servicing and distribution fees up to the annual rates
set forth below (calculated as a percentage of each Fund's average
daily net assets attributable to Class B and Class C shares,
respectively):
<TABLE>
<CAPTION>
SERVICING DISTRIBUTION
FUND FEE FEE
------------------------------
<S> <C> <C>
All Funds .25% .75%
</TABLE>
The Class A servicing fees and Class B and Class C distribution
and servicing fees paid to the Distributor are made under Distri-
bution and Servicing Plans adopted pursuant to Rule 12b-l under
the Investment Company Act of
54
PIMCO Funds: Multi-Manager Series
<PAGE>
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 compen-
sate the Distributor for services rendered even if the amount paid
exceeds the Distributor's expenses.
The distribution fee applicable to Class B and Class C shares
may be spent by the Distributor on any activities or expenses pri-
marily intended to result in the sale of Class B or Class C
shares, respectively, including compensation to, and expenses (in-
cluding overhead and telephone expenses) of, financial consultants
or other employees of the Distributor or of participating or in-
troducing brokers who engage in distribution of Class B or Class C
shares, printing of prospectuses and reports for other than exist-
ing Class B or Class C shareholders, advertising, and preparation,
printing and distribution of sales literature. The servicing fee,
applicable to Class A, Class B and Class C shares of the Trust,
may be spent by the Distributor on personal services rendered to
shareholders of the Trust and the maintenance of shareholder ac-
counts, including compensation to, and expenses (including tele-
phone and overhead expenses) of, financial consultants or other
employees of participating or introducing brokers, certain banks
and other financial intermediaries who aid in the processing of
purchase or redemption requests or the processing of dividend pay-
ments, who provide information periodically to shareholders show-
ing their positions in a Fund's shares, who forward communications
from the Trust to shareholders, who render ongoing advice concern-
ing the suitability of particular investment opportunities offered
by the Trust in light of the shareholders' needs, who respond to
inquiries from shareholders relating to such services, or who
train personnel in the provision of such services. Distribution
and servicing fees may also be spent on interest relating to
unreimbursed distribution or servicing expenses from prior years.
Many of the Distributor's sales and servicing efforts involve
the Trust as a whole, so that fees paid by Class A, Class B or
Class C shares of any Fund may indirectly support sales and ser-
vicing efforts relating to the other Funds' 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 a transaction which
took place on January 17, 1997.
2. Payable only with respect to shares outstanding for one year or
more.
3. Payable only with respect to shares outstanding for one year or
more except in the case of shares for which no payment is made to
the party at the time of sale.
The Distributor may from time to time pay additional cash bo-
nuses or other incentives to selected participating brokers in
connection with the sale or servicing of Class A, Class B and
Class C shares of the Funds. On some occasions, such bonuses or
incentives may be conditioned upon the sale of a specified minimum
dollar amount of the
March 5, 1997 Prospectus
55
<PAGE>
shares of a Fund and/or all of the Funds together 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 ad-
ministrator for the Funds, PIMCO Advisors 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.
From time to time, expenses of principal underwriters incurred
in connection with the sale of Class B and Class C shares of the
Funds and, in connection with the servicing of Class B and Class C
shareholders of the Funds and the maintenance of Class B and Class
C shareholder accounts, may exceed the distribution and servicing
fees collected by the Distributor. Class B and Class C Distribu-
tion and Servicing Plans, which are similar to the Trust's current
Plans, were in effect prior to the date of this Prospectus in re-
spect of certain series of PIMCO Advisors Funds that were prede-
cessors of the Funds listed below. The remaining Funds did not of-
fer Class B or Class C shares prior to the date of this Prospec-
tus. As of September 30, 1996, such expenses were approximately
$11,408,000 in excess of payments under the PIMCO Advisors Funds'
Class B Distribution and Servicing Plan and $2,822,000 in excess
of payments under the PIMCO Advisors Funds' Class C Distribution
and Servicing Plan. The allocation of such excess (on a pro rata
basis) among the predecessors to the Funds listed below as of Sep-
tember 30, 1996 was a follows:
EXCESS EXPENSES*
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------------
(AS A PERCENTAGE (AS A PERCENTAGE
($ IN THOUSANDS) OF NET ASSETS) ($ IN THOUSANDS) OF NET ASSETS)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Renaissance Fund 621 3.96 140 .06
--------------------------------------------------------------------------------------
Growth Fund 1,474 3.96 884 .06
--------------------------------------------------------------------------------------
Target Fund 1,972 3.96 595 .06
--------------------------------------------------------------------------------------
Opportunity Fund N/A N/A 488 .06
--------------------------------------------------------------------------------------
International Fund 233 3.96 124 .06
--------------------------------------------------------------------------------------
Innovation Fund 1,336 3.96 84 .06
--------------------------------------------------------------------------------------
Precious Metals Fund 88 3.96 23 .06
--------------------------------------------------------------------------------------
Tax Exempt Fund 89 3.96 29 .06
</TABLE>
* The table lists such excess expenses, as of September 30, 1996,
for predecessor series of PIMCO Advisors Funds which reorganized
as the listed Funds of the Trust.
How Net Asset Value Is Determined
The net asset values of Class A, Class B and Class C shares of
each Fund of the Trust will be determined once on each day on
which the Exchange is open (a "Business Day"), as of the close of
regular trading (normally 4:00 p.m., Eastern time) on the Ex-
change. Portfolio securities for which market quotations are read-
ily available are valued at market value. Fixed income securities
generally are valued on the basis of quotations obtained from bro-
kers and dealers or pricing services, which take into account ap-
propriate factors such as institutional-sized trading in similar
groups of securities, yield, quality, coupon rate, maturity, type
of issue, trading characteristics, and other market data. Certain
fixed income securities for which daily market quotations are not
readily available may be valued, pursuant to guidelines estab-
lished
56
PIMCO Funds: Multi-Manager Series
<PAGE>
by the Board of Trustees, with reference to fixed income securi-
ties whose prices are more readily obtainable and whose durations
are comparable to the securities being valued. Short-term invest-
ments 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 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
the classes.
Distributions
Shares begin earning dividends on the effective date of purchase,
which is the date that funds are received by the Trust for the
purchase of Class A, Class B and Class C shares. Net investment
income from interest and dividends, if any, will be declared daily
and paid monthly to shareholders of record of the Tax Exempt Fund
and declared and paid quarterly to shareholders of record by the
Equity Income, Renaissance, Value and Balanced Funds. Net
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
realized capital gains from the sale of portfolio securities will
be distributed no less frequently than once annually. Net realized
short-term capital gains may be paid more frequently.
All dividends and/or distributions will be paid in the form of
additional shares of the class of shares of the Fund to which the
dividends and/or distributions relate or, at the election of the
shareholder, of another Fund of the Trust as described below, at
net asset value of such Fund, unless the shareholder elects to re-
ceive cash (either paid to shareholders directly or credited to
their account with their participating broker). Dividends paid by
each Fund with respect to each class of shares are calculated in
the same manner and at the same time, but dividends on Class B and
Class C
March 5, 1997 Prospectus
57
<PAGE>
shares are expected to be lower than dividends on Class A shares
as a result of the distribution fee applicable to Class B and
Class C shares. There are no sales charges on reinvested divi-
dends.
Class A, Class B and Class C shareholders of the Trust may
elect to invest dividends and/or distributions paid by any Fund in
shares of the same class of any other Fund of the Trust or series
of PIMCO Funds: Pacific Investment Management Series which offers
such class of shares at net asset value. The shareholder must have
an account existing in the Fund or series selected for investment
with the identical registered name and address and must elect this
option on the Account Application, on a form provided for that
purpose or by a telephone request to the Transfer Agent at 800-
852-8457. For further information on this option, contact your
broker or call the Distributor at 800-426-0107.
Taxes
Each Fund intends to qualify as a regulated investment company an-
nually and to elect to be treated as a regulated investment com-
pany under the Internal Revenue Code of 1986, as amended (the
"Code"). As such, a Fund generally will not pay federal income tax
on the income and gains it pays as dividends to its shareholders.
In order to avoid a 4% federal excise tax, each Fund intends to
distribute each year substantially all of its net income and
gains.
Shareholders subject to U.S. federal income tax will be subject
to tax on dividends received from a Fund, regardless of whether
received in cash or reinvested in additional shares. Distributions
received by tax-exempt shareholders will not be subject to federal
income tax to the extent permitted under applicable tax law. All
shareholders must treat dividends, other than capital gain divi-
dends, exempt-interest dividends and dividends that represent a
return of capital to shareholders, as ordinary income. In particu-
lar, distributions derived from short-term gains will be treated
as ordinary income. Dividends designated by a Fund as capital gain
dividends derived from the Fund's net capital gains (that is, the
excess of its net long-term capital gains over its net short-term
capital losses) are taxable to shareholders as long-term capital
gain except as provided by an applicable tax exemption. Any dis-
tributions that are not from a Fund's net investment income or net
capital gain may be characterized as a return of capital to share-
holders or, in some cases, as capital gain. Certain dividends de-
clared in October, November or December of a calendar year are
taxable to shareholders (who otherwise are subject to tax on divi-
dends) as though received on December 31 of that year if paid to
shareholders during January of the following calendar year. Each
Fund will advise shareholders annually of the amount and nature of
the dividends paid to them.
Dividends paid to shareholders by the Tax Exempt Fund which are
derived from interest on Tax Exempt Bonds are expected to be des-
ignated by the Fund as "exempt-interest dividends," and sharehold-
ers may exclude such dividends from gross income for federal in-
come tax purposes. However, if a shareholder receives social secu-
rity or railroad retirement benefits, the shareholder may be taxed
on a portion of those benefits as a result of receiving tax-exempt
income. In addition, certain exempt-interest dividends could, as
discussed below, cause certain shareholders to become subject to
the alternative minimum tax and may increase the alternative mini-
mum tax liability of shareholders already subject to this tax.
Other distributions from the Tax Exempt Fund may constitute tax-
able income, and any gain realized on a redemption of shares will
be taxable gain, subject to any applicable tax exemption for which
an investor may qualify.
Dividends derived from interest on certain U.S. Government se-
curities may be exempt from state and local taxes, although inter-
est on mortgage-backed U.S. Government securities may not be so
exempt. The distributions of "exempt-interest dividends" paid by
the Tax Exempt Fund may be exempt from state and local taxation
when received by a shareholder to the extent that they are derived
from interest on Tax Exempt Bonds issued by the state or political
subdivision in which such shareholder resides. The federal exemp-
tion for "exempt-interest dividends" attributable to Tax Exempt
Bonds does not necessarily result in exemption of such dividends
from income for the purpose of state and local taxes. The Trust
will report annually on a state-by-state basis the source of in-
come the Tax Exempt Fund receives on Tax Exempt Bonds that was
paid out as dividends during the preceding year.
58
PIMCO Funds: Multi-Manager Series
<PAGE>
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, 1987 may be treated as dividends. Accordingly, each Fund that
holds the foregoing kinds of securities may be required to pay out
as an income distribution each year an amount which is greater
than the total amount of cash interest the Fund actually received.
Such distributions may be made from the cash assets of the Fund or
by liquidation of portfolio securities, if necessary. The Fund may
realize gains or losses from such liquidations. In the event the
Fund realizes net capital gains from such transactions, its share-
holders may receive a larger capital gain distribution, if any,
than they would in the absence of such transactions.
Taxable shareholders should note that the timing of their in-
vestment or redemptions could have undesirable tax consequences.
If shares are purchased on or just before the record date of a
dividend, taxable shareholders will pay full price for the shares
and may receive a portion of their investment back as a taxable
distribution. If shares are redeemed before payment of an exempt-
interest dividend, shareholders may realize a taxable capital
gain, whereas by waiting and receiving the exempt-interest divi-
dend, a portion of their share value would have been received in
the form of tax-free income.
The preceding discussion relates only to federal income tax;
the consequences under other tax laws may differ. Shareholders
should consult their tax advisers as to the possible application
of state and local income tax laws to Trust dividends and capital
gain distributions. For additional information relating to the tax
aspects of investing in a Fund, see the Statement of Additional
Information.
Management of the Trust
The business affairs of the Trust are managed under the direction
of the Board of Trustees. Information about the Trustees and the
Trust's executive officers may be found in the Statement of Addi-
tional Information under the heading "Management of the Trust."
INVESTMENT PIMCO ADVISORS serves as investment adviser to the Funds pursuant
ADVISOR to an investment advisory agreement with the Trust. PIMCO Advisors
is a Delaware limited partnership organized in 1987. PIMCO Advi-
sors provides investment management and advisory services to pri-
vate accounts of institutional and individual clients and to mu-
tual funds. Total assets under management by PIMCO Advisors and
its subsidiary partnerships as of November 30, 1996 were approxi-
mately $111 billion. A portion of the units of the limited partner
interest in PIMCO Advisors is traded publicly on the
March 5, 1997 Prospectus
59
<PAGE>
Exchange. The general partner of PIMCO Advisors is PIMCO Partners,
G.P. Pacific Mutual Life Insurance Company and its affiliates hold
a substantial interest in PIMCO Advisors through direct or
indirect ownership of units of PIMCO Advisors, and indirectly hold
a majority interest in PIMCO Partners, G.P., with the remainder
held indirectly by a group composed of the Managing Directors of
Pacific Investment Management. PIMCO Advisors is governed by an
Operating Board and an Equity Board, which exercise substantially
all of the governance powers of the general partner and serve as
the functional equivalent of a board of directors. 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 following five of which manage
one or more of the Funds: Blairlogie, Cadence, Columbus Circle,
NFJ and Pacific Investment Management.
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 compensates the Portfolio Manag-
ers from its advisory fee (not from the Trust). Under these agree-
ments, a Portfolio Manager has full investment discretion and
makes all determinations with respect to the investment of a
Fund's assets, or, for the Balanced Fund, with respect to the por-
tion of the Fund's assets allocated to the Portfolio Manager for
investment, and makes all determinations respecting the purchase
and sale of a Fund's securities and other investments.
COLUMBUS CIRCLE manages the Renaissance Fund, the Growth Fund, the
Target Fund, the Opportunity Fund, the Innovation Fund and the Tax
Exempt Fund (the "Columbus Circle Funds"). Columbus Circle is an
investment management firm organized as a general partnership. Co-
lumbus Circle has two partners: PIMCO Advisors as the supervisory
partner, and Columbus Circle Investors Management, Inc. as the
managing partner. Columbus Circle Investors Division of Thomson
Advisory Group L.P. ("TAG"), the predecessor investment adviser to
Columbus Circle, commenced operations in 1975. Accounts managed by
Columbus Circle had combined assets as of November 30, 1996 of ap-
proximately $14 billion. Columbus Circle's address is Metro Cen-
ter, One Station Place, 8th Floor, Stamford, Connecticut 06902.
Columbus Circle is registered as an investment adviser with the
Securities and Exchange Commission.
At the center of Columbus Circle's equity investment strategy
is its theory of Positive Momentum & Positive Surprise. This the-
ory asserts that a good company doing better than generally ex-
pected will experience a rise in its stock price, and conversely,
a company falling short of expectations will experience a drop in
its stock price. Based on this theory, Columbus Circle attempts to
manage the Columbus Circle Funds (except the Tax Exempt Fund) with
a view to investing in growing companies that are surprising the
market with business results that are better than anticipated. The
Trust has been informed that investment decisions made by Columbus
Circle with respect to the Columbus Circle Funds are made by a
committee rather than by a single person acting as portfolio man-
ager. No person is primarily responsible for making recommenda-
tions to that committee.
CADENCE manages the Capital Appreciation Fund, the Mid Cap Growth
Fund 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
60
PIMCO Funds: Multi-Manager Series
<PAGE>
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 November 30, 1996 of approximately $3.3 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, Eric
M. Wetlaufer and Peter B. McManus are primarily responsible for
the day-to-day management of the Cadence Funds. Mr. Breed is a
Managing Director, the Chief Executive Officer, and a founding
partner of Cadence, and has 23 years' investment management expe-
rience. 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 Finan-
cial Analyst. Mr. Bannick is a Managing Director and Executive
Vice President of Cadence and has 11 years' investment management
experience. He previously served as Executive Vice President of
George D. Bjurman & Associates and as Supervising Portfolio Man-
ager 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 Uni-
versity. 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 Sci-
ence degree from Northeastern University. Ms. Burdon is a Chart-
ered Financial Analyst and Certified Public Accountant. Mr. Wet-
laufer is a Managing Director and Portfolio Manager of Cadence and
has 11 years' investment management experience. He previously
served as Vice President of Northfield Information Services. Mr. -
Wetlaufer joined the predecessor of Cadence in 1991. He graduated
from Wesleyan University and is a Chartered Financial Analyst. Mr.
McManus is Director of Fund Management of Cadence and has 19
years' investment management experience. He previously served as a
Vice President of Bank of Boston. Mr. McManus joined Cadence in
1994. He graduated from the University of Massachusetts, and is
certified as a Financial Planner.
NFJ manages the Equity Income Fund, the Value Fund, the Small Cap
Value Fund, and a portion of the Common Stock Segment of the Bal-
anced Fund. NFJ is an investment management firm organized as a
general partnership. NFJ has two partners: PIMCO Advisors as the
supervisory partner, and NFJ Management, Inc. as the managing
partner. NFJ Investment Group, Inc., the predecessor investment
adviser to NFJ, commenced operations in 1989. Accounts managed by
NFJ had combined assets as of November 30, 1996 of approximately
$1.8 billion. NFJ's address is 2121 San Jacinto, Suite 1840, Dal-
las, Texas 75201. NFJ is registered as an investment adviser with
the Securities and Exchange Commission.
Chris Najork is responsible for the day-to-day management of
the Equity Income Fund, the Value Fund, and the portion of the
Common Stock Segment of the Balanced Fund allocated to NFJ. Mr.
Najork is a Managing Director and a founding partner of NFJ and
has 27 years' experience encompassing equity research and portfo-
lio management. He received his bachelor's degree and MBA from
Southern Methodist University. Mr. Najork is a Chartered Financial
Analyst. Mr. Najork and Paul A. Magnuson are primarily responsible
for the day-to-day management of the Small Cap Value Fund. Mr.
Magnuson, a research analyst at NFJ, has 11 years' experience in
equity research and portfolio management. He received his bache-
lor's degree in Finance from the University of Nebraska-Lincoln.
BLAIRLOGIE manages the International Developed Fund, the Interna-
tional Fund, and the Emerging Markets Fund (the "Blairlogie
Funds"). Blairlogie is an investment management firm, organized as
a limited partnership under the laws of Scotland, United Kingdom,
with two general partners and one limited partner. The general
partners are PIMCO Advisors, which serves as the supervisory part-
ner, and Blairlogie Holdings Limited, a wholly owned corporate
subsidiary of PIMCO Advisors, which serves as the managing part-
ner. The limited partner is Blairlogie Partners L.P., a limited
March 5, 1997 Prospectus
61
<PAGE>
partnership, the general partner of which is Pacific Financial As-
set Management Corporation (a subsidiary of Pacific Mutual Life
Insurance Company), and the limited partners of which are the
principal executive officers of Blairlogie Capital Management.
Blairlogie Partners L.P. has agreed with PIMCO Advisors that PIMCO
Advisors will acquire its 25% interest in four annual installments
of 10%, 5%, 5% and 5%, respectively, beginning December 31, 1998.
Blairlogie Capital Management Ltd., the predecessor investment ad-
viser to Blairlogie, commenced operations in 1992. Accounts man-
aged by Blairlogie had combined assets as of November 30, 1996 of
approximately $.7 billion. Blairlogie's address is 4th Floor, 125
Princes Street, Edinburgh EH2 4AD, Scotland. Blairlogie is regis-
tered as an investment adviser with the Securities and Exchange
Commission in the United States and with the Investment Management
Regulatory Organisation in the United Kingdom.
James Smith is primarily responsible for the day-to-day manage-
ment of the Blairlogie Funds. Mr. Smith is a Managing Director and
the Chief Investment Officer of Blairlogie and is responsible for
managing an investment team of seven professionals who, in turn,
specialize in selection of stocks within Europe, Asia, and the
Americas, and in currency and derivatives. He previously served as
a Senior Portfolio Manager at Murray Johnstone in Glasgow,
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 $88 billion of assets under management as of November 30,
1996. Pacific Investment Management's address is 840 Newport Cen-
ter Drive, Suite 360, Newport Beach, California 92660. Pacific In-
vestment Management is registered as an investment adviser with
the Securities and Exchange Commission and as a commodity trading
advisor with the CFTC.
William H. Gross is responsible for the day-to-day management
of the Fixed Income Securities Segment of the Balanced Fund. Mr.
Gross is a founder and a Managing Director of Pacific Investment
Management and has been associated with Pacific Investment Manage-
ment or its predecessor for 25 years. He has extensive investment
experience in both credit research and fixed income portfolio man-
agement. He received his bachelor's degree from Duke University
and his MBA from UCLA Graduate School of Business. Mr. Gross is a
Chartered Financial Analyst and a member of The Los Angeles Soci-
ety of Financial Analysts.
VAN ECK is an unaffiliated investment adviser that manages the
Precious Metals Fund. Van Eck is a Delaware corporation which, to-
gether with its affiliates, provides investment advisory services
to other mutual funds and to private accounts. Van Eck is con-
trolled by John C. Van Eck who, along with members of his immedi-
ate family, owns 100% of the stock of Van Eck. Accounts managed by
Van Eck had combined assets as of November 30, 1996 of approxi-
mately $1.7 billion. Van Eck's address is 99 Park Avenue, New
York, NY 10001. Van Eck is registered as an investment adviser
with the Securities and Exchange Commission.
Henry J. Bingham, Executive Managing Director of Van Eck and
President of the International Investors series of Van Eck Funds,
has served as the Portfolio Manager of the Precious Metals Fund
since the Fund commenced operations.
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
62
PIMCO Funds: Multi-Manager Series
<PAGE>
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")
ADMINIS- to the Funds pursuant to an administration agreement with the
TRATOR 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.
ADVISORY The Funds feature fixed advisory and administrative fees. For pro-
AND viding or arranging for the provision of investment advisory serv-
ADMINIS- ices to the Funds as described above, PIMCO Advisors receives
TRATIVE 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>
March 5, 1997 Prospectus
63
<PAGE>
For providing or procuring administrative services to the Funds
as described above, the Administrator receives monthly fees from
each Fund at an annual rate based on the average daily net assets
attributable in the aggregate to the Fund's Class A, Class B and
Class C shares as follows:
<TABLE>
<CAPTION>
ADMINISTRATIVE
FUND FEE RATE
----------------------------------------------------------------
<S> <C>
Precious Metals Fund .45% of first $2.5 billion
.40% of amounts in excess of $2.5 billion
----------------------------------------------------------------
International Developed,
International and
Emerging Markets Funds .65% of first $2.5 billion
.60% of amounts in excess of $2.5 billion
----------------------------------------------------------------
All Other Funds .40% of first $2.5 billion
.35% of amounts in excess of $2.5 billion
</TABLE>
The investment advisory, administration and sub-administration
agreements for the Funds may be terminated by the Trustees, or by
PIMCO Advisors or Pacific Investment Management (as the case may
be) on 60 days' written notice. In addition, these agreements may
be terminated with regard to the Renaissance Fund, Growth Fund,
Target Fund, Opportunity Fund, International Fund, Innovation
Fund, Precious Metals Fund, and Tax Exempt Fund by a majority of
the Trustees that are not interested persons of the Trust, PIMCO
Advisors, or Pacific Investment Management (as the case may be) on
60 days' written notice. Following their initial terms, the agree-
ments will continue from year to year if approved by the Trustees.
Pursuant to the portfolio management agreements between the Ad-
visor and each of the Portfolio Managers, PIMCO Advisors (not the
Trust) pays each Portfolio Manager a fee based on a percentage of
the average daily net assets of a Fund as follows: Columbus Cir-
cle--.38% for the Renaissance Fund, .34% for the Growth Fund, .36%
for the Target Fund, .48% for the Opportunity Fund, .38% for the
Innovation Fund and .30% for the Tax Exempt Fund; Cadence--.35%
for the Capital Appreciation Fund, .35% for the Mid Cap Growth
Fund and .35% for the portion of the Common Stock Segment of the
Balanced Fund allocated to Cadence; NFJ--.35% for the Equity In-
come 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 Interna-
tional 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.
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.
64
PIMCO Funds: Multi-Manager Series
<PAGE>
Description of the Trust
CAPITAL- The Trust was organized as a Massachusetts business trust on Au-
IZATION gust 24, 1990, and currently consists of twenty-two 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
CLASSESOF In addition to Class A shares, Class B shares and Class C shares,
SHARES certain Funds also offer Institutional and Administrative Class
shares through a separate prospectus, as described under "Alterna-
tive Purchase Arrangements." This Prospectus relates only to Class
A shares, Class B shares and Class C shares of the Funds.
Class A, Class B and Class C shares of each Fund represent in-
terests in the assets of that Fund and have identical dividend,
liquidation and other rights and the same terms and conditions ex-
cept that expenses related to the distribution and shareholder
servicing of Class A, Class B and Class C shares are borne solely
by such class and each class may, at the Trustees' discretion,
also pay a different share of other expenses, not including advi-
sory or custodial fees or other expenses related to the management
of the Trust's assets, if these expenses are actually incurred in
a different amount by that class, or if the class receives serv-
ices of a different kind or to a different degree than the other
classes. All other expenses are allocated to each class on the ba-
sis of the net asset value of that class in relation to the net
asset value of the particular Fund.
VOTING Each class of shares of each Fund has identical voting rights ex-
cept that each class of shares has exclusive voting rights on any
matter submitted to shareholders that relates solely to that
class, and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive
voting rights with respect to matters pertaining to any Distribu-
tion and Servicing Plan applicable to that class. These shares are
entitled to vote at meetings of shareholders. Matters submitted to
shareholder vote must be approved by each Fund separately except
(i) when required by the 1940 Act shares shall be voted together
and (ii) when the Trustees have determined that the matter does
not affect all Funds, then only shareholders of the Fund or Funds
affected shall be entitled to vote on the matter. All classes of
shares of a Fund will vote together, except with respect to a Dis-
tribution and Servicing Plan applicable to a class of shares or
when a class vote is required as specified above or otherwise by
the 1940 Act. Shares are freely transferable, are entitled to div-
idends as declared by the Trustees and, in liquidation of the
Trust, are entitled to receive the net assets of their Fund, but
not of the other Funds. The Trust does not generally hold annual
meetings of shareholders and will do so only when required by law.
Shareholders may remove Trustees from office by votes cast in per-
son or by proxy at a meeting of shareholders or by written con-
sent. Such a meeting will be called at the written request of the
holders of 10% of the Trust's outstanding shares.
Shares entitle their holders to one vote per share (with pro-
portionate voting for fractional shares). As of December 17, 1996,
the following were shareholders of record of at least 25% of the
outstanding voting securities of the indicated Fund: Pacific Mu-
tual Life Insurance Company (Newport Beach, California) with re-
spect to the Diversified
March 5, 1997 Prospectus
65
<PAGE>
Low P/E Fund (the predecessor of the Value Fund); and Charles
Schwab & Co., Inc. (San Francisco, California) with respect to the
Emerging Markets Fund. To the extent such shareholders are also
the beneficial owners of those shares, they may be deemed to con-
trol (as that term is defined in the 1940 Act) the relevant Fund.
Mailings to Shareholders
To reduce the volume of mail shareholders receive, it is antici-
pated that only one copy of most Trust reports, such as the
Trust's annual report, will be mailed to a shareholder's household
(same surname, same address). A shareholder may call 800-227-7337
if additional shareholder reports are desired.
66
PIMCO Funds: Multi-Manager Series
<PAGE>
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<PAGE>
---------------------------------------------------------------
PIMCO Funds: INVESTMENT ADVISOR AND ADMINISTRATOR
Multi-Manager PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach,
Series 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, MA 02110
---------------------------------------------------------------
For further information about the PIMCO Funds, call
1-800-426-0107
P I M C O
