<PAGE>
Multi-Manager
Series
March 8, 1999
Share Classes
Ins Institutional
Adm Administrative
PIMCO FUNDS ASSET ALLOCATION SERIES
PROSPECTUS
Actively managed portfolios of select PIMCO Funds
PIMCO Funds Asset Allocation Series consists of three actively managed mutual
funds that invest in a diversified portfolio of PIMCO Funds. In addition to
broad diversification, each Portfolio provides access to the extensive asset
allocation and investment management capabilities of PIMCO Advisors L.P. and its
affiliates.
<TABLE>
<CAPTION>
90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
<S> <C> <C>
Seeks long-term capital Seeks long-term capital Seeks current income,
appreciation. The Portfolio appreciation and current with long-term capital
normally invests approxi- income. The Portfolio appreciation as a secondary
mately 90% of its assets normally invests objective. The Portfolio
in PIMCO Stock Funds approximately 60% of its normally invests
and 10% in PIMCO assets in PIMCO Stock approximately 30% of its
Bond Funds. Funds and 40% in PIMCO assets in PIMCO Stock
Bond Funds. Funds and 70% in PIMCO
Bond Funds.
</TABLE>
PIMCO
-----
FUNDS
<PAGE>
PIMCO Funds: Multi-Manager Series
Prospectus
March 8, 1999
PIMCO Funds Asset Allocation Series
90/10 Portfolio
60/40 Portfolio
30/70 Portfolio
PIMCO Funds: Multi-Manager Series (the "Trust"), formerly PIMCO
Funds: Equity Advisors Series, is an open-end series management
investment company ("mutual fund"). This Prospectus describes three
diversified investment portfolios (each a "Portfolio") of the Trust.
Each Portfolio has its own investment objective and policies. The
Portfolios are professionally-managed series of the Trust designed
to take advantage of the benefits of asset allocation. Each
Portfolio seeks to achieve its particular investment objective by
investing within specified equity and fixed income ranges among a
number of other mutual funds in the PIMCO Funds family ("Underlying
Funds" or "Funds").
PIMCO Advisors L.P. ("PIMCO Advisors" or the "Adviser") serves as
investment adviser to the Portfolios and determines how the assets
of each Portfolio are allocated among the Underlying Funds. PIMCO
Advisors and its affiliates also provide advisory services to the
Underlying Funds. See "Management of the Portfolios."
This Prospectus describes two classes of shares offered by each
Portfolio: the "Institutional Class" and the "Administrative Class."
Through a separate prospectus, each Portfolio also offers three
additional classes of shares, Class A, Class B and Class C shares.
See "Other Information--Multiple Classes of Shares."
This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Portfolios. It should
be read and retained for ready reference to information about the
Portfolios. Information about the investment objective of each
Portfolio, and of the investment policies and restrictions
applicable to each Portfolio, are set forth in this Prospectus.
There can be no assurance that the investment objective of any
Portfolio will be achieved. Because the market value of each
Portfolio's investments will change, the investment returns and net
asset value per share of each Portfolio will vary.
A Statement of Additional Information, dated November 1, 1998, as
revised February 2, 1999, and as further amended or supplemented
from time to time, is available without charge as specified below.
In addition, a Trust Prospectus dated November 1, 1998 and a
Prospectus of PIMCO Funds: Pacific Investment Management Series
dated November 25, 1998, each as amended or supplemented from time
to time (together, the "Underlying Fund Prospectuses"), relating to
Institutional Class shares of the Underlying Funds, are available
without charge. The Statement of Additional Information and the
Underlying Fund Prospectuses, which contain more detailed
information about the Trust, the Portfolios and/or the Underlying
Funds, have each been filed with the Securities and Exchange
Commission and are incorporated by reference in this Prospectus. The
Securities and Exchange Commission maintains an Internet World Wide
Web site (at www.sec.gov) which contains the Statement of Additional
Information and materials that are incorporated by reference into
this Prospectus and the Statement of Additional Information, the
Underlying Fund Prospectuses, and other information about the Trust,
the Portfolios and the Underlying Funds. The Statement of Additional
Information and the Underlying Fund Prospectuses are available
without charge and may be obtained by writing or calling:
PIMCO Funds
840 Newport Center Drive, Suite 300
Newport Beach, CA 92660
Telephone: 1-800-927-4648
1-800-987-4626 (PIMCO Infolink Audio
Response Network).
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities
commission, nor has the Securities and Exchange Commission or any
state securities commission passed upon the accuracy or adequacy of
this Prospectus. Any representation to the contrary is a criminal
offense.
Shares of the Portfolios are not deposits or obligations of, or
guaranteed or endorsed by, any financial institution, and the shares
are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency, and
involve risk, including the possible loss of principal.
2 PIMCO Funds: Multi-Manager Series
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary...................................................... 4
Expense Information..................................................... 7
Investment Objectives and Policies...................................... 9
Underlying Funds........................................................ 14
Management of the Portfolios............................................ 21
Purchase of Shares...................................................... 28
Redemption of Shares.................................................... 31
Net Asset Value......................................................... 33
Dividends, Distributions and Taxes...................................... 33
Other Information....................................................... 34
</TABLE>
Prospectus 3
<PAGE>
PROSPECTUS SUMMARY
PIMCO Funds: Multi-Manager Series (the "Trust") is an open-end series
management investment company organized as a Massachusetts business trust on
August 24, 1990. This Prospectus describes three separate diversified
investment portfolios (the "Portfolios") offered by the Trust, PIMCO Funds
Asset Allocation Series--90/10 Portfolio (the "90/10 Portfolio"), PIMCO Funds
Asset Allocation Series--60/40 Portfolio (the "60/40 Portfolio") and PIMCO
Funds Asset Allocation Series--30/70 Portfolio (the "30/70 Portfolio").
The Portfolios are intended for investors who prefer to have their asset
allocation decisions made by professional money managers. Each Portfolio has a
distinct investment objective which it seeks to achieve by investing within
specified equity and fixed income ranges among certain series ("Underlying
Funds" or "Funds") of the Trust and PIMCO Funds: Pacific Investment Management
Series. PIMCO Advisors serves as investment adviser for each Fund of the Trust
and its affiliate, Pacific Investment Management Company ("Pacific Investment
Management"), serves as investment adviser for each Fund of PIMCO Funds:
Pacific Investment Management Series. Some of the Underlying Funds invest
primarily in equity securities ("Underlying Stock Funds"); other Funds invest
primarily in fixed income securities, including money market instruments
("Underlying Bond Funds"). The Portfolios are named in accordance with their
equity/fixed income allocation targets. For instance, the 90/10 Portfolio will
normally invest approximately 90% of its assets in Underlying Stock Funds and
10% of its assets in Underlying Bond Funds. The following summarizes certain
key information relating to the Portfolios and is qualified in its entirety by
the more detailed information contained elsewhere in this Prospectus.
Portfolio Profiles
<TABLE>
<CAPTION>
PIMCO Funds
Asset Allocation Series Investment Objective Allocation Strategy
- ---------------------------------------------------------------------------------------------------
<C> <C> <S>
90/10 Portfolio Long-term capital appreciation Under normal conditions,
approximately 90% of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 10% among Underlying
Bond Funds.
- ---------------------------------------------------------------------------------------------------
60/40 Portfolio Long-term capital appreciation Under normal conditions,
and current income approximately 60% of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 40% among Underlying
Bond Funds.
- ---------------------------------------------------------------------------------------------------
30/70 Portfolio Current income, with long-term Under normal conditions,
capital appreciation as a secondary objective approximately 30% of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 70% among Underlying
Bond Funds.
</TABLE>
Investment Risks and Considerations
The Underlying Funds have different investment objectives and policies and
different degrees of potential investment risk and reward. Based on the
allocation strategies listed above, an investor should choose among the
Portfolios based on personal objectives, investment time horizon, tolerance for
risk and personal financial circumstances. For example, because the 90/10
Portfolio will normally invest approximately 90% of its assets in Underlying
Stock Funds, this Portfolio might be suitable for an investor with a relatively
long time horizon who seeks long-term capital appreciation potential and has a
fairly high tolerance for risk and volatility. An investor with a shorter time
horizon who seeks a balance of income and long-term capital appreciation and
has less tolerance for risk and volatility might choose the 60/40 Portfolio,
which invests in a fairly balanced portfolio of Underlying Stock and Bond
Funds. An investor who seeks a higher level of current income combined with
some potential for long-term capital appreciation and has a lower tolerance for
risk and volatility might choose the 30/70 Portfolio, which will normally
invest approximately 70% of its assets in Underlying Bond Funds. While each
Portfolio provides a relatively high level of diversification in comparison
4 PIMCO Funds: Multi-Manager Series
<PAGE>
PROSPECTUS SUMMARY (continued)
to most mutual funds, a single Portfolio may not be suitable as a complete
investment program. For a more complete description of the investment
objectives and policies of the Portfolios, please see "Investment Objectives
and Policies."
Because each Portfolio will invest all of its assets in the Underlying Funds,
each Portfolio's investment performance is directly related to the investment
performance of the Underlying Funds in which it invests. The ability of a
Portfolio to realize its investment objective will depend upon the extent to
which the Underlying Funds realize their objectives. The value of the
Underlying Funds' investments, and the net asset values of the shares of both
the Underlying Funds and the Portfolios, will fluctuate in response to changes
in market and economic conditions, as well as the financial condition and
prospects of issuers in which the Underlying Funds invest.
The possible use of certain investment techniques by an Underlying Fund,
including various derivative instruments such as futures contracts, options and
swap agreements, will subject the Fund to greater risk than Funds that do not
employ such techniques. In addition, investments by certain Underlying Funds in
small market capitalization companies, foreign issuers (including emerging
market issuers) and foreign currencies, illiquid securities and other
instruments will expose those Funds to a higher degree of risk and price
volatility. Some Underlying Funds may also invest in fixed income securities
rated below investment grade (commonly referred to as "high yield" securities
or "junk" bonds), which are considered to be speculative by traditional
investment standards. Each Portfolio may be subject to these and other risks
associated with investments in the Underlying Funds depending upon the
Portfolio's asset allocation strategy. For a description of the various risks
associated with the Portfolios and the Underlying Funds, see "Investment
Objectives and Policies" and "Underlying Funds" in this Prospectus, "Investment
Objectives and Policies" in the Statement of Additional Information and
"Characteristics and Risks of Securities and Investment Techniques" in the
Underlying Fund Prospectuses, which are incorporated herein by reference and
are available free of charge by telephoning the Trust at 1-800-927-4648.
Potential investors in the Portfolios should realize that they may invest
directly in the Underlying Funds and make their own asset allocation decisions.
By investing in a Portfolio, an investor will incur not only a proportionate
share of the expenses of the Portfolio but also a portion of the expenses of
the Underlying Funds in which the Portfolio invests (including investment
advisory and administrative fees charged at the Underlying Fund level). See
"Expense Information" and "Management of the Portfolios--Underlying Fund
Expenses."
Purchase of Shares
This Prospectus describes two classes of shares of each Portfolio: the
"Institutional Class" and the "Administrative Class." Shares of the
Institutional Class are offered primarily for direct investment by
institutional investors (Institutional Class shares may also be offered through
certain financial intermediaries that charge their customers transaction or
other fees with respect to the customers' investments in the Portfolios).
Shares of the Administrative Class are offered primarily through employee
benefit plan alliances, broker-dealers and other intermediaries. Each Portfolio
pays service and/or distribution fees to such entities for services they
provide to such Portfolio's shareholders of that class.
Shares of the Institutional Class and Administrative Class of the Portfolios
are offered at the relevant next determined net asset value with no sales
charge or other fee. The minimum initial investment for shares of either class
is $5 million, subject to certain exceptions described under "Purchase of
Shares." Shares of either class may also be offered to clients of the Adviser
and its affiliates.
Prospectus 5
<PAGE>
PROSPECTUS SUMMARY (continued)
Redemptions and Exchanges
Institutional Class and Administrative Class shares of each Portfolio may be
redeemed without cost at the relevant net asset value per share of the class of
that Portfolio next determined after receipt of the redemption request. The
redemption price may be more or less than the purchase price.
Institutional Class and Administrative Class shares of any Portfolio may be
exchanged without cost on the basis of relative net asset values for shares of
the same class of any other Portfolio or other series of the Trust offered
generally to the public, or for shares of the same class of a series of PIMCO
Funds: Pacific Investment Management Series. See "Redemption of Shares."
6 PIMCO Funds: Multi-Manager Series
<PAGE>
EXPENSE INFORMATION
Expenses are one of several factors to consider when investing in
Institutional Class or Administrative Class shares of the Portfolios. The
following tables and Examples summarize the expenses of each Portfolio that are
borne by its Institutional Class and Administrative Class shareholders based on
estimated expenses for the Portfolio's current fiscal year.
You should bear in mind that shareholders of each Portfolio bear indirectly
the expenses of the Underlying Funds in which the Portfolio invests. The
Portfolios will invest only in Institutional Class shares of the Underlying
Funds and will not pay any sales charges or 12b-1 fees in connection with their
investments in the Underlying Funds. The Portfolios will, however, indirectly
bear their pro rata share of the fees and expenses (including advisory and
administrative fees) incurred by the Underlying Funds that are borne by all
Institutional Class shareholders. Because the Underlying Funds have varied fee
and expense levels and the Portfolios will own different proportions of the
Underlying Funds at different times, the actual fees and expenses indirectly
incurred by the Portfolios will vary.
Shareholder Transaction Expenses (Institutional Class and Administrative
Class):
<TABLE>
<S> <C>
Sales Load Imposed on Purchases.......................................... None
Sales Load Imposed on Reinvested Dividends............................... None
Redemption Fee........................................................... None
Exchange Fee............................................................. None
Fund Reimbursement Fee Imposed on Purchases, Redemptions and Exchanges... None
</TABLE>
Annual Portfolio Operating Expenses (as a percentage of average daily net
assets):
<TABLE>
<CAPTION>
Underlying
Advisory Administrative Fund Total
Institutional Class Shares Fee Fee Expenses* Expenses
-------------------------- -------- -------------- ---------- --------
<S> <C> <C> <C> <C>
90/10 Portfolio................ None 0.10% 0.79% 0.89%
60/40 Portfolio................ None 0.10 0.67 0.77
30/70 Portfolio................ None 0.10 0.55 0.65
</TABLE>
<TABLE>
<CAPTION>
Service/ Underlying
Administrative Class Advisory Administrative 12b-1 Fund Total
Shares Fee Fee Fee Expenses* Expenses
-------------------- -------- -------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
90/10 Portfolio......... None 0.10% 0.25% 0.79% 1.14%
60/40 Portfolio......... None 0.10 0.25 0.67 1.02
30/70 Portfolio......... None 0.10 0.25 0.55 0.90
</TABLE>
* Based on estimated expenses for the current fiscal year. Underlying Fund
Expenses for each Portfolio are estimated based upon the initial
allocation of each Portfolio's assets among the Underlying Funds and upon
the total annual operating expenses of each Underlying Fund. For a
listing of the expenses associated with each Underlying Fund, please see
"Management of the Portfolios--Underlying Fund Expenses." Total Portfolio
Operating Expenses and the Examples set forth on the next page are based
on estimates of the Underlying Fund Expenses each Portfolio will incur.
Actual Underlying Fund Expenses for each Portfolio are expected to vary
with changes in the allocation of the Portfolio's assets, and may be
higher or lower than those shown above.
For a more detailed discussion of the Portfolios' fees and expenses, see
"Fund Administrator," "Advisory Fees," "Administrative Fees," "Underlying Fund
Expenses" and "Service and Distribution Fees" under the caption "Management of
the Portfolios."
Prospectus 7
<PAGE>
EXPENSE INFORMATION (continued)
Example of Portfolio Expenses:
An investor would pay the following expenses on a $1,000 investment assuming
(1) a hypothetical 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
Institutional Class Shares 1 year 3 years
-------------------------- ------ -------
<S> <C> <C>
90/10 Portfolio............................................... $ 9 $28
60/40 Portfolio............................................... 8 25
30/70 Portfolio............................................... 7 21
<CAPTION>
Administrative Class Shares 1 year 3 years
--------------------------- ------ -------
<S> <C> <C>
90/10 Portfolio............................................... $12 $36
60/40 Portfolio............................................... 10 32
30/70 Portfolio............................................... 9 29
</TABLE>
The above tables are provided to assist investors in understanding the
various expenses which may be borne directly or indirectly in connection with
an investment in the Portfolios. These examples should not be considered a
representation of past or future expenses or performance. Actual expenses may
be higher or lower than those shown.
8 PIMCO Funds: Multi-Manager Series
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and general investment policies of each Portfolio
are described below. There can be no assurance that the investment objective
of any Portfolio will be achieved. Because the market value of each
Portfolio's investments will change, the net asset value per share of each
Portfolio will also vary.
The Portfolios are intended for investors who prefer to have their asset
allocation decisions made by professional money managers. Each Portfolio seeks
to achieve its investment objective by investing within specified equity and
fixed income ranges among the Underlying Funds. Each Underlying Fund is a
series of the Trust or PIMCO Funds: Pacific Investment Management Series and
is managed by PIMCO Advisors and/or its affiliates. The Portfolios have
different investment objectives and policies and degrees of potential
investment risk and reward depending upon their allocation strategies. An
investor should choose a Portfolio based on personal objectives, investment
time horizon, tolerance for risk and personal financial circumstances.
Portfolio Descriptions
90/10 Portfolio seeks long-term capital appreciation. Under normal
conditions, approximately 90% of the Portfolio's assets will be allocated
among Underlying Stock Funds and 10% among Underlying Bond Funds.
60/40 Portfolio seeks long-term capital appreciation and current income.
Under normal conditions, approximately 60% of the Portfolio's assets will be
allocated among Underlying Stock Funds and 40% among Underlying Bond Funds.
30/70 Portfolio seeks current income. Long-term capital appreciation is a
secondary objective. Under normal conditions, approximately 30% of the
Portfolio's assets will be allocated among Underlying Stock Funds and 70%
among Underlying Bond Funds.
Unless otherwise noted, each Portfolio's investment objective and its
restrictions and policies relating to the investment of its assets are non-
fundamental and may be changed without shareholder approval.
PIMCO Advisors serves as the investment adviser to the Portfolios and
determines how each Portfolio's assets are allocated among the Underlying
Funds. Each Portfolio invests in particular Underlying Funds (which may differ
from time to time) based on various criteria observed by PIMCO Advisors. Among
other things, PIMCO Advisors analyses the various investment objectives,
policies and strategies of the Underlying Funds to determine which Funds, in
combination with others, are appropriate in light of a Portfolio's investment
objective. PIMCO Advisors then makes allocation decisions among these
Underlying Funds in an attempt to achieve the Portfolio's objective. The table
on the next page illustrates the estimated equity and fixed income allocation
targets and typical ranges for each Portfolio under normal market conditions.
Prospectus 9
<PAGE>
Equity and Fixed Income Ranges
(as a percentage of each Portfolio's average net assets)
<TABLE>
<CAPTION>
Typical
PIMCO Funds Target Allocation
Asset Allocation Series Allocation Range*
- --------------------------------------------------------------
<S> <C> <C>
90/10 Portfolio
Equity 90% 80% - 100%
Fixed Income (including money market**) 10% 0% - 20%
- --------------------------------------------------------------
60/40 Portfolio
Equity 60% 50% - 70%
Fixed Income (including money market**) 40% 30% - 50%
- --------------------------------------------------------------
30/70 Portfolio
Equity 30% 25% - 35%
Fixed Income (including money market**) 70% 65% - 75%
</TABLE>
* Each Portfolio may temporarily deviate from its asset allocation range for
defensive purposes.
** Each Portfolio may hold a portion of its assets in PIMCO Money Market Fund,
in part, so that it can readily sell the securities and have cash available
to pay Portfolio expenses without incurring capital gains.
Each Portfolio is authorized to invest in any or all of the Underlying
Funds. However, it is expected that a Portfolio will invest in only some of
the Underlying Funds at any particular time. A Portfolio's investment in a
particular Underlying Fund may and in some cases is expected to exceed 25% of
its total assets. To the extent that a Portfolio invests a significant portion
of its assets in an Underlying Fund, it will be particularly sensitive to the
risks associated with that Fund. Please see "Underlying Funds" and "Principal
Risks of the Underlying Funds" below for a description of the Underlying Funds
and their attendant risks. The particular Underlying Funds in which each
Portfolio may invest, the equity and fixed income allocation targets and
ranges specified above, and the percentage of each Portfolio's assets invested
from time to time in any Underlying Fund or combination of Funds may be
changed from time to time without the approval of the Portfolio's
shareholders.
Each Portfolio's net asset value will fluctuate in response to changes in
the net asset values of the Underlying Funds in which it invests. Each
Portfolio will invest all of its assets in Underlying Funds, and may invest up
to 100% of its assets in PIMCO Money Market Fund (and thereby deviate from its
asset allocation range) for temporary defensive purposes. A Portfolio may also
borrow money for temporary or emergency purposes.
Each Portfolio is also subject to certain investment restrictions that are
described under "Investment Restrictions" in the Statement of Additional
Information.
Overview of Asset Allocation
PIMCO Advisors' Asset Allocation Committee determines how the Portfolios'
assets are allocated and reallocated from time to time among the Underlying
Funds. The individuals who constitute the Asset Allocation Committee and are
primarily responsible for making asset allocation and other investment
decisions for the Portfolios are William D. Cvengros, Timothy R. Clark, Robert
S. Venable and David Young. Please see "Management of the Portfolios" for a
description of PIMCO Advisors and the individuals on the Asset Allocation
Committee.
PIMCO Advisors' approach to asset allocation encompasses both quantitative
and qualitative processes designed to allocate the Portfolios' assets among
multiple Underlying Funds in order to achieve broadly diversified Portfolios.
The Asset Allocation Committee meets regularly to analyze various economic and
market data. The Committee also collects and synthesizes multiple proprietary
models maintained by the Portfolio Managers of the Underlying Funds. See
10 PIMCO Funds: Multi-Manager Series
<PAGE>
"Management of the Portfolios--Portfolio Managers for the Underlying Funds."
These models are quantitatively compiled by the Committee to provide a
framework for developing PIMCO Advisors' allocation strategies with respect to
the major asset classes and sub-classes held by the Underlying Funds.
The resulting framework assists the Asset Allocation Committee in the
following ways: (1) it identifies the desired tactical allocation ranges for
the Portfolios around long-term strategic broad asset class and sub-class
targets, (2) it identifies individual Funds among the Underlying Funds that
are expected to provide consistent, quality performance in the various asset
classes and sub-classes identified for the Portfolios and (3) it is used by
the Committee in its on-going evaluation of the equity and fixed income
markets in an attempt to identify and implement value-added tactical shifts
for the Portfolios. These tactical shifts and resulting reallocations of
Portfolio assets are not expected to be large or frequent in nature, and
should result in modest levels of portfolio turnover for the Portfolios. See
"Portfolio Turnover."
Equity Portion of the Portfolios
The equity portion of each Portfolio will be allocated among a number of
Underlying Stock Funds which provide a broad range of equity-based investment
objectives and strategies. By allocating assets among these Funds, the equity
portions of the Portfolios can be diversified in multiple ways, including the
following:
By Region
[ ] U.S. Equities
[ ] International Developed Markets Equities
[ ] International Emerging Markets Equities
By Investment Style
[ ] Blend (Broad Market)
[ ] Value
[ ] Growth
By Size
[ ] Large-Cap
[ ] Mid-Cap
[ ] Small-Cap
For a description of the Underlying Stock Funds and their investment
objectives and strategies, please see "Underlying Funds." The Portfolio
Managers for the Underlying Stock Funds each have different investment
philosophies and processes which are reflected in the Funds they manage.
Through asset allocation, PIMCO Advisors can take advantage of the expertise
of each Portfolio Manager and combine the investment styles set forth above in
providing broadly diversified Portfolios. For a description of each Portfolio
Manager and its particular investment philosophy and process, please see
"Management of the Portfolios--Portfolio Managers for the Underlying Funds."
Prospectus 11
<PAGE>
Fixed Income Portion of the Portfolios
The fixed income portion of each Portfolio will be allocated among a number
of Underlying Bond Funds which provide a broad range of fixed income-based
investment objectives and strategies. By allocating assets among these Funds,
the fixed income portions of the Portfolios can be diversified in multiple
ways, including the following:
By Region
[ ] U.S. Fixed Income
[ ] Foreign Fixed Income
By Sector/Investment Specialty
[ ] Governments
[ ] Mortgages
[ ] Corporate
[ ] Inflation-Indexed
By Credit Quality
[ ] Investment Grade/Money Market
[ ] Medium Grade
[ ] High Yield
By Duration
[ ] Long-Term
[ ] Intermediate-Term
[ ] Short-Term
For a description of the Underlying Bond Funds and their investment
objectives and strategies, please see "Underlying Funds." Pacific Investment
Management is the investment adviser and Portfolio Manager for each Underlying
Bond Fund. Through asset allocation, PIMCO Advisors can take advantage of the
broad fixed income expertise of Pacific Investment Management and combine the
investment styles set forth above in providing broadly diversified Portfolios.
For a description of Pacific Investment Management and its investment
philosophy and process, please see "Management of the Portfolios--Portfolio
Managers for the Underlying Funds."
Potential Conflicts of Interest
As described above, PIMCO Advisors has broad discretion to allocate and
reallocate the Portfolios' assets among the Underlying Funds, consistent with
the Portfolios' investment objectives and policies and the asset allocation
ranges specified above. Although PIMCO Advisors does not charge an investment
advisory fee for its asset allocation services, PIMCO Advisors and its
affiliates indirectly receive fees (including investment advisory and
administrative fees) from the Underlying Funds in which the Portfolios invest.
In this regard, PIMCO Advisors has a financial incentive to invest a
Portfolio's assets in Underlying Funds with higher fees than other Funds, even
if it believes that alternate investments would better serve the Portfolio's
investment program. PIMCO Advisors is legally obligated to disregard that
incentive in making asset allocation decisions for the Portfolios. The
Trustees and officers of the Trust may also have conflicting interests in
fulfilling their fiduciary duties to both the Portfolios and the Underlying
Funds.
12 PIMCO Funds: Multi-Manager Series
<PAGE>
General Risks of Investing in the Portfolios
Because the Portfolios invest all of their assets in the Underlying Funds,
the risks associated with investing in the Portfolios are closely related to
the risks associated with the securities held by the Underlying Funds. The
ability of a Portfolio to achieve its investment objective will depend upon
the ability of the Underlying Funds to achieve their objectives. Of course,
the extent to which the investment performance and risks associated with a
particular Portfolio correlate to those of a particular Underlying Fund will
depend upon the extent to which the Portfolio's assets are allocated from time
to time for investment in the Underlying Fund. For a description of the
principal risks associated with investments in the Underlying Funds, please
see "Underlying Funds--Principal Risks of the Underlying Funds" in this
Prospectus, "Investment Objectives and Policies" in the Statement of
Additional Information and "Characteristics and Risks of Securities and
Investment Techniques" in the Underlying Fund Prospectuses, which are
incorporated herein by reference and are available free of charge by
telephoning the Trust at 1-800-927-4648.
Portfolio Turnover
A change in the securities held by a Portfolio is known as "portfolio
turnover." Because PIMCO Advisors does not expect to reallocate the
Portfolios' assets among the Underlying Funds on a frequent basis, the
portfolio turnover rates for the Portfolios are expected to be modest (i.e.,
less than 25%) in comparison to most mutual funds. However, the Portfolios'
indirectly bear the expenses associated with portfolio turnover of the
Underlying Funds, a number of which have fairly high portfolio turnover rates
(i.e., in excess of 100%). High portfolio turnover involves correspondingly
greater expenses to an Underlying Fund, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities and
reinvestments in other securities. Shareholders in the Portfolios may also
bear expenses directly or indirectly through sales of securities held by the
Portfolios and the Underlying Funds which result in realization of ordinary
income or taxable capital gains (including short-term capital gains which are
generally taxed at ordinary income tax rates). See "Dividends, Distributions
and Taxes."
Service Systems--Year 2000 Problem
Many of the services provided to the Portfolios depend on the smooth
functioning of computer systems. Many systems in use today cannot distinguish
between the year 1900 and the year 2000. Should any of the service systems
fail to process information properly, that could have an adverse impact on the
Portfolios' operations and services provided to shareholders. The Adviser,
Distributor, Shareholder Servicing and Transfer Agent, Custodian and certain
other service providers to the Portfolios have reported that each is working
toward mitigating the risks associated with the so-called "year 2000 problem."
However, there can be no assurance that the problem will be corrected in all
respects and that the Portfolios' operations and services provided to
shareholders will not be adversely affected, nor can there be any assurance
that the year 2000 problem will not have an adverse effect on the entities
whose securities are held by the Underlying Funds or on domestic or global
equity markets or economies, generally.
"Fundamental" Policies
The investment objective of each Portfolio described in this Prospectus may
be changed by the Board of Trustees without shareholder approval. If there is
a change in a Portfolio's investment objective, shareholders should consider
whether the Portfolio remains an appropriate investment in light of their then
current financial positions and needs.
Prospectus 13
<PAGE>
UNDERLYING FUNDS
Each Portfolio invests all of its assets in Underlying Funds. Accordingly,
each Portfolio's investment performance depends upon a favorable allocation
among the Underlying Funds as well as the ability of the Underlying Funds to
meet their objectives. There can be no assurance that the investment objective
of any Underlying Fund will be achieved. Shares of the Underlying Funds are
not offered in this Prospectus.
Portfolio Managers
PIMCO Advisors serves as investment adviser for each of the Underlying Stock
Funds. The PIMCO Equity Advisors division ("PIMCO Equity Advisors") of PIMCO
Advisors manages the investments of PIMCO Innovation Fund. Affiliates of PIMCO
Advisors serve as sub-advisers for the remaining Underlying Stock Funds,
except that another affiliate, Pacific Investment Management, is the sole
investment adviser to PIMCO StocksPLUS Fund. Under these arrangements, PIMCO
Equity Advisors, the sub-advisers and Pacific Investment Management (referred
to collectively as "Portfolio Managers") have full investment discretion and
make all determinations with respect to the investment of the assets of these
Funds. Pacific Investment Management is also the sole investment adviser to
each Underlying Bond Fund. The Portfolio Managers and their investment
specialties are listed below.
<TABLE>
<CAPTION>
Portfolio Manager Investment Specialty
- -------------------------------------------------------------------------------
<C> <S>
Blairlogie Capital Management ("Blairlogie") (/1/) International stocks using
Scottish standards of
prudent investment
management with modern
quantitative analytical
tools
--------------------------
Cadence Capital Management ("Cadence") Stocks of growth companies
that the Portfolio Manager
believes are trading at a
reasonable price
--------------------------
Columbus Circle Investors ("Columbus Circle") (/2/) Stocks, using its
"Positive Momentum &
Positive Surprise"
discipline
--------------------------
NFJ Investment Group ("NFJ") Value stocks that the
Portfolio Manager believes
are undervalued and/or
offer above-average
dividend yields
--------------------------
Pacific Investment Management All sectors of the bond
market using its total
return philosophy--seeking
both yield and capital
appreciation
--------------------------
Parametric Portfolio Associates ("Parametric") Stocks, using
quantitatively-driven
fundamental analysis and
economic methods, with
specialties in emerging
markets and tax-efficient
products
--------------------------
PIMCO Equity Advisors division of PIMCO Disciplined approach to
Advisors ("PIMCO Equity Advisors") identifying quality growth
companies
</TABLE>
1. On or about April 30, 1999, it is anticipated that PIMCO Advisors will sell
substantially all of its ownership interest in Blairlogie. See "Management
of the Portfolios--Portfolio Managers for the Underlying Funds--
Blairlogie."
2. On or about May 7, 1999, PIMCO Equity Advisors will assume full portfolio
management responsibility for PIMCO Renaissance Fund, an Underlying Stock
Fund currently managed by Columbus Circle. See "Management of the
Portfolios--Portfolio Managers for the Underlying Funds--Columbus Circle."
14 PIMCO Funds: Multi-Manager Series
<PAGE>
Underlying Stock Funds
The following provides a concise description of the investment objective and
primary investments of each Underlying Stock Fund and lists the Fund's
Portfolio Manager. For a complete description of these Funds, please see the
Underlying Fund Prospectuses, which are incorporated herein by reference and
are available free of charge by telephoning the Trust at 1-800-927-4648.
<TABLE>
<CAPTION>
Portfolio
Fund Name Investment Objective Primary Investments Manager
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Funds PIMCO Equity Income Current income as a primary objective; Common stocks with below-average price NFJ
long-term growth of capital as a to earnings ratios and higher dividend
secondary earnings objective yields relative to their industry groups
----------------------------------------------------------------------------------------------------------------------
PIMCO Renaissance Long-term growth of capital Common stocks with below-average Columbus
and income valuations that have improving Circle (1)
business fundamentals
----------------------------------------------------------------------------------------------------------------------
PIMCO Core Equity Long-term growth of capital; income Common stocks of companies with market Columbus
as a secondary objective capitalizations in excess of $3 billion Circle
----------------------------------------------------------------------------------------------------------------------
PIMCO Mid-Cap Equity Long-term growth of capital Common stocks of companies with market Columbus
capitalizations between $800 million and Circle
$3 billion
----------------------------------------------------------------------------------------------------------------------
PIMCO Value Long-term growth of capital Common stocks with below-average price to NFJ
and income earnings ratios relative to their
industry groups
----------------------------------------------------------------------------------------------------------------------
PIMCO Value 25 Long-term growth of capital Approximately 25 common stocks of NFJ
and income companies with medium market
capitalizations and below-average price
to earnings ratios relative to their
industry groups
----------------------------------------------------------------------------------------------------------------------
PIMCO Capital Growth of capital Common stocks of companies with market Cadence
Appreciation capitalizations of at least $1 billion
that have improving fundamentals and whose
stock is reasonably valued by the market
----------------------------------------------------------------------------------------------------------------------
PIMCO Mid-Cap Growth of capital Common stocks of companies with market Cadence
Growth capitalizations in excess of $500 million
that have improving fundamentals and whose
stock is reasonably valued by the market
----------------------------------------------------------------------------------------------------------------------
PIMCO Enhanced Total return which equals or exceeds Common stocks represented in the S&P 500 Parametric
Equity the total return performance of an
index representing the performance
of a reasonably broad spectrum of
common stocks (currently the
S&P 500 (2))
----------------------------------------------------------------------------------------------------------------------
PIMCO Tax-Efficient Maximum after-tax growth of capital A broadly diversified portfolio of at Parametric
Equity least 200 common stocks of companies
with larger market capitalizations
- ------------------------------------------------------------------------------------------------------------------------------------
Aggressive PIMCO Small-Cap Long-term growth of capital and Common stocks of companies with market NFJ
Stock Funds Value income capitalizations between $50 million and
$1 billion and below-average price to
earnings ratios relative to their
industry groups
----------------------------------------------------------------------------------------------------------------------
PIMCO Small-Cap Growth of capital Common stocks of companies with market Cadence
Growth capitalizations between $50 million and
$1 billion that have improving fundamentals
and whose stock is reasonably valued by
the market
----------------------------------------------------------------------------------------------------------------------
PIMCO Micro-Cap Long-term growth of capital Common stocks of companies with market Cadence
Growth capitalizations of less than $100 million
that have improving fundamentals and whose
stock is reasonably valued by the market
- ------------------------------------------------------------------------------------------------------------------------------------
International PIMCO International Capital appreciation; income is Non-U.S. stocks of companies with small, Blairlogie (3)
Stock Funds incidental medium and large market capitalizations
(developed and emerging markets)
----------------------------------------------------------------------------------------------------------------------
PIMCO International Long-term capital appreciation An international portfolio of equity and Columbus
Growth equity-related securities Circle
----------------------------------------------------------------------------------------------------------------------
PIMCO Structured Long-term growth of capital Common stocks of companies located in Parametric
Emerging Markets emerging market countries
----------------------------------------------------------------------------------------------------------------------
PIMCO Tax-Efficient Same as PIMCO Structured Emerging Common stocks of companies located in Parametric
Structured Markets Fund, except that the Fund emerging market countries
Emerging Markets seeks to achieve superior after-tax
returns by employing a variety of
tax-efficient management strategies
- ------------------------------------------------------------------------------------------------------------------------------------
Specialized PIMCO Innovation Capital appreciation; no consideration Common stocks of companies with small, PIMCO Equity
Stock Funds given to income medium and large market capitalizations Advisors (4)
(technology-related stocks)
----------------------------------------------------------------------------------------------------------------------
PIMCO StocksPLUS Total return which exceeds the total S&P 500 stock index derivatives Pacific
return performance of the S&P 500 backed by a portfolio of fixed Investment
income securities Management
</TABLE>
1. On or about May 7, 1999, PIMCO Equity Advisors will assume full portfolio
management responsibility for PIMCO Renaissance Fund. See "Management of the
Portfolios--Portfolio Managers for the Underlying Funds--Columbus Circle."
2. The Standard & Poor's 500 Composite Stock Price Index.
3. On or about April 30, 1999, it is anticipated that PIMCO Advisors will sell
substantially all of its ownership interest in Blairlogie. PIMCO Advisors has
determined to continue to retain Blairlogie as Portfolio Manager for PIMCO
International Fund.
4. Prior to March 5, 1999, Columbus Circle served as Portfolio Manager for PIMCO
Innovation Fund.
Prospectus 15
<PAGE>
Underlying Bond Funds
Pacific Investment Management has full investment discretion and makes all
determinations with respect to the investment of the assets of each Underlying
Bond Fund.
The investment objective of each Underlying Bond Fund (except as provided
below) is to seek to realize maximum total return, consistent with
preservation of capital and prudent investment management. The "total return"
sought by most of the Underlying Bond Funds will consist of interest and
dividends from underlying securities and capital appreciation or depreciation
reflected in changes in the value of portfolio securities. The investment
objective of PIMCO Real Return Bond Fund is to seek to realize maximum real
return, consistent with preservation of real capital and prudent investment
management. "Real return" is total return adjusted for inflation. The
investment objective of each of PIMCO Money Market Fund and PIMCO Short-Term
Fund is to seek to obtain maximum current income consistent with preservation
of capital and daily liquidity. PIMCO Money Market Fund also attempts to
maintain a stable net asset value of $1.00 per share, although there can be no
assurance that it will be successful in doing so.
The following provides a concise description of the primary investments of
and other information relating to each Underlying Bond Fund. For a complete
description of these Funds, please see the Underlying Fund Prospectus for
PIMCO Funds: Pacific Investment Management Series, which is incorporated
herein by reference and is available free of charge by telephoning the Trust
at 1-800-927-4648.
<TABLE>
<CAPTION>
Fund Name Primary Investments Duration Credit Quality (/1/)
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
Short-Term PIMCO Money Market Money market instruments [less than or Min 95% Aaa or Prime 1;
Bond Funds equal to] (Less than or equal to]
90 days 5% Aa or Prime 2
dollar-weighted
average maturity
----------------------------------------------------------------------------------------------------------
PIMCO Short-Term Money market instruments 0-1 yr B to Aaa; max 10%
and short maturity fixed below Baa
income securities
----------------------------------------------------------------------------------------------------------
PIMCO Low Duration Short and intermediate 1-3 yrs B to Aaa; max 10%
maturity fixed income below Baa
securities
- -----------------------------------------------------------------------------------------------------------------------
Intermediate- PIMCO Moderate Duration Short and intermediate 2-5 yrs B to Aaa; max 10%
Term maturity fixed income below Baa
Bond Funds securities
----------------------------------------------------------------------------------------------------------
PIMCO Real Return Bond Inflation-indexed fixed N/A B to Aaa; max 10%
income securities below Baa
----------------------------------------------------------------------------------------------------------
PIMCO Total Return Intermediate maturity 3-6 yrs B to Aaa; max 10%
fixed income securities below Baa
----------------------------------------------------------------------------------------------------------
PIMCO Total Return II Same as PIMCO Total Return 3-6 yrs Baa to Aaa
Fund, except that the Fund
is subject to credit quality and
foreign issuer restrictions
----------------------------------------------------------------------------------------------------------
PIMCO High Yield Higher yielding fixed 2-6 yrs B to Aaa; min 65%
income securities below Baa
- -----------------------------------------------------------------------------------------------------------------------
Long-Term PIMCO Long-Term U.S. Long-term maturity fixed [less than or A to Aaa
Bond Funds Government income securities equal to 8 yrs
- -----------------------------------------------------------------------------------------------------------------------
International PIMCO Global Bond Intermediate maturity U.S. 3-7 yrs B to Aaa; max 10%
Bond Funds and foreign fixed income below Baa
securities
----------------------------------------------------------------------------------------------------------
PIMCO Foreign Bond Intermediate maturity 3-7 yrs B to Aaa; max 10%
hedged foreign fixed below Baa
income securities
----------------------------------------------------------------------------------------------------------
PIMCO Emerging Markets Bond Emerging market fixed 0-8 yrs B to Aaa
income securities
<CAPTION>
Foreign (/2/)
- -----------------------------------------------------------------------------------------------------------------------
<C>
0%
----------------------------------------------------------------------------------------------------------
0-5%
----------------------------------------------------------------------------------------------------------
0-20%
- -----------------------------------------------------------------------------------------------------------------------
0-20%
----------------------------------------------------------------------------------------------------------
0-35%
----------------------------------------------------------------------------------------------------------
0-20%
----------------------------------------------------------------------------------------------------------
0%
----------------------------------------------------------------------------------------------------------
0%
- -----------------------------------------------------------------------------------------------------------------------
0%
- -----------------------------------------------------------------------------------------------------------------------
25-75%
----------------------------------------------------------------------------------------------------------
[greater than or equal to]
85%
----------------------------------------------------------------------------------------------------------
[greater than or equal to]
80%
</TABLE>
1. As rated by Moody's Investors Service, Inc., or if unrated, determined by
Pacific Investment Management to be of comparable quality.
2. Percentage limitations relate to foreign currency-denominated securities
for all Underlying Bond Funds except PIMCO Foreign Bond, Global Bond and
Emerging Markets Bond Funds. Percentage limitations for these three Funds re-
late to securities of foreign issuers, denominated in any currency. Each Un-
derlying Bond Fund (except PIMCO Total Return II and Long-Term U.S.
Government Funds) may invest beyond these limits in U.S. dollar-denominated
securities of foreign issuers. PIMCO Total Return II and Long-Term U.S.
Government Funds may not invest in any securities of foreign issuers.
16 PIMCO Funds: Multi-Manager Series
<PAGE>
Each Underlying Bond Fund will normally invest at least 65% of its assets in
the following types of securities, which, unless provided above, may be issued
by domestic or foreign entities and denominated in U.S. dollars or foreign
currencies: securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities ("U.S. Government securities"); corporate debt
securities, including convertible securities and corporate commercial paper;
mortgage-backed and other asset-backed securities; inflation-indexed bonds
issued by both governments and corporations; structured notes, including
hybrid or "indexed" securities, catastrophe bonds and loan participations;
delayed funding loans and revolving credit facilities; bank certificates of
deposit, fixed time deposits and bankers' acceptances; repurchase agreements
and reverse repurchase agreements; debt securities issued by states or local
governments and their agencies, authorities and instrumentalities; 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,
including rates of interest that vary inversely at a multiple of a designated
or floating rate, or that vary according to changes in relative values of
currencies. Most of the Underlying Bond Funds may (but are not required to)
make substantial use of derivative instruments or use a series of purchase and
sale contracts or other investment techniques to obtain market exposure to the
securities in which they primarily invest.
Additional Underlying Funds
In addition to the Funds listed above, a Portfolio may invest in additional
Underlying Funds, including those that may become available for investment in
the future, at the discretion of PIMCO Advisors and without shareholder
approval.
Principal Risks of the Underlying Funds
There can be no assurance that the investment objectives of any of the
Underlying Funds will be achieved. The following summarizes principal risks
associated with investments in the Underlying Funds. The summary is not
intended to be exhaustive. For a more complete description of these risks,
please refer to "Investment Objectives and Policies" in the Statement of
Additional Information and "Characteristics and Risks of Securities and
Investment Techniques" in the Underlying Fund Prospectuses, which are
incorporated herein by reference and are available free of charge by
telephoning the Trust at 1-800-927-4648.
Market Risk Most securities in which the Underlying Funds invest are subject
to some degree of market risk, which is the risk of unfavorable market-induced
changes in the value of a security. The following summarizes general market
risks associated with investments in fixed income and equity securities.
Fixed Income Securities Changes in the market values of fixed income
securities (i.e., capital appreciation or depreciation) are largely a function
of changes in the current level of interest rates. The value of an Underlying
Fund's investments in fixed income securities will typically change as the
level of interest rates fluctuate. During periods of falling interest rates,
the value of fixed income securities generally rise. Conversely, during
periods of rising interest rates, the value of fixed income securities
generally decline.
"Duration" is one measure of the expected life of a fixed income security.
When interest rates are falling, a portfolio with a shorter duration will
generally not generate as high a level of total return as a portfolio with a
longer duration. When interest rates are rising, a portfolio with a shorter
duration will generally outperform a longer duration portfolio. When interest
rates are flat, shorter duration portfolios generally will not generate as
high a level of total return as longer duration portfolios (assuming that
long-term interest rates are higher than short-term rates, which is commonly
the case). Accordingly, longer duration portfolios generally have a greater
potential for total return than shorter duration portfolios,
Prospectus 17
<PAGE>
but are also subject to greater levels of market risk and price volatility.
Therefore, Underlying Bond Funds with longer average portfolio durations
(e.g., PIMCO Long-Term U.S. Government Fund) are generally subject to higher
levels of market risk than Funds with shorter durations (e.g., PIMCO Money
Market, Short-Term and Low Duration Funds). Also, some portfolios (e.g., those
with mortgage-backed and other prepayable securities) have changing durations
and may have increasing durations precisely when that is least advantageous
(i.e., when interest rates are rising).
Certain types of securities in which the Underlying Bond Funds may invest
are particularly sensitive to fluctuations in prevailing interest rates and
have relatively high levels of market risk. These include various mortgage-
related securities (for instance, the interest-only or "IO" class of a
stripped mortgage-backed security) and "zero coupon" securities (fixed income
securities, including certain U.S. Government securities, that do not make
periodic interest payments and are purchased at a discount from their value at
maturity). Please see "Investment Objectives and Policies" in the Statement of
Additional Information for a description of these and other fixed income
securities that are particularly sensitive to market risk.
Equity Securities Changes in the market values of equity securities (i.e.,
capital appreciation or depreciation) may depend upon a number of factors,
including: general economic and market conditions; prospects of the security's
issuer; changing interest rates; real or perceived economic and competitive
industry conditions; and currency exchange rates. Generally, over the long
term, the total return obtained by a portfolio that invests primarily in
equity securities has historically been greater than that obtained by a
portfolio that invests primarily in fixed income securities. However, an
equity portfolio is generally subject to greater market risk and price
volatility than a fixed income portfolio and is considered to be a more
aggressive investment.
Credit Risk of Fixed Income Securities Credit risk associated with
investments in fixed income securities relates to the ability of the issuer to
make scheduled payments of principal and interest on an obligation. The
Underlying Funds that invest in fixed income securities are subject to varying
degrees of risk that the issuers of the securities will have their credit
ratings downgraded or will default, potentially reducing the Underlying Fund's
share price and income level. Nearly all fixed income securities are subject
to some credit risk, whether the issuers of the securities are corporations,
states and local governments or foreign governments. Even certain U.S.
Government securities are subject to credit risk.
Credit risk is particularly acute for Underlying Funds which invest in so-
called "high-yield" securities or "junk" bonds, which are fixed income
securities rated lower than Baa by Moody's Investors Service, Inc. ("Moody's")
or BBB by Standard & Poor's Ratings Services ("S&P"), or are determined to be
of comparable quality to securities so rated. While such securities offer the
potential for higher investment returns than higher-rated securities, they
carry a high degree of credit risk and are considered predominantly
speculative with respect to the issuer's continuing ability to meet principal
and interest payments. High yield securities may also be more susceptible to
real or perceived adverse economic and competitive industry conditions and may
be less liquid than higher-rated securities. Accordingly, Underlying Funds
which invest a significant portion of their assets in high yield securities
(e.g., PIMCO High Yield and Emerging Markets Bond Funds) are subject to
substantial credit risk, while Funds that invest in higher quality securities
(e.g., PIMCO Money Market and Long-Term U.S. Government Funds) are subject to
less credit risk.
Investments in Companies with Small Market Capitalizations Certain
Underlying Stock Funds (in particular, PIMCO Micro-Cap Growth, Small-Cap Value
and Small-Cap Growth Funds) invest in common stock of companies with market
capitalizations that are small compared to other publicly traded companies.
Investments in smaller, less seasoned companies may present greater
opportunities for growth and capital appreciation, but also involve greater
risks than customarily are associated with larger, more established companies.
These companies may have limited product
18 PIMCO Funds: Multi-Manager Series
<PAGE>
lines, markets or financial resources, or they may be dependent upon a limited
management group. In addition, their securities may be traded in the over-the-
counter market or on a regional exchange, or may otherwise have limited
liquidity.
Foreign Securities and Currencies Many Underlying Funds (in particular,
PIMCO International, International Growth, Structured Emerging Markets, Tax-
Efficient Structured Emerging Markets, Global Bond, Foreign Bond and Emerging
Markets Bond Funds) invest in securities of foreign issuers, securities traded
principally in securities markets outside the United States and/or securities
denominated in foreign currencies (together, "foreign securities").
Investing in foreign securities involves special risks not typically
associated with investing in U.S. securities. These risks include: differences
in accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; higher custodial costs;
the possibility that foreign taxes will be charged on dividends and interest
payable on foreign securities; the possibility of nationalization,
expropriation or confiscatory taxation; adverse changes in investment or
exchange control regulations (which may include suspension of the ability to
transfer currency from a country); political instability; the possibility of
unfavorable foreign economic factors; and greater price volatility.
Certain Underlying Funds (in particular, PIMCO Structured Emerging Markets,
Tax-Efficient Structured Emerging Markets and Emerging Markets Bond Funds) may
invest in the securities of issuers based in countries with developing or
"emerging market" economies. These securities may present market, credit,
currency, liquidity, legal, political and other risks greater than, or in
addition to, risks of investing in developed foreign countries. These risks
include: high currency exchange rate fluctuations; greater social, economic
and political uncertainty and instability (including the risk of war); more
substantial governmental involvement in the economy; less governmental
supervision and regulation of the securities markets and participants in those
markets; unavailability of currency hedging techniques in certain emerging
market countries; the fact that companies in emerging market countries may be
newly organized and may be smaller and less seasoned companies; the difference
in, or lack of, auditing and financial reporting standards, which may result
in unavailability of material information about issuers; different clearance
and settlement procedures, which may be unable to keep pace with the volume of
securities transactions or otherwise make it difficult to engage in such
transactions; the risk that it may be more difficult to obtain and/or enforce
legal judgments in foreign jurisdictions; and significantly smaller market
capitalizations of emerging market issuers.
Underlying Funds that invest in fixed income securities denominated in
foreign currencies or in foreign currencies and related derivative instruments
(in particular, PIMCO Global Bond, Foreign Bond and Emerging Markets Bond
Funds) and Underlying Funds that invest in equity securities traded
principally in foreign currencies, may be adversely affected by changes in
foreign currency exchange rates. Those rates may fluctuate significantly over
short periods of time for a number of reasons, including the forces of supply
and demand in the foreign exchange markets, actual or perceived changes in
interest rates, and 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. For example, significant uncertainty
surrounds the recent introduction of the euro (a common currency unit for the
European Union) in January 1999 and its ongoing effect on the value of
securities denominated in local European currencies. For a more complete
discussion of foreign currency risks (including those associated with the
euro), please see "Investment Objectives and Policies--Foreign Currencies" in
the Statement of Additional Information.
Derivative Instruments The Underlying Funds (with the exception of PIMCO
Money Market Fund) may (but are not required to) utilize a number of
derivative instruments for risk management purposes or as part of their
investment strategies. These include futures contracts, options contracts,
options on futures contracts, forward contracts and swap
Prospectus 19
<PAGE>
agreements. Generally, derivatives are financial contracts whose value depends
upon, or is derived from, the value of an underlying asset, reference rate or
index, and may relate to stocks, bonds, interest rates, currencies or currency
exchange rates, commodities, and related indexes. For a description of the
various derivative instruments that may be utilized by the Underlying Funds,
please see "Investment Objectives and Policies" in the Statement of Additional
Information.
The use of derivatives instruments involves risks different from, or greater
than, the risks associated with investing directly in securities and other
more traditional investments. The following provides a general discussion of
important risk factors relating to the use of derivative instruments by the
Underlying Funds.
Management Risk Derivative products are highly specialized instruments that
require investment techniques and risk analyses different from those
associated with stocks and bonds. The use of a derivative requires an
understanding not only of the underlying instrument but also of the derivative
itself, without the benefit of observing the performance of the derivative
under all possible market conditions.
Credit Risk The use of a derivative involves the risk that a loss may be
sustained as a result of the failure of another party to the contract (usually
referred to as a "counterparty") to make required payments or otherwise comply
with the contract's terms.
Liquidity Risk Liquidity risk exists when a particular derivative instrument
is difficult to purchase or sell. If a derivative transaction is particularly
large or if the relevant market is illiquid (as is the case with many
privately negotiated derivatives), it may not be possible to initiate a
transaction or liquidate a position at an advantageous time or price.
Leverage Risk Because many derivatives have a leverage component, adverse
changes in the value or level of the underlying asset, reference rate or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. When an Underlying Fund uses
derivatives for leverage, investments in that Fund will tend to be more
volatile, resulting in larger gains or losses in response to market changes.
Market and Other Risks Like most other investments, derivative instruments
are subject to the general risk that the market value of the instrument will
change in a way detrimental to the investor's interest. Other risks in using
derivatives include the risk of mispricing or improper valuation of
derivatives and the inability of derivatives to correlate perfectly with
underlying assets, rates and indexes. Many derivatives, in particular
privately negotiated derivatives, are complex and often valued subjectively.
Improper valuations can result in increased cash payment requirements to
counterparties or a loss of value to an Underlying Fund. Also, the value of
derivatives may not correlate perfectly, or at all, with the value of the
assets, reference rates or indices they are designed to closely track.
Consequently, an Underlying Fund's use of derivatives may not always be an
effective means of, and sometimes could be counterproductive to, furthering
the Fund's investment objective or risk management strategy. In addition,
suitable derivative transactions may not be available in all circumstances and
there can be no assurance that an Underlying Fund will engage in such
transactions at any given time or from time to time.
A Note on PIMCO StocksPLUS Fund While the objective of PIMCO StocksPLUS Fund
is to achieve a total return which exceeds the total return performance of the
S&P 500, it does so by investing substantially all of its assets in a
combination of equity-based derivative instruments and a portfolio of fixed
income securities. Consequently, the risks of investing in the Fund include
the risks of derivatives and the risks generally associated with the
Underlying Bond Funds. To the extent that the Fund invests in S&P 500
derivatives backed by a portfolio of fixed income securities, under certain
20 PIMCO Funds: Multi-Manager Series
<PAGE>
conditions, generally in a market where the value of both S&P 500 derivatives
and fixed income securities are declining, the Fund may experience greater
losses than would be the case if it were to invest directly in a portfolio of
S&P 500 stocks.
Certain Other Miscellaneous Investment Practices In addition to investing in
the securities listed above under "Primary Investments," some or all of the
Underlying Funds may to varying extents: lend portfolio securities; enter into
repurchase agreements and reverse repurchase agreements; purchase and sell
securities on a when-issued or delayed delivery basis; enter into forward
commitments to purchase securities; purchase and write call and put options on
securities and securities indexes; enter into futures contracts, options on
futures contracts and swap agreements; invest in foreign securities; and buy
or sell foreign currencies and enter into forward foreign currency contracts.
These and the other types of securities and investment techniques used by the
Underlying Funds all have attendant risks. The Portfolios are indirectly
subject to some or all of these risks to varying degrees because they invest
all of their assets in the Underlying Funds. For further information
concerning the investment practices of and risks associated with the
Underlying Funds, please see "Investment Objectives and Policies" in the
Statement of Additional Information and the Underlying Fund Prospectuses,
which are incorporated herein by reference and are available free of charge by
telephoning the Trust at 1-800-927-4648.
MANAGEMENT OF THE PORTFOLIOS
The business affairs of the Trust are managed under the direction of the
Board of Trustees. Information about the Trustees and the Trust's executive
officers may be found in the Statement of Additional Information under the
heading "Management of the Trust."
Investment Adviser
PIMCO Advisors serves as investment adviser to the Portfolios pursuant to an
investment advisory agreement with the Trust. PIMCO Advisors is a Delaware
limited partnership organized in 1987. PIMCO Advisors provides investment
management and advisory services to private accounts of institutional and
individual clients and to mutual funds. Total assets under management of PIMCO
Advisors and its subsidiary partnerships as of December 31, 1998 were
approximately $244.2 billion.
The general partners of PIMCO Advisors are PIMCO Partners, G.P. and PIMCO
Advisors Holdings L.P. ("PAH"). PIMCO Partners, G.P. is a general partnership
between PIMCO Holding LLC, a Delaware limited liability company and an
indirect wholly-owned subsidiary of Pacific Life Insurance Company, and PIMCO
Partners LLC, a California limited liability company controlled by the current
Managing Directors and two former Managing Directors of Pacific Investment
Management. PIMCO Partners, G.P. is the sole general partner of PAH. PIMCO
Advisors is governed by a Management Board, which exercises substantially all
of the governance powers of the general partner and serves as the functional
equivalent of a board of directors.
PIMCO Advisors' address is 800 Newport Center Drive, Newport Beach,
California 92660. PIMCO Advisors is registered as an investment adviser with
the Securities and Exchange Commission. PIMCO Advisors currently has seven
subsidiary investment adviser partnerships, the following six of which manage
one or more of the Underlying Funds: Blairlogie, Cadence, Columbus Circle,
NFJ, Pacific Investment Management and Parametric. On or about April 30, 1999,
it is anticipated that PIMCO Advisors will sell substantially all of its
ownership interest in Blairlogie. See "Portfolio Managers for the Underlying
Funds--Blairlogie" below.
Prospectus 21
<PAGE>
PIMCO Advisors' Asset Allocation Committee is responsible for determining
how the Portfolios' assets are allocated and reallocated from time to time
among the Underlying Funds. Individuals who determine general investment
advice and constitute the Asset Allocation Committee for PIMCO Advisors are
William D. Cvengros, Timothy R. Clark, Robert S. Venable and David Young.
William D. Cvengros is the Chief Executive Officer, President and a Member
of the Management Board of PIMCO Advisors and Chairman and a Trustee of the
Trust. He was formerly President of the Trust and a Director and the Vice
Chairman and Chief Investment Officer of Pacific Life Insurance Company. He
received a B.A. in Economics from the University of Notre Dame and an M.B.A.
from Northwestern University and he is a Chartered Financial Analyst. Timothy
R. Clark is a Vice President of PIMCO Advisors and a Senior Vice President of
PIMCO Funds Distributors LLC. He previously served as President of Katonah
Capital Management, Inc. Prior to that, he was with Zweig Advisors Inc. and
its affiliates serving in various capacities, including portfolio manager for
various open- and closed-end funds. He received a B.A. in Economics from
Harvard University and an M.B.A. from New York University. Robert S. Venable
is a Vice President of PIMCO Advisors. He previously served as a Vice
President and portfolio manager at Pacific Investment Management. Mr. Venable
has a B.S. from the University of California, Berkeley and an M.B.A. from the
Wharton School of Business and he is a Chartered Financial Analyst. David
Young is a Vice President in Account Management at Pacific Investment
Management. Previously, he was a Vice President--Client Relations and
Marketing of a former division of PIMCO Advisors, a Director--Client Relations
with Pacific Financial Asset Management Company and a Vice President and
portfolio manager with Analytic Investment Management, Inc. He received a B.A.
in Economics and Political Science and an M.B.A. from the University of
California, Irvine and he is a Chartered Financial Analyst.
Under the investment advisory agreement, PIMCO Advisors, subject to the
supervision of the Board of Trustees, is responsible for providing advice and
guidance with respect to the Portfolios and for managing, either directly or
through others selected by the Adviser, the investment of the Portfolios.
PIMCO Advisors also furnishes to the Board of Trustees periodic reports on the
investment performance of each Portfolio.
Portfolio Managers for the Underlying Funds
PIMCO Equity Advisors manages the investments of PIMCO Innovation Fund, an
Underlying Stock Fund. Pursuant to portfolio management agreements, PIMCO
Advisors employs Portfolio Managers to manage the portfolios of all of the
other Underlying Stock Funds with the exception of PIMCO StocksPLUS Fund, for
which Pacific Investment Management serves as investment adviser and Portfolio
Manager. Pacific Investment Management also serves as investment adviser and
Portfolio Manager of each Underlying Bond Fund. The Portfolio Managers have
full investment discretion and make all determinations with respect to the
investment of the assets of the Underlying Funds they manage. If a Portfolio
Manager retained by PIMCO Advisors ceases to manage the portfolio of an
Underlying Stock Fund for which PIMCO Advisors serves as adviser, PIMCO
Advisors will either assume full responsibility for the management of that
Fund, or retain a new portfolio manager subject to the approval of the
Trustees and, if required, the shareholders of the Fund.
Blairlogie manages PIMCO International Fund. Blairlogie is an investment
management firm organized as a limited partnership under the laws of the
United Kingdom with two general partners and one limited partner. Currently,
the general partners are PIMCO Advisors, which serves as the supervisory
partner, and Blairlogie Holdings Limited, a wholly owned subsidiary of PIMCO
Advisors, which serves as the managing partner. Blairlogie Capital Management
Ltd., the predecessor investment adviser to Blairlogie, commenced operations
in 1992. Accounts managed by Blairlogie had combined assets as of December 31,
1998 of approximately $900 million. Blairlogie's address is 4th Floor, 125
Princes
22 PIMCO Funds: Multi-Manager Series
<PAGE>
Street, Edinburgh EH2 4AD, Scotland. Blairlogie is registered 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.
Blairlogie has more than 50 years of experience in the highly specialized
field of international investing. Its investment philosophy combines
traditional Scottish standards of prudent investment management with modern
quantitative analytical tools. In managing PIMCO International Fund,
Blairlogie employs sophisticated analytical tools to attain specific
information on each country considered for investment and conducts personal
visits to numerous geographical regions, using the information to determine
country allocations. It then selects what it believes to be the best stocks
within each country according to growth, quality and value characteristics.
Through continued monitoring, sell decisions are influenced by changes in
country weightings or changes in a particular security's attractiveness.
It is anticipated that PIMCO Advisors will sell substantially all of its
ownership interest in Blairlogie to Alleghany Asset Management, Inc. on or
about April 30, 1999 (the "Blairlogie Transaction"). The consummation of the
Blairlogie Transaction is subject to a number of conditions. PIMCO Advisors
has determined to continue to retain Blairlogie as the Portfolio Manager of
the Fund subsequent to the Blairlogie Transaction pursuant to a new portfolio
management agreement between PIMCO Advisors and Blairlogie. This Prospectus
will be supplemented or revised if these events do not occur substantially in
accordance with the schedule outlined above.
Cadence manages PIMCO Capital Appreciation, Mid-Cap Growth, Small-Cap Growth
and Micro-Cap Growth Funds (the "Cadence Funds"). Cadence is an investment
management firm organized as a general partnership. Cadence has two partners:
PIMCO Advisors as the supervisory partner, and Cadence Capital Management Inc.
as the managing partner. Cadence Capital Management Corporation, the
predecessor investment adviser to Cadence, commenced operations in 1988.
Accounts managed by Cadence had combined assets as of December 31, 1998 of
approximately $7.4 billion. Cadence's address is Exchange Place, 53 State
Street, Boston, Massachusetts 02109. Cadence is registered as an investment
adviser with the Securities and Exchange Commission.
Cadence utilizes an equity investment strategy that focuses on both growth
(evaluating securities on the basis of their potential earnings growth) and
value (evaluating securities based on their price) characteristics, and
attempts to identify reasonably priced securities that offer rapid prospective
earnings growth potential. Cadence utilizes a quantitative screening process
in selecting stocks. Distinct computerized models are used to screen and rank
each issue in a selected universe according to growth and price
considerations. Cadence believes that the models identify the stocks in the
universe exhibiting growth characteristics with reasonable valuations. Stocks
are then selected for a portfolio using qualitative research, and are replaced
when they score worse-than-median screen ranks, have negative earnings
surprises or show poor relative performance. The universes are rescreened
frequently to obtain a favorable composition of growth and value
characteristics for the Cadence Funds.
Columbus Circle manages PIMCO Renaissance*, Core Equity, Mid-Cap Equity and
International Growth Funds (the "Columbus Circle Funds"). Columbus Circle is
an investment management firm organized as a general partnership. Columbus
Circle has two partners: PIMCO Advisors as the supervisory partner, and
Columbus Circle Investors Management Inc. as the managing partner. Columbus
Circle Investors Division of Thomson Advisory Group L.P. ("TAG"), the
predecessor investment adviser to Columbus Circle, commenced operations in
1975. Accounts managed
- --------
* On or about May 7, 1999, PIMCO Equity Advisors will assume full portfolio
management responsibility for PIMCO Renaissance Fund under the terms of the
Trust's investment advisory agreement with PIMCO Advisors, and will have
responsibility for the day-to-day portfolio management of the Fund.
Information about PIMCO Equity Advisors is provided below under "PIMCO
Equity Advisors."
Prospectus 23
<PAGE>
by Columbus Circle had combined assets as of December 31, 1998 of
approximately $9.6 billion. Columbus Circle's address is Metro Center, One
Station Place, 8th Floor, Stamford, Connecticut 06902. Columbus Circle is
registered as an investment adviser with the Securities and Exchange
Commission.
At the center of Columbus Circle's equity investment strategy is its theory
of Positive Momentum & Positive Surprise. This theory asserts that a good
company doing better than generally expected will experience a rise in its
stock price, and conversely, a company falling short of expectations will
experience a drop in its stock price. Based on this theory, Columbus Circle
attempts to manage the Columbus Circle Funds with a view to investing in
growing companies that are surprising the market with business results that
are better than anticipated.
NFJ manages PIMCO Equity Income, Value, Value 25 and Small-Cap Value Funds
(the "NFJ Funds"). 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 December 31, 1998 of
approximately $2.4 billion. NFJ's address is 2121 San Jacinto, Suite 1840,
Dallas, Texas 75201. NFJ is registered as an investment adviser with the
Securities and Exchange Commission.
In managing the NFJ Funds, NFJ uses a value-based philosophy and investment
process. NFJ adheres to the traditional value philosophy that stocks priced
lower than the true value of the issuing company will increase in value, but
differs from many value managers by also considering industry diversification
and the benefits it affords a portfolio. NFJ classifies stock universes by
industry and according to market capitalization. Stocks are selected from a
universe using screening processes that focus on low P/E ratios and/or high
yields within each industry, subject to quality and price momentum screens.
Although quarterly rebalancing is a general rule, NFJ will replace stocks when
an alternate stock within the same industry has a significantly better
characteristics than the current NFJ Fund holdings.
Pacific Investment Management manages each Underlying Bond Fund and PIMCO
StocksPLUS Fund, each of which is a series of PIMCO Funds: Pacific Investment
Management Series. Pacific Investment Management is an investment management
firm organized as a general partnership. Pacific Investment Management has two
partners: PIMCO Advisors as the supervisory partner, and PIMCO Management,
Inc. as the managing partner. Pacific Investment Management Company, the
predecessor investment adviser to Pacific Investment Management, commenced
operations in 1971. Pacific Investment Management had approximately $158
billion of assets under management as of December 31, 1998. Pacific Investment
Management's address is 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660. Pacific Investment Management is registered as an investment
adviser with the Securities and Exchange Commission and as a commodity trading
adviser with the CFTC.
Pacific Investment Management specializes in all sectors of the fixed income
market using its total return philosophy--seeking both yield and capital
appreciation. Pacific Investment Management's total return philosophy revolves
around the principle of diversification and that no single risk should
dominate returns. By diversifying strategies, or relying on multiple sources
of value, Pacific Investment Management attempts to generate a solid track
record with a high degree of consistency. Pacific Investment Management seeks
to add value through the use of "top down" strategies such as its exposure to
interest rates, or duration, changing volatility, yield curve positioning and
sector rotation. "Bottom up" strategies are also employed involving analysis
and selection of specific securities.
Parametric manages PIMCO Enhanced Equity, Tax-Efficient Equity, Structured
Emerging Markets and Tax-Efficient Structured Emerging Markets Funds (the
"Parametric Funds"). Parametric is an investment management firm organized as
a general partnership. Parametric has two partners: PIMCO Advisors as the
supervisory partner, and
24 PIMCO Funds: Multi-Manager Series
<PAGE>
Parametric Management Inc. as the managing partner. Parametric Portfolio
Associates, Inc., the predecessor investment adviser to Parametric, commenced
operations in 1987. Accounts managed by Parametric had combined assets as of
December 31, 1998 of approximately $3.4 billion. Parametric's address is 7310
Columbia Center, 701 Fifth Avenue, Seattle, Washington 98104-7090. Parametric
is registered as an investment adviser with the SEC and as a commodity trading
adviser with the CFTC.
Parametric has developed a structured, long-term investment process that
combines quantitatively-driven fundamental analysis and economic methods.
Parametric attempts to build risk-controlled portfolios of equity securities
that are both reasonably priced and poised to benefit from investor sentiment
by combining its understanding of the financial markets and investment
behavior with extensive quantitative research and modeling. This investment
philosophy is applied for each Parametric Fund, including those with an
emerging markets or tax-efficient focus.
PIMCO Equity Advisors manages PIMCO Innovation Fund. PIMCO Equity Advisors
is a division of PIMCO Advisors and provides investment management and
advisory services primarily to equity-oriented mutual funds and other
institutional clients. Information about PIMCO Advisors is provided above
under "Investment Adviser." Prior to March 5, 1999, Columbus Circle served as
Portfolio Manager for PIMCO Innovation Fund.
PIMCO Equity Advisors specializes in fundamental research that identifies
characteristics of wealth creating businesses. The primary investment style is
quality growth within various market capitalization ranges--small-cap, mid-cap
and large-cap. PIMCO Equity Advisors seeks to identify quality growth
companies using proprietary research and the execution of a disciplined
investment process.
Fund Administrator
PIMCO Advisors also serves as administrator (the "Administrator") for the
Portfolios' Institutional Class and Administrative Class shares pursuant to an
administration agreement with the Trust. The Administrator provides or
procures administrative services for Institutional Class and Administrative
Class shareholders of the Portfolios, which include clerical help and
accounting, bookkeeping, internal audit services and certain other services
required by the Portfolios and preparation of reports to the Portfolios'
shareholders and regulatory filings. The Administrator has retained Pacific
Investment Management to provide such services as sub-administrator. The
Administrator and/or the sub-administrator may also retain other affiliates to
provide certain of these services. In addition, the Administrator, at its own
expense, arranges for the provision of legal, audit, custody, transfer agency
(including sub-transfer agency and other administrative services) and other
services necessary for the ordinary operation of the Portfolios, 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 Portfolios (and not the Administrator) are responsible for the following
expenses: (i) salaries and other compensation of any of the Trust's executive
officers and employees who are not officers, directors, stockholders or
employees of PIMCO Advisors, Pacific Investment Management or their
subsidiaries or affiliates; (ii) taxes and governmental fees; (iii) brokerage
fees and commissions and other portfolio transaction expenses; (iv) the costs
of borrowing money, including interest expenses; (v) fees and expenses of the
Trustees who are not "interested persons" of the Adviser, any Portfolio
Manager or the Trust, and any counsel retained exclusively for their benefit;
(vi) extraordinary expenses, including costs of litigation and indemnification
expenses; (vii) expenses which are capitalized in accordance with generally
accepted accounting principles; and (viii) any expenses allocated or allocable
to a specific class of shares, which include distribution and/or service fees
payable with respect to the Administrative Class shares, and may include
certain other expenses as permitted by the Trust's Multiple Class Plan adopted
pursuant to Rule 18f-3 under the 1940
Prospectus 25
<PAGE>
Act, subject to review and approval by the Trustees. The Portfolios also
indirectly pay their proportionate share of the expenses of the Underlying
Funds (including advisory and administrative fees) in which they invest. See
"Underlying Fund Expenses" below.
Advisory Fees
The Portfolios do not pay any fees to PIMCO Advisors under the Trust's
investment advisory agreement in return for the advisory and asset allocation
services provided by PIMCO Advisors. The Portfolios do, however, indirectly
pay a proportionate share of the advisory fees paid to PIMCO Advisors and
Pacific Investment Management by the Underlying Funds in which the Portfolios
invest. See "Underlying Fund Expenses" below.
Administrative Fees
The Portfolios feature fixed administrative fees. For providing or procuring
administrative services to the Portfolios as described above, the
Administrator receives monthly fees from each Portfolio at the annual rate of
0.10% based on the average daily net assets attributable in the aggregate to
the Portfolio's Institutional Class and Administrative Class shares. The
Portfolios also indirectly pay a proportionate share of the administrative
fees charged by PIMCO Advisors and Pacific Investment Management to the
Underlying Funds in which the Portfolios invest. See "Underlying Fund
Expenses" below. The administration and sub-administration agreements for the
Portfolios may be terminated by the Trustees, or by PIMCO Advisors or Pacific
Investment Management (as the case may be), on 60 days' written notice.
Following their initial terms, the agreements will continue from year-to-year
if approved by the Trustees.
Underlying Fund Expenses
The expenses associated with investing in a "fund of funds," such as the
Portfolios, are generally higher than those for mutual funds that do not
invest primarily in other mutual funds. This is because shareholders in a
"fund of funds" indirectly pay a portion of the fees and expenses charged at
the underlying fund level.
The Trust has structured the Portfolios to reduce expenses incurred at the
Underlying Fund level as follows: (a) the Portfolios do not pay any fees for
asset allocation or advisory services under the Trust's investment advisory
agreement; and (b) the Portfolios invest in Institutional Class shares of the
Underlying Funds, which are not subject to any sales charges or 12b-1 fees.
The table on the following page sets forth annual advisory fee and total
operating expense information for Institutional Class shares of the Underlying
Funds. Shareholders of each Portfolio indirectly bear a proportionate share of
these expenses depending upon how the Portfolio's assets are allocated from
time to time among the Underlying Funds. See "Expense Information."
26 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Annual Underlying Fund Expenses
(Based on the average daily net assets
attributable to a Fund's Institutional
Class shares):
Advisory Admini- Total Fund
Underlying Fund Fees strative Fees Operating Expenses
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
PIMCO Equity Income 0.45% 0.25% 0.70%
- ----------------------------------------------------------------------------
PIMCO Renaissance 0.60 0.25 0.85
- ----------------------------------------------------------------------------
PIMCO Core Equity 0.57 0.25 0.82
- ----------------------------------------------------------------------------
PIMCO Mid-Cap Equity 0.63 0.25 0.88
- ----------------------------------------------------------------------------
PIMCO Value 0.45 0.25 0.70
- ----------------------------------------------------------------------------
PIMCO Value 25 0.50 0.25 0.75
- ----------------------------------------------------------------------------
PIMCO Capital Appreciation 0.45 0.25 0.70
- ----------------------------------------------------------------------------
PIMCO Mid-Cap Growth 0.45 0.25 0.70
- ----------------------------------------------------------------------------
PIMCO Enhanced Equity 0.45 0.25 0.70
- ----------------------------------------------------------------------------
PIMCO Tax-Efficient Equity 0.45 0.25 0.70
- ----------------------------------------------------------------------------
PIMCO Small-Cap Value 0.60 0.25 0.85
- ----------------------------------------------------------------------------
PIMCO Small-Cap Growth 1.00 0.25 1.25
- ----------------------------------------------------------------------------
PIMCO Micro-Cap Growth 1.25 0.25 1.50
- ----------------------------------------------------------------------------
PIMCO International 0.55 0.50 1.05
- ----------------------------------------------------------------------------
PIMCO International Growth 0.85 0.50 1.35
- ----------------------------------------------------------------------------
PIMCO Structured Emerging Markets 0.45 0.50 0.95
- ----------------------------------------------------------------------------
PIMCO Tax-Efficient Structured
Emerging Markets 0.45 0.50 0.95
- ----------------------------------------------------------------------------
PIMCO Innovation 0.65 0.25 0.90
- ----------------------------------------------------------------------------
PIMCO StocksPLUS 0.40 0.25 0.65
- ----------------------------------------------------------------------------
PIMCO Money Market 0.15 0.20 0.35
- ----------------------------------------------------------------------------
PIMCO Short-Term 0.25 0.20 0.45
- ----------------------------------------------------------------------------
PIMCO Low Duration 0.25 0.18 0.43
- ----------------------------------------------------------------------------
PIMCO Moderate Duration 0.25 0.20 0.45
- ----------------------------------------------------------------------------
PIMCO Real Return Bond 0.25 0.25 0.50
- ----------------------------------------------------------------------------
PIMCO Total Return 0.25 0.18 0.43
- ----------------------------------------------------------------------------
PIMCO Total Return II 0.25 0.25 0.50
- ----------------------------------------------------------------------------
PIMCO High Yield 0.25 0.25 0.50
- ----------------------------------------------------------------------------
PIMCO Long-Term U.S. Government 0.25 0.25 0.50
- ----------------------------------------------------------------------------
PIMCO Global Bond 0.25 0.30 0.55
- ----------------------------------------------------------------------------
PIMCO Foreign Bond 0.25 0.25 0.50
- ----------------------------------------------------------------------------
PIMCO Emerging Markets Bond 0.45 0.40 0.85
</TABLE>
Prospectus 27
<PAGE>
Service and Distribution Fees
The Trust has adopted an Administrative Services Plan and a Distribution
Plan (the "Plans") with respect to the Administrative Class shares of each
Portfolio. Under the terms of the Plans, the Trust is permitted to reimburse,
out of the Administrative Class assets of each Portfolio, in an amount up to
.25% on an annual basis of the average daily net assets of that class,
financial intermediaries that provide services in connection with the
distribution and marketing of shares and/or the provision of certain
shareholder services (in the case of the Distribution Plan) or the
administration of plans or programs that use shares of the Portfolios as their
funding medium (in the case of the Administrative Services Plan), and to
reimburse certain other related expenses. Total reimbursements under the Plans
may be paid in an amount up to .25% on an annual basis of the average daily
net assets attributable to the Administrative Class shares of each Portfolio.
The same entity may not receive both distribution and administrative services
fees with respect to the same assets but may with respect to separate assets
receive fees under each Plan. Fees paid pursuant to either Plan may be paid
for shareholder services and the maintenance of accounts, and therefore may
constitute "service fees" for purposes of applicable rules of the National
Association of Securities Dealers, Inc. Each Plan has been adopted in
accordance with the requirements of Rule 12b-1 under the 1940 Act and will be
administered in accordance with the provisions of that rule, except that
shareholders will not have the voting rights set forth in Rule 12b-1 with
respect to the Administrative Services Plan that they will have with respect
to the Distribution Plan. For more complete disclosure regarding the Plans and
their terms, see the Statement of Additional Information.
Institutional and Administrative Class shares of the Portfolios may also be
offered through certain brokers and financial intermediaries ("service
agents") that have established a shareholder servicing relationship with the
Trust on behalf of their customers. The Trust pays no compensation to such
entities other than service fees paid with respect to Administrative Class
shares. Service agents may impose additional or different conditions on the
purchase or redemption of Portfolio shares by their customers and may charge
their customers transaction or other account fees on the purchase and
redemption of Portfolio shares. Each service agent is responsible for
transmitting to its customers a schedule of any such fees and information
regarding any additional or different conditions regarding purchases and
redemptions. Shareholders who are customers of service agents should consult
their service agents for information regarding these fees and conditions.
Distributor
Shares of the Portfolios are distributed through PIMCO Funds Distributors
LLC (the "Distributor"), a wholly owned subsidiary of PIMCO Advisors. The
Distributor, located at 2187 Atlantic Street, Stamford, Connecticut 06902, is
a broker-dealer registered with the SEC.
PURCHASE OF SHARES
Each Portfolio currently offers its shares in five classes: Institutional
Class, Administrative Class, Class A, Class B and Class C. This Prospectus
relates only to the Institutional Class shares and Administrative Class shares
of the Portfolios. For information regarding Class A, Class B and Class C
shares, see "Other Information--Multiple Classes of Shares" below.
Shares of the Institutional Class are offered primarily for direct
investment by investors such as pension and profit sharing plans, employee
benefit trusts, endowments, foundations, corporations, and high net worth
individuals (Institutional Class shares may also be offered through certain
financial intermediaries that charge their customers transaction or other fees
with respect to their customers' investments in the Portfolios). Shares of the
Administrative
28 PIMCO Funds: Multi-Manager Series
<PAGE>
Class are offered primarily through employee benefit plan alliances, broker-
dealers, and other intermediaries, and each Portfolio pays service and/or
distribution fees to such entities for services they provide to shareholders
of that class.
Shares of either the Institutional Class or the Administrative Class of the
Portfolios may be purchased at the relevant net asset value of that class
without a sales charge or other fee. The minimum initial investment for shares
of either class is $5 million, except that the minimum initial investment for
a registered investment adviser purchasing Institutional Class shares for its
clients through omnibus accounts is $250,000 per Portfolio. Shares may also be
offered to clients of Blairlogie, Cadence, Columbus Circle, NFJ, Pacific
Investment Management, Parametric and their affiliates, and to the benefit
plans of PIMCO Advisors and its affiliates. In addition, the minimum initial
investment does not apply to shares of the Institutional Class offered through
fee-based programs sponsored and maintained by a registered broker-dealer and
approved by the Distributor pursuant to which each investor pays an asset
based fee at an annual rate of at least .50% of the assets in the account to a
financial intermediary for investment advisory and/or administrative services.
Pension and profit-sharing plans, employee benefit trusts and employee
benefit plan alliances and "wrap account" programs established with broker-
dealers or financial intermediaries may purchase shares of either class only
if the plan or program for which the shares are being acquired will maintain
an omnibus or pooled account for each Portfolio and will not require a
Portfolio to pay any type of administrative payment per participant account to
any third party.
The investment minimums discussed in this section do not apply to
participants in PIMCO Advisors Portfolio Strategies, a managed product
sponsored by PIMCO Advisors.
Initial Investment
An account may be opened by completing and signing a Client Registration
Application and mailing it to PIMCO Funds at the following address: 840
Newport Center Drive, Suite 300, Newport Beach, California 92660. A Client
Registration Application may be obtained by calling 1-800-800-0952.
Except as provided below, purchases of Institutional Class and
Administrative Class shares can only be made by wiring federal funds to
National Financial Data Services (the "Transfer Agent"), 330 West 9th Street,
4th Floor, Kansas City, Missouri 64105. Before wiring federal funds, the
investor must first telephone the Trust at 1-800-927-4648 to receive
instructions for wire transfer, and the following information will be
requested: name of authorized person; shareholder name; shareholder account
number; name of Portfolio and share class; amount being wired; and wiring bank
name.
Shares may be purchased without first wiring federal funds if the proceeds
of the investment are derived from an advisory account maintained by the
investor with PIMCO Advisors or one of its affiliates; from surrender or other
payment from an annuity, insurance, or other contract held by Pacific Life
Insurance Company; or from an investment by broker-dealers, institutional
clients or other financial intermediaries which have established a shareholder
servicing relationship with the Trust on behalf of their customers.
A purchase order, together with payment in proper form, received by the
Transfer Agent prior to the close of regular trading (normally 4:00 p.m.,
Eastern time) on the New York Stock Exchange (the "Exchange"), on a day the
Trust is open for business, will be effected at that day's net asset value. An
order received after the close of regular trading on the Exchange will be
effected at the net asset value determined on the next business day. However,
orders received by certain retirement plans and other financial intermediaries
on a business day prior to the close of regular trading on the Exchange and
communicated to the Transfer Agent prior to 9:00 a.m., Eastern time, on the
following business day will be effected at the net asset value determined on
the prior business day. The Trust is "open for business" on each day the
Exchange
Prospectus 29
<PAGE>
is open for trading, which excludes the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Purchase
orders will be accepted only on days on which the Trust is open for business.
Additional Investments
Additional investments may be made at any time at the relevant net asset
value for the particular class by calling the Trust and wiring federal funds
to the Transfer Agent as outlined above.
Other Purchase Information
Purchases of a Portfolio's Institutional Class and Administrative Class
shares will be made in full and fractional shares. In the interest of economy
and convenience, certificates for shares will not be issued.
The Trust and the Distributor each reserves the right, in its sole
discretion, to suspend the offering of shares of the Portfolios or to reject
any purchase order, in whole or in part, when, in the judgment of management,
such suspension or rejection is in the best interests of the Trust. The Trust
and the Distributor may also waive the minimum initial investment for certain
investors.
Purchases and sales should be made for long-term investment purposes only.
The Trust and Adviser each reserves the right to restrict purchases of
Portfolio shares (including exchanges) when a pattern of frequent purchases
and sales made in response to short-term fluctuations in share price appears
evident.
Institutional Class and Administrative Class shares of the Trust are not
qualified or registered for sale in all states. Prospective investors should
inquire as to whether shares of a particular Portfolio are available for offer
and sale in their state of residence. Shares of the Trust may not be offered
or sold in any state unless registered or qualified in that jurisdiction or
unless an exemption from registration or qualification is available.
Retirement Plans
Shares of the Portfolios are available for purchase by retirement and
savings plans, including Keogh plans, 401(k) plans, 403(b) custodial accounts,
and Individual Retirement Accounts. The administrator of a plan or employee
benefits office can provide participants or employees with detailed
information on how to participate in the plan and how to elect a Portfolio as
an investment option. Participants in a retirement or savings plan may be
permitted to elect different investment options, alter the amounts contributed
to the plan, or change how contributions are allocated among investment
options in accordance with the plan's specific provisions. The plan
administrator or employee benefits office should be consulted for details. For
questions about participant accounts, participants should contact their
employee benefits office, the plan administrator, or the organization that
provides recordkeeping services for the plan. Investors who purchase shares
through retirement plans should be aware that plan administrators may
aggregate purchase and redemption orders for participants in the plan.
Therefore, there may be a delay between the time the investor places an order
with the plan administrator and the time the order is forwarded to the
Transfer Agent for execution.
30 PIMCO Funds: Multi-Manager Series
<PAGE>
REDEMPTION OF SHARES
Redemptions by Mail
Institutional Class and Administrative Class shares may be redeemed by
submitting a written request to PIMCO Funds, 840 Newport Center Drive, Suite
300, Newport Beach, California 92660, stating the Portfolio from which the
shares are to be redeemed, the class of shares, the number or dollar amount of
the shares to be redeemed and the account number. The request must be signed
exactly as the names of the registered owners appear on the Trust's account
records, and the request must be signed by the minimum number of persons
designated on the Client Registration Application that are required to effect
a redemption.
Redemptions by Telephone or Other Wire Communication
If an election is made on the Client Registration Application (or
subsequently in writing), redemptions of shares may be requested by calling
the Trust at 1-800-927-4648, by sending a facsimile to 1-949-760-4456, or by
other means of wire communication. Investors should state the Portfolio and
class from which the shares are to be redeemed, the number or dollar amount of
the shares to be redeemed and the account number. Redemption requests of an
amount of $10 million or more may be initiated by telephone, but must be
confirmed in writing by an authorized party prior to processing.
In electing a telephone redemption, the investor authorizes Pacific
Investment Management and the Transfer Agent to act on telephone instructions
from any person representing himself to be the investor, and reasonably
believed by Pacific Investment Management and the Transfer Agent to be
genuine. Neither the Trust nor its Transfer Agent may be liable for any loss,
cost or expense for acting on instructions (whether in writing or by
telephone) believed by the party receiving such instructions to be genuine and
in accordance with the procedures described in this Prospectus. Shareholders
should realize that by electing the telephone or wire redemption option, they
may be giving up a measure of security that they might have if they were to
redeem their shares in writing. Furthermore, interruptions in telephone
service may mean that a shareholder will be unable to effect a redemption by
telephone when desired. The Transfer Agent also provides written confirmation
of transactions initiated by telephone as a procedure designed to confirm that
telephone instructions are genuine (written confirmation is also provided for
redemption requests received in writing). All telephone transactions are
recorded, and Pacific Investment Management or the Transfer Agent may request
certain information in order to verify that the person giving instructions is
authorized to do so. If the Trust or Transfer Agent fails to employ reasonable
procedures to confirm that instructions communicated by telephone are genuine,
it may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All redemptions, whether initiated by letter or telephone, will
be processed in a timely manner, and proceeds will be forwarded by wire in
accordance with the redemption policies of the Trust detailed below. See
"Redemption of Shares--Other Redemption Information."
Shareholders may decline telephone exchange or redemption privileges after
an account is opened by instructing the Transfer Agent in writing at least
seven business days prior to the date the instruction is to be effective.
Shareholders may experience delays in exercising telephone redemption
privileges during periods of abnormal market activity. During periods of
volatile economic or market conditions, shareholders may wish to consider
transmitting redemption orders by telegram, facsimile or overnight courier.
Defined contribution plan participants may request redemptions by contacting
the employee benefits office, the plan administrator or the organization that
provides recordkeeping services for the plan.
Prospectus 31
<PAGE>
Other Redemption Information
Redemption requests for Portfolio shares are effected at the net asset value
per share next determined after receipt in good order of the redemption
request by the Trust or its designee. A redemption request received by the
Trust or its designee prior to the close of regular trading on the Exchange
(normally 4:00 p.m., Eastern time), on a day the Trust is open for business,
is effective on that day. A redemption request received after that time
becomes effective on the next business day.
Payment of the redemption price will ordinarily be wired to the investor's
bank within three business days after the redemption request, but may take up
to seven business days. Redemption proceeds will be sent by wire only to the
bank name designated on the Client Registration Application. The Trust may
suspend the right of redemption or postpone the payment date at times when the
Exchange is closed, or during certain other periods as permitted under the
federal securities laws.
For shareholder protection, a request to change information contained in an
account registration (for example, a request to change the bank designated to
receive wire redemption proceeds) must be received in writing, signed by the
minimum number of persons designated on the Client Registration Application
that are required to effect a redemption, and accompanied by a signature
guarantee from any eligible guarantor institution, as determined in accordance
with the Trust's procedures. Shareholders should inquire as to whether a
particular institution is an eligible guarantor institution. A signature
guarantee cannot be provided by a notary public. In addition, corporations,
trusts, and other institutional organizations are required to furnish evidence
of the authority of the persons designated on the Client Registration
Application to effect transactions for the organization.
Due to the relatively high cost of maintaining small accounts, the Trust
reserves the right to redeem Institutional Class and Administrative Class
shares in any account for their then-current value (which will be promptly
paid to the investor) if at any time, due to redemption by the investor, the
shares in the account do not have a value of at least $100,000. A shareholder
will receive advance notice of a mandatory redemption and will be given at
least 30 days to bring the value of its account up to at least $100,000. This
mandatory redemption policy does not apply to participants in PIMCO Advisors
Portfolio Strategies, a managed product sponsored by PIMCO Advisors.
The Trust agrees to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the Portfolio's net assets during any 90-day
period for any one shareholder. In consideration of the best interests of the
remaining shareholders, the Trust reserves the right to pay any redemption
proceeds exceeding this amount in whole or in part by a distribution in kind
of securities held by a Portfolio in lieu of cash. It is highly unlikely that
shares would ever be redeemed in kind. When shares are redeemed in kind, the
redeeming shareholder should expect to incur transaction costs upon the
disposition of the securities received in the distribution.
Exchange Privilege
Shares of a Portfolio may be exchanged for shares of the same class of any
other Portfolio or other series of the Trust based on the respective net asset
values of the shares involved. An exchange may be made by following the
redemption procedure described above under "Redemptions by Mail" or, if the
telephone redemption option has been elected, by calling the Trust at 1-800-
927-4648. Shares of a Portfolio may also be exchanged for shares of the same
class of a series of PIMCO Funds: Pacific Investment Management Series.
Shareholders interested in such an exchange may request a prospectus for these
other series by contacting PIMCO Funds: Pacific Investment Management Series
at the same address and telephone number as the Trust.
32 PIMCO Funds: Multi-Manager Series
<PAGE>
Exchanges may be made only with respect to Portfolios or other eligible
series that are registered in the state of residence of the investor or where
an exemption from registration is available. An exchange order is treated the
same for tax purposes as a redemption followed by a purchase and may result in
a capital gain or loss, and special rules may apply in computing tax basis
when determining gain or loss. See "Taxation" in the Statement of Additional
Information.
The Trust reserves the right to refuse exchange purchases if, in the
judgment of the Adviser, the purchase would adversely affect a Portfolio and
its shareholders. In particular, a pattern of exchanges characteristic of
"market-timing" strategies may be deemed by the Adviser to be detrimental to
the Trust or a particular Portfolio. Currently, the Trust limits the number of
"round trip" exchanges an investor may make. An investor makes a "round trip"
exchange when the investor purchases shares of a particular Portfolio,
subsequently exchanges those shares for shares of a different Portfolio or
other PIMCO Fund, and then exchanges back into the originally purchased
Portfolio. The Trust has the right to refuse any exchange for any investor who
completes (by making the exchange back into the shares of the originally
purchased Portfolio) more than six round trip exchanges in any twelve-month
period. Although the Trust will attempt to give shareholders prior notice
whenever it is reasonably able to do so, it may impose additional restrictions
on exchanges at any time.
NET ASSET VALUE
The net asset values of Institutional Class and Administrative Class shares
of each Portfolio will be determined once on each day on which the Exchange is
open (a "Business Day"), as of the close of regular trading (normally 4:00
p.m., Eastern time) on the Exchange. Net asset value will not be determined on
days on which the Exchange is closed.
The market values of the shares of the Underlying Funds held by the
Portfolios are determined once each Business Day in the same manner as the net
asset values of the Portfolios' shares are determined as described below.
Each Portfolio's liabilities are allocated among its classes. The total of
such liabilities allocated to a class plus that class's distribution and/or
servicing fees and any other expenses specially allocated to that class are
then deducted from the class's proportionate interest in the Portfolio's
assets, and the resulting amount for each class is divided by the number of
shares of that class outstanding to produce the class's "net asset value" per
share. Under certain circumstances, the per share net asset value of the
Administrative Class shares of the Portfolios may be lower than the per share
net asset value of the Institutional Class shares as a result of the daily
expense accruals of the service and/or distribution fees applicable to the
Administrative Class shares. Generally, for Portfolios that pay income
dividends, those dividends are expected to differ over time by approximately
the amount of the expense accrual differential between a particular
Portfolio's classes.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Shares begin earning dividends on the effective date of purchase, provided
notification deadlines are met. See "Purchase of Shares." Net investment
income from interest and dividends, if any, will be declared and paid to
shareholders of record at least monthly by the 30/70 Portfolio, at least
quarterly by the 60/40 Portfolio and at least annually by the 90/10 Portfolio.
Any net capital gains from the sale of portfolio securities will be
distributed no less frequently than once annually. Net short-term capital
gains may be paid more frequently. Dividend and capital gain distributions of
a Fund will be reinvested in additional shares of that Portfolio unless the
shareholder elects to have them paid in cash. Dividends from net investment
income with respect to Administrative Class shares will be lower than those
paid with respect to Institutional Class shares, reflecting the payment of
service and/or distribution fees by that class.
Prospectus 33
<PAGE>
Each Portfolio intends to qualify as a regulated investment company annually
and to elect to be treated as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"). As such, a Portfolio
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
Portfolio 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 Portfolio, regardless of whether received in cash or
reinvested in additional shares. Distributions received by tax-exempt
shareholders will not be subject to federal income tax to the extent permitted
under applicable tax law. All shareholders must treat dividends, other than
capital gain dividends and dividends that represent a return of capital to
shareholders, as ordinary income. In particular, distributions derived from
short-term gains will be treated as ordinary income. Dividends designated by a
Portfolio as capital gain dividends derived from the Portfolio'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 (generally subject to a 20% tax rate) except as provided by an applicable
tax exemption. Any distributions that are not from a Portfolio's net
investment income or net capital gain may be characterized as a return of
capital to shareholders or, in some cases, as capital gain. Certain dividends
declared in October, November or December of a calendar year are taxable to
shareholders (who otherwise are subject to tax on dividends) as though
received on December 31 of that year if paid to shareholders during January of
the following calendar year. Each Portfolio will advise shareholders annually
of the amount and nature of the dividends paid to them.
Taxable shareholders should note that the timing of their investment or
redemptions could have undesirable tax consequences. Dividends and
distributions on a Portfolio's shares are generally subject to federal income
tax as described herein to the extent they do not exceed the Portfolio's
realized income and gains, even though such dividends and distributions may
economically represent a return of a particular shareholder's investment. Such
distributions are likely to occur in respect of shares purchased at a time
when the Portfolio's net asset value reflects gains that are either
unrealized, or realized but not distributed. Such realized gains may be
required to be distributed even when a Portfolio's net asset value also
reflects unrealized losses.
A Portfolio's use of a fund-of-funds structure could affect the amount,
timing and character of distributions to shareholders. See "Taxation" in the
Statement of Additional Information.
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 foreign, 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
Portfolio, see the Statement of Additional Information.
OTHER INFORMATION
Capitalization
The Trust was organized as a Massachusetts business trust on August 24,
1990, and currently consists of twenty-eight portfolios that are operational,
three of which are described in this Prospectus. Other portfolios may be
offered by means of a separate prospectus. The Board of Trustees may establish
additional portfolios in the future. The capitalization of the Trust consists
of an unlimited number of shares of beneficial interest. When issued, shares
of the Trust are fully paid, non-assessable and freely transferable.
34 PIMCO Funds: Multi-Manager Series
<PAGE>
Under Massachusetts law, shareholders could, under certain circumstances, be
held liable for the obligations of the Trust. However, the Second Amended and
Restated Agreement and Declaration of Trust (the "Declaration of Trust") of
the Trust disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust also provides for indemnification out of a
Portfolio's property for all loss and expense of any shareholder of that
Portfolio held liable on account of being or having been a shareholder. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which such disclaimer is inoperative
or the Portfolio of which he or she is or was a shareholder is unable to meet
its obligations, and thus should be considered remote.
Multiple Classes of Shares
In addition to Institutional Class shares and Administrative Class shares,
the Portfolios also currently offer three additional classes of shares, Class
A, Class B and Class C, through a separate prospectus. This Prospectus relates
only to Institutional Class and Administrative Class shares of the Portfolios.
The other classes of the Portfolios have different sales charges and expense
levels, which will affect performance accordingly. To obtain more information
about the other classes of shares, please call the Distributor at 1-800-426-
0107.
Institutional Class and Administrative Class shares of each Portfolio
represent interests in the assets of that Portfolio, and each class has
identical dividend, liquidation and other rights and the same terms and
conditions, except that expenses related to the distribution and/or
shareholder servicing of Administrative Class shares are borne solely by such
class, and each class may, at the Trustees' discretion, also pay a different
share of other expenses, not including advisory or custodial fees or other
expenses related to the management of the Trust's assets, if these expenses
are actually incurred in a different amount by that class, or if the class
receives services of a different kind or to a different degree than the other
classes. All other expenses are allocated to each class on the basis of the
net asset value of that class in relation to the net asset value of the
particular Portfolio.
Voting
Each class of shares of each Portfolio has identical voting rights, except
that each class of shares has exclusive voting rights on any matter submitted
to shareholders that relates solely to that class, and has separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class. The Administrative Class
shares have exclusive voting rights with respect to matters pertaining to any
Distribution Plan applicable to that class. These shares are entitled to vote
at meetings of shareholders. Matters submitted to shareholder vote must be
approved by each Portfolio 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 Portfolios, then only
shareholders of the Portfolio or Portfolios affected shall be entitled to vote
on the matter. All classes of shares of a Portfolio will vote together, except
with respect to a Distribution Plan or agreement applicable to a class of
shares or when a class vote is required as specified above or otherwise by the
1940 Act. Shares are freely transferable, are entitled to dividends as
declared by the Trustees and, in liquidation of the Trust, are entitled to
receive the net assets of their Portfolio, but not of the other Portfolios or
other series of the Trust. The Trust does not generally hold annual meetings
of shareholders and will do so only when required by law. Shareholders may
remove Trustees from office by votes cast in person or by proxy at a meeting
of shareholders or by written consent. Such a meeting will be called at the
written request of the holders of 10% of the Trust's outstanding shares.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of
a majority of the outstanding shares" of a Portfolio (or the Trust) means the
vote of the
Prospectus 35
<PAGE>
lesser of: (1) 67% of the shares of the Portfolio (or the Trust) present at a
meeting, if the holders of more than 50% of the outstanding shares are present
in person or by proxy; or (2) more than 50% of the outstanding shares of the
Portfolio (or the Trust).
Performance Information
From time to time the Trust may make available certain information about the
performance of the Institutional Class and Administrative Class shares of some
or all of the Portfolios. Information about a Portfolio's performance is based
on that Portfolio's record to a recent date and is not intended to indicate
future performance. Performance information is computed separately for each
Portfolio's Institutional Class and Administrative Class shares in accordance
with the formulas described below. Because Administrative Class shares bear
the expense of service and/or distribution fees, it is expected that, under
normal circumstances, the level of performance of a Portfolio's Administrative
Class shares will be lower than that of the Portfolio's Institutional Class
shares.
The total return of Institutional Class and Administrative Class shares of
all Portfolios may be included in advertisements or other written material.
When a Portfolio's total return is advertised with respect to its
Institutional Class and Administrative Class shares, it will be calculated for
the past year, the past five years and the past ten years (or if the class has
been offered for a period shorter than one, five or ten years, that period
will be substituted) since the inception of the class, as more fully described
in the Statement of Additional Information. Total return for each class is
measured by comparing the value of an investment in the Portfolio at the
beginning of the relevant period to the redemption value of the investment in
the Portfolio at the end of the period (assuming immediate reinvestment of any
dividends or capital gains distributions at net asset value). Total return may
be advertised using alternative methods that reflect all elements of return,
but that may be adjusted to reflect the cumulative impact of alternative fee
and expense structures.
Quotations of yield for a Portfolio or class will be based on the investment
income per share (as defined by the SEC) during a particular 30-day (or one-
month) period (including dividends and interest), less expenses accrued during
the period ("net investment income"), and will be computed by dividing net
investment income by the maximum public offering price per share on the last
day of the period.
The Portfolios may also provide current distribution information to their
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 Portfolio will be based
on distributions for a specified period (i.e., total dividends from net
investment income), divided by the relevant class net asset value per share on
the last day of the period and annualized. Current distribution rates differ
from standardized yield rates in that they represent what a class of a
Portfolio has declared and paid to shareholders as of the end of a specified
period rather than the Portfolio's actual net investment income for that
period.
The Adviser may also report to shareholders or to the public in
advertisements concerning its performance as adviser to clients other than the
Portfolios, and on its comparative performance or standing in relation to
other money managers. Such comparative information may be compiled or provided
by independent ratings services or by news organizations. Any performance
information, whether related to the Portfolios, the Adviser or an advisory
affiliate of the Adviser, should be considered in light of the Portfolio's
investment objectives and policies, characteristics and quality of the
Portfolios' investments, and the market conditions during the time period
indicated, and should not be considered to be representative of what may be
achieved by the Portfolios in the future.
Investment results of the Portfolios will fluctuate over time, and any
representation of the Portfolios' 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.
36 PIMCO Funds: Multi-Manager Series
<PAGE>
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PIMCO INVESTMENT ADVISER AND ADMINISTRATOR
Funds PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA
Asset 92660
Allocation
Series --------------------------------------------------------------------
CUSTODIAN
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
MO 64105
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TRANSFER AGENT
National Financial Data Services, 330 West 9th Street, 4th Floor,
Kansas City, MO 64105
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INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
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LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
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<PAGE>
<TABLE>
<S> <C> <C>
For More Information Statement of Additional Information about the Trust
The following documents are Information (SAI) The SAI (including the SAI) can be
or will be available that contains additional reviewed and copied at the
offer further information on information about the Securities and Exchange
the Portfolios and other Portfolios. A current SAI has Commission's Public Reference
series of PIMCO Funds: Multi- been filed with the Securities Room in Washington, D.C.
Manager Series and Exchange Commission, and Information on the operation
is incorporated into this of the public reference room
Annual/Semi-Annual Reports to prospectus by reference. may be obtained by calling the
Shareholders The Trust's annual Commission at 1-800-SEC-0330.
and semi-annual reports include a To request a free copy of Reports and other information
discussion of the market condi- these documents or to make about the Trust are available
tions and investment strategies inquiries about the on the Commission's Internet
that significantly affected the Portfolios, please write or site at www.sec.gov, and
Portfolio's performance during its call: copies of that information may
last fiscal year or other period. be obtained, upon payment of a
PIMCO Funds: duplicating fee, by writing
Multi-Manager Series the Public Reference Section
840 Newport Center Drive of the Commission, Washington,
Suite 300 D.C. 20549-6009.
Newport Beach, CA 92660
Telephone:
1-800-927-4648
1-800-987-4626 (PIMCO
Infolink Audio Response
Network)
</TABLE>
PIMCO
-----
FUNDS
SEC File Number: 811-06161
PIMCO Funds
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
PZ026 01/99
