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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PIMCO Funds: Multi-Manager Series
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
- -----------------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
- -----------------------------------------------------------------
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
- -----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------
(5) Total fee paid:
- -----------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PIMCO ADVISORS L.P.
800 Newport Center Drive
Newport Beach, California 92660
January 19, 1999
Dear International Fund Shareholder:
On behalf of the Board of Trustees of PIMCO Funds: Multi-Manager Series (the
"Trust"), we are pleased to invite you to a special meeting of the
shareholders of the PIMCO International Fund to be held at 10:00 a.m., Eastern
time, on Friday, February 26, 1999, at 2187 Atlantic Street, Stamford,
Connecticut 06902.
As discussed in the enclosed proxy statement, PIMCO Advisors L.P. ("PIMCO
Advisors") has agreed to sell Blairlogie Capital Management ("Blairlogie") to
affiliates of Alleghany Asset Management, Inc. At the meeting, you will be
asked to approve a new Portfolio Management Agreement relating to the Fund
among the Trust, PIMCO Advisors and Blairlogie. This new Portfolio Management
Agreement provides that, following this transaction, Blairlogie will continue
to provide portfolio management services to the Fund on the same terms and
with the same compensation structure under which it currently operates.
In addition, you will be asked to approve a proposal allowing PIMCO Advisors
to change the Fund's portfolio manager without shareholder approval. If
approved, this proposal will allow PIMCO Advisors to change the Fund's
portfolio manager without the expense and delay of convening a shareholder
meeting.
Your vote is important
After reviewing these proposals, your Board of Trustees unanimously agreed
that they are in the best interests of the Fund's shareholders and voted to
approve them, as more fully described in the accompanying proxy statement. Now
it is your turn to review the proposals and vote. For more information about
the issues requiring your vote, please refer to the accompanying proxy
statement.
No matter how many shares you own, your timely vote is important. If you are
not able to attend the meeting, then please complete, sign, date and mail the
enclosed proxy promptly in order to avoid the expense of additional mailings
or having our proxy solicitor, Shareholder Communications Corporation,
telephone you.
Thank you in advance for your participation in this important event.
Sincerely,
/s/ Stephen J. Treadway
Stephen J. Treadway
Executive Vice President
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
PIMCO International Fund
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
February 26, 1999
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To the Shareholders of the PIMCO International Fund:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the PIMCO International Fund (the "Fund"), a series of PIMCO
Funds: Multi-Manager Series (the "Trust"), will be held at 10:00 a.m., Eastern
time, on Friday, February 26, 1999, at 2187 Atlantic Street, Stamford,
Connecticut 06902, for the following purposes:
1. To approve a new Portfolio Management Agreement relating to the Fund
by and among the Trust, on behalf of the Fund, PIMCO Advisors L.P. (the
"Adviser") and Blairlogie Capital Management, as discussed in Part II of
the Proxy Statement.
2. To approve a proposal with respect to the future operations of the
Fund whereby the Fund may, from time to time, to the extent permitted by
any exemption or exemptions granted by the Securities and Exchange
Commission, permit the Adviser to enter into new or amended portfolio
management agreements with sub-adviser(s) with respect to the Fund without
obtaining shareholder approval of such agreement(s), and to permit such
sub-adviser(s) to manage the assets of the Fund pursuant to such portfolio
management agreement(s), as discussed in Part III of the Proxy Statement.
3. To consider and act upon any other matters which may properly come
before the Meeting or any adjournment thereof.
Shareholders of record at the close of business on January 12, 1999 are
entitled to notice of, and to vote at, the Meeting.
By order of the Board of
Trustees,
Newton B. Schott, Jr.,
Secretary
January 19, 1999
YOUR VOTE IS IMPORTANT
PLEASE RESPOND--YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL
IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE SO THAT YOU WILL BE
REPRESENTED AT THE MEETING.
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
PIMCO International Fund
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PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Trustees (the "Trustees") of PIMCO Funds:
Multi-Manager Series (the "Trust") for use at the Special Meeting of
Shareholders (the "Meeting") of the PIMCO International Fund (the "Fund"), a
series of the Trust, to be held at 10:00 a.m., Eastern time, on Friday,
February 26, 1999, at 2187 Atlantic Street, Stamford, Connecticut 06902, and
at any adjournment or adjournments thereof. This Proxy Statement and its
enclosures are being mailed to shareholders beginning on or about January 19,
1999. A copy of the Annual Reports of the Trust (relating to Class A, B and C
shares of the Trust and to Administrative and Institutional Class shares of
the Trust) for the fiscal year ended June 30, 1998 may be obtained without
charge by writing to PIMCO Funds Distributors LLC, 2187 Atlantic Street,
Stamford, Connecticut 06902, or by calling 1-800-426-0107.
I. GENERAL
All shareholders of record of the Fund at the close of business on January
12, 1999, the record date for determining shareholders entitled to vote at the
Meeting (the "Record Date"), are entitled to one vote for each share of
beneficial interest of the Fund held on the Record Date, and each fractional
share shall be entitled to a proportional fractional vote. The number of
shares of beneficial interest of the Fund issued and outstanding as of the
Record Date was 12,352,989.841.
Timely, properly executed proxies will be voted as you instruct. If no
specification is made with respect to a proposal, shares will be voted in
accordance with the recommendation of the Trustees. At any time before it has
been voted, the enclosed proxy may be revoked by the signer by a written
revocation received by the Secretary of the Trust, by properly executing a
later-dated proxy or by attending the Meeting and voting in person.
Solicitation of proxies by personal interview, mail and telephone may be
made by officers and Trustees of the Trust and officers and employees of PIMCO
Advisors L.P. (the "Adviser"), its affiliates and other representatives of the
Trust. The Trust has retained Shareholder Communications Corporation ("SCC"),
40 Exchange Place, New York, New York 10005, to aid in the solicitation of
proxies. The costs of retaining SCC and other expenses incurred in connection
with the solicitation of proxies, and the costs of holding the Meeting, will
not be borne by the Fund, but will be divided equally between Alleghany Asset
Management, Inc. and the Adviser.
<PAGE>
II. RENEWAL OF PORTFOLIO MANAGEMENT ARRANGEMENTS WITH BLAIRLOGIE
Description of the Transaction
The Adviser has entered into a Purchase and Sale Agreement dated October 24,
1998 (as amended, the "Purchase Agreement") by and among the Adviser, certain
of the Adviser's affiliates (together with the Adviser, the "Sellers"),
Blairlogie International LLC ("Blairlogie International") and certain other
parties, pursuant to which the Sellers will sell their direct and indirect
ownership interests in Blairlogie Capital Management ("Blairlogie") to
Blairlogie International and its subsidiary (together, the "Buyer").
Blairlogie International is a wholly owned subsidiary of Alleghany Asset
Management, Inc.
The Sellers currently own a 75% general partner interest in Blairlogie (the
"Sellers' Interest"). At the closing of the transactions contemplated by the
Purchase Agreement (the "Transaction"), the Sellers will transfer the Sellers'
Interest to Buyer. The aggregate consideration to be paid by Buyer to the
Sellers is expected to be approximately $6.6 million, subject to certain
adjustments.
The Transaction is being treated for purposes of the Investment Company Act
of 1940 (the "1940 Act") as a change in control of Blairlogie. The 1940 Act
provides that such a change in control constitutes an "assignment" of the
Current Portfolio Management Agreement (as defined below) under which
Blairlogie provides advisory services to the Fund. Such an "assignment" would
result in the automatic termination of the Current Portfolio Management
Agreement as of the closing of the Transaction (the "Closing Date").
This Proxy Statement seeks shareholder approval of the New Portfolio
Management Agreement (as defined below) between the Fund and Blairlogie, to be
effective as of the Closing Date. The New Portfolio Management Agreement would
be, in substance, identical to the Current Portfolio Management Agreement. The
effect of Proposal 1 is to permit the Fund to continue to operate, following
the Transaction, under investment management arrangements substantially
identical to those in effect immediately before the Transaction.
Effects of the Transaction
Blairlogie has informed the Trust that it contemplates no material changes
in the investment philosophy, policies or strategies of the Fund. Blairlogie
will continue to operate from offices in Edinburgh, Scotland, with the same
personnel providing services to the Fund as before the Closing Date. In
particular, the same persons who are presently responsible at Blairlogie for
securities analysis and selection and the management of the Fund's portfolio
are expected to perform similar functions following the Closing Date. The
Purchase Agreement requires that certain key personnel of Blairlogie enter
into employment agreements (which will include non-competition and/or non-
solicitation and other customary provisions) with Blairlogie, providing
assurance that investment continuity will be maintained.
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Each of the Adviser and Buyer has informed the Trust that it will use all
commercially reasonable efforts to assure compliance with the conditions of
Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe
harbor for an investment adviser or any affiliated persons to receive any
amount or benefit in connection with a change in control of the investment
adviser to an investment company as long as two conditions are met. First, no
"unfair burden" may be imposed on the investment company as a result of the
transaction relating to the change in control, or any express or implied
terms, conditions or understandings applicable thereto. As defined in the 1940
Act, the term "unfair burden" includes any arrangement during the two-year
period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any interested person of any such
adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders (other than
fees for bona fide investment advisory or other services), or from any person
in connection with the purchase or sale of securities or other property to,
from, or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter of the investment company). The second
condition of Section 15(f) is that, during the three-year period immediately
following the change of control, at least 75% of an investment company's board
of trustees must not be "interested persons" of the investment adviser or the
predecessor investment adviser within the meaning of the 1940 Act.
The completion of the Transaction is contingent upon obtaining the consent
of Blairlogie clients representing a significant portion of the assets
currently under the management of Blairlogie. Other conditions precedent to
the closing of the Transaction include, among other things, that all
regulatory filings, applications, notifications and consents have been duly
and properly made or obtained. If the conditions to the Transaction are not
met and the Transaction is therefore not consummated, the Current Portfolio
Management Agreement will remain in effect. In the event the New Portfolio
Management Agreement is not approved by the Fund's shareholders and the
Transaction is completed, the Board will consider appropriate action.
The Trustees have approved, and recommend that the shareholders of the Fund
approve, the New Portfolio Management Agreement for the Fund (Proposal 1).
Description of New Portfolio Management Agreement
Pursuant to an Amended and Restated Portfolio Management Agreement between
the Adviser and Blairlogie dated January 14, 1997 (the "Current Portfolio
Management Agreement"), the Adviser has delegated to Blairlogie its
responsibility to provide portfolio management services to the Fund.
Blairlogie's address is 125 Princes Street, 4th Floor, Edinburgh EH2 4AD,
Scotland. Blairlogie has acted as sub-adviser to the Fund since 1994. The
Fund's shareholders last approved the Current Portfolio Management Agreement
at a meeting held on December 20, 1996. The Current Portfolio Management
Agreement was submitted for shareholder approval at such time in connection
with the reorganization of the Fund, formerly a series of PIMCO Advisors
Funds, into a newly created series of the Trust.
The terms and provisions of the portfolio management agreement with respect
to the Fund that will be entered into between the Adviser and Blairlogie on or
about the
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closing of the Transaction (the "New Portfolio Management Agreement") are
substantially identical to those of the Current Portfolio Management
Agreement. The following discussion of the New Portfolio Management Agreement
is qualified in its entirety by reference to the copy of the New Portfolio
Management Agreement attached to this Proxy Statement as Exhibit A. The New
Portfolio Management Agreement was approved by the Board of Trustees of the
Trust at a meeting held on December 10, 1998.
The New Portfolio Management Agreement provides that, subject to the general
supervision of the Trustees and the Adviser, Blairlogie shall provide a
continuous investment program for the Fund and determine the composition of
the assets of the Fund, including the determination of the purchase, retention
or sale of securities, cash and other investments for the Fund. Blairlogie
provides such services in accordance with the Fund's investment objective,
investment policies and investment restrictions as stated in the Trust's
registration statement filed with the Securities and Exchange Commission (the
"SEC"), as supplemented and amended from time to time.
The New Portfolio Management Agreement provides that it will, unless sooner
terminated in accordance with the Amended and Restated Advisory Agreement
between the Adviser and the Trust dated January 14, 1997 (the "Advisory
Agreement"), continue in effect for a period of two years from its effective
date and thereafter on an annual basis, provided such continuance is approved
at least annually by the vote of a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust, the Adviser or
the Fund's portfolio manager (the "Independent Trustees") and either (a) by
the vote of a majority of the Board of Trustees of the Trust or (b) by the
vote of a majority of the outstanding voting securities of the Fund. The New
Portfolio Management Agreement provides that it may not be materially amended
without a majority vote of the outstanding voting securities of the Fund and
that it terminates automatically in the event of its assignment (as defined by
the 1940 Act).
The New Portfolio Management Agreement may be terminated at any time,
without the payment of any penalty, by (a) the Trust by vote of a majority of
the Board of Trustees, by vote of a majority of the Independent Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon 60
days' written notice to Blairlogie or (b) by the Adviser upon 60 days' written
notice to Blairlogie. The New Portfolio Management Agreement may be terminated
by Blairlogie upon 60 days' written notice to the Trust.
The New Portfolio Management Agreement provides that, except as required by
applicable law, Blairlogie and its affiliates and controlling persons shall
not be liable for any act or omission or mistake in judgment connected with or
arising out of any services rendered under the agreement, except by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties under
the agreement. In addition, the New Portfolio Management Agreement provides
that each of the Adviser and Blairlogie shall indemnify the other party and
its affiliates and controlling persons for liability incurred by such party
arising out of the indemnifying party's responsibilities to the Trust based on
(a) the misfeasance, malfeasance or nonfeasance of the indemnifying party or
its employees, representatives, affiliates or persons acting on its behalf or
(b) material inaccuracies or omissions in the
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Trust's registration statement made in reliance on information furnished by
the indemnifying party.
Under the New Portfolio Management Agreement, a monthly sub-advisory fee
based on the average daily net assets of the Fund is payable by the Adviser to
Blairlogie, as compensation for all services rendered, facilities furnished
and expenses borne by Blairlogie, at the annual rate of .40%. The Fund does
not pay any direct compensation to Blairlogie. The Adviser has informed the
Trustees that, for the fiscal year ended June 30, 1998, the aggregate sub-
advisory fee paid by the Adviser to Blairlogie under the Current Portfolio
Management Agreement was $671,040.
Approval of the New Portfolio Management Agreement by the Trustees of the
Trust
Based on a review of the investment approach and investment practices used
by Blairlogie in managing the Fund's portfolios, the Fund's performance record
under Blairlogie's management and the benefits of continuity of management,
the Adviser recommended and the Trustees determined that it would be
appropriate for Blairlogie to remain responsible for the day-to-day management
of the Fund's portfolio following the Transaction. Thus, on December 10, 1998,
the Trustees approved the New Portfolio Management Agreement.
In evaluating the New Portfolio Management Agreement, the Trustees took into
account that the New Portfolio Management Agreement and the Current Portfolio
Management Agreement, including their terms relating to the services to be
provided by Blairlogie, are substantially identical. The Trustees also
considered the terms of the Transaction and the possible effects of the
Transaction on Blairlogie's ability to provide portfolio management services
to the Fund. Representatives of Blairlogie and Alleghany represented to the
Trustees that the Transaction would not result in any changes, other than
changes in the ordinary course of business, in the management, operations,
personnel or legal structure of Blairlogie, and that Blairlogie personnel who
provide portfolio management services to the Fund are not expected to change
as a result of the Transaction.
After consideration of the foregoing factors and such other factors as the
Trustees deemed relevant, the Trustees concluded that it was appropriate and
desirable for Blairlogie to continue, after the Transaction, to act as sub-
adviser to the Fund on the same terms as were in effect before the
Transaction. Accordingly, the Trustees unanimously approved the New Portfolio
Management Agreement and recommend its approval by the shareholders.
Trustees Recommendation
The Trustees of the Trust unanimously recommend that the shareholders of the
Fund vote to approve the New Portfolio Management Agreement for the Fund.
Approval requires the vote of the lesser of (1) 67% of the shares of the
Fund represented at the Meeting, if more than 50% of the shares of the Fund
are represented at the Meeting, or (2) more than 50% of the outstanding shares
of the Fund.
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III. FUTURE PORTFOLIO MANAGEMENT AGREEMENTS WITHOUT SHAREHOLDER APPROVAL
The Fund proposes, to the extent permitted by any exemption or exemptions
that may be granted upon application made to the SEC or by any applicable SEC
rule, to permit the Adviser to enter into new or amended portfolio management
agreements with a sub-adviser(s) with respect to the Fund without obtaining
shareholder approval of such portfolio management agreements, and to permit
such sub-adviser(s) to manage the assets of the Fund pursuant to such
agreements. This Proposal is being submitted to the shareholders of the Fund
for approval as required by the terms of an exemptive application which the
Trust and the Adviser expect to file with the SEC (the "Proposed SEC Exemption
Request") and will not become effective with respect to the Fund unless and
until (a) the SEC has granted the relief requested in the Proposed SEC
Exemption Request and (b) this Proposal has been approved by the shareholders
of the Fund.
The 1940 Act generally provides that an investment adviser or sub-adviser to
a mutual fund may act as such only pursuant to a written agreement which has
been approved by a vote of the fund's shareholders, as well as by a vote of a
majority of the trustees of the fund who are not parties to such agreement or
interested persons of any party to such agreement. The Trust and the Adviser,
however, intend to file with the SEC the Proposed SEC Exemption Request. If
the Proposed SEC Exemption Request is granted, the Adviser would be permitted,
under specified conditions, to enter into new and amended portfolio management
agreements for the management of the Fund, including agreements with new sub-
advisers and agreements with existing sub-advisers if there is a material
change in the terms of the portfolio management agreement or if there is an
"assignment," as defined in the 1940 Act, or other event causing termination
of the existing portfolio management agreement, without obtaining the approval
of the Fund's shareholders of such new or amended portfolio management
agreements. Such agreements must nevertheless be approved by the Trustees, in
accordance with the requirements of the 1940 Act. One of the conditions of the
Proposed SEC Exemption Request would be that within 90 days after entering
into a new or amended portfolio management agreement without shareholder
approval, the Fund must provide to shareholders an information statement
setting forth substantially the information that would be required to be
contained in a proxy statement for a meeting of shareholders to vote on the
approval of the agreement. Furthermore, the Fund would still require
shareholder approval to amend the Advisory Agreement (including any amendment
to raise the management fee rate payable under the Advisory Agreement) or to
enter into a new Advisory Agreement with the Adviser or any other adviser.
The Trust is requesting shareholder approval of this Proposal for several
reasons. As described in Part II, the Fund utilizes an adviser/sub-adviser
management structure whereby the Adviser, acting as the Fund's investment
adviser, delegates day-to-day portfolio management responsibilities to
Blairlogie as sub-adviser. Under such a structure, the Fund's sub-adviser acts
in a capacity similar to a manager of a mutual fund who is employed by such
mutual fund's investment adviser and who manages the portfolio under the
oversight and supervision of such investment adviser. If the Fund were to
change sub-advisers, the Adviser would continue in its role as adviser and
would continue to exercise oversight and supervision of the Fund's investment
affairs as conducted by the new sub-adviser. Changing the Fund's sub-adviser
is, therefore,
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analogous to an investment adviser of a mutual fund replacing the employee who
manages the investment portfolio of such mutual fund with a different manager,
which does not require shareholder approval under the 1940 Act.
In addition, the shareholder approval requirement under the 1940 Act may
cause the Fund's shareholders to incur unnecessary expenses, such as the
expenses involved in holding, and soliciting proxies for, a shareholder
meeting, and could hinder the prompt implementation of sub-advisory changes
that are in the best interest of the shareholders, such as prompt removal of a
sub-adviser if circumstances warrant such removal. The Trustees believe that
without the ability to promptly replace a sub-adviser or re-approve existing
portfolio management agreements, as the case may be, investors' expectations
may be frustrated and the Fund and its shareholders could be disadvantaged
under the following circumstances: (a) where a sub-adviser has been terminated
because its performance was unsatisfactory or its retention was otherwise
deemed inadvisable, (b) where a sub-adviser has resigned and (c) where there
has been an "assignment" (e.g., a change in control of the sub-adviser) or
other event causing the termination of the portfolio management agreement
(events which, in many cases, are beyond the control of the Fund or the
Trust). In such circumstances, without the ability to engage a new sub-adviser
promptly, the Adviser might have to assume direct responsibility for
management of the assets previously assigned to a sub-adviser. For these
reasons, the Trustees believe that approval of this Proposal would benefit
shareholders.
In reaching this conclusion, the Trustees weighed the costs of shareholder
meetings and the possible negative impact caused by a delay in replacing a
sub-adviser or re-approving existing portfolio management arrangements against
the benefits of shareholder scrutiny of proposed portfolio management
agreements with additional or replacement sub-advisers or amended portfolio
management agreements with existing sub-advisers. To this end, the Trustees
considered that, even in the absence of shareholder approval, any proposal to
add or replace a sub-adviser, or to materially amend a portfolio management
agreement with an existing sub-adviser, would receive careful review. First,
the Adviser would assess the Fund's needs and, if it believed additional or
replacement sub-advisers could benefit the Fund, would review the relevant
universe of available investment managers. Second, any recommendations made by
the Adviser would have to be approved by a majority of the Board of Trustees,
including a majority of the Independent Trustees. Finally, any selections of
additional or replacement investment sub-advisers or any amendment of an
existing portfolio management agreement would have to comply with conditions
contained in the Proposed SEC Exemption Request, assuming it is granted.
Although the Trust currently intends to file the Proposed SEC Exemption
Request, it reserves the right not to file the Proposed SEC Exemption Request
if the Trustees believe such action is in the best interest of the Fund and
its shareholders.
The Trustees unanimously recommend that the shareholders of the Fund vote to
approve the proposed grant of authority to permit the Adviser to enter into
new or amended portfolio management agreements with sub-advisers with respect
to the Fund without obtaining shareholder approval of such agreements, and to
permit such sub-advisers to manage the assets of the Fund pursuant to such
portfolio management agreements.
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The required vote for approval of the grant of authority to permit the
Adviser to enter into new and amended portfolio management agreements without
shareholder approval is the lesser of (1) 67% of the shares of the Fund
represented at the Meeting, if more than 50% of the outstanding shares of the
Fund are represented at the Meeting, or (2) more than 50% of the outstanding
shares of the Fund.
IV. ADDITIONAL INFORMATION
The Trust is a diversified, open-end management investment company organized
in 1990 as a business trust under the laws of Massachusetts. The Trust is a
series type company with twenty-eight investment portfolios. The Fund is one
of those portfolios. The address of the Trust is 840 Newport Center Drive,
Suite 300, Newport Beach, California 92660.
Advisory Agreement
The Adviser, or a predecessor of the Adviser, has acted as the Fund's
adviser since August 25, 1986, and currently acts as the Fund's adviser
pursuant to the Advisory Agreement. The Fund's shareholders last approved the
Advisory Agreement on December 20, 1996. The Advisory Agreement was submitted
for shareholder approval at such time in connection with the reorganization of
the Fund, formerly a series of PIMCO Advisors Funds, into a newly created
series of the Trust.
The Advisory Agreement requires that, subject to the general supervision of
the Trustees, the Adviser, either directly or through others engaged by it,
provide a continuous investment program for the Fund and determine the
composition of the assets of the Fund, including the determination of the
purchase, retention or sale of securities, cash and other investments for the
Fund. The Adviser provides or arranges for the provision of such services in
accordance with the Fund's investment objective, investment policies and
investment restrictions as stated in the Trust's registration statement filed
with the SEC, as supplemented or amended from time to time. The Advisory
Agreement provides that the Adviser may, at its expense and subject to its
supervision, engage sub-advisers to render any or all of the investment
advisory services that the Adviser would be obligated to provide under the
Advisory Agreement. It is pursuant to this authority that the Adviser has
entered into the Current Portfolio Management Agreement with Blairlogie.
The Advisory Agreement provides that it will, unless sooner terminated in
accordance with its terms, continue in effect with respect to the Fund for a
period of two years from its effective date and thereafter on an annual basis
with respect to the Fund, provided such continuance is approved at least
annually by the vote of a majority of the Trustees who are not "interested
persons" (as defined by the 1940 Act) of the Trust or the Adviser and either
(a) by the vote of a majority of the Trustees or (b) by the vote of a majority
of the outstanding voting securities of the Fund. The Advisory Agreement
provides that it terminates automatically in the event of its assignment (as
defined by the 1940 Act) by the Adviser. The Advisory Agreement provides that
it may not be materially amended without a majority vote of the outstanding
voting securities of the Fund.
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The Advisory Agreement may be terminated at any time, without the payment of
any penalty, by the Trust by vote of a majority of the Trustees or by a vote
of a majority of the outstanding voting securities of the Fund, upon 60 days'
written notice to the Adviser or by the Adviser at any time, without the
payment of any penalty, upon 60 days' written notice to the Trust. The
Advisory Agreement may also be terminated at any time, without the payment of
any penalty, by vote of a majority of the Trustees who are not "interested
persons" of the Trust or the Adviser.
The Advisory Agreement provides that the Adviser shall not be subject to any
liability arising out of any services rendered by it under the Advisory
Agreement, except by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreement provides that the Adviser shall pay the expenses
associated with maintaining its staff and personnel and shall, at its own
expense, provide all services, equipment, office space and facilities
necessary to perform its obligations under the Advisory Agreement.
Under the Advisory Agreement, a monthly advisory fee based on the average
daily net assets of the Fund is payable by the Fund to the Adviser at an
annual rate of .55%. For the fiscal year ended June 30, 1998, the aggregate
advisory fees payable by the Fund to the Adviser under the Advisory Agreement
were $922,680.
Information About the Adviser
The Adviser serves as investment adviser to each series of the Trust,
including the Fund, pursuant to an investment advisory agreement with the
Trust. The Adviser is a Delaware limited partnership organized in 1987. The
Adviser provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual funds. Total
assets under management by the Adviser and its subsidiary partnerships as of
September 30, 1998 were approximately $225.9 billion. The general partners of
the Adviser are PIMCO Partners, G.P. ("PGP") and PIMCO Advisors Holdings L.P.
("PAH"). PGP 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 Company. PGP is the sole general
partner of PAH. The Adviser 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.
The Adviser, PGP and PAH are located at 800 Newport Center Drive, Newport
Beach, California 92660. William D. Cvengros is Chief Executive Officer,
President and a Member of the Management Board of the Adviser, as well as
Chairman and a Trustee of the Trust. Mr. Cvengros' principal occupation is his
position with the Adviser. His business address is at the Adviser.
9
<PAGE>
Information About Blairlogie
Blairlogie is a limited partnership formed in 1994 under the laws of
Scotland, United Kingdom. The Adviser and Blairlogie Holdings Limited
("Holdings"), a limited company organized under the laws of the United Kingdom
and a wholly owned subsidiary of the Adviser, are the general partners of
Blairlogie. Holdings is the Managing General Partner of Blairlogie. The
principal offices of Blairlogie and Holdings are located at 125 Princes
Street, 4th Floor, Edinburgh EH2, Scotland.
Gavin R. Dobson is the Chief Executive Officer of Blairlogie. The principal
occupation of Mr. Dobson is his position with Blairlogie. Mr. Dobson's
business address is at Blairlogie.
In connection with the Transaction, Mr. Dobson and James G. S. Smith, the
Chief Investment Officer of Blairlogie, will enter into employment agreements
with Blairlogie and will therefore receive employment compensation therefrom.
By virtue of this employment compensation, each of Messrs. Dobson and Smith
may be deemed to have a substantial interest in shareholder approval of
Proposal 1.
Other Funds Managed by Blairlogie
The following table sets forth certain information concerning other mutual
funds that have investment objectives similar to those of the International
Fund, for which Blairlogie serves as investment adviser or sub-adviser:
<TABLE>
<CAPTION>
Approximate
Annual Portfolio net assets
Management Fee Rate (in millions)
(as a percentage of as of
Name of Fund average daily net assets) December 31, 1998
------------ ------------------------- -----------------
<S> <C> <C>
Gradison International Fund......... .70% of all assets U.S.$34.5
PB Series Trust (Providian)......... .65% of all assets U.S.$12.2
</TABLE>
With respect to these funds Blairlogie serves as a sub-adviser and,
accordingly, the sponsoring investment adviser pays Blairlogie a sub-advisory
fee at the rates shown under "Annual Portfolio Management Fee Rate."
Brokerage and Research Services
Transactions on stock exchanges and other agency transactions involve the
payment by the Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction.
When Blairlogie places orders for the purchase and sale of portfolio
securities for the Fund, it is anticipated that such transactions will be
effected through a number of brokers and dealers. In so doing, Blairlogie
intends to use its best efforts to obtain for the Fund the most favorable
price and execution available, except to the extent it may be permitted to pay
higher brokerage commissions as described below. In seeking the most favorable
price and execution, Blairlogie considers all factors it deems relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the
10
<PAGE>
market for the security, the amount of commission, the timing of the
transactions taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealer involved and the
quality of service rendered by the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive research, statistical and quotation services from broker-
dealers which execute portfolio transactions for the clients of such advisers.
Consistent with this practice, Blairlogie may receive research, statistical
and quotation services from many of the broker-dealers with which the Fund's
portfolio transactions are placed. These services, which in some instances
could also be purchased for cash, include such matters as general economic and
security market reviews, industry and company reviews, evaluations of
securities and recommendations as to the purchase and sale of securities. Some
of these services are of value to Blairlogie in advising its other clients,
although not all of these services are necessarily useful and of value in
advising the Fund. The fees paid to Blairlogie are not reduced because
Blairlogie receives such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the
"1934 Act"), under both the New Portfolio Management Agreement and the Current
Portfolio Management Agreement Blairlogie may cause the Fund to pay a broker-
dealer which provides "brokerage and research services" (as defined by the
1934 Act) to Blairlogie an amount of disclosed commission for effecting a
securities transaction for the Fund in excess of the commission which another
broker-dealer would have charged for effecting the same transaction. The
authority of Blairlogie to cause the Fund to pay any such greater commission
is subject to such policies as the Trustees may adopt from time to time.
During the fiscal year ended June 30, 1998, the Fund did not pay any
brokerage commissions to any broker then affiliated with the Adviser or
Blairlogie.
11
<PAGE>
Ownership of Shares and Voting Information
As of December 31, 1998, the Trust believes that the Trustees and officers
of the Trust, as a group, owned less than one percent of each class of shares
of the Fund and of the Trust as a whole. As of December 31, 1998, the
following persons owned of record or beneficially 5% or more of the noted
class of shares of the Fund:
<TABLE>
<CAPTION>
Shares Percentage of
Beneficially Outstanding
Owned Shares Owned
------------- -------------
<S> <C> <C>
Institutional
90/10 Portfolio..................................... 59,027.114 55.80%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
60/40 Portfolio..................................... 36,813.129 34.80%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
30/70 Portfolio..................................... 9,944.736 9.40%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
Class A
Merrill Lynch Pierce Fenner & Smith Inc.*........... 93,207.233 11.39%
Attn: Book Entry Department
4800 Deer Lake Drive E., FL 3
Jacksonville, Florida 32246-6484
Class B
Merrill Lynch Pierce Fenner & Smith Inc.*........... 145,020.761 18.17%
Attn: Book Entry Department
4800 Deer Lake Drive E., FL 3
Jacksonville, Florida 32246-6484
Class C
Merrill Lynch Pierce Fenner & Smith Inc.*........... 1,294,874.899 12.84%
Attn: Book Entry Department
4800 Deer Lake Drive E., FL 3
Jacksonville, Florida 32246-6484
</TABLE>
- ----------
* Shares are believed to be held only as nominee.
12
<PAGE>
Certain Trustees and Officers of the Trust
The following persons are both officers or Trustees of the Trust and
officers or directors of the Adviser: William D. Cvengros, Stephen J.
Treadway, Newton B. Schott, Jr. and Richard M. Weil.
No persons act as both officers or Trustees of the Trust and officers or
directors of Blairlogie.
Fund Administrator
The Adviser also serves as administrator for the Fund pursuant to an
Administration Agreement between the Trust and the Adviser.
Principal Underwriter
PIMCO Funds Distributors LLC, whose address is 2187 Atlantic Street,
Stamford, Connecticut 06902, is the principal underwriter for the Fund.
Other Matters
The holders of 30% of the shares of the Fund outstanding as of the Record
Date, present in person or represented by proxy, constitute a quorum for the
transaction of business by the shareholders of the Fund at the Meeting,
although it is necessary for more than 50% of the shares of the Fund to be
represented at the Meeting in order for either Proposal 1 or Proposal 2 to be
approved. Votes cast by proxy or in person at the Meeting will be counted by
persons appointed by the Trust as tellers for the Meeting. The tellers will
count the total number of votes cast "for" approval of each Proposal for
purposes of determining whether sufficient affirmative votes have been cast.
The tellers will count all shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or nominees
as to which (a) instructions have not been received from the beneficial owners
or the persons entitled to vote and (b) the broker or nominee does not have
discretionary voting power on a particular matter) as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
Assuming the presence of a quorum, abstentions have the effect of a negative
vote on each Proposal.
In the event that a quorum is not present for purposes of acting on a
Proposal, or if sufficient votes in favor of a Proposal are not received by
the time of the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any
such adjournment will require the affirmative vote of a plurality of the
shares present in person or represented by proxy at the session of the Meeting
to be adjourned. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of any
Proposal that has not then been adopted. They will vote against any such
adjournment those proxies required to be voted against each Proposal that has
not then been adopted and will not vote any proxies that direct them to
abstain from voting on such Proposals.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present
or knows that others will present are Proposals 1 and 2, mentioned in the
Notice of Special Meeting.
13
<PAGE>
Shareholder Proposals at Future Meetings
The Trust does not hold annual or other regular meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders of
the Trust must be received by the Trust a reasonable time before that meeting
in order for such proposals to be considered for inclusion in the proxy
materials relating to that meeting.
January 19, 1999
14
<PAGE>
APPENDIX A
PORTFOLIO MANAGEMENT AGREEMENT
PIMCO INTERNATIONAL FUND
AGREEMENT made this day of , 1999 between PIMCO Advisors L.P.
("Adviser"), a limited partnership, and Blairlogie Capital Management (the
"Portfolio Manager"), a partnership.
WHEREAS, PIMCO Funds: Multi-Manager Series (the "Trust") is registered with
the Securities and Exchange Commission ("SEC") as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in
a separate portfolio; and
WHEREAS, the Trust has established multiple series, including operational
series or series that are expected to be operational that are designated as
the PIMCO International Fund, PIMCO Capital Appreciation Fund, PIMCO Mid-Cap
Growth Fund, PIMCO Small-Cap Growth Fund, PIMCO Micro-Cap Growth Fund, PIMCO
Renaissance Fund, PIMCO Core Equity Fund, PIMCO Growth Fund, PIMCO Mid-Cap
Equity Fund, PIMCO Target Fund, PIMCO Opportunity Fund, PIMCO Innovation Fund,
PIMCO Equity Income Fund, PIMCO Value Fund, PIMCO Small-Cap Value Fund, PIMCO
Enhanced Equity Fund, PIMCO Structured Emerging Markets Fund, PIMCO Balanced
Fund, PIMCO Tax-Efficient Equity Fund, PIMCO Value 25 Fund, PIMCO
International Growth Fund, PIMCO Hard Assets Fund, PIMCO Tax-Efficient
Structured Emerging Markets Fund and PIMCO Precious Metals Fund, such series
together with any other series subsequently established by the Trust, with
respect to which the Trust desires to retain the Portfolio Manager to render
investment advisory services hereunder, and with respect to which the
Portfolio Manager is willing to do so, being herein collectively referred to
also as the "Funds"; and
WHEREAS, the Portfolio Manager is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Trust has retained the Adviser to render management services to
the Fund (as defined below) pursuant to an Investment Advisory Agreement dated
as of November 15, 1994, as from time to time amended, supplemented or
modified hereof, and such Agreement authorizes the Adviser to engage Portfolio
Managers to discharge the Adviser's responsibilities with respect to the
management of the Funds; and
WHEREAS, the Adviser desires to retain the Portfolio Manager to furnish
investment advisory services to one or more of the Funds of the Trust, and the
Portfolio Manager is willing to furnish such services to such Funds and the
Adviser in the manner and on the terms hereinafter set forth;
A-1
<PAGE>
NOW, THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Adviser and the Portfolio
Manager as follows:
1. Appointment. The Adviser hereby appoints Blairlogie Capital
Management to act as Portfolio Manager to the PIMCO International Fund
(the "Fund") for the periods and on the terms set forth in this Agreement.
The Portfolio Manager accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
In the event the Adviser wishes to retain the Portfolio Manager to
render investment advisory services to one or more series other than the
Fund, the Adviser shall notify the Portfolio Manager in writing. If the
Portfolio Manager is willing to render such services, it shall notify the
Adviser in writing, whereupon such series shall become a Fund hereunder,
and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the supervision of the
Trust's Board of Trustees and the Adviser, the Portfolio Manager will
provide a continuous investment program for the Fund and determine the
composition of the assets of the Fund, including determination of the
purchase, retention, or sale of the securities, cash, and other
investments for the Fund. The Portfolio Manager will provide investment
research and analysis, which may consist of computerized investment
methodology, and will conduct a continuous program of evaluation,
investment, sales, and reinvestment of the Fund's assets by determining
the securities and other investments that shall be purchased, entered
into, sold, closed, or exchanged for the Fund, when these transactions
should be executed, and what portion of the assets of the Fund should be
held in the various securities and other investments in which it may
invest, and the Portfolio Manager is hereby authorized to execute and
perform such services on behalf of the Fund. To the extent permitted by
the investment policies of the Fund, the Portfolio Manager shall make
decisions for the Fund as to foreign currency matters and make
determinations as to the retention or disposition of foreign currencies or
securities or other instruments denominated in foreign currencies, or
derivative instruments based upon foreign currencies, including forward
foreign currency contracts and options and futures on foreign currencies
and shall execute and perform the same on behalf of the Fund. The
Portfolio Manager will provide the services under this Agreement in
accordance with the Fund's investment objective or objectives, investment
policies, and investment restrictions as stated in the Trust's
Registration Statement filed on Form N-1A with the SEC, as supplemented or
amended from time to time, copies of which shall be sent to the Portfolio
Manager by the Adviser. In performing these duties, the Portfolio Manager:
a. Shall conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Trust's
Board of Trustees, and with the provisions of the Trust's Registration
Statement filed on Form N-1A, as supplemented or amended from time to
time.
b. Shall use reasonable efforts to manage the Fund so that it
qualifies as a regulated investment company under Subchapter M of the
Internal Revenue Code.
A-2
<PAGE>
c. Is responsible, in connection with its responsibilities under
this Section 2, for decisions to buy and sell securities and other
investments for the Fund, for broker-dealer and futures commission
merchant ("FCM") selection, and for negotiation of commission rates.
The Portfolio Manager's primary consideration in effecting a security
or other transaction will be to obtain the best execution for the
Fund, taking into account the factors specified in the Prospectus and
Statement of Additional Information for the Trust, as they may be
amended or supplemented from time to time. Subject to such policies as
the Board of Trustees may determine and consistent with Section 28(e)
of the Securities Act of 1934, the Portfolio Manager shall not be
deemed to have acted unlawfully or to have breached any duty created
by this Agreement or otherwise solely by reason of its having caused
the Fund to pay a broker or dealer, acting as agent, for effecting a
portfolio transaction at a price in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the Portfolio Manager determines in good faith that
such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Portfolio
Manager's overall responsibilities with respect to the Fund and to its
other clients as to which it exercises investment discretion. To the
extent consistent with these standards, and in accordance with Section
11(a) of the Securities Exchange Act of 1934 and Rule 11a2-(T)
thereunder, and subject to any other applicable laws and regulations,
the Portfolio Manager is further authorized to allocate the orders
placed by it on behalf of the Fund to the Portfolio Manager if it is
registered as a broker or dealer with the SEC, to its affiliate that
is registered as a broker or dealer with the SEC, or to such brokers
and dealers that also provide research or statistical research and
material, or other services to the Fund or the Portfolio Manager. Such
allocation shall be in such amounts and proportions as the Portfolio
Manager shall determine consistent with the above standards, and, upon
request, the Portfolio Manager will report on said allocation to the
Adviser and Board of Trustees of the Trust, indicating the brokers or
dealers to which such allocations have been made and the basis
therefor.
d. May, on occasions when the purchase or sale of a security is
deemed to be in the best interest of the Fund as well as any other
investment advisory clients, to the extent permitted by applicable
laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased with those of its other clients
where such aggregation is not inconsistent with the policies set forth
in the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Portfolio Manager in a manner
that is fair and equitable in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust and to such
other clients.
e. Will, in connection with the purchase and sale of securities for
each Fund, arrange for the transmission to the custodian for the Trust
on a daily basis, such confirmation, trade tickets, and other
documents and information, including, but not limited to, Cusip,
Sedol, or other numbers that identify securities to be purchased or
sold on behalf of the Fund, as may be reasonably
A-3
<PAGE>
necessary to enable the custodian to perform its administrative and
recordkeeping responsibilities with respect to the Fund, and, with
respect to portfolio securities to be purchased or sold through the
Depository Trust Company, will arrange for the automatic transmission
of the confirmation of such trades to the Trust's custodian.
f. Will assist the custodian and recordkeeping agent(s) for the
Trust in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Trust, the value
of any portfolio securities or other assets of the Fund for which the
custodian and recordkeeping agent(s) seek assistance from the
Portfolio Manager or identify for review by the Portfolio Manager.
g. Will make available to the Trust and Adviser, promptly upon
request, the Fund's investment records and ledgers as are necessary to
assist the Trust to comply with the requirements of the 1940 Act and
the Investment Advisers Act of 1940, as well as other applicable laws,
and will furnish to regulatory authorities having the requisite
authority any information or reports in connection with such services
which may be requested in order to ascertain whether the operations of
the Trust are being conducted in a manner consistent with applicable
laws and regulations.
h. Will regularly report to the Trust's Board of Trustees on the
investment program for the Fund and the issuers and securities
represented in the Fund's portfolio, and will furnish the Trust's
Board of Trustees with respect to the Fund such periodic and special
reports as the Trustees may reasonably request.
i. Shall be responsible for making reasonable inquiries and for
reasonably ensuring that any employee of the Portfolio Manager has
not, to the best of the Portfolio Manager's knowledge:
i. been convicted, in the last ten (10) years, of any felony or
misdemeanor involving the purchase or sale of any security or
arising out of such person's conduct as an underwriter, broker,
dealer, investment adviser, municipal securities dealer,
government securities broker, government securities dealer,
transfer agent, or entity or person required to be registered
under the Commodity Exchange Act, or as an affiliated person,
salesman, or employee of any investment company, bank, insurance
company, or entity or person required to be registered under the
Commodity Exchange Act; or
ii. been permanently or temporarily enjoined by reason of any
misconduct, by order, judgment, or decree of any court of
competent jurisdiction from acting as an underwriter, broker,
dealer, investment adviser, municipal securities dealer,
government securities broker, government securities dealer,
transfer agent, or entity or person required to be registered
under the Commodity Exchange Act, or as an affiliated person,
salesman or employee of any investment company, bank, insurance
company, or entity or person required to be registered under the
Commodity Exchange Act, or from engaging in or continuing any
conduct or practice in connection with any such activity or in
connection with the purchase or sale of any security.
A-4
<PAGE>
3. Disclosure about Portfolio Manager. The Portfolio Manager has
reviewed the Registration Statement for the Trust filed with the SEC and
represents and warrants that, with respect to the disclosure about the
Portfolio Manager or information relating, directly or indirectly, to the
Portfolio Manager, such Registration Statement contains, as of the date
hereof, no untrue statement of any material fact and does not omit any
statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading. The
Portfolio Manager further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and a duly registered
investment adviser in all states in which the Portfolio Manager is
required to be registered. The Adviser has received a current copy of the
Portfolio Manager's Uniform Application for Investment Adviser
Registration on Form ADV, as filed with the SEC. The Portfolio Manager
agrees to provide the Adviser with current copies of the Portfolio
Manager's Form ADV, and any supplements or amendments thereto, as filed
with the SEC.
4. Expenses. During the term of this Agreement, the Portfolio Manager
will pay all expenses incurred by it and its staff and for their
activities in connection with its services under this Agreement. The
Portfolio Manager shall not be responsible for any of the following:
a. Expenses of all audits by the Trust's independent public
accountants;
b. Expenses of the Trust's transfer agent(s), registrar, dividend
disbursing agent(s), and shareholder recordkeeping services;
c. Expenses of the Trust's custodial services, including
recordkeeping services provided by the custodian;
d. Expenses of obtaining quotations for calculating the value of the
Fund's net assets;
e. Expenses of obtaining Portfolio Activity Reports for each Fund;
f. Expenses of maintaining the Trust's tax records;
g. Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of Adviser, its subsidiaries or affiliates,
or any Portfolio Manager of the Trust;
h. Taxes, if any, levied against the Trust or any of its Funds;
i. Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Fund;
j. Costs, including the interest expenses, of borrowing money;
k. Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses and reports
of the Trust to its shareholders, the filing of reports with
regulatory bodies, the maintenance of the Trust's existence, and the
registration of shares with federal and state securities or insurance
authorities;
l. The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for
sale;
A-5
<PAGE>
m. Costs of printing stock certificates representing shares of the
Trust;
n. Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate
thereof;
o. The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
p. Association membership dues;
q. Extraordinary expenses of the Trust as may arise, including
expenses incurred in connection with litigation, proceedings and other
claims and the legal obligations of the Trust to indemnify its
trustees, officers, employees, shareholders, distributors, and agents
with respect thereto; and
r. Organizational and offering expenses and, if applicable,
reimbursement (with interest) of underwriting discounts and
commissions.
5. Compensation. For the services provided, the Adviser will pay the
Portfolio Manager a fee accrued and computed daily and payable monthly,
based on the average daily net assets of the Fund at the annual rate of
.40% of the average daily net assets of the Fund.
6. Seed Money. The Adviser agrees that the Portfolio Manager shall not
be responsible for providing money for the initial capitalization of the
Trust or the Fund.
7. Compliance.
a. The Portfolio Manager agrees that it shall immediately notify the
Adviser and the Trust in the event (i) that the SEC has censured the
Portfolio Manager; placed limitations upon its activities, functions
or operations; suspended or revoked its registration as an investment
adviser; or has commenced proceedings or an investigation that may
result in any of these actions, and (ii) upon having a reasonable
basis for believing that the Fund has ceased to qualify or might not
qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code. The Portfolio Manager further agrees to notify
the Adviser and the Trust immediately of any material fact known to
the Portfolio Manager that is not contained in the Registration
Statement or prospectus for the Trust, or any amendment or supplement
thereto, or of any statement contained therein that becomes untrue in
any material respect.
b. The Adviser agrees that it shall immediately notify the Portfolio
Manager in the event (i) that the SEC has censured the Adviser or the
Trust; placed limitations upon either of their activities, functions,
or operations; suspended or revoked the Adviser's registration as an
investment adviser; or has commenced proceedings or an investigation
that may result in any of these actions, and (ii) upon having a
reasonable basis for believing that a Fund has ceased to qualify or
might not qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code.
8. Independent Contractor. The Portfolio Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized by the Adviser from time
to time, have no
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<PAGE>
authority to act for or represent the Adviser in any way or otherwise be
deemed its agent. The Portfolio Manager understands that unless expressly
provided herein or authorized from time to time by the Trust, the
Portfolio Manager shall have no authority to act for or represent the
Trust in any way or otherwise be deemed the Trust's agent.
9. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Portfolio Manager hereby agrees that all records
which it maintains for the Fund are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's or the Adviser's request, although the Portfolio Manager may, at
its own expense, make and retain a copy of such records. The Portfolio
Manager further agrees to preserve for the periods prescribed by Rule 31a-
2 under the 1940 act the records required to be maintained by Rule 31a-1
under the 1940 Act and to preserve the records required by Rule 204-2
under the Advisers Act for the period specified in the Rule.
10. Cooperation. Each party to this Agreement agrees to cooperate with
each other party and with all appropriate governmental authorities having
the requisite jurisdiction (including, but not limited to, the SEC) in
connection with any investigation or inquiry relating to this Agreement or
the Trust.
11. Services Not Exclusive. It is understood that the services of the
Portfolio Manager are not exclusive, and nothing in this Agreement shall
prevent the Portfolio Manager (or its affiliates) from providing similar
services to other clients, including investment companies (whether or not
their investment objectives and policies are similar to those of the
Funds) or from engaging in other activities.
12. Liability. Except as provided in Section 13 and as may otherwise be
required by the 1940 Act or the rules thereunder or other applicable law,
the Adviser agrees that the Portfolio Manager, any affiliated person of
the Portfolio Manager, and each person, if any, who, within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act") controls the
Portfolio Manager shall not be liable for, or subject to any damages,
expenses, or losses in connection with, any act or omission connected with
or arising out of any services rendered under this Agreement, except by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under this
Agreement.
13. Indemnification. The Portfolio Manager agrees to indemnify and hold
harmless the Adviser, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each
person, if any, who, within the meaning of Section 15 of the 1933 Act,
controls ("controlling person") the Adviser (collectively, "Blairlogie
Indemnified Persons") against any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses), to which
the Adviser or such affiliated person or controlling person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, under any other
statute, at common law or otherwise, arising out of the Portfolio
Manager's responsibilities to the Trust which (i) may be based upon any
misfeasance, malfeasance, or nonfeasance by the Portfolio Manager, any of
its employees or representatives, or any affiliate of or any person acting
on behalf of the Portfolio Manager (other than a Blairlogie Indemnified
Person), or (ii) may be based upon any untrue statement or
A-7
<PAGE>
alleged untrue statement of a material fact contained in a registration
statement or prospectus covering the Shares of the Trust or any Fund, or
any amendment thereof or any supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if
such a statement or omission was made in reliance upon information
furnished to the Adviser, the Trust, or any affiliated person of the Trust
by the Portfolio Manager or any affiliated person of the Portfolio Manager
(other than a Blairlogie Indemnified Person); provided, however, that in
no case is the Portfolio Manager's indemnity in favor of the Adviser or
any affiliated person or controlling person of the Adviser deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of his reckless
disregard of obligations and duties under this Agreement.
The Adviser agrees to indemnify and hold harmless the Portfolio Manager,
any affiliated person within the meaning of Section 2(a)(3) of the 1940
Act of the Portfolio Manager and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls the Portfolio Manager
(collectively, "Adviser Indemnified Persons") against any and all losses,
claims, damages, liabilities or litigation (including legal and other
expenses) to which the Portfolio Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the 1940 Act,
the Advisers Act, under any other statute, at common law or otherwise,
arising out of the Adviser's responsibilities as adviser of the Trust
which (i) may be based upon any misfeasance, malfeasance, or nonfeasance
by the Adviser, any of its employees or representatives or any affiliate
of or any person acting on behalf of the Adviser (other than an Adviser
Indemnified Person) or (ii) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or prospectus covering Shares of the Trust or any Fund, or any
amendment thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, unless such
statement or omission was made in reliance upon written information
furnished to the Adviser or any affiliated person of the Adviser by the
Portfolio Manager or any affiliated person of the Portfolio Manager (other
than an Adviser Indemnified Person); provided however, that in no case is
the indemnity of the Adviser in favor of the Portfolio Manager, or any
affiliated person or controlling person of the Portfolio Manager deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties, or by reason of his reckless
disregard of obligations and duties under this Agreement.
14. Duration and Termination. This Agreement shall take effect as of the
date hereof. This Agreement shall remain in effect for two years from such
date and continue thereafter on an annual basis with respect to the Fund;
provided that such annual continuance is specifically approved at least
annually (a) by the vote of a majority of the Board of Trustees of the
Trust, or (b) by the vote of a majority of the outstanding voting shares
of the Fund, and provided that continuance is also approved by the vote of
a majority of the Board of Trustees of the Trust who are not parties to
this Agreement or "interested persons" (as such term is defined in
A-8
<PAGE>
the 1940 Act) of the Trust, the Adviser, or the Portfolio Manager, cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may not be materially amended without a majority vote of
the outstanding shares (as defined in the 1940 Act) of the Fund, except to
the extent permitted by any exemption or exemptions that may be granted
upon application made to the SEC or by any applicable SEC rule. This
Agreement may be terminated:
a. by the Trust at any time with respect to the services provided by
the Portfolio Manager, without the payment of any penalty, by vote of
(1) a majority of the Trustees of the Trust; (2) a majority of the
Trustees of the Trust who are not parties to this Agreement or
"interested persons" (as such term is defined in the 1940 Act) of the
Trust, the Adviser or the Portfolio Manager; or (3) a majority of the
outstanding voting shares of the Trust or, with respect to the Fund,
by vote of a majority of the outstanding voting shares of the Fund, on
60 days' written notice to the Portfolio Manager;
b. by the Portfolio Manager at any time, without the payment of any
penalty, upon 60 days' written notice to the Trust; or
c. by the Adviser at any time, without the payment of any penalty,
upon 60 days' written notice to the Portfolio Manager.
However, any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 1940 Act) of a particular Fund
shall be effective to continue this Agreement with respect to such Fund
notwithstanding (a) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Fund or (b)
that this Agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be required by
any other applicable law or otherwise. This Agreement will terminate
automatically with respect to the services provided by the Portfolio
Manager in event of its assignment, as that term is defined in the 1940
Act, by the Portfolio Manager.
15. Agreement and Declaration of Trust. A copy of the Second Amended and
Restated Agreement and Declaration of Trust for the Trust is on file with
the Secretary of the Commonwealth of Massachusetts. The Second Amended and
Restated Agreement and Declaration of Trust has been executed on behalf of
the Trust by a Trustee of the Trust in his capacity as Trustee of the
Trust and not individually. The obligations of this Agreement shall be
binding upon the assets and property of the Trust and shall not be binding
upon any Trustee, officer, or shareholder of the Trust individually.
16. Miscellaneous.
a. This Agreement shall be governed by the laws of California,
provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
rules or orders of the SEC thereunder.
b. The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
A-9
<PAGE>
c. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby, and to this extent, the
provisions of this Agreement shall be deemed to be severable. To the
extent that any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise with regard to
any party hereunder, such provisions with respect to other parties
hereto shall not be affected thereby.
d. The parties hereto acknowledge and agree that the Trust is an
express third party beneficiary to this Agreement.
e. With respect to any actions brought by the Adviser or the Trust
against the Portfolio Manager, the Portfolio Manager: (i) consents to
the subject matter and in personam jurisdiction and venue in the
United States District Court for the Central District of California;
(ii) waives the right to contest the subject matter and in personam
jurisdiction and venue in the United States District Court for the
Central District of California on any ground; and (iii) agrees that
service of process upon it can be made either in person or by
certified or registered mail, return receipt requested, to the Adviser
at 800 Newport Center Drive, Newport Beach, California 92660, or any
other address designated by the Adviser as the address to which
notices pursuant to this Agreement should be sent. The Portfolio
Manager agrees that service to such address shall be deemed to
constitute sufficient service of process under both the federal and
state rules of civil procedure wherever the case is filed. In the
event it is determined that the United States District Court for the
Central District of California should lack subject matter jurisdiction
for any reason, the Portfolio Manager consents to the subject matter
and in personam jurisdiction and venue in a California State court of
competent jurisdiction in Orange County.
A-10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PIMCO ADVISORS L.P.
_______________________________________________ By: ______________________
Attest: Title:
Title:
BLAIRLOGIE CAPITAL
MANAGEMENT
_______________________________________________ By: ______________________
Attest: Title:
Title:
A-11
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
PROXY SOLICITED BY THE BOARD OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS ON FEBRUARY 26, 1999
The undersigned hereby appoints Stephen J. Treadway, Timothy R. Clark and Newton
B. Schott, Jr., and each of them separately, proxies with power of substitution
to each, and hereby authorizes them to represent and to vote, as designated
below, at the Special Meeting of Shareholders of the PIMCO INTERNATIONAL FUND
(the "Fund"), a series of PIMCO FUNDS: MULTI-MANAGER SERIES, on February 26,
1999 at 10:00 Eastern time, and any adjournments thereof, all of the shares of
the Fund which the undersigned would be entitled to vote if personally present.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS
PROXY CARD. All joint owners should sign. When signing as
executor, administrator, attorney, trustee or guardian or as
custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate
the signer's office. If a partner, sign in the partnership
name.
-----------------------------------------------------------
Signature
-----------------------------------------------------------
Signature (if held jointly)
-----------------------------------------------------------
Date
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH PROPOSAL.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting. The Trustees recommend a vote FOR
Proposals 1 and 2.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
[_] [_] [_]
1. To approve the Portfolio Management Agreement
with respect to the Fund between PIMCO
Advisors L.P. and Blairlogie Capital
Management.
[_] [_] [_]
2. To approve a proposal whereby the Fund may
enter into new or amended portfolio management
agreements with sub-advisers without
shareholder approval, as discussed in Part III
of the Proxy Statement.
</TABLE>
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
