<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated January 11, 1999
to the
Prospectus for Class A, Class B
and Class C Shares Dated November 1, 1998
Disclosure relating to
PIMCO INTERNATIONAL DEVELOPED FUND AND
PIMCO EMERGING MARKETS FUND
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THIS DOCUMENT SUPPLEMENTS THE PIMCO FUNDS: MULTI-MANAGER SERIES (THE
"TRUST") PROSPECTUS FOR CLASS A, CLASS B AND CLASS C SHARES DATED
NOVEMBER 1, 1998 (THE "RETAIL PROSPECTUS").
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In addition to the diversified investment portfolios described in the Retail
Prospectus, the Trust also offers Class A and Class C shares of PIMCO
International Developed Fund and PIMCO Emerging Markets Fund (the "Funds").
Existing Class A and Class C shareholders of the Funds and participants in
certain qualified benefits plans that own Class A or Class C shares of the
Funds as of January 11, 1999 may purchase additional shares. Otherwise, shares
of the Funds are not available for investment or exchanges. See "Purchase,
Redemption and Exchange Information" below.
1. SCHEDULE OF FEES (APPLICABLE TO BOTH FUNDS).
Shareholder Transaction Expenses:
<TABLE>
<CAPTION>
CLASS A CLASS C
SHARES SHARES
------- -------
<S> <C> <C>
Maximum initial sales charge imposed on purchases (as a
percentage of offering price at time of purchase)............ 5.50% None
Maximum sales charge imposed on reinvested dividends (as a
percentage of offering price at time of purchase)............ None None
Maximum contingent deferred sales charge ("CDSC") (as a
percentage of original purchase price) ...................... 1%(1) 1%(2)
Exchange Fee.................................................. None None
</TABLE>
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1. Imposed only in certain circumstances where Class A shares are purchased
without a front-end sales charge at the time of purchase. See "Alternative
Purchase Arrangements" in the Retail Prospectus.
2. The CDSC on Class C shares is imposed only on shares redeemed in the first
year.
<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES EXAMPLE: You would pay
the following expenses EXAMPLE: You would pay
on a $1,000 investment the following expenses
ANNUAL FUND assuming (1) 5% annual on a $1,000 investment
OPERATING EXPENSES return and (2) assuming (1) 5% annual
(As a percentage of average net redemption at the end return and (2) no
assets): of each time period: redemption:
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TOTAL
ADMINI- FUND
ADVISORY STRATIVE 12b-1 OPERATING 1 3 5 10 1 3 5 10
FUND FEES FEES(1) FEES(2) EXPENSES YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
- ------------------------------------------------------------ ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Developed .60% .65% .25% 1.50% $69 $100 $132 $224 $69 $100 $132 $224
Emerging Markets .85 .65 .25 1.75 72 107 145 250 72 107 145 250
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES EXAMPLE: You would pay
the following expenses EXAMPLE: You would pay
on a $1,000 investment the following expenses
ANNUAL FUND assuming (1) 5% annual on a $1,000 investment
OPERATING EXPENSES return and (2) assuming (1) 5% annual
(As a percentage of average net redemption at the end return and (2) no
assets): of each time period: redemption:
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TOTAL
ADMINI- FUND
ADVISORY STRATIVE 12b-1 OPERATING 1 3 5 10 1 3 5 10
FUND FEES FEES(1) FEES(2) EXPENSES YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
- ------------------------------------------------------------ ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Developed .60% .65% 1.00% 2.25% $33 $70 $120 $258 $23 $70 $120 $258
Emerging Markets .85 .65 1.00 2.50 35 78 133 284 25 78 133 284
</TABLE>
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(1) The Administrative Fees for each Fund are subject to reduction to the
extent that the average net assets attributable in the aggregate to the
Fund's Class A, Class B and Class C shares exceed $2.5 billion. See
"Management of the Trust--Advisory and Administrative Fees" below.
(2) 12b-1 fees which are equal to .25% represent servicing fees which are paid
annually to the Distributor and repaid to participating brokers, certain
banks and other financial intermediaries. 12b-1 fees which exceed .25%
represent aggregate distribution and servicing fees. See "Distributor and
Distribution and Servicing Plans" in the Retail Prospectus.
The purpose of the foregoing tables is to assist investors in understanding
the various costs and expenses of the Trust that are borne directly or
indirectly by Class A and Class C shareholders of the Funds. The Examples for
Class A shares assume payment of the current maximum applicable sales load.
Due to the 12b-1 distribution fee imposed on Class C shares, a Class C
shareholder of a Fund may, depending on the length of time the shares are
held, pay more than the economic equivalent of the maximum front-end sales
charges permitted by relevant rules of the National Association of Securities
Dealers, Inc.
NOTE: THE FIGURES SHOWN IN THE EXAMPLES ARE ENTIRELY HYPOTHETICAL. THEY ARE
NOT REPRESENTATIONS OF PAST OR FUTURE PERFORMANCE OR EXPENSES; ACTUAL
PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS THAN SHOWN.
2
<PAGE>
2. FINANCIAL HIGHLIGHTS.
The following financial highlights present certain information and ratios as
well as performance information for the Funds. The information provided below
is included in the June 30, 1998 PIMCO Funds Annual Report (relating to Class
A, B and C shares) and has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report thereon is also included in such Annual
Report. The Annual Report is incorporated by reference in the Statement of
Additional Information and may be obtained without charge from the
Distributor. Financial Statements and related notes are also incorporated by
reference in the Statement of Additional Information.
<TABLE>
<CAPTION>
TOTAL DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS
NET ASSET NET REALIZED/ INCOME DIVIDENDS IN EXCESS FROM NET IN EXCESS
VALUE NET UNREALIZED GAIN FROM FROM NET OF NET REALIZED OF NET
SELECTED PER SHARE DATA BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT INVESTMENT CAPITAL REALIZED
FOR THE PERIOD ENDED: OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME INCOME GAINS CAPITAL GAINS
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL DEVELOPED
FUND
CLASS A
06/30/98 $ 13.08 $ 0.18 (a) $ 1.68 (a) $ 1.86 $ (0.10) $ 0.00 $ (0.58) $ 0.00
01/20/97--06/30/97 11.71 0.09 (a) 1.28 (a) 1.37 0.00 0.00 0.00 0.00
CLASS C
06/30/98 13.06 0.02 (a) 1.71 (a) 1.73 (0.06) 0.00 (0.58) 0.00
01/20/97--06/30/97 11.71 0.06 (a) 1.29 (a) 1.35 0.00 0.00 0.00 0.00
EMERGING MARKETS FUND
CLASS A
06/30/98 $ 13.94 $ 0.03 (a) $ (3.85)(a) $ (3.82) $ 0.00 $ 0.00 $ 0.00 $ 0.00
01/20/97--06/30/97 12.82 0.09 (a) 1.03 (a) 1.12 0.00 0.00 0.00 0.00
CLASS C
06/30/98 13.89 (0.06)(a) (3.81)(a) (3.87) 0.00 0.00 0.00 0.00
01/20/97--06/30/97 12.82 0.04 (a) 1.03 (a) 1.07 0.00 0.00 0.00 0.00
<CAPTION>
DISTRIBUTIONS
SELECTED PER SHARE DATA FROM
FOR THE PERIOD ENDED: EQUALIZATION
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<S> <C>
INTERNATIONAL DEVELOPED
FUND
CLASS A
06/30/98 $ 0.00
01/20/97--06/30/97 0.00
CLASS C
06/30/98 0.00
01/20/97--06/30/97 0.00
EMERGING MARKETS FUND
CLASS A
06/30/98 $ 0.00
01/20/97--06/30/97 0.00
CLASS C
06/30/98 0.00
01/20/97--06/30/97 0.00
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
TAX BASIS NET ASSET NET ASSETS EXPENSES INCOME (LOSS) PORTFOLIO
SELECTED PER SHARE DATA RETURN OF TOTAL VALUE END TOTAL END OF TO AVERAGE TO AVERAGE TURNOVER
FOR THE PERIOD ENDED: CAPITAL DISTRIBUTIONS OF PERIOD RETURN PERIOD (000S) NET ASSETS NET ASSETS RATE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL DEVELOPED
FUND
CLASS A
06/30/98 $ 0.00 $ (0.68) $ 14.26 15.49 % $ 1,061 1.57% 1.38% 60%
01/20/97--06/30/97 0.00 0.00 13.08 11.70 318 1.54* 1.74* 77
CLASS C
06/30/98 0.00 (0.64) 14.15 14.38 6,363 2.25 0.19 60
01/20/97--06/30/97 0.00 0.00 13.06 11.53 2,526 2.28* 1.07* 77
EMERGING MARKETS FUND
CLASS A
06/30/98 $ 0.00 $ 0.00 $ 10.12 (27.40)% $ 426 1.78% 0.25% 52%
01/20/97--06/30/97 0.00 0.00 13.94 8.74 214 1.89* 1.52* 74
CLASS C
06/30/98 0.00 0.00 10.02 (27.86) 1,169 2.54 (0.54) 52
01/20/97--06/30/97 0.00 0.00 13.89 8.35 1,833 2.63* 0.66* 74
</TABLE>
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* Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
3
<PAGE>
3. INVESTMENT OBJECTIVES AND POLICIES.
The investment objective and general investment policies of the Funds are
described below. There can be no assurance that the investment objective of
either Fund will be achieved. Because the market value of the Funds'
investments will change, the net asset value per share of the Funds also will
vary. The investment objective of each of the International Developed and
Emerging Markets Funds is fundamental and may not be changed without
shareholder approval by vote of a majority of the outstanding shares of the
Fund.
INTERNATIONAL DEVELOPED FUND seeks long-term growth of capital. The Fund
invests primarily in a diversified portfolio of international equity
securities. The Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index ("EAFE Index") is used as a basis for choosing
the countries in which the Fund invests. However, the Fund is not limited to
the countries and weightings of the EAFE Index. Under normal market
conditions, the Fund will invest no more than 35% of its assets in securities
issued by companies located in countries that the Portfolio Manager
determines, on the basis of market capitalization, liquidity, and other
considerations, to have underdeveloped securities markets. The Portfolio
Manager applies two levels of screening in selecting investments for the Fund.
First, an active country selection model analyzes world markets and assigns a
relative value ranking, or "favorability weighting," to each country in the
relevant country universe to determine markets which are relatively
undervalued. Second, at the stock selection level, quality analysis and value
analysis are applied to each security, assessing variables such as balance
sheet strength and earnings growth (quality factors) and performance relative
to the industry, price to earnings ratios, and price to book ratios (value
factors). This two-level screening method identifies undervalued securities
for purchase and also provides a sell discipline for fully valued securities.
In selecting securities, the Portfolio Manager considers, to the extent
practicable and on the basis of information available to it for research, a
company's environmental business practices.
For purposes of allocating the Fund's investments, a company is considered
to be located in the country in which it is domiciled, in which it is
primarily traded, from which it derives a significant portion of its revenues,
or in which a significant portion of its goods or services are produced.
Most of the international equity securities in which the Fund invests will
be traded in foreign currencies. The Fund may engage in foreign currency
transactions to protect itself against fluctuations in currency exchange rates
in relation to the U.S. dollar or to the weighting of a particular foreign
currency on the EAFE Index. Such foreign currency transactions may include
forward foreign currency contracts, foreign exchange futures contracts, and
options thereon, currency exchange transactions on a spot (i.e., cash) basis,
and put and call options on foreign currencies. Up to 10% of the Fund's assets
may be invested in the securities of other investment companies. The Fund may
sell (write) call and put options. The Fund may utilize stock index futures
contracts and options thereon for hedging purposes and also for investment
purposes. For instance, the Fund may invest in stock index futures contracts
and related options as an alternative to purchasing individual stocks to
adjust its exposure to a particular foreign market. See "Characteristics and
Risks of Securities and Investment Techniques--Derivative Instruments--Index
Futures" in the Retail Prospectus. The Fund may also engage in equity index
swap transactions.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. For
a discussion of such risks, see "Characteristics and Risks of Securities and
Investment Techniques--Foreign Securities" in the Retail Prospectus.
Currently, the Portfolio Manager for the International Developed Fund is
Blairlogie Capital Management ("Blairlogie"). It is anticipated that the
International Developed Fund will reorganize as a series of another mutual
fund family on or before March 31, 1999 and thereafter would not be offered as
a series of the Trust. Please see the Note under "Management of the Trust"
below for details.
EMERGING MARKETS FUND seeks long-term growth of capital. The Fund invests
primarily in common stocks of companies located in countries identified as
emerging market countries. The Morgan Stanley Capital
4
<PAGE>
International Emerging Markets Free Index ("MSCI Free Index") and the
International Finance Corporation Emerging Markets Index ("IFC Index") are
used as the bases for choosing the countries in which the Fund invests.
However, the Fund is not limited to the countries and weightings of these
indexes. The Portfolio Manager applies two levels of screening in selecting
investments for the Fund. First, an active country selection model analyzes
world markets and assigns a relative value ranking, or "favorability
weighting," to each country in the relevant country universe to determine
markets which are relatively undervalued. Second, at the stock selection
level, quality analysis and value analysis are applied to each security,
assessing variables such as balance sheet strength and earnings growth
(quality factors), and performance relative to the industry, price to earnings
ratios, and price to book ratios (value factors). This two-level screening
method identifies undervalued securities for purchase as well as provides a
sell discipline for fully valued securities. In selecting securities, the
Portfolio Manager considers, to the extent practicable and on the basis of
information available to it for research, a company's environmental business
practices.
For purposes of implementing its investment objective, the Fund invests
primarily in some or all of the following emerging market countries (this list
is not exclusive):
Argentina Greece Jordan Poland Sri Lanka
Brazil Hong Kong Malaysia Portugal Taiwan
Chile Hungary Mexico Romania Thailand
China India Pakistan Russia Turkey
Colombia Indonesia Peru South Africa Venezuela
Czech Republic Israel Philippines South Korea Zimbabwe
For purposes of allocating the Fund's investments, a company is considered
to be located in the country in which it is domiciled, in which it is
primarily traded, from which it derives a significant portion of its revenues,
or in which a significant portion of its goods or services are produced.
Most of the foreign securities in which the Fund invests will be denominated
in foreign currencies. The Fund may engage in foreign currency transactions to
protect itself against fluctuations in currency exchange rates in relation to
the U.S. dollar or to the weighting of a particular foreign currency on the
MSCI Free Index or the IFC Index. Such foreign currency transactions may
include forward foreign currency contracts, foreign exchange futures
contracts, and options thereon, currency exchange transactions on a spot
(i.e., cash) basis, and put and call options on foreign currencies. Up to 10%
of the Fund's assets may be invested in the securities of other investment
companies. The Fund may sell (write) call and put options. The Fund may
utilize stock index futures contracts and options thereon for hedging purposes
and also for investment purposes. For instance, the Fund may invest in stock
index futures contracts and related options as an alternative to purchasing
individual stocks to adjust its exposure to a particular foreign market. See
"Characteristics and Risks of Securities and Investment Techniques--Derivative
Instruments--Index Futures" in the Retail Prospectus. The Fund may also engage
in equity index swap transactions.
Investing in the securities of foreign issuers, and particularly emerging
market issuers, involves special risks and considerations not typically
associated with investing in U.S. companies. For a discussion of such risks,
see "Characteristics and Risks of Securities and Investment Techniques--
Foreign Securities" in the Retail Prospectus.
Currently, the Portfolio Manager for the Emerging Markets Fund is
Blairlogie. It is anticipated that the Emerging Markets Fund will reorganize
as a series of another mutual fund family on or before March 31, 1999 and
thereafter would not be offered as a series of the Trust. Please see the Note
under "Management of the Trust" below for details.
Stock Funds. The International Developed and Emerging Markets Funds are each
"Stock Funds" as described in the Retail Prospectus. Each Fund will invest
primarily (normally at least 65% of its assets) in common stock. Each Fund may
maintain a portion of its assets, which will usually not exceed 10%, in U.S.
5
<PAGE>
Government securities, high quality debt securities (whose maturity or
remaining maturity will not exceed five years), money market obligations, and
in cash to provide for payment of the Fund's expenses and to meet redemption
requests. It is the policy of the Funds to be as fully invested in common
stocks as practicable at all times. This policy precludes the Funds from
investing in debt securities as a defensive investment posture (although the
Funds may invest in such securities to provide for payment of expenses and to
meet redemption requests). Accordingly, investors in the Funds bear the risk
of general declines in stock prices and the risk that a Fund's exposure to
such declines cannot be lessened by investment in debt securities. The Funds
may also invest in convertible securities, preferred stocks, and warrants,
subject to certain limitations.
4. CHARACTERISTICS AND RISKS OF SECURITIES AND INVESTMENT TECHNIQUES.
The Funds may invest in the securities and utilize the investment techniques
described under the following sub-headings of "Characteristics and Risks of
Securities and Investment Techniques" in the Retail Prospectus and are subject
to the attendant risks described: "Investment in Companies with Small and
Medium Market Capitalizations," "Foreign Securities," "Foreign Currency
Transactions," "Money Market Instruments," "Convertible Securities,"
"Derivative Instruments" (including "Options on Securities, Securities
Indexes, and Currencies," "Swap Agreement" (for the Emerging Markets Fund
only), "Futures Contracts and Options on Futures Contracts" and "Index
Futures"), "Loans of Portfolio Securities," "Short Sales," "When-Issued,
Delayed Delivery and Forward Commitment Transactions," "Repurchase
Agreements," "Reverse Repurchase Agreements and Other Borrowings," "Illiquid
Securities," and "Investment in Investment Companies." The Emerging Markets
Fund may enter into equity index swap agreements for purposes of gaining
exposure to the stocks making up an index of securities without actually
purchasing those stocks. Each Fund is subject to the risks described under
"Service Systems--Year 2000 Problem" in the Retail Prospectus.
The Emerging Markets Fund is particularly sensitive to the risks associated
with investing in the securities of issuers based in "emerging market"
countries as described under "Foreign Securities" in the Retail Prospectus.
The Emerging Markets Fund is also subject to the risks described under
"Foreign Securities--Special Risks of Investing in Russian and Other Eastern
European Securities" in the Retail Prospectus.
The annual portfolio turnover rates for the Funds were as follows for fiscal
1998 and 1997, respectively: International Developed Fund--60% and 77%;
Emerging Markets Fund--52% and 74%.
5. PURCHASE, REDEMPTION AND EXCHANGE INFORMATION.
Please see "How to Buy Shares," "Alternative Purchase Arrangements,"
"Exchange Privilege" and "How to Redeem" in the Retail Prospectus for
information on purchase, redemption and exchange information for Class A and
Class C shares of the Funds.
Class A, B and C shares of the International Developed and Emerging Markets
Funds are not available for purchase or exchange by new investors. As of
January 11, 1999, Class B shares are also not available for additional
purchases or exchanges by existing Class B shareholders. Existing Class A and
Class C shareholders of the Funds may purchase additional shares of the Funds.
Also, participants in certain self-directed qualified benefit plans that owned
Class A or Class C shares of a Fund as of January 11, 1999 for any single plan
participant will be eligible to direct the purchase of the Fund's Class A or
Class C shares by their plan account for so long as the plan continues to own
Class A or Class C shares of the Fund for any plan participant. It is
anticipated that the Funds will reorganize as series of another mutual fund
family on or before March 31, 1999. Thereafter, shares of the Funds would not
be available to any investor for purchase from the Trust or for exchanges
involving other PIMCO Funds. Please see the Note under "Management of the
Trust" below for details.
6. MANAGEMENT OF THE TRUST.
PIMCO Advisors L.P. ("PIMCO Advisors" or the "Adviser") serves as investment
adviser and administrator to the Funds. Please see "Management of the Trust--
Investment Adviser" and "Management of the Trust--Fund Administrator" in the
Retail Prospectus for a description of PIMCO Advisors.
6
<PAGE>
Blairlogie Capital Management ("Blairlogie") serves as the Portfolio Manager
of the Funds and James Smith of Blairlogie is primarily responsible for the
day-to-day management of each Fund. Please see "Management of the Trust--
Portfolio Managers--Blairlogie" in the Retail Prospectus for a description of
Blairlogie and biographical information about Mr. Smith.
NOTE: It is anticipated that PIMCO Advisors will sell substantially all of its
ownership interest in Blairlogie to Alleghany Asset Management, Inc. on or
before March 31, 1999 (the "Blairlogie Transaction"). The Blairlogie
Transaction is subject to a number of conditions, including approval by the
shareholders of the Emerging Markets and International Developed Funds. In
connection with the anticipated Blairlogie Transaction, it is proposed that
the Emerging Markets and International Developed Funds will transfer all of
their assets and liabilities to newly formed series of the Alleghany Funds to
be managed by Blairlogie. (The proposed transactions are referred to as
"Reorganizations"). The proposed Reorganizations are subject to a number of
conditions, including approval by the Trust's Board of Trustees and the
shareholders of the Emerging Markets and International Developed Funds. The
Retail Prospectus will be supplemented or revised if any of these events
involving Blairlogie and the Funds do not occur substantially in accordance
with the schedule outlined above.
Advisory and Administrative Fees
The Funds feature fixed advisory and administrative fees. For providing or
arranging for the provision of investment advisory services to the Funds,
PIMCO Advisors receives monthly Advisory Fees from the International Developed
Fund at the annual rate of 0.60%, and from the Emerging Markets Fund at the
annual rate of 0.85%, each based on the average daily net assets of the
relevant Fund. Pursuant to the portfolio management agreement between PIMCO
Advisors and Blairlogie, PIMCO Advisors (and not the Funds or the Trust) pays
Blairlogie fees at the annual rate of 0.50% based on the average daily net
assets of the International Developed Fund and 0.75% based on the average
daily net assets of the Emerging Markets Fund.
For providing or procuring administrative services for the Funds, PIMCO
Advisors (in its capacity as Administrator) receives monthly Administrative
Fees from each Fund at the following annual rate based on the average daily
net assets attributable in the aggregate to the Fund's Class A, Class B and
Class C Shares: 0.65% of the first $2.5 billion and 0.60% of amounts in excess
of $2.5 billion.
7. DISTRIBUTIONS.
Net investment income from interest and dividends, if any, will be declared
and paid at least annually to shareholders of record by each of the
International Developed and Emerging Markets Funds.
7
