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PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated June 29, 1999
to the Prospectus for Institutional Class and Administrative Class
Shares Dated May 7, 1999
Disclosure Relating to
PIMCO Core Equity Fund
PIMCO Mid-Cap Equity Fund
PIMCO International Growth Fund
On or about July 1, 1999, PIMCO Advisors L.P. ("PIMCO Advisors"), the
Trust's investment adviser, will assume full portfolio management responsibility
for PIMCO Core Equity, Mid-Cap Equity and International Growth Funds under the
terms of the Trust's investment advisory agreement with PIMCO Advisors. The
PIMCO Equity Advisors division ("PIMCO Equity Advisors") of PIMCO Advisors will
oversee the management of these Funds. PIMCO Advisors is assuming full portfolio
management responsibility for these Funds from its subsidiary Columbus Circle
Investors ("CCI"), the Funds' current Sub-Adviser, in connection with PIMCO
Advisors' anticipated sale of CCI to certain employees of CCI.
Kenneth W. Corba and John K. Schneider will share primary responsibility
for the day-to-day portfolio management of PIMCO Core Equity Fund. Mr. Corba, a
Managing Director and Chief Investment Officer of PIMCO Equity Advisors, has 14
years' investment management experience. Mr. Corba was most recently Chief
Investment Officer of Eagle Asset Management, and prior to that he was a
principal and a Senior Vice President at Stein Roe and Farnham Inc. Mr. Corba
received his bachelor's degree and MBA from the University of Michigan. He is a
Chartered Financial Analyst. Mr. Schneider previously served as a partner and
Portfolio Manager of Schneider Capital Management. He has 13 years' investment
management experience. He graduated from Lehigh University and is a Chartered
Financial Analyst.
Kenneth W. Corba, Jeff Parker and John K. Schneider will share primary
responsibility for the day-to-day portfolio management of PIMCO Mid-Cap Equity
Fund. Information about Messrs. Corba and Schneider is provided above. Jeff
Parker, an Assistant Portfolio Manager at PIMCO Equity Advisors, most recently
served as an Assistant Portfolio Manager of Eagle Asset Management. Prior to
that he was a Senior Consultant with Andersen Consulting, specializing in health
care and technology. He has 3 years' investment management experience. Mr.
Parker received his bachelor's degree from the University of Miami and his MBA
from Vanderbilt University.
David Stein and Cliff Quisenberry will share primary responsibility for the
day-to-day portfolio management of PIMCO International Growth Fund. Mr. Stein is
employed by
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PIMCO Equity Advisors as a Senior Portfolio Manager. Mr. Stein graduated with
bachelor's and master's degrees in Applied Mathematics from the University of
Witwatersrand, South Africa, and received a Ph.D. in Applied Mathematics from
Harvard University. He previously served as the Director of Investment Research
at GTE Investment Management, Director of Active Equity Strategies at the
Vanguard Group, and Director of Quantitative Portfolio Management and Research
at IBM. Mr. Quisenberry is employed by PIMCO Equity Advisors as a Portfolio
Manager. He has 9 years of portfolio management experience. He previously served
as a Vice President and Portfolio Manager at Cutler & Co., and as a Security
Analyst and Portfolio Manager at Fred Alger Management. Mr. Quisenberry
graduated from Yale University with a bachelor's degree in Economics. He is a
Chartered Financial Analyst. As described on pages 53-54 of the Prospectus,
Messrs. Stein and Quisenberry hold positions with Parametric Portfolio
Associates, an affiliate of PIMCO Advisors that serves as Sub-Adviser to several
other Funds of the Trust, and share portfolio management responsibility for
these Funds.
Based on information currently available, the Trust anticipates that
current shareholders with more than an 85% interest in PIMCO Core Equity Fund,
more than an 80% interest in PIMCO Mid-Cap Equity Fund and more than a 95%
interest in PIMCO International Growth Fund will redeem their shares either
prior to or during July 1999, thus resulting in very substantial reductions in
the current assets of the Funds.
In connection with the above-referenced management changes for the Funds,
the Prospectus is amended as follows effective July 1, 1999:
The description of PIMCO Core Equity Fund under "Investment Objectives and
Policies" beginning on page 22 of the Prospectus is amended in its entirety as
follows:
"CORE EQUITY FUND seeks long-term growth of capital, with income as a
secondary objective. The Fund attempts to exceed the total return
performance of the S&P 500 over a reasonable measurement period. The Fund
usually invests in approximately 40 common stocks of companies with market
capitalizations in excess of $10 billion at the time of investment. In
selecting stocks, the Sub-Adviser uses two distinct investment disciplines.
Approximately 50% of the value of the Fund's portfolio will be selected
using a "Growth" style. The Portfolio Manager of this Growth segment seeks
to own companies with well-defined "wealth creating" characteristics,
including superior earnings growth, high profitability and consistent,
predictable earnings. In addition, through fundamental research, the
Portfolio Manager seeks to identify dominant companies that are gaining
market share, have superior management and possess a sustainable
competitive advantage. Stocks in the Growth segment are sold when earnings,
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sentiment and relative performance are disappointing or if an alternative
investment is more attractive.
The remainder of the Fund's portfolio (approximately 50% of its
value) will be selected using a "Value" style. The Portfolio Manager of
this Value segment invests primarily in common stocks of companies having
below-average valuations whose business fundamentals are expected to
improve. Valuation is determined based on characteristics such as price to
earnings, price to book, and price to cash flow ratios. Stocks are analyzed
to identify the key drivers of financial results and catalysts for change
that indicate a company may demonstrate improving fundamentals in the
future. Stocks in the Value segment are sold from the Fund's portfolio when
the Portfolio Manager believes that the issuers' business fundamentals are
weakening or when their valuations have become excessive.
The Fund may invest a portion of its assets in securities of foreign
issuers traded in foreign securities markets, which will not exceed 15% of
the Fund's net assets at the time of investment. Investing in the
securities of foreign issuers involves special risks and considerations not
typically associated with investing in U.S. companies. For a discussion of
such risks, see "Characteristics and Risks of Securities and Investment
Techniques--Foreign Securities." The Fund may also purchase and write call
and put options on securities, securities indexes and on foreign
currencies; enter into futures contracts and use options on futures
contracts; and enter into forward foreign currency contracts. The Portfolio
Manager for the Growth segment of the Core Equity Fund is Kenneth W. Corba
of PIMCO Equity Advisors. The Portfolio Manager for the Value segment of
the Fund is John K. Schneider of PIMCO Equity Advisors."
The description of PIMCO Mid-Cap Equity Fund under "Investment Objectives
and Policies" beginning on page 22 of the Prospectus is amended in its entirety
as follows:
"MID-CAP EQUITY FUND seeks long-term growth of capital. The Fund
usually invests in approximately 40 common stocks of companies with market
capitalizations of $1 billion to $10 billion at the time of investment. In
selecting stocks, the Sub-Adviser uses two distinct investment disciplines.
Approximately 50% of the value of the Fund's portfolio will be selected
using a "Growth" style. The Portfolio Manager of this Growth segment seeks
to own companies with well-defined "wealth creating" characteristics,
including superior earnings growth, high profitability and consistent,
predictable
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earnings. In addition, through fundamental research, the Portfolio Manager
seeks to identify dominant companies that are gaining market share, have
superior management and possess a sustainable competitive advantage. Stocks
in the Growth segment are sold when earnings, sentiment and relative
performance are disappointing or if an alternative investment is more
attractive.
The remainder of the Fund's portfolio (approximately 50% of its
value) will be selected using a "Value" style. The Portfolio Manager of
this Value segment invests primarily in common stocks of companies having
below-average valuations whose business fundamentals are expected to
improve. Valuation is determined based on characteristics such as price to
earnings, price to book, and price to cash flow ratios. Stocks are analyzed
to identify the key drivers of financial results and catalysts for change
that indicate a company may demonstrate improving fundamentals in the
future. Stocks in the Value segment are sold from the Fund's portfolio when
the Portfolio Manager believes that the issuers' business fundamentals are
weakening or when their valuations have become excessive.
The Fund may invest a portion of its assets in securities of foreign
issuers traded in foreign securities markets, which will not exceed 15% of
the Fund's net assets at the time of investment. Investing in the
securities of foreign issuers involves special risks and considerations not
typically associated with investing in U.S. companies. For a discussion of
such risks, see "Characteristics and Risks of Securities and Investment
Techniques--Foreign Securities." The Fund may also purchase and write call
and put options on securities, securities indexes and on foreign
currencies; enter into futures contracts and use options on futures
contracts; and enter into forward foreign currency contracts. The Portfolio
Managers for the Growth segment of the Mid-Cap Equity Fund are Kenneth W.
Corba and Jeff Parker of PIMCO Equity Advisors. The Portfolio Manager for
the Value segment of the Fund is John K. Schneider of PIMCO Equity
Advisors."
The description of PIMCO International Growth Fund under "Investment
Objectives and Policies" beginning on page 23 of the Prospectus is amended in
its entirety as follows:
"INTERNATIONAL GROWTH FUND seeks long-term capital appreciation. The
Fund invests in an international portfolio of equity and equity-related
securities of companies the principal activities of which are in countries
other than the United States. The Fund will normally invest in securities
traded in foreign securities markets and in securities
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of foreign issuers traded on U.S. securities markets. As noted below,
except for temporary defensive investments, the Fund will not invest in
securities of U.S. issuers traded on U.S. securities markets. Otherwise,
there are no prescribed limits on geographic asset distribution, and the
Fund has the authority to invest in securities traded in securities markets
of any country in the world. Under certain adverse investment conditions,
the Fund may restrict the number of securities markets in which it invests,
although under normal market conditions, the Fund's investments will
include securities principally traded in at least three different countries
(not including the U.S.). The Fund will not limit its investments to any
particular type or size of company. In pursuing its investment objective,
under normal market conditions, the Fund will invest at least 65% of its
assets in equity securities of issuers which exhibit growth
characteristics. The Fund may also invest in issuers which do not exhibit
growth characteristics, but whose securities are thought to be undervalued.
The Fund may invest in developed foreign securities markets and in
emerging markets, where markets may not fully reflect the potential of the
developing economy. The Fund may also invest in shares of companies which
are not presently listed but are in the process of being privatized by the
government and shares of companies that are traded in over-the-counter
markets or other types of unlisted securities markets.
In making investment decisions for the Fund, the Sub-Adviser may
consider fundamental factors such as country factors (e.g., changes in the
political environment or funds flows); macroeconomic factors (e.g., GDP
growth, inflation and interest rates); global secular trends (e.g., global
grain shortages or growth in wireless communications); and industry and
company specific factors. The relevant factors can be country (top down) or
company (bottom up) specific.
The Sub-Adviser believes that securities markets of many nations can
be expected to move relatively independently of one another, because
business cycles and other economic or political events that influence one
country's securities markets may have little effect on the securities
markets of other countries. By investing in an international portfolio, the
Fund seeks to reduce the risks associated with investing in the economy of
only one country.
The Fund may invest up to 10% of its assets in securities of other
investment companies, such as closed-end management investment companies
which invest in foreign markets. The Fund may also purchase
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and write call and put options on securities, securities indexes, and on
foreign currencies; enter into futures contracts and use options on futures
contracts, including futures contracts on foreign currencies; buy or sell
foreign currencies; and enter into forward foreign currency contracts. 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."
The Fund will not normally invest in securities of U.S. issuers
traded on U.S. securities markets. However, when the Sub-Adviser believes
that conditions in international securities markets warrant a defensive
investment strategy, the Fund may temporarily invest up to 100% of its
assets in domestic debt, foreign debt and equity securities principally
traded in the U.S., including money market instruments, obligations issued
or guaranteed by the U.S. or a foreign government or their respective
agencies, authorities or instrumentalities, or corporate bonds and
sponsored American Depository Receipts. The Fund will not invest in debt
securities which are of less than investment grade quality at the time of
purchase (i.e., securities rated Ba or below by Moody's or BB or below by
S&P or, if unrated, considered by the Sub-Adviser to be of comparable
quality).
Investing in the securities of foreign issuers, and particularly
emerging market issuers, involves special risks not typically associated
with investing in U.S. companies. For a discussion of such risks, see
"Characteristics and Risks of Securities and Investment Techniques--Foreign
Securities."
The Portfolio Managers for the International Growth Fund are David
Stein and Cliff Quisenberry of PIMCO Equity Advisors. Messrs. Stein and
Quisenberry also hold positions with Parametric and serve as Portfolio
Managers for other Funds."
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