<PAGE>
As filed with the Securities and Exchange Commission on August 30, 2000.
Registration Nos. 33-36528;
811-6161
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
---
Pre-Effective Amendment No. ___ / /
---
Post-Effective Amendment No. 52 / X /
---
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
---
Amendment No. 55 / X /
---
PIMCO FUNDS: MULTI-MANAGER SERIES
(Exact Name of Registrant as Specified in Charter)
840 Newport Center Drive, Newport Beach, CA 92660
(Address of principal executive offices) (Zip code)
(800) 427-4648
(Registrant's telephone number, including area code)
Name and address
of agent for service: Copies to:
--------------------- ----------
Stephen J. Treadway Newton B. Schott, Jr., Joseph B. Kittredge, Esq.
c/o PIMCO Funds Esq. Ropes & Gray
Distributors LLC c/o PIMCO Funds One International Place
2187 Atlantic Street Distributors LLC Boston, Massachusetts
Stamford, Connecticut 2187 Atlantic Street 02110
06902 Stamford, Connecticut
06902
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
---
/ / On [date] pursuant to paragraph (b)
---
/ / 60 days after filing pursuant to paragraph (a)(1)
---
/ X / On November 1, 2000 pursuant to paragraph (a)(1)
---
/ / 75 days after filing pursuant to paragraph (a)(2)
---
/ / On [date] pursuant to paragraph (a)(2) of rule 485
---
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
--- previously filed post-effective amendment.
This Post-Effective Amendment relates to each series of the Trust except
for PIMCO Healthcare Innovation, PIMCO Internet Innovation, PIMCO Telecom
Innovation, PIMCO Electronics Innovation, PIMCO Small-Cap Technology,
PIMCO/Allianz Select World, PIMCO/Allianz New Asia, PIMCO/Allianz Europe Growth
and PIMCO/Allianz Emerging Markets Funds, each a series of the Trust currently
in registration (together, the "New Series"). This Post-Effective Amendment does
not amend or supersede disclosure in the Trust's Registration Statement relating
to the New Series.
<PAGE>
PIMCO Funds Prospectus
PIMCO
Funds: This Prospectus describes 21 mutual funds offered by PIMCO Funds:
Multi- Multi-Manager Series. The Funds provide access to the professional
Manager investment advisory services offered by PIMCO Advisors L.P. and
Series its investment management affiliates. As of September 30, 2000,
PIMCO Advisors and its affiliates managed approximately
$[ ] billion in assets. PIMCO Advisors' institutional heritage is
reflected in the PIMCO Funds offered in this Prospectus.
November
1, 2000
This Prospectus explains what you should know about the Funds
before you invest. Please read it carefully.
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
Share
Classes
Institutional
and
Administrative
1 PIMCO Funds: Multi-Manager Series
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information.............................................. 3
Fund Summaries
Equity Income Fund............................................. 5
Value Fund..................................................... 7
Renaissance Fund............................................... 9
Growth Fund.................................................... 11
Select Growth Fund............................................. 13
Target Fund.................................................... 15
Growth & Income Fund........................................... 17
Opportunity Fund............................................... 19
Innovation Fund................................................ 21
Global Innovation Fund......................................... 23
Select International Fund...................................... 25
Mega-Cap Fund.................................................. 27
Capital Appreciation Fund...................................... 29
Mid-Cap Fund................................................... 31
Micro-Cap Fund................................................. 33
Small-Cap Value Fund........................................... 35
Enhanced Equity Fund........................................... 37
Tax-Efficient Equity Fund...................................... 39
Structured Emerging Markets Fund............................... 41
Tax-Efficient Structured Emerging Markets Fund................. 44
International Fund............................................. 47
Summary of Principal Risks....................................... 49
Management of the Funds.......................................... 53
Investment Options -- Institutional Class and Administrative
Class Shares ................................................... 59
Purchases, Redemptions and Exchanges............................. 60
How Fund Shares Are Priced....................................... 65
Fund Distributions............................................... 66
Tax Consequences................................................. 67
Characteristics and Risks of Securities and Investment
Techniques...................................................... 67
Financial Highlights............................................. 78
</TABLE>
Prospectus 2
<PAGE>
Summary Information
The table below lists the investment objectives and certain investment
characteristics of the Funds. Other important characteristics are described
in the individual Fund Summaries beginning on page 5.
<TABLE>
<CAPTION>
Approximate
Number of
Sub-Adviser Fund Investment Objective Main Investments Holdings
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PIMCO Equity Equity Income Current income as a Income producing common stocks of 40-50
Advisors primary objective; long- companies with market capitalizations
term growth of capital of more than $2 billion
as a secondary objective
-----------------------------------------------------------------------------------------------------
Value Long-term growth of Common stocks of companies with market 40
capital and income capitalizations of more than $5
billion and below-average valuations
whose business fundamentals are
expected to improve.
-----------------------------------------------------------------------------------------------------
Renaissance Long-term growth of Common stocks of companies with below- 50-80
capital and income average valuations whose business
fundamentals are expected to improve
-----------------------------------------------------------------------------------------------------
Growth Long-term growth of Common stocks of companies with market 35-40
capital; income is an capitalizations of at least $5 billion
incidental consideration
-----------------------------------------------------------------------------------------------------
Select Growth Long-term growth of Common stocks of companies with market 15-25
capital; income is an capitalizations of at least $10
incidental consideration billion
-----------------------------------------------------------------------------------------------------
Target Capital appreciation; no Common stocks of companies with market 40-60
consideration is given capitalizations of between $1 billion
to income and $10 billion
-----------------------------------------------------------------------------------------------------
Growth & Long-term growth of Common stocks of companies with market 40-60
Income capital; current income capitalizations of at least $1 billion
is a secondary objective
-----------------------------------------------------------------------------------------------------
Opportunity Capital appreciation; no Common stocks of companies with market 60-100
consideration is given capitalizations of between $100
to income million and $2 billion
-----------------------------------------------------------------------------------------------------
Innovation Capital appreciation; no Common stocks of technology-related 40
consideration is given companies with market capitalizations
to income of more than $200 million
-----------------------------------------------------------------------------------------------------
Global Capital appreciation; no Common stocks of U.S. and non-U.S. 30-60
Innovation consideration is given technology-related companies with
to income market capitalizations of more than
$200 million
-----------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Select Capital appreciation An international portfolio of common 50-100
International stocks
International
Advisors LLC
-----------------------------------------------------------------------------------------------------------------
Cadence Capital Mega-Cap Long-term growth of Common stocks of companies with very 40-60
Management capital large market capitalizations that have
improving fundamentals and whose stock
is reasonably valued by the market
-----------------------------------------------------------------------------------------------------
Capital Growth of capital Common stocks of companies with market 60-100
Appreciation capitalizations of at least $1 billion
that have improving fundamentals and
whose stock is reasonably valued by
the market
-----------------------------------------------------------------------------------------------------
Mid-Cap Growth of capital Common stocks of companies with market 60-100
capitalizations of more than $500
million (excluding the largest 200
companies) that have improving
fundamentals and whose stock is
reasonably valued by the market
-----------------------------------------------------------------------------------------------------
Micro-Cap Long-term growth of Common stocks of companies with market 60-100
capital capitalizations of less than $250
million that have improving
fundamentals and whose stock is
reasonably valued by the market
-----------------------------------------------------------------------------------------------------------------
NFJ Investment Group Small-Cap Long-term growth of Common stocks of companies with market 100
Value capital and income capitalizations of between $100
million and $1.5 billion and below-
average price-to-earnings ratios
relative to the market and their
industry groups
-----------------------------------------------------------------------------------------------------------------
</TABLE>
3 PIMCO Funds: Multi-Manager Series
<PAGE>
Summary Information (continued)
<TABLE>
<CAPTION>
Approximate
Number of
Sub-Adviser Fund Investment Objective Main Investments Holdings
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Parametric Portfolio Enhanced A total return which Common stocks represented in the S&P 100-200
Associates Equity equals or exceeds the 500 Index with market capitalizations
total return performance of more than $5 billion
of an index (currently
the S&P 500 Index) that
represents the
performance of a
reasonably broad
spectrum of common
stocks that are publicly
traded in the U.S.
-----------------------------------------------------------------------------------------------------
Tax-Efficient Maximum after-tax growth A broadly diversified portfolio of at More
Equity of capital least 200 common stocks of companies than
represented in the S&P 500 Index with 200
market capitalizations of more than $5
billion
-----------------------------------------------------------------------------------------------------
Structured Long-term growth of Common stocks of companies located in, More
Emerging capital or whose business relates to, emerging than
Markets markets 300
-----------------------------------------------------------------------------------------------------
Tax-Efficient Long-term growth of Common stocks of companies located in, More
Structured capital; the Fund also or whose business relates to, emerging than
Emerging seeks to achieve markets 300
Markets superior after-tax
returns for its
shareholders by using a
variety of tax-efficient
management strategies
-----------------------------------------------------------------------------------------------------------------
Blairlogie Capital International Capital appreciation Common stocks of foreign (non-U.S.) 200-250
Management through investment in an issuers (developed and emerging
international portfolio; markets) with market capitalizations
income is an incidental of more than $500 million
consideration
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Fund
Descriptions,
Performance
and Fees
The Funds provide a broad range of investment choices. The
following Fund Summaries identify each Fund's investment
objective, principal investments and strategies, principal risks,
performance information and fees and expenses. A more detailed
"Summary of Principal Risks" describing principal risks of
investing in the Funds begins after the Fund Summaries.
It is possible to lose money on investments in the Funds. The
fact that a Fund had good performance in the past (for example,
during the year ended 1999) is no assurance that the value of the
Fund's investments will not decline in the future or appreciate at
a slower rate. An investment in a Fund is not a deposit of a bank
and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Prospectus 4
<PAGE>
PIMCO Equity Income Fund
Ticker Symbols:
PEIIX (Inst. Class)
PINAX (Admin. Class)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments Seeks current Income producing common stocks More than $2 billion
and income as a with potential for capital
Strategies primary appreciation Dividend Frequency
objective, and Quarterly
long-term growth Approximate Number of Holdings
of capital as a 40-50
secondary
objective
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in income-producing (e.g.,
dividend-paying) common stocks of companies with market
capitalizations of more than $2 billion at the time of investment.
The Fund may also invest in convertible securities and preferred
stocks.
The Fund's initial selection universe consists of the 1,000
largest publicly traded companies (in terms of market
capitalization) in the U.S. The portfolio managers classify the
universe by industry. They then identify the most undervalued
stocks in each industry based mainly on relative P/E ratios,
calculated both with respect to trailing operating earnings and
forward earnings estimates. From this group of stocks, the Fund
buys approximately 25 stocks with the highest dividend yields. The
portfolio managers then screen the most undervalued companies in
each industry by dividend yield to identify the highest yielding
stocks in each industry. From this group, the Fund buys
approximately 25 additional stocks with the lowest P/E ratios.
In selecting stocks, the portfolio managers consider quantitative
factors such as price momentum (based on changes in stock price
relative to changes in overall market prices), earnings momentum
(based on analysts' earnings per share estimates and revisions to
those estimates), relative dividend yields, valuation relative to
the overall market and trading liquidity. The portfolio managers
may replace a stock when a stock within the same industry group
has a considerably higher dividend yield or lower valuation than
the Fund's current holding.
The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs). In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in high-quality fixed income securities. This
would be inconsistent with the Fund's investment objective and
principal strategies.
-------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
.Market Risk .Foreign Investment Risk .Credit Risk
.Issuer Risk .Currency Risk .Management Risk
.Value Securities Risk .Interest Rate Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
-------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(11/30/94), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Prior to May 8, 2000, the Fund had
a different sub-adviser and would not necessarily have achieved
the performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
5 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Equity Income Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (2nd Qtr.
'99) 16.06%
--------------------
Lowest (3rd Qtr.
'98) -10.93%
[CHART APPEARS HERE]
'92 14.75%
'93 8.47%
'94 -1.61%
'95 33.47%
'96 21.48%
'97 31.38%
'98 8.37%
'99 -1.92%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (3/8/91)(/3/)
-------------------------------------------------------------------
Institutional Class -1.92% 17.75% 14.25%
-------------------------------------------------------------------
Administrative Class -2.22% 17.47% 13.96%
-------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 19.75%
-------------------------------------------------------------------
Lipper Equity Income Funds Average(/2/) 4.77% 18.02% 14.57%
-------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Equity Income Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that seek relatively high current income and
growth of income through investing 65% or more of their
portfolios in dividend-paying equities. It does not take into
account sales charges.
(3) The Fund began operations on 3/8/91. Index comparisons begin
on 2/28/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
Institutional $72 $224 $390 $ 871
------------------------------------------------------------------
Administrative 97 303 525 1,166
------------------------------------------------------------------
</TABLE>
Prospectus 6
<PAGE>
PIMCO Value Fund
Ticker Symbols:
PDLIX (Inst. Class)
PVLAX (Admin.Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks long-term Undervalued Capitalization Range
and growth of capital larger
Strategies and income capitalization More than $5 billion
stocks with
improving
business Dividend Frequency
fundamentals Quarterly
Approximate Number of Holdings
40
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of more than $5 billion at the time of
investment and below-average valuations whose business
fundamentals are expected to improve. To achieve income, the Fund
invests a portion of its assets in income-producing (e.g.,
dividend-paying) common stocks.
The portfolio manager selects stocks for the Fund using a "value"
style. The portfolio manager invests primarily in stocks of
companies having below-average valuations whose business
fundamentals are expected to improve. The portfolio manager
determines valuation based on characteristics such as price-to-
earnings, price-to-book, and price-to-cash flow ratios. The
portfolio manager analyzes stocks and seeks to identify the key
drivers of financial results and catalysts for change, such as new
management and new or improved products, that indicate a company
may demonstrate improving fundamentals in the future. The
portfolio manager looks to sell a stock when he believes that the
company's business fundamentals are weakening or when the stock's
valuation has become excessive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADR's). In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its
assets in high-quality fixed income securities. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Foreign Investment Risk . Credit Risk
. Issuer Risk . Currency Risk . Management Risk
. Value Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(8/21/97), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Prior to May 8, 2000, the Fund had
a different sub-adviser and would not necessarily have achieved
the performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
7 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Value Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (2nd Qtr.
'99) 17.92%
--------------------
Lowest (3rd Qtr.
'98) -13.23%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
'92 -13.15%
'93 16.41%
'94 -4.07%
'95 38.91%
'96 20.34%
'97 26.21%
'98 10.17%
'99 4.30%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/30/91)(/3/)
----------------------------------------------------------------------
Institutional Class 4.30% 19.37% 15.11%
----------------------------------------------------------------------
Administrative Class 3.94% 19.05% 14.81%
----------------------------------------------------------------------
Russell 1000 Value Index(/1/) % % %
----------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average(/2/) % % %
----------------------------------------------------------------------
</TABLE>
(1) The Russell 1000 Value Index is an unmanaged index that
measures the performance of companies in the Russell 1000
Index considered to have less than average growth
orientation. It is not possible to invest directly in the
index. The Russell 1000 Value Index replaced the S&P 500
Index (an unmanaged index of large capitalization common
stocks) as the Fund's comparative index because PIMCO
Advisors believes that the Russell 1000 Value Index is more
representative of the Fund's investment strategies. For
periods ended December 31, 1999, the 1 Year, 5 Year and Fund
Inception average total returns of the S&P 500 Index were
21.04%, 28.56% and 19.70%, respectively.
(2) The Lipper Multi-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges, without concentrating in any one market
capitalization range over an extended period of time. It does not
take into account sales charges.
(3) The Fund began operations on 12/30/91. Index comparisons begin
on 12/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION> Share Class
Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $72 $224 $390 $ 871
------------------------------------------------------------------
Administrative 97 303 525 1,166
------------------------------------------------------------------
</TABLE>
Prospectus 8
<PAGE>
PIMCO Renaissance Fund
Ticker Symbols: PRNIX
(Inst. Class)
PRAAX
(Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks long-term Undervalued Capitalization Range
and growth of capital stocks with All capitalizations
Strategies and income improving
business Dividend Frequency
fundamentals Quarterly
Approximate Number of Holdings
50-80
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with below-average valuations whose business fundamentals are
expected to improve. Although the Fund typically invests in
companies with market capitalizations of $1 billion to $10 billion
at the time of investment, it may invest in companies in any
capitalization range. To achieve income, the Fund invests a
portion of its assets in income producing (e.g., dividend-paying)
stocks.
The portfolio manager selects stocks for the Fund using a "value"
style. The portfolio manager invests primarily in common stocks of
companies having below-average valuations whose business
fundamentals, such as market share, strength of management and
competitive position, are expected to improve. The portfolio
manager determines valuation based on characteristics such as
price-to-earnings, price-to-book, and price-to-cash flow ratios.
The portfolio manager analyzes stocks and seeks to identify the
key drivers of financial results and catalysts for change, such as
new management and new or improved products, that indicate a
company may demonstrate improving fundamentals in the future. The
portfolio manager looks to sell a stock when he believes that the
company's business fundamentals are weakening or when the stock's
valuation has become excessive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Foreign Investment Risk . Credit Risk
. Issuer Risk . Currency Risk . Management
. Value Securities Risk Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Institutional Class shares
(12/30/97) and Administrative Class shares (8/31/98), performance
information shown in the bar chart (including the information to
its right) and in the Average Annual Total Returns table for those
classes is based on the performance of the Fund's Class C shares,
which are offered in a different prospectus. The prior Class C
performance has been adjusted to reflect the actual fees and
expenses paid by Institutional Class and Administrative Class
shares, including no sales charges (loads) and lower distribution
and/or service (12b-1) fees (if any) and administrative fees.
Prior to May 7, 1999, the Fund had a different sub-adviser and
would not necessarily have achieved the performance results shown
on the next page under its current investment management
arrangements. Past performance is no guarantee of future results.
9 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Renaissance Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'98) 18.51%
--------------------
Lowest (3rd Qtr.
'98) -16.52%
[GRAPH]
'90 -14.47%
'91 34.75%
'92 9.02%
'93 22.62%
'94 -3.95%
'95 29.06%
'96 25.82%
'97 36.42%
'98 11.83%
'99 9.80%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (4/18/88)(/3/)
------------------------------------------------------------------------------
Institutional Class 9.80% 22.16% 14.94% 14.39%
------------------------------------------------------------------------------
Administrative Class 9.77% 21.91% 14.68% 14.13%
------------------------------------------------------------------------------
Russell Mid-Cap Value Index(/1/) % % % %
------------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average(/2/) % % % %
------------------------------------------------------------------------------
</TABLE>
(1) The Russell Mid-Cap Value Index is an unmanaged index that
measures the performance of medium capitalization companies
in the Russell 1000 Index with lower price-to-book ratios
and lower forecasted growth values. It is not possible to
invest directly in the index. The Mid-Cap Value Index
replaced the Russell 1000 Value Index (an unmanaged index
that measures the performance of companies in the Russell
1000 Index considered to have less than average growth
orientation) and replaced the S&P 500 Index (an unmanaged
index of large capitalization common stocks) as one of the
Fund's comparative indexes because PIMCO Advisors believes
the Russell Mid-Cap Value Index is more representative of
the Fund's investment strategies. For periods ended December
31, 1999, the 1 Year, 5 Years, 10 Years and Fund Inception
average annual total returns of the Russell 1000 Value Index
were 7.34%, 23.08%, 15.60% and 15.38%, respectively, and of
the S&P 500 Index were 21.04%, 28.56%, 18.21% and 19.06%,
respectively.
(2) The Lipper Multi-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does not
take into account sales charges
(3) The Fund began operations on 4/18/88. Index comparisons
begin on 4/30/88.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
None
Shareholder Fees (fees paid directly from your investment)
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
-----------------------------------------------------------------
Institutional 0.60% None 0.25% 0.85%
-----------------------------------------------------------------
Administrative 0.60 0.25% 0.25 1.10
-----------------------------------------------------------------
</TABLE>
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 87 $271 $471 $1,049
-----------------------------------------------------------------------------------
Administrative 112 350 606 1,340
-----------------------------------------------------------------------------------
</TABLE>
Prospectus 10
<PAGE>
PIMCO Growth Fund
Ticker
Symbols: PGFIX
(Inst. Class)
PGFAX
(Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment ObjectiveFund Focus Approximate
Investments Seeks long-term Larger Capitalization Range
and growth of capitalization At least $5 billion
Strategies capital; income common stocks
is an incidental Dividend Frequency
consideration Approximate Number
of Holdings At least annually
35-40
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of at least $5 billion at
the time of investment.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Foreign Investment Risk
. Credit Risk
. Issuer Risk . Currency Risk . Management Risk
. Growth Securities Risk
. Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Class C shares, which are offered in a different
prospectus. This is because the Fund has not offered Institutional
Class or Administrative Class shares for a full calendar year.
Although Class C, Institutional Class and Administrative Class
shares would have similar annual returns (because all the Fund's
shares represent interests in the same portfolio of securities),
Class C performance would be lower than Institutional Class or
Administrative Class performance because of the higher sales
charges and expenses paid by Class C shares. The returns in the
bar chart and the information to its right do not reflect the
impact of sales charges (loads). If they did, the returns would be
lower than those shown. Unlike the bar chart, performance figures
for Class C shares in the Average Annual Total Returns table
reflect the impact of sales charges. For periods prior to the
inception of Institutional Class and Administrative Class shares
(3/31/99), the Average Annual Total Returns table also shows
estimated historical performance for Institutional Class and
Administrative Class shares based on the performance of the Fund's
Class C shares. The prior Class C performance has been adjusted to
reflect that there are no sales charges and lower distribution
and/or service (12b-1) fees (if any), administrative fees and
other expenses paid by Institutional Class and Administrative
Class shares. Prior to March 6, 1999, the Fund had a different
sub-adviser and would not necessarily have achieved the
performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
11 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Growth Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 36.21%
--------------------
Lowest (3rd Qtr.
'90) -13.14%
[BAR CHART APPEARS HERE]
'90 0.29%
'91 41.88%
'92 2.08%
'93 9.32%
'94 -0.75%
'95 27.47%
'96 17.52%
'97 21.84%
'98 38.90%
'99 39.83%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (2/24/84)(/3/)
-------------------------------------------------------------------------------
Class C 38.83% 28.80% 18.77% 19.25%
-------------------------------------------------------------------------------
Institutional Class 40.87% 30.17% 20.08% 20.58%
-------------------------------------------------------------------------------
Administrative Class 40.54% 29.85% 19.79% 20.29%
-------------------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 18.21% 18.60%
-------------------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(/2/) % % % %
-------------------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 2/24/84. Index comparisons
begin on 2/29/84.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.50% None 0.25% 0.75%
------------------------------------------------------------------
Administrative 0.50 0.25% 0.25 1.00
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 77 $240 $417 $ 930
------------------------------------------------------------------
Administrative 102 318 552 1,225
------------------------------------------------------------------
</TABLE>
Prospectus 12
<PAGE>
PIMCO Select Growth Fund
Ticker Symbols: PCFIX
(Inst. Class)
PCEAX (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks long-term Larger Capitalization Range
and growth of capitalization At least $10 billion
Strategies capital; income common stocks
is an incidental
consideration
Dividend Frequency
Approximate Number of Holdings
At least annually
15-25
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of at least $10 billion at
the time of investment. The Fund normally invests in the
securities of 15 to 25 issuers.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund is "non-diversified," which means that it invests in a
relatively small number of issuers.
The Fund may invest up to 25% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs). In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in high-quality fixed income securities. This
would be inconsistent with the Fund's investment objective and
principal strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
.Market Risk .Growth Securities Risk .Credit Risk
.Issuer Risk .Foreign Investment Risk .Management Risk
.Focused Investment Risk .Currency Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(5/31/95), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. The performance information on the
next page reflects the Fund's advisory fee rate in effect prior
to April 1, 2000 (0.57% per annum); these results would have been
lower had the current advisory fee rate (0.60% per annum) then
been in effect. Prior to July 1, 1999, the Fund had a different
sub-adviser and would not necessarily have achieved the
performance results shown on the next page under its current
investment management arrangements. In addition, the Fund changed
its investment objective and policies on April 1, 2000; the
performance results shown on the next page would not necessarily
have been achieved had the Fund's current objective and policies
then been in effect. Past performance is no guarantee of future
results.
13 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Select Growth Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'98) 24.90%
--------------------
Lowest (3rd Qtr.
'98) -11.38%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
'95 -27.96%
'96 17.95%
'97 25.32%
'98 41.06%
'99 24.27%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/28/94)(/3/)
-----------------------------------------------------------------------
Institutional Class 24.27% 27.09% 27.06%
-----------------------------------------------------------------------
Administrative Class 23.75% 26.69% 26.67%
-----------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 28.56%
-----------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(/2/) % % %
-----------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 12/28/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees(/1/) (12b-1) Fees Expenses(/2/) Expenses
------------------------------------------------------------------
Institutional 0.60% None 0.25% 0.85%
------------------------------------------------------------------
Administrative 0.60 0.25% 0.25 1.10
------------------------------------------------------------------
(1) On April 1, 2000, the Fund's advisory fee rate increased by
0.03%, to 0.60% per annum.
(2) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 87 $271 $471 $1,049
------------------------------------------------------------------
Administrative 112 350 606 1,340
------------------------------------------------------------------
</TABLE>
Prospectus 14
<PAGE>
PIMCO Target Fund
Ticker Symbols: PFTIX
(Inst. Class)
PTADX (Admin.
Class)
<TABLE>
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments Seeks capital appreciation; no Medium capitalization common Between $1 billion and $10 billion
and consideration is given to income stocks
Strategies
Approximate Number of Holdings Dividend Frequency
40-60 At least annually
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of between $1 billion and
$10 billion at the time of investment.
The portfolio managers select stocks for the Fund using a
"growth" style. The portfolio managers seek to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio managers seek to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio managers believe that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest to a limited degree in other kinds of
equity securities, including preferred stocks and convertible
securities. The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
.Market Risk .Liquidity Risk .Focused Investment Risk
.Issuer Risk .Foreign Investment Risk .Credit Risk
.Growth Securities Risk .Currency Risk .Management Risk
.Smaller Company Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Class A shares, which are offered in a different
prospectus. This is because the Fund has not offered Institutional
Class or Administrative Class shares for a full calendar year.
Although Class A, Institutional Class and Administrative Class
shares would have similar annual returns (because all the Fund's
shares represent interests in the same portfolio of securities),
Class A performance would be lower than Institutional Class or
Administrative Class performance because of the higher sales
charges and/or expenses paid by Class A shares. The returns in the
bar chart and the information to its right do not reflect the
impact of sales charges (loads). If they did, the returns would be
lower than those shown. Unlike the bar chart, performance figures
for Class A shares in the Average Annual Total Returns table
reflect the impact of sales charges. For periods prior to the
inception of Institutional Class and Administrative Class shares
(3/31/99), the Average Annual Total Returns table also shows
estimated historical performance for those classes based on the
performance of the Fund's Class A shares. The Class A performance
has been adjusted to reflect that there are no sales charges and
lower administrative fees and other expenses paid by Institutional
Class and Administrative Class shares (including no distribution
and/or service (12b-1) fees paid by Institutional Class shares).
Prior to March 6, 1999, Fund had a different sub-adviser and would
not necessarily have achieved the performance results shown on the
next page under its current investment management arrangements.
Past performance is no guarantee of future results.
15 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Target Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 53.05%
--------------------
Lowest (3rd Qtr.
'98) -13.15%
[BAR CHART APPEARS HERE]
'93 -24.52%
'94 3.09%
'95 30.31%
'96 15.68%
'97 15.44%
'98 23.27%
'99 66.25%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/17/92)(/3/)
-----------------------------------------------------------------------
Class A 57.10% 28.28% 24.13%
-----------------------------------------------------------------------
Institutional Class 66.50% 30.31% 25.66%
-----------------------------------------------------------------------
Administrative Class 66.28% 30.02% 25.37%
-----------------------------------------------------------------------
S&P Mid-Cap 400 Index(/1/) 14.73% 23.05% 17.55%
-----------------------------------------------------------------------
Lipper Multi-Cap Growth Funds Average(/2/) % % %
-----------------------------------------------------------------------
</TABLE>
(1) The S&P Mid-Cap 400 Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Multi-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 12/17/92. Index comparisons begin
on 12/31/92.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.55% None 0.25% 0.80%
------------------------------------------------------------------
Administrative 0.55 0.25% 0.25 1.05
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 82 $255 $444 $ 990
------------------------------------------------------------------
Administrative 107 334 579 1,283
------------------------------------------------------------------
</TABLE>
Prospectus 16
<PAGE>
PIMCO Growth & Income Fund Ticker Symbols: PMEIX
(Inst. Class)
N/A (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks long-term Medium and large Capitalization Range
and grownth longterm capitalization More than $1 billion
Strategies growth of common stocks
capital; current
income is a
secondary
objective
Dividend Frequency
Approximate Number of Holdings
At least annually
40-60
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of at least $1 billion at the time of
investment. The Fund may invest up to 75% of its assets in
securities selected for their growth potential. The Fund will
normally invest at least 25% of its assets in securities selected
for their income potential, including dividend-paying common
stocks, preferred stocks, corporate bonds, convertible securities
and REITs.
When selecting securities for the Fund's "growth" segment, the
portfolio managers seek to identify companies with well-defined
"wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market
as a whole), high profitability and consistent, predictable
earnings. In addition, through fundamental research, the portfolio
managers seek to identify companies that are gaining market share,
have superior management and possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The Fund's portfolio managers may choose to
sell a stock in the "growth" segment when they believe that its
earnings will be disappointing or that market sentiment on the
company will turn negative. The portfolio managers will also
consider selling a stock if the company does not meet the
managers' estimates on revenues and/or earnings, or if an
alternative investment is deemed to be more attractive.
When selecting stocks for the Fund's "income" segment, the
portfolio managers seek to identify companies with strong
operating fundamentals that offer potential for capital
appreciation and that also have a dividend yield in excess of the
yield on the S&P 500 Index. The portfolio managers may replace an
"income" security when another security with a similar risk-to-
reward profile offers either better potential for capital
appreciation or a higher yield than the Fund's current holding. To
achieve its income objective, the Fund may also invest in
preferred stocks, corporate bonds, convertible securities and
REITs. The Fund may invest up to 10% of its assets in corporate
bonds, which will typically consist of investment grade securities
of varying maturities but may also include high yield securities
("junk bonds") rated at least B by Standard & Poor's Rating
Services or Moody's Investors Service, Inc. or, if unrated,
determined by the Adviser to be of comparable quality.
The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs). In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in high-quality fixed income securities. This
would be inconsistent with the Fund's investment objective and
principal strategies.
--------------------------------------------------------------------------------
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
Principal Risks
<TABLE>
<S> <C> <C>
.Market Risk .Liquidity Risk .Interest Rate Disk
.Issuer Risk .Foreign Investment Risk .High Yield Risk
.Value Securities Risk .Currency Risk .Credit Risk
.Growth Securities Risk .Focused Investment Risk .Management Risk
.Smaller Company Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
</TABLE>
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class Shares.
During the periods shown, Administrative Class shares were
outstanding only from 8/21/97 (the inception date of
Administrative Class shares) to 5/27/99 (the date on which all
Administrative Class shares then outstanding were redeemed). For
periods prior to 8/21/97 and after 5/27/99, performance
information shown in the Average Annual Total Returns table for
Administrative Class shares is based on the performance of the
Fund's Institutional Class shares, adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. The performance information on the
next page reflects the Fund's advisory fee rate in effect prior to
August 1, 2000 (0.63% per annum). Prior to July 1, 1999, the Fund
had a different sub-adviser and would not necessarily have
achieved the performance results shown on the next page under its
current investment management arrangements. In addition, the Fund
changed its investment objective and policies on August 1, 2000;
the performance results shown on the next page would not
necessarily have been achieved had the Fund's current objective
and policies then been in effect. Past performance is no guarantee
of future results.
17 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Growth & Income Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00-9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 40.12%
--------------------
Lowest (3rd Qtr.
'98) -11.53%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
'95 31.72%
'96 17.31%
'97 16.22%
'98 29.89%
'99 51.81%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/28/94)(/3/)
---------------------------------------------------------------------
Institutional Class 51.81% 28.77% 28.72%
---------------------------------------------------------------------
Administrative Class 51.32% 28.48% 28.41%
---------------------------------------------------------------------
S&P Mid-Cap 400 Index(/1/) 14.73% 23.05% 23.05%
---------------------------------------------------------------------
Lipper Large-Cap Core Funds Average(/2/) 22.29% 25.53% 25.53%
---------------------------------------------------------------------
</TABLE>
(1) The S&P Mid-Cap 400 Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index.
It does not take into account sales charges. The Lipper Large-
Cap Core Funds Average replaced the Lipper Mid-Cap Funds
Average (a total return performance average of funds tracked
by Lipper Analytical Services, Inc. that invest primarily in
companies with market capitalizations of less than $5 billion
at the time of investment) because PIMCO Advisors believes the
Large-Cap Core Funds Average is more representative of the
Fund's investment strategies. For periods ended December 31,
1999, the 1 Year, 5 Years and Fund Inception average annual
total returns of the Lipper Mid-Cap Fund Average were 39.38%,
23.07% and 23.07%, respectively.
(3) The Fund began operations on 12/28/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees(/1/) (12b-1) Fees Expenses(/2/) Expenses
------------------------------------------------------------------
Institutional 0.60% None 0.25% 0.85%
------------------------------------------------------------------
Administrative 0.60 0.25% 0.25 1.10
------------------------------------------------------------------
(1) On August 1, 2000, the Fund's advisory fee rate decreased by
0.03%, to 0.60% per annum.
(2) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 87 $271 $471 $1,049
------------------------------------------------------------------
Administrative 112 350 606 1,340
------------------------------------------------------------------
</TABLE>
Prospectus 18
<PAGE>
PIMCO Opportunity Fund
Ticker Symbols: POFIX
(Inst. Class)
POADX (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks capital Smaller Capitalization Range
and appreciation; no capitalization Between $100 million
Strategies consideration is common stocks and $2 billion
given to income
Approximate Number Dividend Frequency
of Holdings At least annually
60-100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of between $100 million and
$2 billion at the time of investment.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
.Market Risk .Liquidity Risk .Focused Investment
.Issuer Risk .Foreign Investment Risk .Credit Risk
.Growth Securities Risk .Currency Risk .Management Risk
.Smaller Company Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Class C shares, which are offered in a different
prospectus. This is because the Fund has not offered Institutional
Class or Administrative Class shares for a full calendar year.
Although Class C, Institutional Class and Administrative Class
shares would have similar annual returns (because all the Fund's
shares represent interests in the same portfolio of securities),
Class C performance would be lower than Institutional Class or
Administrative Class performance because of the sales charges and
higher expenses paid by Class C shares. The returns in the bar
chart and the information to its right do not reflect the impact
of sales charges (loads). If they did, the returns would be lower
than those shown. Unlike the bar chart, performance figures for
Class C shares in the Average Annual Total Returns table reflect
the impact of sales charges. For periods prior to the inception of
Institutional Class and Administrative Class shares (3/31/99), the
Average Annual Total Returns table also shows estimated historical
performance for those classes based on the performance of the
Fund's Class C shares. The Class C performance has been adjusted
to reflect that there are no sales charges and lower distribution
and/or service (12b-1) fees (if any), administrative fees and
other expenses paid by Institutional Class and Administrative
Class shares. Prior to March 6, 1999, the Fund had a different
sub-adviser and would not necessarily have achieved the
performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
19 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Opportunity Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 45.70%
--------------------
Lowest (3rd Qtr.
'98) -25.78%
[BAR CHART APPEARS HERE]
'90 -7.34%
'91 68.08%
'92 28.46%
'93 36.16%
'94 -4.74%
'95 41.43%
'96 11.54%
'97 -4.75%
'98 1.29%
'99 63.99%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (2/24/84)(/3/)
-------------------------------------------------------------------------------
Class C 62.99% 20.09% 20.55% 18.93%
-------------------------------------------------------------------------------
Institutional Class 64.93% 21.34% 21.86% 20.25%
-------------------------------------------------------------------------------
Administrative Class 64.59% 21.04% 21.57% 19.96%
-------------------------------------------------------------------------------
Russell 2000 Index(/1/) 21.25% 16.69% 13.40% 12.49%
-------------------------------------------------------------------------------
Lipper Small-Cap Growth Funds Average(/2/) % % % %
-------------------------------------------------------------------------------
</TABLE>
(1) The Russell 2000 Index is a capitalization weighted broad
based index of 2,000 small capitalization U.S. stocks. It is
not possible to invest directly in the index.
(2) The Lipper Small-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of less than 250% of the dollar-weighted median
market capitalization of the S&P Small-Cap 600 Index. It does not
take into account sales charges.
(3) The Fund began operations on 2/24/84. Index comparisons begin
on 2/29/84.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
-----------------------------------------------------------------
Institutional 0.65% None 0.25% 0.90%
-----------------------------------------------------------------
Administrative 0.65 0.25% 0.25 1.15
-----------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
</TABLE>
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and that the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<TABLE>
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 92 $287 $498 $1,108
-----------------------------------------------------------------
Administrative 117 365 633 1,398
-----------------------------------------------------------------
</TABLE>
Prospectus 20
<PAGE>
PIMCO Innovation Fund
Ticker Symbols: PIFIX
(Inst. Class)
PIADX (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks capital Common stocks of Capitalization Range
and appreciation; no technology- More than $200
Strategies consideration is related companies million
given to income
Dividend Frequency
Approximate Number of Holdings
40 At least annually
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
which utilize new, creative or different, or "innovative,"
technologies to gain a strategic competitive advantage in their
industry, as well as companies that provide and service those
technologies. The Fund identifies its investment universe of
technology-related companies primarily by reference to
classifications made by independent firms, such as Standard &
Poor's (for example, companies classified as "Information
Technology" companies), and by identifying companies that derive a
substantial portion of their revenues from the manufacture, sale
and/or service of technological products. Although the Fund
emphasizes companies which utilize technologies, it is not
required to invest exclusively in companies in a particular
business sector or industry.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify
technology-related companies with well-defined "wealth creating"
characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition,
through fundamental research, the portfolio manager seeks to
identify companies that are gaining market share, have superior
management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution
systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if
the company does not meet or exceed consensus estimates on
revenues and/or earnings or if an alternative investment is more
attractive.
Although the Fund invests principally in common stocks, the Fund
may also invest in other kinds of equity securities, including
preferred stocks and convertible securities. The Fund may invest
up to 15% of its assets in foreign securities, except that it may
invest without limit in American Depository Receipts (ADRs). In
response to unfavorable market and other conditions, the Fund may
make temporary investments of some or all of its assets in high-
quality fixed income securities. This would be inconsistent with
the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Smaller Company Risk .Currency Risk
.Issuer Risk .Liquidity Risk .Credit Risk
.Focused Investment .Foreign Investment .Management Risk
Risk Risk
.Growth Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Class A shares, which are offered in a different
prospectus. This is because the Fund has not offered Institutional
Class or Administrative Class shares for a full calendar year.
Although Class A, Institutional Class and Administrative Class
shares would have similar returns (because all the Fund's shares
represent interests in the same portfolio of securities), Class A
performance would be lower than Institutional Class or
Administrative Class performance because of the higher sales
charges and/or expenses paid by Class A shares. The returns in the
bar chart and the information to its right do not reflect the
impact of sales charges (loads). If they did, the returns would be
lower than those shown. Unlike the bar chart, performance figures
for Class A shares in the Average Annual Total Returns table
reflect the impact of sales charges. For periods prior to the
inception of Institutional Class shares (3/5/99) and for all
periods shown for Administrative Class shares (which were not
offered during those periods), the Average Annual Total Returns
table also shows estimated historical performance for those
classes based on the performance of the Fund's Class A shares. The
Class A performance has been adjusted to reflect that there are no
sales charges and lower administrative fees and other expenses
paid by Institutional Class and Administrative Class shares
(including no distribution and/or service (12b-1) fees paid by
Institutional Class shares). Prior to March 6, 1999, the Fund had
a different sub-adviser and would not necessarily have achieved
the performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
21 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Innovation Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 80.12%
--------------------
Lowest (1st Qtr.
'97) -12.56%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
'95 45.33%
'96 23.60%
'97 9.03%
'98 79.41%
'99 139.40%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/22/94)(/3/)
---------------------------------------------------------------------------
Class A 126.24% 51.38% 51.01%
---------------------------------------------------------------------------
Institutional Class 140.65% 53.74% 53.36%
---------------------------------------------------------------------------
Administrative Class 139.75% 53.33% 52.94%
---------------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 28.56%
---------------------------------------------------------------------------
Lipper Science and Technology
Fund Average(/2/)
134.77% 40.91% 40.91%
---------------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Science and Technology Fund Average is a total
return performance average of funds tracked by Lipper Analytical
Services, Inc. that invest 65% of their assets in science and
technology stocks. It does not take into account sales charges.
(3) The Fund began operations on 12/22/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.65% None 0.25% 0.90%
------------------------------------------------------------------
Administrative 0.65 0.25% 0.25 1.15
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 92 $287 $498 $1,108
------------------------------------------------------------------
Administrative 117 365 633 1,398
------------------------------------------------------------------
</TABLE>
Prospectus 22
<PAGE>
PIMCO Global Innovation Fund
Ticker Symbols: N/A
(Inst. Class)
N/A (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks capital Common stocks of Capitalization Range
and Seeks capital U.S. and non- More than $200 million
Strategies appreciation; no U.S. technology-
given to income related Dividend Frequency
companies At least annually
Approximate Number
of Holdings
30-60
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of U.S. and
non-U.S. companies which utilize new, creative or different, or
"innovative," technologies to gain a strategic competitive
advantage in their industry, as well as companies that provide and
service those technologies. The Fund identifies its investment
universe of technology-related companies primarily by reference to
classifications made by independent firms, such as Standard &
Poor's (for example, companies classified as "Information
Technology" companies), and by identifying companies that derive a
substantial portion of their revenues from the manufacture, sale
and/or service of technological products. Although the Fund
emphasizes companies which utilize technologies, it is not
required to invest exclusively in a particular business sector or
industry.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify
technology-related companies with well-defined "wealth creating"
characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition,
through fundamental research, the portfolio manager seeks to
identify companies that are gaining market share, have superior
management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution
systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if
the company does not meet or exceed consensus estimates on
revenues and/or earnings or if an alternative investment is more
attractive.
Although the Fund invests principally in common stocks, the Fund
may also invest in other types of equity securities, including
preferred stocks and convertible securities. The Fund will invest
in the securities of issuers located in at least three countries
(one of which may be the United States). Although the Fund
normally invests in securities traded principally in the
securities markets of developed countries, the Fund has no
prescribed limits on geographic asset distribution and may invest
in any foreign securities market in the world, including in
emerging markets. The Fund may utilize foreign currency exchange
contracts and derivative instruments (such as stock index futures
contracts), primarily for risk management or hedging purposes.
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Derivatives Risk .Leveraging Risk
.Issuer Risk .Foreign Investment .Credit Risk
Risk .Management Risk
.Growth Securities Risk .Emerging Markets Risk
.Smaller Company Risk .Currency Risk
.Liquidity Risk .Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information
The Fund commenced operations in December 1999 and does not yet
have a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
23 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Global Innovation Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 1.00% None 0.40% 1.40%
------------------------------------------------------------------
Administrative 1.00 0.25% 0.40 1.65
------------------------------------------------------------------
(1) Other Expenses reflects a 0.40% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION> Share Class
Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $143 $443
------------------------------------------------------------------
Administrative 168 520
------------------------------------------------------------------
</TABLE>
Prospectus 24
<PAGE>
PIMCO/Allianz Select International Fund
Ticker Symbols: N/A
(Inst. Class)
N/A (Admin. Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks capital Common stocks of Capitalization Range
and appreciation non-U.S. issuers More than $1 billion
Strategies Approximate Number Dividend Frequency
of Holdings At least annually
50-60
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio
of common stocks and other equity securities of companies located
outside of the United States. Although the Fund normally invests
in issuers from at least five different countries, it may at times
invest in fewer than five countries, or even a single country. The
Fund typically invests in approximately 50 to 60 stocks, with each
stock usually constituting from 1.25% to 4.0% of the Fund's
portfolio. The Fund may invest in both developed and developing,
or "emerging," markets. The Fund has no other limits on geographic
asset distribution and may invest in any foreign securities market
in the world. The Fund may also invest in securities of foreign
issuers traded on U.S. securities markets, but will normally not
invest in U.S. issuers. The Fund invests most of its assets in
foreign securities which trade in currencies other than the U.S.
dollar and may invest directly in foreign currencies.
The portfolio manager selects securities for the Fund using the
Sub-Adviser's "Best Research" investment style. The Best Research
style uses a research-driven "bottom-up" approach that seeks to
utilize the Sub-Adviser's global research capabilities to identify
companies with above-average long-term growth prospects and
attractive valuations and that possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The portfolio manager seeks to select those
stocks with the best long-term performance expectations, using a
broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures,
divided and profit growth, balance sheet strength and return on
assets. The portfolio managers sell stocks in order to adjust or
rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts)
primarily for portfolio management and hedging purposes. The Fund
may also invest in equity securities other than common stocks
(such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in foreign and domestic fixed income
securities and in equity securities of U.S. issuers. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
.Foreign Investment .Growth Securities .Focused Investment
Risk Risk Risk
.Emerging Market Risk .Value Securities Risk .Leveraging Risk
.Currency Risk .Smaller Company Risk .Derivatives Risk
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Management Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
The Fund's Administrative Class shares do not have a performance
history. Performance information shown in the Average Annual Total
Returns table for Administrative Class shares is based on the
performance of the Fund's Institutional Class shares, adjusted to
reflect the actual distribution and/or service (12b-1) fees and
other expenses paid by Administrative Class shares. The
performance information on the next page reflects the Fund's
advisory fee rate in effect prior to May 8, 2000 (0.85% per
annum). Prior to November 1, 2000, the Fund had different sub-
advisers and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. In addition, the Fund changed its
investment objectives and policies on November 1, 2000; the
performance results shown on the next page would not necessarily
have been achieved had the Fund's current objectives and policies
then been in effect. Past performance is no guarantee of future
results.
25 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO/Allianz Select International Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 47.11%
--------------------
Lowest (3rd Qtr.
'98) -17.79%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (12/31/97)(/3/)
---------------------------------------------------------------------
Institutional Class 109.71% 70.98%
---------------------------------------------------------------------
Administrative Class 109.22% 70.57%
---------------------------------------------------------------------
MSCI EAFE Index(/1/) 27.30% 23.77%
---------------------------------------------------------------------
Lipper International Fund Average(/2/) 40.91% 25.73%
---------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) ("MSCI EAFE") Index is a widely
recognized, unmanaged index of issuers in countries of
Europe, Australia and the Far East. It is not possible to
invest directly in the index.
(2) The Lipper International Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest their assets in securities whose
primary trading markets are outside of the United States. It does
not take into account sales charges.
(3) The Fund began operations on 12/31/97. Index comparisons begin
on 12/31/97.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.75% None 0.50% 1.25%
------------------------------------------------------------------
Administrative 0.75 0.25% 0.50 1.50
------------------------------------------------------------------
(1) Other Expenses reflects a 0.50% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $127 $397 $686 $1,511
------------------------------------------------------------------
Administrative 153 474 818 1,791
------------------------------------------------------------------
</TABLE>
Prospectus 26
<PAGE>
PIMCO Mega-Cap Fund
Ticker Symbols: N/A (Inst. Class)
N/A (Admin. Class)
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Very large Capitalization Range
and Seeks long-term capitalization The largest 250
Strategies growth of capital common stocks publicly traded
companies (in terms
Approximate Number of market
of Holdings capitalizations)
40-60
Dividend Frequency
At least annually
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with very large market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers the 250 largest publicly traded
companies (in terms of market capitalization) in the U.S. The team
screens the stocks in this universe for a series of growth
criteria, such as dividend growth, earnings growth, relative
growth of earnings over time (earnings momentum) and the company's
history of meeting earnings targets (earnings surprise), and also
value criteria, such as price-to-earnings, price-to-book and
price-to-cash flow ratios. The team then selects individual stocks
by subjecting the top portion of the stocks in the screened
universe to a rigorous analysis of company factors, such as
strength of management, competitive industry position, and
business prospects, and financial statement data, such as
earnings, cash flows and profitability. The team may interview
company management in making investment decisions. The Fund's
capitalization criteria applies at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 2% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Growth Securities Risk .Focused Investment
.Issuer Risk .Credit Risk Risk
.Value Securities .Management Risk
Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The Fund commenced operations in September 1999 and does not yet
Information have a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
27 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Mega-Cap Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
-----------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
-----------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
-----------------------------------------------------------------
</TABLE>
(1) Other Expenses reflects a 0.25% Administrative Fee paid by the
class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions..
<TABLE>
<CAPTION>
Year Year
Share Class Year 1 Year 3 5 10
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $72 $224
-------------------------------------------------------------------------------------
Administrative 97 303
-------------------------------------------------------------------------------------
</TABLE>
Prospectus 28
<PAGE>
PIMCO Capital Appreciation Fund
Ticker Symbols: PAPIX (Inst. Class)
PICAX (Admin. Class)
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Larger Capitalization Range
and Seeks growth of capitalization At least $1 billion
Strategies capital common stocks
Dividend Frequency
Approximate Number At least annually
of Holdings
60-100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with larger market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers the 1,000 largest publicly traded
companies (in terms of market capitalization) in the U.S. The team
screens the stocks in this universe for a series of growth
criteria, such as dividend growth, earnings growth, relative
growth of earnings over time (earnings momentum) and the company's
history of meeting earnings targets (earnings surprise), and also
value criteria, such as price-to-earnings, price-to-book and
price-to-cash flow ratios. The team then selects individual stocks
by subjecting the top 10% of the stocks in the screened universe
to a rigorous analysis of company factors, such as strength of
management, competitive industry position, and business prospects,
and financial statement data, such as earnings, cash flows and
profitability. The team may interview company management in making
investment decisions. The Fund's capitalization criteria applies
at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor performance relative to all
stocks in the Fund's capitalization range or to companies in the
same business sector. A stock may also be sold if its weighting in
the portfolio becomes excessive (normally above 2% of the Fund's
investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Growth Securities Risk .Credit Risk
.Issuer Risk .Focused Investment Risk .Management Risk
.Value Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(7/31/96), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Past performance is no guarantee
of future results.
29 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Capital Appreciation Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 23.43%
--------------------
Lowest (3rd Qtr.
'98) -14.16%
[GRAPH]
'92 -7.51%
'93 17.70%
'94 -4.26%
'95 37.14%
'96 26.79%
'97 34.22%
'98 17.59%
'99 22.30%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (3/8/91)(/3/)
-------------------------------------------------------------------
Institutional Class 22.30% 27.40% 20.03%
-------------------------------------------------------------------
Administrative Class 21.92% 27.08% 19.72%
-------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 19.75%
-------------------------------------------------------------------
Lipper Multi - Cap Core Funds
Average(/2/) % % %
-------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Multi-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does not
take into account sales charges.
(3) The Fund began operations on 3/8/91. Index comparisons begin
on 2/28/91.
--------------------------------------------------------------------------------
Fees and
Expenses These tables describe the fees and expenses you may pay if you buy
of the and hold Institutional Class or Administrative Class shares of the
Fund Fund:
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by the
class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $72 $224 $390 $ 871
------------------------------------------------------------------
Administrative 97 303 525 1,166
------------------------------------------------------------------
</TABLE>
Prospectus 30
<PAGE>
PIMCO Mid-Cap Fund
Ticker Symbols: PMGIX (Inst. Class)
PMCGX (Admin. Class)
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Medium Capitalization
and Seeks growth capitalization Range
Strategies of capital common stocks More than $500
million (excluding
Approximate Number the largest 200
of Holdings companies)
60-100
Dividend Frequency
At least annually
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with medium market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers companies in the U.S. market with market
capitalizations of more than $500 million, but excluding the 200
largest capitalization companies. The team screens the stocks in
this universe for a series of growth criteria, such as dividend
growth, earnings growth, relative growth of earnings over time
(earnings momentum) and the company's history of meeting earnings
targets (earnings surprise), and also value criteria, such as
price-to-earnings, price-to-book and price-to-cash flow ratios.
The team then selects individual stocks by subjecting the top 10%
of the stocks in the screened universe to a rigorous analysis of
company factors, such as strength of management, competitive
industry position, and business prospects, and financial statement
data, such as earnings, cash flows and profitability. The team may
interview company management in making investment decisions. The
Fund's capitalization criteria applies at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 2% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
.Market Risk .Growth Securities Risk .Focused Investment Risk
.Issuer Risk .Smaller Company Risk .Credit Risk
.Value Securities Risk .Liquidity Risk .Management Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(11/30/94), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Past performance is no guarantee
of future results.
31 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Mid-Cap Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 23.10%
--------------------
Lowest (3rd Qtr.
'98) -14.40%
[GRAPH]
'92 -9.18%
'93 15.77%
'94 -2.36%
'95 37.29%
'96 23.36%
'97 34.17%
'98 7.93%
'99 12.98%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years (8/26/91)(/3/)
-----------------------------------------------------------------
Institutional Class 12.98% 22.61% 17.59%
-----------------------------------------------------------------
Administrative Class 12.67% 22.33% 17.31%
-----------------------------------------------------------------
Russell Mid-Cap Index(/1/) 18.23% 21.85% 17.31%
-----------------------------------------------------------------
Lipper Mid-Cap Core Funds
Average(/2/)
% % %
-----------------------------------------------------------------
</TABLE>
(1) The Russell Mid-Cap Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Mid-Cap Funds Average is a total return performance
average of funds tracked by Lipper Analytical Services, Inc. that
invest primarily in companies with market capitalizations of less
than 300% of the dollar-weighted median market capitalization of
the S&P Mid-Cap 400 Index. It does not take into account sales
charges.
(3) The Fund began operations on 8/26/91. Index comparisons begin
on 8/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $72 $224 $390 $ 871
------------------------------------------------------------------
Administrative 97 303 525 1,166
------------------------------------------------------------------
</TABLE>
Prospectus 32
<PAGE>
<TABLE>
<CAPTION>
PIMCO Micro-Cap Fund
Ticker
Symbols: PMCIX (Inst. Class)
PMGAX (Admin. Class)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments Seeks long-term Very small Less than $250 million
and growth of capital capitalization
Strategies common stocks Dividend Frequency
At least annually
Approximate Number
of Holdings
60-100
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with very small market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers companies in the U.S. market with market
capitalizations less than $250 million. The team screens the
stocks in this universe for a series of growth criteria, such as
dividend growth, earnings growth, relative growth of earnings over
time (earnings momentum) and the company's history of meeting
earnings targets (earnings surprise), and also value criteria,
such as price-to-earnings, price-to-book and price-to-cash flow
ratios. The team then selects individual stocks by subjecting the
top 10% of the stocks in the screened universe to a rigorous
analysis of company factors, such as strength of management,
competitive industry position, and business prospects, and
financial statement data, such as earnings, cash flows and
profitability. The team may interview company management in making
investment decisions. The Fund's capitalization criteria applies
at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 3% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
.Market Risk .Growth Securities Risk .Focused Investment Risk
.Issuer Risk .Smaller Company Risk .Credit Risk
.Value Securities Risk .Liquidity Risk .Management Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(4/1/96), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Past performance is no guarantee
of future results.
33 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Micro-Cap Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (3rd Qtr.
'97) 21.61%
--------------------
Lowest (3rd Qtr.
'98) -20.71%
[GRAPH]
'94 1.02%
'95 36.25%
'96 23.83%
'97 36.69%
'98 -3.88%
'99 5.43%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (6/25/93)(/3/)
-----------------------------------------------------------------------
Institutional Class 5.43% 18.50% 16.99%
-----------------------------------------------------------------------
Administrative Class 5.17% 18.22% 16.70%
-----------------------------------------------------------------------
Russell 2000 Index(/1/) 21.25% 16.69% 14.19%
-----------------------------------------------------------------------
Lipper Small-Cap Core Funds
Average(/2/) % % %
-----------------------------------------------------------------------
</TABLE>
(1) The Russell 2000 Index is a capitalized weighted broad based
index of small capitalization U.S. stocks. It is not possible
to invest directly in the index.
(2) The Lipper Small-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations (on a three-year weighted basis) of less than
250% of the dollar-weighted median market capitalization of the
S&P Small-Cap 600 Index. It does not take into account sales
charges.
(3) The Fund began operations on 6/25/93. Index comparisons begin
on 6/30/93.
--------------------------------------------------------------------------------
Fees and
Expenses These tables describe the fees and expenses you may pay if you buy
of the and hold Institutional Class or Administrative Class shares of the
Fund Fund:
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 1.25% None 0.25% 1.50%
------------------------------------------------------------------
Administrative 1.25 0.25% 0.25 1.75
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $153 $474 $818 $1,791
------------------------------------------------------------------
Administrative 178 551 949 2,062
------------------------------------------------------------------
</TABLE>
Prospectus 34
<PAGE>
PIMCO Small-Cap Value Fund
Ticker Symbols: PSVIX (Inst. Class)
PVADX (Admin. Class)
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Undervalued smaller Capitalization Range
and Seeks long-term capitalization Between $100 million
Strategies growth of capital common stocks and $1.5 billion
and income
Approximate Number Dividend Frequency
of Holdings At least annually
100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of between $100 million and $1.5
billion at the time of investment and below average P/E ratios
relative to the market and their respective industry groups. To
achieve income, the Fund invests a portion of its assets in
income-producing (e.g., dividend-paying) common stocks.
The Fund's initial selection universe consists of approximately
4,500 stocks of companies within the Fund's capitalization range.
The portfolio managers screen this universe to identify
approximately 500 undervalued stocks representing approximately
160 industry groups. This screening process is based on a number
of valuation factors, including P/E ratios (calculated both with
respect to trailing operating earnings and forward earnings
estimates) and price-to-sales, price-to-book value, and price-to-
cash flow ratios. These factors are considered both on a relative
basis (compared to other stocks in the same industry group) and on
an absolute basis (compared to the overall market).
From this narrowed universe, the portfolio managers select
approximately 100 stocks for the Fund, each of which has close to
equal weighting in the portfolio. They select stocks based on a
quantitative analysis of factors including price momentum (based
on changes in stock price relative to changes in overall market
prices), earnings momentum (based on analysts' earnings per share
estimates and revisions to those estimates), relative dividend
yields and trading liquidity. The portfolio is also structured to
have a maximum weighting of no more than 10% in any one industry.
The portfolio managers may replace a stock if its market
capitalization becomes excessive, if its valuation exceeds the
average valuation of stocks represented in the S&P 500 Index, or
when a stock within the same industry group has a considerably
lower valuation than the Fund's current holding.
Under normal circumstances, the Fund intends to be fully
invested in common stocks (aside from certain cash management
practices). The Fund may temporarily hold up to 10% of its assets
in cash and cash equivalents for defensive purposes in response to
unfavorable market and other conditions. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Smaller Company Risk .Credit Risk
.Issuer Risk .Liquidity Risk .Management Risk
.Value Securities Risk .Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(11/1/95), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Past performance is no guarantee
of future results.
35 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Small-Cap Value Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 -
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (2nd Qtr.
"99) 16.39%
--------------------
Lowest (3rd Qtr.
"98) -18.61%
[CHART APPEARS HERE]
'92 18.27%
'93 13.39%
'94 -4.07%
'95 24.98%
'96 27.22%
'97 34.47%
'98 -9.16%
'99 -6.40%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (10/1/91)(/3/)
-----------------------------------------------------------------------
Institutional Class -6.40% 12.97% 11.98%
-----------------------------------------------------------------------
Administrative Class -6.69% 12.67% 11.69%
-----------------------------------------------------------------------
Russell 2000 Index(/1/) 21.25% 16.69% 14.97%
-----------------------------------------------------------------------
Lipper Small-Cap Value Funds
Average(/2/)
% % %
-----------------------------------------------------------------------
</TABLE>
(1) The Russell 2000 Index is a capitalization weighted broad
based index of 2,000 small capitalization U.S. stocks. It is
not possible to invest directly in the index.
(2) The Lipper Small-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of less than 250% of the dollar-weighted median
market capitalization of the S&P Small-Cap 600 Index. It does not
take into account sales charges.
(3) The Fund began operations on 10/1/91. Index comparisons begin
on 9/30/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.60% None 0.25% 0.85%
------------------------------------------------------------------
Administrative 0.60 0.25% 0.25 1.10
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $ 87 $271 $471 $1,049
------------------------------------------------------------------
Administrative 112 350 606 1,340
------------------------------------------------------------------
</TABLE>
Prospectus 36
<PAGE>
PIMCO Enhanced Equity Fund
Ticker Symbols: PEEIX
(Inst. Class)
PEQAX (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks to provide A portion of the Capitalization Range
and a total return common stocks More than $5 billion
Strategies which equals or represented in
exceeds the the S&P 500 Dividend Frequency
total return Index At least annually
performance of
an index Approximate Number
(currently the of Holdings
S&P 500 Index) 100-200
that represents
the performance
of a reasonably
broad spectrum
of common stocks
that are
publicly traded
in the U.S.
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks represented
in the S&P 500 Index.
In making investment decisions for the Fund, the portfolio
managers first rank the stocks in the S&P 500 Index using a
quantitative model that analyses each stock's exposure to both
growth factors (including company revenues and cash flows,
reported and estimated earnings and earnings estimates revisions)
and value factors (including relative stock price and price-to-
earnings ratios). The rankings give more weight to stocks with
rising earnings expectations where the stock price reflects
reasonable valuation relative to other stocks in the same industry
sector.
Using these rankings, the portfolio managers construct a sector-
neutral portfolio of between 100 to 200 stocks designed to have
above-average total return potential relative to the S&P 500
Index. The portfolio managers also use a computer optimization
model to provide risk-controlled exposure to the S&P 500 Index,
such that the portfolio ordinarily has no greater volatility than
the index and provides diversification across the industry sectors
represented in the index. The portfolio managers attempt to
maintain this balance through frequent and modest restructuring of
the portfolio. Generally, a stock is sold when it drops
significantly in the portfolio managers' rankings or when a
replacement is necessary to maintain the Fund's balance of risk
relative to the S&P 500 Index.
Notwithstanding these strategies, there is no assurance that the
Fund's investment performance will equal or exceed that of the S&P
500 Index.
The Fund may invest in stocks of foreign issuers if included in
the S&P 500. The Fund may change the index upon which it bases its
performance without shareholder approval, although it does not
expect to make such a change under ordinary circumstances.
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Foreign Investment Risk .Leveraging Risk
.Issuer Risk .Currency Risk .Credit Risk
.Value Securities Risk .Focused Investment Risk .Management Risk
.Growth Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Administrative Class shares
(8/21/97), performance information shown in the Average Annual
Total Returns table for that class is based on the performance of
the Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Administrative Class shares. Past performance is no guarantee
of future results.
37 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Enhanced Equity Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00___%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
"98) 22.48%
--------------------
Lowest (3rd Qtr.
"98) -13.13%
[CHART APPEARS HERE]
'92 6.60%
'93 3.71%
'94 -0.49%
'95 34.42%
'96 21.15%
'97 30.85%
'98 26.51%
'99 17.49%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years (2/11/91)(/3/)
-------------------------------------------------------------------------
Institutional Class 17.49% 25.93% 17.41%
-------------------------------------------------------------------------
Administrative Class 17.40% 25.64% 17.13%
-------------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 20.50%
-------------------------------------------------------------------------
Lipper Large-Cap Core
Funds Average(/2/)
% % %
-------------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into accout sales charges.
(3) The Fund began operations on 2/11/91. Index comparisons begin
on 1/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $72 $224 $390 $ 871
------------------------------------------------------------------
Administrative 97 303 525 1,166
------------------------------------------------------------------
</TABLE>
Prospectus 38
<PAGE>
PIMCO Tax-Efficient Equity Fund
Ticker Symbols: N/A
(Inst. Class)
PTXAX (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks maximum A portion of the Capitalization Range
and after-tax growth common stocks More than $5 billion
Strategies of capital represented in
the S&P 500 Dividend Frequency
Index at least annually
Approximate Number
of Holdings
More than 200
The Fund attempts to provide a total return which exceeds the
return of the S&P 500 Index by investing in a broadly diversified
portfolio of at least 200 common stocks. The Fund also attempts to
achieve superior after-tax returns for its shareholders by using a
variety of tax-efficient management strategies.
The Fund seeks to achieve its investment objective by normally
investing at least 95% of its assets in stocks represented in the
S&P 500 Index. The Fund's portfolio is designed to have certain
characteristics that are similar to those of the index, including
such measures as dividend yield, P/E ratio, relative volatility,
economic sector exposure, return on equity and market price-to-
book value ratio. The Fund's return is intended to correlate
highly with the return of the S&P 500 Index, but the portfolio
managers attempt to produce a higher total return than the index
by selecting a portion of the stocks represented in the index
using the quantitative techniques described below. The portfolio
managers also use these techniques to make sell decisions.
Notwithstanding these strategies, there is no assurance that the
Fund's investment performance will equal or exceed that of the S&P
500 Index.
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
Quantitative Techniques. The portfolio managers use a proprietary
quantitative model that ranks companies based on long-term (5-10
years) price appreciation potential. They analyze factors such as
growth of sustainable earnings and dividend behavior. Stocks in
the top 50% of the model's ranking are considered for purchase by
the Fund. The Fund looks to sell stocks selected from the bottom
20% of the model's ranking based on cost, current market value and
anticipated benefit of replacement. The portfolio managers' sell
discipline also focuses on reducing realized capital gains as
indicated below.
Tax-Efficient Strategies. The portfolio managers utilize a range
of active tax management strategies designed to minimize the
Fund's taxable distributions, including low portfolio turnover and
favoring investments in low-dividend, growth-oriented companies.
The portfolio managers also identify specific shares of stock to
be sold that have the lowest tax cost. When prudent, stocks are
also sold to realize capital losses in order to offset realized
capital gains. In limited circumstances, the Fund may also
distribute appreciated securities to shareholders to meet
redemption requests so as to avoid realizing capital gains.
Despite the use of these tax-efficient strategies, the Fund may
realize gains and shareholders will incur tax liability from time
to time.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Growth Securities Risk .Credit Risk
.Issuer Risk .Focused Investment Risk .Management Risk
.Value Securities Risk .Leveraging Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance Shown below is summary performance information for the Fund in a
Information bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Fund by showing changes in its performance from year to year
and by showing how the Fund's average annual returns compare with
the returns of a broad-based securities market index and an index
of similar funds. The bar chart and the information to its right
show performance of the Fund's Administrative Class shares. For
periods prior to the inception of Institutional Class shares
(7/2/99) and Administrative Class shares (9/30/98), performance
information shown in the bar chart (including the information to
its right) and in the Average Annual Total Returns table for those
classes is based on the performance of the Fund's Class D shares,
which are offered in a different prospectus. The prior Class D
performance has been adjusted to reflect that there are lower
administrative fees and other expenses paid by Institutional Class
and Administrative Class shares (including no distribution and/or
service (12b-1) fees paid by Institutional Class shares). Past
performance is no guarantee of future results.
39 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Tax-Efficient Equity Fund (continued)
Calendar Year Total Returns -- Administrative Class
[GRAPH OF CALENDER YEAR TOTAL RETURNS APPEARS HERE]
More Recent Return
Information
--------------------
1/1/00 - 9/30/00____%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 15.15%
--------------------
Lowest (3rd Qtr.
'99) -7.32%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
'99 17.66%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year (7/10/98)(/3/)
--------------------------------------------------------------------------
Administrative Class 17.66% 15.62%
--------------------------------------------------------------------------
Institutional Class 18.09% 16.05%
--------------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 20.42%
--------------------------------------------------------------------------
Lipper Large-Cap Core Funds
Average(/2/)
% %
--------------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 7/10/98. Index comparisons begin
on 6/30/98.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
-----------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
-----------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
-----------------------------------------------------------------
</TABLE>
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distribution, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional $72 $224 $390 $ 871
-----------------------------------------------------------------------------------
Administrative 97 303 525 1,166
-----------------------------------------------------------------------------------
</TABLE>
Prospectus 40
<PAGE>
PIMCO Structured Emerging Markets Fund
Ticker Symbols: PSTIX
(Inst. Class)
N/A (Admin.
Class)
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Common stocks of Capitalization Range
and Seeks long-term emerging market All capitalizations
Strategies growth of capital issuers
Dividend Frequency
Approximate Number At least annually
of Holdings
More than 300
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
located in, or whose business relates to, emerging markets. The
Fund is normally exposed to roughly 20 emerging market countries
and invests in more than 300 stocks. The Fund invests most of its
assets in foreign securities which trade primarily in currencies
other than the U.S. dollar and may also invest directly in foreign
currencies.
The International Finance Corporation Investable Composite Index
is the primary source for identifying emerging market countries
for the Fund. The portfolio managers may identify other emerging
market countries on the basis of market capitalization and
liquidity, as well their inclusion (or consideration for
inclusion) as emerging market countries in other broad-based
market indexes.
The portfolio managers follow a disciplined and systematic
investment process that emphasizes diversification and fairly
consistent allocation among countries, industries and issuers.
They select countries based on factors such as level of economic
development (with emphasis on GNP per capita and local economic
diversification) and the maturity of equity markets in the country
(with emphasis on freedom of investment flows and development of
legal, regulatory, banking and settlement systems). They assign
equal weight to most countries represented in the portfolio unless
the size of a country's equity market is prohibitive. Countries
with smaller equity markets (i.e., less than $5 billion of market
capitalization) are assigned one-half the weight of countries with
larger equity markets. The portfolio managers divide all issuers
in each eligible country into the following five broad economic
sector groups: financial, industrial, consumer, utilities and
natural resources. The Fund attempts to maintain exposure across
all five sectors in each country. The portfolio managers purchase
and sell individual stocks based on such factors as liquidity,
industry representation, performance relative to industry and
long-term profitability. A stock may also be sold when the
portfolio managers believe its relative weighting in the portfolio
has become excessive.
The Fund intends to invest substantially all of its assets in
common stocks and other equity and equity-linked securities (aside
from certain cash management practices) and will not make
defensive investments in response to unfavorable market and other
conditions. The Fund may use derivatives.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Foreign .Value Securities .Focused
Investment Risk Risk Investment Risk
.Emerging Markets .Growth .Leveraging Risk
Risk Securities Risk .Credit Risk
.Currency Risk .Smaller Company .Management Risk
.Market Risk Risk
.Issuer Risk .Liquidity Risk
.Derivatives Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
41 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Structured Emerging Markets Fund (continued)
--------------------------------------------------------------------------------
Performance Shown below is summary performance information for the Fund in a
Information bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Fund by showing changes in its performance from year to year
and by showing how the Fund's average annual returns compare with
the returns of a broad-based securities market index and an index
of similar funds. The bar chart and the information to its right
show performance of the Fund's Institutional Class shares, but the
returns do not reflect the impact of a 1.00% Fund Reimbursement
Fee charged both at the time of purchase and at the time of
redemption. If they did, the returns would be lower than those
shown. The Fund's Administrative Class shares do not have a
performance history. Performance information shown in the Average
Annual Total Returns table for Administrative Class shares is
based on the performance of the Fund's Institutional Class shares,
adjusted to reflect the actual distribution and/or service (12b-1)
fees and other expenses paid by Administrative Class shares.
Unlike the bar chart, performance figures for Institutional Class
and Administrative Class shares in the Average Annual Total
Returns table reflect the impact of Fund Reimbursement Fees. Past
performance is no guarantee of future results.
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00___%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (2nd Qtr.
'99) 31.36%
--------------------
Lowest (3rd Qtr.
'99) -3.62%
[BAR CHART OF TOTAL RETURNS APPEARS HERE]
'99 65.04%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (6/30/98)(/3/)
-------------------------------------------------------------------
Institutional Class 62.40% 31.47%
-------------------------------------------------------------------
Administrative Class 62.03% 31.19%
-------------------------------------------------------------------
IFC Investable Composite Index(/1/) 66.79% 33.38%
-------------------------------------------------------------------
Lipper Emerging Markets Fund Average(/2/) 70.86% 29.36%
-------------------------------------------------------------------
</TABLE>
(1) The IFC Investable Composite Index is an unmanaged index
representing the movements of stock prices and total returns
in emerging stock markets taking into consideration foreign
investment restrictions and stock screening for minimum size
and liquidity. It is not possible to invest directly in the
index.
(2) The Lipper Emerging Markets Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that have an investment objective of long-term
capital appreciation through investing at least 65% of their
total assets in "emerging markets" (as determined by a
country's GNP per capita or other economic measures)
securities. It does not take into account sales charges.
(3) The Fund began operations on 6/30/98. Index comparisons begin
on 6/30/98.
Prospectus 42
<PAGE>
PIMCO Structured Emerging Markets Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your None
investment)
Fund Reimbursement Fee (as a percentage of offering or 1.00%*
exchange price or amount redeemed)
* Unless a waiver applies, you will be charged a "Fund
Reimbursement Fee" when you purchase, sell (redeem) or exchange
Institutional Class or Administrative Class shares of the Fund.
The fee will be equal to 1.00% of the net asset value of the
shares purchased, redeemed or exchanged. Fund Reimbursement Fees
are paid to and retained by the Fund and are not sales charges
(loads). See "Purchases, Redemptions and Exchanges--Fund
Reimbursement Fees."
Average Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
-----------------------------------------------------------------
Institutional 0.45% None 0.50% 0.95%
-----------------------------------------------------------------
Administrative 0.45 0.25% 0.50 1.20
-----------------------------------------------------------------
</TABLE>
(1) Other Expenses reflects a 0.50% Administrative Fee paid by
the class.
Examples: The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
Assuming you redeem your shares at the end of each period.*
<TABLE>
<S> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10
----------------------------------------------------------------------------
Institutional $299 $511 $741 $1,402
----------------------------------------------------------------------------
Administrative 324 588 872 1,684
----------------------------------------------------------------------------
Assuming you do not redeem your shares.*
Share Class Year 1 Year 3 Year 5 Year 10
----------------------------------------------------------------------------
Institutional $196 $400 $620 $1,255
----------------------------------------------------------------------------
Administrative 221 477 753 1,540
----------------------------------------------------------------------------
</TABLE>
* The Examples assume the payment of a 1.00% Fund Reimbursement
Fee both at the time of purchase and at the time of redemption
even though such fees may be waived for certain investors. See
"Purchases, Redemptions and Exchanges--Fund Reimbursement
Fees."
43 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Tax-Efficient Structured Emerging Markets Fund
Ticker Symbols: PEFIX
(Inst. Class)
N/A (Admin.
Class)
--------------------------------------------------------------------------------
Investment Fund Focus Approximate
Principal Objective Common stocks of Capitalization Range
Investments Seeks long-term emerging market All capitalizations
and growth of issuers
Strategies capital. The
Fund also seeks
to achieve
superior after-
tax returns for
its shareholders
by using tax-
efficient
management
strategies.
Approximate Number of Dividend Frequency
Holdings At least annually
More than 300
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
located in, or whose business relates to, emerging markets. The
Fund is normally exposed to roughly 20 emerging market countries
and invests in more than 300 stocks. The Fund invests most of its
assets in foreign securities which trade primarily in currencies
other than the U.S. dollar and may also invest directly in foreign
currencies.
The International Finance Corporation Investable Composite Index
is the primary source for identifying emerging market countries
for the Fund. The portfolio managers may identify other emerging
market countries on the basis of market capitalization and
liquidity, as well their inclusion (or consideration for
inclusion) as emerging market countries in other broad-based
market indexes.
The portfolio managers follow a disciplined and systematic
investment process that emphasizes diversification and fairly
consistent allocation among countries, industries and issuers.
They select countries based on factors such as level of economic
development (with emphasis on GNP per capita and local economic
diversification) and the maturity of equity markets in the country
(with emphasis on freedom of investment flows and development of
legal, regulatory, banking and settlement systems). They assign
equal weight to most countries represented in the portfolio unless
the size of a country's equity market is prohibitive. Countries
with smaller equity markets (i.e., less than $5 billion of market
capitalization) are assigned one-half the weight of countries with
larger equity markets. The portfolio managers divide all issuers
in each eligible country into the following five broad economic
sector groups: financial, industrial, consumer, utilities and
natural resources. The Fund attempts to maintain exposure across
all five sectors in each country. The portfolio managers purchase
and sell individual stocks based on such factors as liquidity,
industry representation, performance relative to industry and
long-term profitability. A stock may also be sold when the
portfolio managers believe its relative weighting in the portfolio
has become excessive.
The Fund intends to invest substantially all of its assets in
common stocks and other equity and equity-linked securities (aside
from certain cash management practices) and will not make
defensive investments in response to unfavorable market and other
conditions. The Fund may use derivatives.
Tax-Efficient Strategies. The portfolio managers utilize a range
of active tax management strategies designed to minimize the
Fund's taxable distributions, including low portfolio turnover and
favoring investments in low-dividend, growth-oriented companies.
The portfolio managers also identify specific shares of stock to
be sold that have the lowest tax cost. When prudent, stocks are
also sold to realize capital losses in order to offset realized
capital gains. In limited circumstances, the Fund may also
distribute appreciated securities to shareholders to meet
redemption requests so as to avoid realizing capital gains.
Despite the use of these tax-efficient strategies, the Fund may
realize gains and shareholders will incur tax liability from time
to time.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Value Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Growth Securities Risk .Leveraging Risk
.Currency Risk .Smaller Company Risk .Credit Risk
.Market Risk .Liquidity Risk .Management Risk
.Issuer Risk .Derivatives Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
Prospectus 44
<PAGE>
PIMCO Tax-Efficient Structured Emerging Markets Fund (continued)
--------------------------------------------------------------------------------
Performance Shown below is summary performance information for the Fund in a
Information bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Fund by showing changes in its performance from year to year
and by showing how the Fund's average annual returns compare with
the returns of a broad-based securities market index and an index
of similar funds. The bar chart and the information to its right
show performance of the Fund's Institutional Class shares, but the
returns do not reflect the impact of a 1.00% Fund Reimbursement
Fee charged both at the time of purchase and at the time of
redemption. If they did, the returns would be lower than those
shown. The Fund's Administrative Class shares do not have a
performance history. Performance information shown in the Average
Annual Total Returns table for Administrative Class shares is
based on the performance of the Fund's Institutional Class shares,
adjusted to reflect the actual distribution and/or service (12b-1)
fees and other expenses paid by Administrative Class shares.
Unlike the bar chart, performance figures for Institutional Class
and Administrative Class shares in the Average Annual Total
Returns table reflect the impact of Fund Reimbursement Fees. Past
performance is no guarantee of future results.
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (2nd Qtr.
'99) 32.77%
--------------------
Lowest (3rd Qtr.
'99) -1.06%
[BAR CHART OF TOTAL RETURNS]
'99 72.61%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (6/30/98)(/3/)
-------------------------------------------------------------------
Institutional Class 69.68% 37.10%
-------------------------------------------------------------------
Administrative Class 69.29% 36.82%
-------------------------------------------------------------------
IFC Investable Composite Index(/1/) 66.79% 33.38%
-------------------------------------------------------------------
Lipper Emerging Markets Fund Average(/2/) 70.86% 29.36%
-------------------------------------------------------------------
</TABLE>
(1) The IFC Investable Composite Index is an unmanaged index
representing the movements of stock prices and total returns
in emerging stock markets taking into consideration foreign
investment restrictions and stock screening for minimum size
and liquidity. It is not possible to invest directly in the
index.
(2) The Lipper Emerging Markets Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that have an investment objective of long-term
capital appreciation through investing at least 65% of their
total assets in "emerging markets" (as determined by a
country's GNP per capita or other economic measures)
securities. It does not take into account sales charges.
(3) The Fund began operations on 6/30/98. Index comparisons begin
on 6/30/98.
45 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Tax-Efficient Structured Emerging Markets Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your None
investment)
Fund Reimbursement Fee (as a percentage of offering or 1.00%*
exchange price or amount redeemed)
* Unless a waiver applies, you will be charged a "Fund
Reimbursement Fee" when you purchase, sell (redeem) or exchange
Institutional Class or Administrative Class shares of the Fund.
The fee will be equal to 1.00% of the net asset value of the
shares purchased, redeemed or exchanged. Fund Reimbursement Fees
are paid to and retained by the Fund and are not sales charges
(loads). See "Purchases, Redemptions and Exchanges--Fund
Reimbursement Fees."
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
-----------------------------------------------------------------
Institutional 0.45% None 0.50% 0.95%
-----------------------------------------------------------------
Administrative 0.45% 0.25% 0.50 1.20
-----------------------------------------------------------------
</TABLE>
(1) Other Expenses reflects a 0.50% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
Assuming you do not redeem your shares.*
<TABLE>
<S> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
Institutional $299 $511 $741 $1,402
-----------------------------------------------------------------------------------
Administrative 324 588 872 1,684
-----------------------------------------------------------------------------------
</TABLE>
Assuming you do not redeem you shares.*
<TABLE>
<S> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
Institutional $196 $400 $620 $1,255
-----------------------------------------------------------------------------------
Administrative 221 477 753 1,540
-----------------------------------------------------------------------------------
</TABLE>
* The Examples assume the payment of a 1.00% Fund Reimbursement
Fee both at the time of purchase and at the time of redemption
even though such fees may be waived for certain investors. See
"Purchases, Redemptions and Exchanges--Fund Reimbursement
Fees."
Prospectus 46
<PAGE>
PIMCO International Fund
Ticker Symbols: N/A (Inst. Class)
N/A (Admin. Class)
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Common stocks of Capitalization Range
and Seeks capital foreign More than $500
Strategies appreciation (non-U.S.) million
through issuers
investment in an Dividend Frequency
international Approximate Number At least annually
portfolio; income of Holdings
is an incidental 200-250
consideration
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio
of common stocks, which may or may not pay dividends. The Fund
normally invests in securities traded principally in developed
foreign securities markets, but may also invest up to 30% of its
assets in developing or "emerging" markets. The Fund has no
prescribed limits on geographic asset distribution and may invest
in any foreign securities market in the world. The Fund may also
invest in securities of foreign issuers traded on U.S. securities
markets, but will normally not invest in U.S. issuers. The Fund
invests most of its assets in foreign securities which trade in
currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager uses a "top down" investment approach. He
first determines regional and country weightings for the Fund by
considering such factors as the condition and growth potential of
the various economies and securities markets, currency and
taxation considerations and other financial, social, national and
political factors. The Sub-Adviser's country specialists then
select individual stocks to fill out the desired country
weightings. In selecting stocks, the specialists analyze a broad
range of company fundamentals, such as price-to-earnings, price-
to-book value and price-to-cash flow ratios (value factors),
earnings, dividend and profit growth (growth factors) and balance
sheet strength and return on assets (quality factors). The
portfolio manager sells stocks in order to adjust or rebalance the
Fund's regional and country weightings or to replace companies
with weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts)
primarily for risk management or hedging purposes. The Fund may
also invest in equity securities other than common stocks (such as
preferred stocks and convertible securities) and may invest up to
10% of its assets in other investment companies. In response to
unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in foreign and
domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund's investment
objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Foreign Investment Risk .Value Securities Risk .Focused Investment
.Emerging Markets Risk .Growth Securities Risk Risk
.Currency Risk .Smaller Companies Risk .Leveraging Risk
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Derivatives Risk .Management Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares.
For periods prior to the inception of Institutional Class and
Administrative Class shares (9/30/98), performance information
shown in the bar chart (including the information to its right)
and in the Average Annual Total Returns table for those classes is
based on the performance of the Fund's Class C shares, which are
offered in a different prospectus. The prior Class C performance
has been adjusted to reflect the actual fees and expenses paid by
Institutional Class and Administrative Class shares, including no
sales charges (loads) and lower distribution and/or service (12b-1
fees) (if any) and administrative fees. The Fund had different
sub-advisers during the periods prior to November 15, 1994 and
would not necessarily have achieved the performance results shown
on the next page under its current investment management
arrangements. Past performance is no guarantee of future results.
47 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO International Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
"99) 21.81%
--------------------
Lowest (3rd Qtr.
"98) -21.91%
[CHART APPEARS HERE]
'90 -14.51%
'91 21.28%
'92 -4.75%
'93 34.98%
'94 -7.11%
'95 7.01%
'96 6.98%
'97 3.03%
'98 9.68%
'99 28.32%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (8/25/86)(/3/)
--------------------------------------------------------------
Institutional Class 28.32% 10.67% 7.47% 9.07%
--------------------------------------------------------------
Administrative Class 27.96% 10.32% 7.17% 8.78%
--------------------------------------------------------------
MSCI EAFE Index(/1/) 27.31% 13.15% 7.34% 10.35%
--------------------------------------------------------------
Lipper International Fund
Average(/2/) 40.86% 15.08% 10.22% 11.57%
--------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) ("MSCI EAFE") Index is a widely
recognized, unmanaged index of issuers in countries of
Europe, Australia and Asia. It is not possible to invest
directly in the index.
(2) The Lipper International Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest their assets in securities whose
primary trading markets are outside of the United States. It
does not take into account sales charges.
(3) The Fund began operations on 8/25/86. Index comparisons begin
on 8/31/86.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.55% None 0.50% 1.05%
------------------------------------------------------------------
Administrative 0.55 0.25% 0.50 1.30
------------------------------------------------------------------
(1) Other Expenses reflects a 0.50% Administrative Fee paid by the
class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
Institutional $107 $334 $579 $1,283
------------------------------------------------------------------
Administrative 132 412 713 1,568
------------------------------------------------------------------
</TABLE>
Prospectus 48
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of
that Fund's investments. Many factors can affect those values. The
factors that are most likely to have a material effect on a
particular Fund's portfolio as a whole are called "principal
risks." The principal risks of each Fund are identified in the
Fund Summaries and are summarized in this section. Each Fund may
be subject to additional principal risks and risks other than
those described below because the types of investments made by
each Fund can change over time. Securities and investment
techniques mentioned in this summary and described in greater
detail under "Characteristics and Risks of Securities and
Investment Techniques" appear in bold type. That section and
"Investment Objectives and Policies" in the Statement of
Additional Information also include more information about the
Funds, their investments and the related risks. There is no
guarantee that a Fund will be able to achieve its investment
objective.
Market The market price of securities owned by a Fund may go up or down,
Risk sometimes rapidly or unpredictably. Each of the Funds normally
invests most of its assets in common stocks and/or other equity
securities. A principal risk of investing in each Fund is that the
equity securities in its portfolio will decline in value due to
factors affecting equity securities markets generally or
particular industries represented in those markets. The values of
equity securities may decline due to general market conditions
which are not specifically related to a particular company, such
as real or perceived adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may
also decline due to factors which affect a particular industry or
industries, such as labor shortages or increased production costs
and competitive conditions within an industry. Equity securities
generally have greater price volatility than fixed income
securities.
Issuer The value of a security may also decline for a number of reasons
Risk which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the
issuer's goods or services.
Value
Securities Each Fund may invest in companies that may not be expected to
Risk experience significant earnings growth, but whose securities its
portfolio manager believes are selling at a price lower than their
true value. The Equity Income, Value, Renaissance, Growth &
Income, Select International, Mega-Cap, Capital Appreciation, Mid-
Cap, Micro-Cap and Small-Cap Value Funds place particular emphasis
on value securities. Companies that issue value securities may
have experienced adverse business developments or may be subject
to special risks that have caused their securities to be out of
favor. If a portfolio manager's assessment of a company's
prospects is wrong, or if the market does not recognize the value
of the company, the price of its securities may decline or may not
approach the value that the portfolio manager anticipates.
Growth
Securities Each Fund may invest in equity securities of companies that its
Risk portfolio manager believes will experience relatively rapid
earnings growth. The Growth, Select Growth, Target, Growth &
Income, Opportunity, Innovation, Global Innovation, Select
International, Mega-Cap, Capital Appreciation, Mid-Cap and Micro-
Cap Funds place particular emphasis on growth securities. Growth
securities typically trade at higher multiples of current earnings
than other securities. Therefore, the values of growth securities
may be more sensitive to changes in current or expected earnings
than the values of other securities.
Smaller
Company
Risk
The general risks associated with equity securities and liquidity
risk are particularly pronounced for securities of companies with
smaller market capitalizations. These companies may have limited
product lines, markets or financial resources or they may depend
on a few key employees. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or
on a regional exchange, or may otherwise have limited liquidity.
The Micro-Cap Fund, in particular, and the Innovation, Global
Innovation, Opportunity and Small-Cap Value Funds generally have
substantial exposure to this risk. The Target,
49 PIMCO Funds: Multi-Manager Series
<PAGE>
Growth & Income, Select International and Mid-Cap Funds also have
significant exposure to this risk because they invest substantial
assets in companies with medium-sized market capitalizations,
which are smaller and generally less-seasoned than the largest
companies.
Liquidity All of the Funds are subject to liquidity risk. Liquidity risk
Risk exists when particular investments are difficult to purchase or
sell, possibly preventing a Fund from selling such illiquid
securities at an advantageous time or price. Funds with principal
investment strategies that involve securities of companies with
smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have
the greatest exposure to liquidity risk.
Derivatives
Risk All Funds except the Mega-Cap, Capital Appreciation, Mid-Cap,
Micro-Cap and Small-Cap Value Funds may use derivatives, which are
financial contracts whose value depends on, or is derived from,
the value of an underlying asset, reference rate or index. The
various derivative instruments that the Funds may use are
referenced under "Characteristics and Risks of Securities and
Investment Techniques--Derivatives" in this Prospectus and
described in more detail under "Investment Objectives and
Policies" in the Statement of Additional Information. The Funds
may sometimes use derivatives as part of a strategy designed to
reduce exposure to other risks, such as interest rate or currency
risk. The Funds may also use derivatives for leverage, which
increases opportunities for gain but also involves greater risk of
loss due to leveraging risk. A Fund's use of derivative
instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities
and other traditional investments. Derivatives are subject to a
number of risks described elsewhere in this section, such as
liquidity risk, market risk, credit risk and management risk. They
also involve the risk of mispricing or improper valuation and the
risk that changes in the value of the derivative may not correlate
perfectly with the underlying asset, rate or index. In addition, a
Fund's use of derivatives may increase or accelerate the amount of
taxes payable by shareholders. A Fund investing in a derivative
instrument could lose more than the principal amount invested.
Also, suitable derivative transactions may not be available in all
circumstances and there can be no assurance that a Fund will
engage in these transactions to reduce exposure to other risks
when that would be beneficial.
Foreign
(non- A Fund that invests in foreign securities, and particularly the
U.S.) Global Innovation, Select International, Structured Emerging
Investment Markets, Tax-Efficient Structured Emerging Markets and
Risk International Funds, may experience more rapid and extreme changes
in value than Funds that invest exclusively in securities of U.S.
issuers or securities that trade exclusively in U.S. markets. The
securities markets of many foreign countries are relatively small,
with a limited number of companies representing a small number of
industries. Additionally, issuers of foreign securities are
usually not subject to the same degree of regulation as U.S.
issuers. Reporting, accounting and auditing standards of foreign
countries differ, in some cases significantly, from U.S.
standards. Also, nationalization, expropriation or confiscatory
taxation, currency blockage, political changes or diplomatic
developments could adversely affect a Fund's investments in a
foreign country. In the event of nationalization, expropriation or
other confiscation, a Fund could lose its entire investment in
foreign securities. To the extent that a Fund, such as the Global
Innovation, Select International, Structured Emerging Markets,
Tax-Efficient Structured Emerging Markets or International Funds,
invests a significant portion of its assets in a narrowly defined
geographic area such as Europe, Asia or South America, the Fund
will generally have more exposure to regional economic risks
associated with foreign investments. Adverse conditions in certain
regions (such as Southeast Asia) can also adversely affect
securities of other countries whose economies appear to be
unrelated. In addition, special U.S. tax considerations may apply
to a Fund's investment in foreign securities.
Emerging
Markets
Risk
Foreign investment risk may be particularly high to the extent
that a Fund invests in emerging market securities of issuers based
in countries with developing economies. These securities may
present market, credit, currency, liquidity, legal, political and
other risks different from, or greater than, the risks of
investing in developed foreign countries. The Structured Emerging
Markets and Tax-Efficient Structured Emerging Markets
Prospectus 50
<PAGE>
Funds normally invest most of their assets in emerging market
securities and are particularly sensitive to these risks. The
Global Innovation, Select International and International Funds
may also invest a significant portion of their assets in emerging
market securities.
Currency Funds that invest directly in foreign currencies or in securities
Risk that trade in, and receive revenues in, foreign currencies are
subject to the risk that those currencies will decline in value
relative to the U.S. Dollar, or, in the case of hedging positions,
that the U.S. Dollar will decline in value relative to the
currency being hedged. The Global Innovation, Select
International, Structured Emerging Markets, Tax-Efficient
Structured Emerging Markets and International Funds are
particularly sensitive to currency risk. Currency rates in foreign
countries may fluctuate significantly over short periods of time
for a number of reasons, including changes in interest rates,
intervention (or the failure to intervene) by U.S. or foreign
governments, central banks or supranational entities such as the
International Monetary Fund, or by the imposition of currency
controls or other political developments in the U.S. or abroad.
Focused
Investment Focusing Fund investments in a small number of issuers, industries
Risk or foreign currencies increases risk. Funds, such as the Select
Growth Fund, that are "non-diversified" because they invest in a
relatively small number of issuers may have more risk because
changes in the value of a single security or the impact of a
single economic, political or regulatory occurrence may have a
greater adverse impact on the Fund's net asset value. Some of
those issuers also may present substantial credit or other risks.
The Global Innovation, Select International, Structured Emerging
Markets, Tax-Efficient Structured Emerging Markets and
International Funds may be subject to increased risk to the extent
that they focus their investments in securities denominated in a
particular foreign currency or in a narrowly defined geographic
area outside the U.S., because companies in those areas may share
common characteristics and react similarly to market developments.
Similarly, the Innovation and Global Innovation Funds are
vulnerable to events affecting companies which use innovative
technologies to gain a strategic, competitive advantage in their
industry and companies that provide and service those technologies
because these funds normally "concentrate" their investments in
those companies. Also, the Funds may from time to time have
greater risk to the extent they invest a substantial portion of
their assets in related industries such as "technology" or
"financial and business services," which may share common
characteristics and react similarly to market developments.
Leveraging The Funds, and in particular the Global Innovation, Enhanced
Risk Equity, Tax-Efficient Equity, Structured Emerging Markets, Tax-
Efficient Structured Emerging Markets and International Funds, may
engage in transactions or purchase instruments that give rise to
forms of leverage. Such transactions and instruments may include,
among others, the use of reverse repurchase agreements and other
borrowings, the investment of collateral from loans of portfolio
securities, or the use of when-issued, delayed-delivery or forward
commitment transactions. The use of derivatives may also involve
leverage. Leverage, including borrowing, will cause the value of a
Fund's shares to be more volatile than if the Fund did not use
leverage. This is because leverage tends to exaggerate the effect
of any increase or decrease in the value of a Fund's portfolio
securities. The use of leverage may also cause a Fund to liquidate
portfolio positions when it would not be advantageous to do so in
order to satisfy its obligations or to meet segregation
requirements.
Interest
Rate Risk To the extent that Funds purchase fixed income securities for
investment or defensive purposes, they will be subject to interest
rate risk, a market risk relating to investments in fixed income
securities such as bonds and notes. The Growth & Income Fund is
particularly sensitive to this risk because it may invest in
interest rate sensitive securities such as corporate bonds.
As interest rates rise, the value of fixed income securities in a
Fund's portfolio are likely to decrease. Securities with longer
"durations" (defined below) tend to be more sensitive to changes
in interest rates, usually making them more volatile than
securities with shorter durations. Duration is a measure of the
expected life of a fixed income security that is used to determine
the sensitivity of a security's price to changes in interest
rates. Generally, a Fund with a longer average portfolio duration
will be more sensitive to changes in interest rates than a Fund
with a shorter average portfolio duration.
51 PIMCO Funds: Multi-Manager Series
<PAGE>
High Funds that invest in high yield securities and unrated securities
Yield of similar quality (commonly known as "junk bonds") may be subject
Risk to greater levels of interest rate, credit and liquidity risk than
Funds that do not invest in such securities. The Growth & Income
Fund is particularly susceptible to this risk. High yield
securities are considered predominantly speculative with respect
to the issuer's continuing ability to make principal and interest
payments. An economic downturn or period of rising interest rates
could adversely affect the market for high yield securities and
reduce a Fund's ability to sell its high yield securities.
All of the Funds are subject to credit risk. This is the risk that
the issuer or the guarantor of a fixed income security, or the
Credit counterparty to a derivatives contract, repurchase agreement or a
Risk loan of portfolio securities, is unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor
its obligations. Securities are subject to varying degrees of
credit risk, which are often reflected in their credit ratings.
Management Each Fund is subject to management risk because it is an actively
Risk managed investment portfolio. PIMCO Advisors, the Sub-Advisers and
each individual portfolio manager will apply investment techniques
and risk analyses in making investment decisions for the Funds,
but there can be no guarantee that these will produce the desired
results.
Prospectus 52
<PAGE>
Management of the Funds
Investment
Adviser
and
Administrator
PIMCO Advisors serves as the investment adviser and the
administrator (serving in its capacity as administrator, the
"Administrator") for the Funds. Subject to the supervision of the
Board of Trustees, PIMCO Advisors is responsible for managing,
either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other
administrative matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport
Beach, California 92660. Organized in 1987, PIMCO Advisors
provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual
funds. As of September 30, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $[ ] billion in assets under
management.
PIMCO Advisors has retained investment management firms ("Sub-
Advisers") to manage each Fund's investments, except that the
PIMCO Equity Advisors division of PIMCO Advisors manages the
investments of the Equity Income, Value, Renaissance, Growth,
Select Growth, Target, Growth & Income, Opportunity, Innovation
and Global Innovation Funds. (PIMCO Equity Advisors is also
referred to as a "Sub-Adviser" in this capacity.) See "Sub-
Advisers" below.
PIMCO Advisors has retained its affiliate, Pacific Investment
Management Company LLC, to provide various administrative and
other services required by the Funds in its capacity as sub-
administrator. PIMCO Advisors and the sub-administrator may retain
other affiliates to provide certain of these services.
Advisory Each Fund pays PIMCO Advisors fees in return for providing or
Fees arranging for the provision of investment advisory services. In
the case of Funds for which PIMCO Advisors has retained a separate
Sub-Adviser, PIMCO Advisors (and not the Fund) pays a portion of
the advisory fees it receives to the Sub-Adviser in return for its
services.
For the fiscal year ended June 30, 2000, the Funds paid monthly
advisory fees to PIMCO Advisors at the following annual rates
(stated as a percentage of the average daily net assets of each
Fund taken separately):
<TABLE>
<CAPTION>
Fund Advisory Fees
-----------------------------------------------------------------
<S> <C>
Equity Income, Value, Capital Appreciation, Mid-Cap,
Tax-Efficient Equity, Structured Emerging Markets,
Tax-Efficient Structured Emerging Markets and
Enhanced Equity Funds 0.45%
Growth Fund 0.50%
Target and International Funds 0.55%
Select Growth Fund 0.57%*
Renaissance and Small-Cap Value Funds 0.60%
Growth & Income Fund 0.63%*
Opportunity and Innovation Funds 0.65%
Select International Fund 0.85%*
Micro-Cap Fund 1.25%
</TABLE>
-------
* On April 1, 2000, the advisory fee rate for the Select Growth
Fund increased to 0.60% per annum. On May 8, 2000, the advisory
fee rate for the Select International Fund decreased to 0.75%
per annum. On August 1, 2000, the advisory fee rate for the
Growth & Income Fund decreased to 0.60% per annum.
The Global Innovation and Mega-Cap Funds were not operational
during the entire fiscal year ended June 30, 2000. The annual
investment advisory fee rates payable by those Funds were 1.00%
and 0.45%, respectively (each stated as a percentage of the
average daily net assets of each Fund taken separately).
Administrative
Fees
Each Fund pays for the administrative services it requires under a
fee structure which is essentially fixed. Institutional and
Administrative Class shareholders of each Fund pay an
administrative fee to PIMCO Advisors, computed as a percentage of
the Fund's assets attributable in the aggregate to those classes
of shares. PIMCO Advisors, in turn, provides or procures
administrative services for Institutional and Administrative Class
shareholders and also bears the costs of various third-party
services required by the Funds, including
53 PIMCO Funds: Multi-Manager Series
<PAGE>
audit, custodial, portfolio accounting, legal, transfer agency and
printing costs. The result of this fee structure is an expense
level for Institutional and Administrative Class shareholders of
each Fund that, with limited exceptions, is precise and
predictable under ordinary circumstances.
Institutional and Administrative Class shareholders of the Funds
pay PIMCO Advisors monthly administrative fees at the following
annual rates (stated as a percentage of the average daily net
assets attributable in the aggregate to the Fund's Institutional
and Administrative Class shares):
<TABLE>
<CAPTION>
Fund Administrative Fees
-----------------------------------------------------------------
<S> <C>
Select International, International, Structured
Emerging
Markets and Tax-Efficient Structured Emerging
Markets Funds 0.50%
Global Innovation Fund 0.40%
All Other Funds 0.25%
</TABLE>
Sub- Each Sub-Adviser has full investment discretion and makes all
Advisers determinations with respect to the investment of a Fund's assets.
The following provides summary information about each Sub-Adviser,
including the Fund(s) it manages and its investment specialty.
<TABLE>
<CAPTION>
Sub-Adviser* Funds Investment Specialty
----------------------------------------------------------------------------
<S> <C> <C>
PIMCO Equity Advisors Equity Income, Value, Disciplined approach to
division of PIMCO Renaissance, Growth, identifying quality growth
Advisors ("PIMCO Equity Select Growth, Target, and/or undervalued
Advisors") Growth & Income, companies
1345 Avenue of the Opportunity, Innovation
Americas, 50th Floor and Global Innovation
New York, NY 10105
PIMCO/Allianz Select International Fund [ ]
International Advisors
LLC ("PAIA")
1345 Avenue of the
Americas
50th Floor
New York, NY 10105
Cadence Capital Mega-Cap, Capital A blend of growth
Management ("Cadence") Appreciation, Mid-Cap and companies whose stock is
Exchange Place, 53 State Micro-Cap reasonably valued by the
Street market
Boston, MA 02109
NFJ Investment Group Small-Cap Value Value stocks that the Sub-
("NFJ") Adviser believes are
2121 San Jacinto, Suite undervalued and/or offer
1840 above-average dividend
Dallas, TX 75201 yields
Parametric Portfolio Enhanced Equity, Tax- Stocks, using
Associates Efficient Equity, quantitatively-driven
("Parametric") Structured Emerging fundamental analysis and
7310 Columbia Center, Markets and Tax-Efficient economic methods, with a
701 Fifth Avenue Structured Emerging specialty in tax-efficient
Seattle, WA 98104 Markets products
Blairlogie Capital International International stocks using
Management Scottish standards of
("Blairlogie") prudent investment
4th Floor, 125 Princes management with modern
Street quantitative analytical
Edinburgh EH2 4AD, tools
Scotland
</TABLE>
-------
* PIMCO Equity Advisors is a division of PIMCO Advisors. PAIA is a
wholly-owned subsidiary of PIMCO Advisors. With the exception of
Blairlogie, each of the other Sub-Advisers is an affiliated sub-
partnership of PIMCO Advisors.
The following provides additional information about each Sub-
Adviser and the individual Portfolio Manager(s) who have or share
primary responsibility for managing the Funds' investments.
Prospectus 54
<PAGE>
PIMCO A division of PIMCO Advisors, PIMCO Equity Advisors provides
Equity equity-related advisory services to mutual funds and institutional
Advisors accounts. See "Investment Adviser and Administrator" above for
additional information about PIMCO Advisors.
The following individuals at PIMCO Equity Advisors have or share
primary responsibility for the noted Funds. A different sub-
advisory firm served as Sub-Adviser for each of the Growth,
Target, Opportunity and Innovation Funds prior to March 6, 1999,
for the Renaissance Fund prior to May 7, 1999, for the Select
Growth and Growth & Income Funds prior to July 1, 1999, and for
the Equity Income and Value Funds prior to May 8, 2000.
<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Recent Professional Experience
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Income Kenneth W. Corba 5/00 Managing Director and Chief
Investment Officer of PIMCO Equity
Advisors and a Member of the
Management Board of PIMCO Advisors.
Prior to joining PIMCO Advisors, he
was with Eagle Asset Management from
1995 to 1998, serving in various
capacities including as Chief
Investment Officer and Portfolio
Manager. He was with Stein Roe and
Farnham Inc. from 1984 to 1995,
serving in various capacities
including as Director of the Capital
Management Group, Senior Vice
President and Portfolio Manager.
Value John K. Schneider 5/00 Senior Portfolio Manager of PIMCO
Equity Advisors. Prior to joining
PIMCO Advisors, he was a partner and
Portfolio Manager of Schneider
Capital Management from 1996 to
1999, where he managed equity
accounts for various institutional
clients. Prior to that he was a
member of the Equity Policy
Committee and Director of Research
at Newbold's Asset Management from
1991 to 1996.
Renaissance Mr. Schneider 5/99 See above.
Growth Mr. Corba 5/99 See above.
Select Growth Messrs. Corba and 7/99 See above.
Schneider
Target Mr. Corba 3/99 See above.
Jeff Parker 3/99 Assistant Portfolio Manager and
Research Analyst for PIMCO Equity
Advisors. Prior to joining PIMCO
Equity Advisors, he managed equity
accounts as an Assistant Portfolio
Manager at Eagle Asset Management
from 1996 to 1998. He was a Senior
Consultant with Andersen Consulting,
specializing in health care and
technology, from 1991 to 1994.
Growth & Income Mr. Corba 7/99 See above.
Peter C. Thoms 8/00 Investment Analyst at Federated
Investors from July 1998 to May
1999. Previously, he received his
M.B.A. at the University of
Virginia's Darden School of
Business.
Opportunity Michael F. Gaffney 3/99 Managing Director of PIMCO Equity
Advisors, where he manages the
Opportunity Fund and other small-cap
products. Prior to joining PIMCO
Advisors, he was with Alliance
Capital Management L.P. from 1993 to
1999, serving in various capacities
including as Senior Vice President
and Portfolio Manager.
Innovation Dennis P. McKechnie 10/98 Portfolio Manager of PIMCO Equity
Advisors. Prior to joining PIMCO
Advisors, he was with Columbus
Circle Investors from 1991 to 1999,
where he managed equity accounts and
served in various capacities
including as Portfolio Manager for
the Innovation Fund.
Global Innovation Mr. McKechnie 12/99+ See above.
</TABLE>
55 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Recent Professional Experience
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jiyoung Kim 4/00 Senior Research Analyst for PIMCO Innovation
Fund, where she covers biotechnology,
telecommunications equipment, semiconductors
and networking. Prior to joining PIMCO Equity
Advisors in [ ], she was a Senior Research
Analyst at Fred Alger Management from [ ] to
[ ]. Prior to that, she was a Senior Research
Technician at Repligen, a [ ] company.
-------
+ Since inception of the Fund. Prior to PIMCO Advisors and PIMCO
Equity Advisors assuming their positions as Adviser and Sub-
Adviser, respectively, of the Global Innovation Fund, Mr.
McKechnie managed the Fund's portfolio in his capacity as an
officer of the Trust.
A wholly-owned subsidiary of PIMCO Advisors, PAIA provides
PAIA international advisory services to mutual funds. PAIA commenced
operations in [ ], 2000. Accounts managed by PAIA had combined
assets as of
September 30, 2000 of approximately $[ ] billion.
The following individuals at PAIA share primary responsibility for
the Select International Fund.
Portfolio
Fund Manager(s) Since Recent Professional Experience
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Select Udo Frank 11/00* Managing Director and Chief Investment Officer
International of Allianz Asset Advisory and Management GmbH
("Allianz AAM"), responsible for the entire
area (since 1997), and Chief Executive Officer
and Chief Investment Officer of Allianz PIMCO
Asset Management. Previously, he served as the
Chief Investment Officer of Allianz KAG (since
1994).
Gerd Wolfgang Hintz 10/00* Managing Director of the Equity Research
Department at Allianz AAM since 1998. In
addition, he has been responsible for Allianz
AAM's trading department since January 2000.
Previously, he was the head of Research and
Investor Relations of Allianz AG.
</TABLE>
-------
* Since inception of the Fund.
Cadence
An affiliated sub-partnership of PIMCO Advisors, Cadence provides
advisory services to mutual funds and institutional accounts.
Cadence Capital Management Corporation, the predecessor investment
adviser to Cadence, commenced operations in 1988. Accounts managed
by Cadence had combined assets as of September 30, 2000 of
approximately $[ ] billion.
The following individuals at Cadence share primary responsibility
for each of the noted Funds.
<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Recent Professional Experience
-----------------------------------------------------------------
<S> <C> <C> <C>
Mega- David B. Breed 9/99* Managing Director, Chief Executive
Cap Officer, Chief Investment Officer
and founding partner of Cadence.
Member of the Management Board of
PIMCO Advisors. He is a research
generalist and has lead the team of
portfolio managers and analysts
since 1988. Mr. Breed has managed
separate equity accounts for many
institutional clients and has led
the team that manages the PIMCO
Funds sub-advised by Cadence since
those Funds' inception dates.
William B. Bannick 9/99* Managing Director and Executive
Vice President at Cadence. Mr.
Bannick is a research generalist
and Senior Portfolio Manager for
the Cadence team. He has managed
separately managed equity accounts
for various Cadence institutional
clients and has been a member of
the team that manages the PIMCO
Funds sub-advised by Cadence since
joining Cadence in 1992.
</TABLE>
Prospectus 56
<PAGE>
<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Recent Professional Experience
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Katherine A. Burdon 9/99* Managing Director and Senior
Portfolio Manager at Cadence. Ms.
Burdon is a research generalist and
has managed separately managed
equity accounts for various Cadence
institutional clients and has been a
member of the team that manages the
PIMCO Funds sub-advised by Cadence
since joining Cadence in 1993.
Peter B. McManus 9/99* Director, Account Management at
Cadence. He has been a member of the
investment team at Cadence and
handles client relationships of
separately managed accounts, and has
been a member of the team that
manages the PIMCO Funds sub-advised
by Cadence since joining Cadence in
1994. Previously, he served as a
Vice President of Bank of Boston
from 1991 to 1994.
Capital Appreciation Mr. Breed 3/91* See above.
Mr. Bannick 10/92 See above.
Ms. Burdon 1/93 See above.
Mr. McManus 10/94 See above.
Mid-Cap Mr. Breed 8/91* See above.
Messrs. Bannick and Same as See above.
McManus and Capital
Ms. Burdon Appreciation
Fund
Micro-Cap Messrs. Breed and 6/93* See above.
Bannick and Ms.
Burdon
Mr. McManus 10/94 See above.
</TABLE>
-------
*Since inception of the Fund.
NFJ
An affiliated sub-partnership of PIMCO Advisors, NFJ provides
advisory services to mutual funds and institutional accounts. NFJ
Investment Group, Inc., the predecessor investment adviser to NFJ,
commenced operations in 1989. Accounts managed by NFJ had combined
assets as of September 30, 2000 of approximately $[ ] billion.
The following individuals at NFJ share primary responsibility for
the noted Fund.
<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Recent Professional Experience
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small-Cap Value Chris Najork 10/91* Managing Director and founding
partner of NFJ. He has 30 years'
experience encompassing equity
research and portfolio management.
Prior to the formation of NFJ in
1989, he was a senior vice
president, senior portfolio manager
and analyst at NationsBank, which he
joined in 1974.
Benno J. Fischer 10/91* Managing Director and founding
partner of NFJ. He has 32 years'
experience in portfolio management,
investment analysis and research.
Prior to the formation of NFJ in
1989, he was chief investment
officer (institutional and fixed
income), senior vice president and
senior portfolio manager at
NationsBank, which he joined in
1971. Prior to joining NationsBank,
Mr. Fischer was a securities analyst
at Chase Manhattan Bank and Clark,
Dodge.
Paul A. Magnuson 7/95 Principal at NFJ. He is a Portfolio
Manager and Senior Research Analyst
with 14 years' experience in equity
analysis and portfolio management.
Prior to joining NFJ in 1992, he was
an assistant vice president at
NationsBank, which he joined in
1985. Within the Trust Investment
Qualitative Services Division of
NationsBank, he was responsible for
equity analytics and structured
fund management.
</TABLE>
-------
*Since inception of the Fund.
Parametric
An affiliated sub-partnership of PIMCO Advisors, Parametric
provides advisory services to mutual funds and institutional
accounts. Parametric Portfolio Associates, Inc., the predecessor
investment adviser to Parametric, commenced operations in 1987.
Accounts managed by Parametric had combined assets as of September
30, 2000 of approximately $[ ] billion.
57 PIMCO Funds: Multi-Manager Series
<PAGE>
The following individuals share primary responsibility for each of
the noted Funds.
<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Recent Professional Experience
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enhanced Equity David Stein 7/96* Managing Director of Parametric. He
has been with Parametric since 1996
where he leads the investment,
research and product development
activities. Previously, he served in
Investment Research at GTE
Corporation from 1995 to 1996, in
Equity Research at Vanguard Group
from 1994 to 1995 and in Investment
Research at IBM Corporation from
1977 to 1994.
Tom Seto 10/98* Vice President and Portfolio Manager
of Parametric. Since joining
Parametric in 1998, he has been
responsible for management of
Parametric's active U.S. equity
strategies and has managed
structured equity portfolios.
Previously, he was with Barclays
Global Investors from 1991 to 1998,
serving in various capacities
including as head of U.S. Equity
Index Investments and Portfolio
Manager.
Tax-Efficient Equity Messrs. Stein and 9/98* See above.
Seto
Structured Emerging Messrs. Stein and 6/98* See above.
Markets Seto
Cliff Quisenberry 6/98* Vice President and Global Portfolio
Manager of Parametric. He joined
Parametric in 1998 where he heads
international investments in both
developed and emerging markets.
Previously, he served as Vice
President and Portfolio Manager at
Cutler & Co. from 1990 to 1994 and
as a Securities Analyst and
Portfolio Manager at Fred Alger
Management from 1987 to 1998.
Tax-Efficient Structured Messrs. Stein, Seto 6/98* See above.
Emerging Markets and Quisenberry
</TABLE>
-------
*Since inception of the Fund.
Blairlogie
Blairlogie provides advisory services to mutual funds and
institutional accounts. Blairlogie Capital Management Ltd., the
predecessor investment adviser to Blairlogie, commenced operations
in 1992. Accounts managed by Blairlogie had combined assets as of
September 30, 2000 of approximately $[ ] billion.
Blairlogie is an indirect majority-owned subsidiary of the
Alleghany Corporation, and is not an affiliate of PIMCO Advisors.
Blairlogie was formerly an affiliated sub-partnership of PIMCO
Advisors. On April 30, 1999, PIMCO Advisors sold all of its
ownership interest in Blairlogie to subsidiaries of the Alleghany
Corporation. PIMCO Advisors retained Blairlogie as the Sub-Adviser
of the International Fund both prior and subsequent to this
transaction.
The following individual at Blairlogie has primary responsibility
for the International Fund.
<TABLE>
<CAPTION>
Fund Portfolio Manager Since Recent Professional Experience
--------------------------------------------------------------------------
<S> <C> <C> <C>
International James Smith 11/94 Chief Investment Officer of Blairlogie
since 1992, responsible for setting
investment policy, asset allocation,
managing the investment team and stock
selection in Latin America.
</TABLE>
Adviser/Sub-Adviser
Relationship
Shareholders of each fund (except the Innovation, Mid-Cap and
Micro-Cap Funds) have approved a proposal permitting PIMCO
Advisors to enter into new or amended sub-advisory agreements with
one or more sub-advisers with respect to each Fund without
obtaining shareholder approval of such agreements, subject to the
conditions of an exemptive order that has been granted by the
Securities Exchange Commission. One of the conditions requires the
Board of Trustees to approve any such agreement. In addition, the
exemptive order prohibits PIMCO Advisors from entering into sub-
advisory agreements with affiliates of PIMCO Advisors without
shareholder approval, unless those affiliates are substantially
wholly-owned by PIMCO Advisors.
Distributor
The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly
owned subsidiary of PIMCO Advisors. The Distributor, located at
2187 Atlantic Street, Stamford, Connecticut 06902, is a broker-
dealer registered with the Securities and Exchange Commission.
Prospectus 58
<PAGE>
Investment Options --
Institutional Class and Administrative Class Shares
The Trust offers investors Institutional Class and Administrative
Class shares of the Funds in this Prospectus.
The Trust does not charge any sales charges (loads) or other fees
in connection with purchases, sales (redemptions) or exchanges of
Institutional Class or Administrative Class shares, except that a
1.00% Fund Reimbursement Fee may apply to transactions involving
shares of the Structured Emerging Markets and Tax-Efficient
Structured Emerging Markets Funds. See "Purchases, Redemptions and
Exchanges--Fund Reimbursement Fees" below.
Administrative Class shares are generally subject to a higher
level of operating expenses than Institutional Class shares due to
the additional service and/or distribution fees paid by
Administrative Class shares as described below. Therefore,
Institutional Class shares will generally pay higher dividends and
have a more favorable investment return than Administrative Class
shares.
. Service and Distribution (12b-1) Fees--Administrative Class
Shares. The Trust has adopted an Administrative Services Plan for
the Administrative Class shares of each Fund. It has also adopted
a Distribution Plan for the Administrative Class shares of each
Fund. Each Plan has been adopted in accordance with the
requirements of Rule 12b-1 under the Investment Company Act of
1940 and is administered in accordance with that rule. However,
shareholders do not have the voting rights set forth in Rule 12b-1
with respect to the Administrative Services Plan.
Each Plan allows the Funds to use its Administrative Class assets
to reimburse financial intermediaries that provide services
relating to Administrative Class shares. The Distribution Plan
permits reimbursement for expenses in connection with the
distribution and marketing of Administrative Class shares and/or
the provision of shareholder services to Administrative Class
shareholders. The Administrative Services Plan permits
reimbursement for services in connection with the administration
of plans or programs that use Administrative Class shares of the
Funds as their funding medium and for related expenses.
In combination, the Plans permit a Fund to make total
reimbursements at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to its Administrative Class
shares. The same entity may not receive both distribution and
administrative services fees with respect to the same
Administrative Class assets, but may receive fees under each Plan
with respect to separate assets. Because these fees are paid out
of a Fund's Administrative Class assets on an ongoing basis, over
time they will increase the cost of an investment in
Administrative Class shares and may cost an investor more than
other types of sales charges.
. Arrangements with Service Agents. Institutional Class and
Administrative Class shares of the Funds may be offered through
certain brokers and financial intermediaries ("service agents")
that have established a shareholder servicing relationship with
the Trust on behalf of their customers. The Trust pays no
compensation to such entities other than service and/or
distribution fees paid with respect to Administrative Class
shares. Service agents may impose additional or different
conditions than the Trust on purchases, redemptions or exchanges
of Fund shares by their customers. Service agents may also
independently establish and charge their customers transaction
fees, account fees and other amounts in connection with purchases,
sales and redemptions of Fund shares in addition to any fees
charged by the Trust. These additional fees may vary over time and
would increase the cost of the customer's investment and lower
investment returns. Each service agent is responsible for
transmitting to its customers a schedule of any such fees and
information regarding any additional or different conditions
regarding purchases, redemptions and exchanges. Shareholders who
are customers of service agents should consult their service
agents for information regarding these fees and conditions.
59 PIMCO Funds: Multi-Manager Series
<PAGE>
Purchases, Redemptions and Exchanges
Purchasing Investors may purchase Institutional Class and Administrative
Shares Class shares of the Funds at the relevant net asset value ("NAV")
of that class without a sales charge or other fee, except that a
1.00% Fund Reimbursement Fee may apply to transactions involving
shares of the Structured Emerging Markets and Tax-Efficient
Structured Emerging Markets Funds. See "Fund Reimbursement Fees"
below.
Institutional Class shares are offered primarily for direct
investment by investors such as pension and profit sharing plans,
employee benefit trusts, endowments, foundations, corporations and
high net worth individuals. Institutional Class shares may also be
offered through certain financial intermediaries that charge their
customers transaction or other fees with respect to their
customers' investments in the Funds.
Administrative Class shares are offered primarily through
employee benefit plan alliances, broker-dealers and other
intermediaries, and each Fund pays service and/or distribution
fees to these entities for services they provide to Administrative
Class shareholders.
Pension and profit-sharing plans, employee benefit trusts and
employee benefit plan alliances and "wrap account" programs
established with broker-dealers or financial intermediaries may
purchase shares of either class only if the plan or program for
which the shares are being acquired will maintain an omnibus or
pooled account for each Fund and will not require a Fund to pay
any type of administrative payment per participant account to any
third party.
. Investment Minimums. The minimum initial investment for shares
of either class is $5 million, except that the minimum initial
investment for a registered investment adviser purchasing
Institutional Class shares for its clients through omnibus
accounts is $250,000 per Fund. At the discretion of PIMCO
Advisors, the minimum initial investment may be waived for
Institutional or Administrative Class shares offered to clients of
PIMCO Equity Advisors, Cadence, NFJ, Pacific Investment Management
Company LLC, Parametric, and their affiliates, and to the benefit
plans of PIMCO Advisors and its affiliates. In addition, the
minimum initial investment does not apply to Institutional Class
shares offered through fee-based programs sponsored and maintained
by a registered broker-dealer and approved by the Distributor in
which each investor pays an asset based fee at an annual rate of
at least 0.50% of the assets in the account to a financial
intermediary for investment advisory and/or administrative
services.
The Trust and the Distributor may waive the minimum initial
investment for other categories of investors at their discretion.
The investment minimums discussed in this section and the
limitations set forth in "Investment Limitations" below do not
apply to participants in PIMCO Advisors Portfolio Strategies, a
managed product sponsored by PIMCO Advisors.
. Timing of Purchase Orders and Share Price Calculations. A
purchase order received by the Trust's transfer agent, National
Financial Data Services (the "Transfer Agent"), prior to the close
of regular trading (normally 4:00 p.m., Eastern time) on the New
York Stock Exchange, on a day the Trust is open for business,
together with payment made in one of the ways described below,
will be effected at that day's net asset value ("NAV"). An order
received after the close of regular trading on the New York Stock
Exchange will be effected at the NAV determined on the next
business day. However, orders received by certain retirement plans
and other financial intermediaries on a business day prior to the
close of regular trading on the New York Stock Exchange and
communicated to the Transfer Agent prior to 9:00 a.m., Eastern
time, on the following business day will be effected at the NAV
determined on the prior business day. The Trust is "open for
business" on each day the New York Stock Exchange is open for
trading, which excludes the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Purchase orders will be accepted only on days on
which the Trust is open for business.
Prospectus 60
<PAGE>
. Initial Investment. Investors may open an account by
completing and signing a Client Registration Application and
mailing it to PIMCO Funds at 840 Newport Center Drive, Suite 300,
Newport Beach, California 92660. A Client Registration Application
may be obtained by calling 1-800-927-4648.
Except as described below, an investor may purchase Institutional
Class and Administrative Class shares only by wiring federal funds
to the Transfer Agent, National Financial Data Services, 330 West
9th Street, 4th Floor, Kansas City, Missouri 64105. Before wiring
federal funds, the investor must telephone the Trust at 1-800-927-
4648 to receive instructions for wire transfer and must provide
the following information: name of authorized person, shareholder
name, shareholder account number, name of Fund and share class,
amount being wired, and wiring bank name.
An investor may purchase shares without first wiring federal
funds if the proceeds of the investment are derived from an
advisory account the investor maintains with PIMCO Advisors or one
of its affiliates, from surrender or other payment from an
annuity, insurance, or other contract held by Pacific Life
Insurance Company LLC, or from an investment by broker-dealers,
institutional clients or other financial intermediaries which have
established a shareholder servicing relationship with the Trust on
behalf of their customers.
. Additional Investments. An investor may purchase additional
Institutional Class and Administrative Class shares of the Funds
at any time by calling the Trust and wiring federal funds to the
Transfer Agent as outlined above.
. Other Purchase Information. Purchases of a Fund's
Institutional Class and Administrative Class shares will be made
in full and fractional shares. In the interest of economy and
convenience, certificates for shares will not be issued.
The Trust and the Distributor each reserves the right, in its
sole discretion, to suspend the offering of shares of the Funds or
to reject any purchase order, in whole or in part, when, in the
judgment of management, such suspension or rejection is in the
best interests of the Trust.
An investor should invest in the Funds for long-term investment
purposes only. The Trust and PIMCO Advisors each reserves the
right to restrict purchases of Fund shares (including exchanges)
when a pattern of frequent purchases and sales made in response to
short-term fluctuations in share price appears evident. Notice of
any such restrictions, if any, will vary according to the
particular circumstances.
Institutional Class and Administrative Class shares of the Trust
may not be qualified or registered for sale in all states.
Investors should inquire as to whether shares of a particular Fund
are available for offer and sale in the investor's state of
residence. Shares of the Trust may not be offered or sold in any
state unless registered or qualified in that jurisdiction or
unless an exemption from registration or qualification is
available.
Subject to the approval of the Trust, an investor may purchase
shares of a Fund with liquid securities that are eligible for
purchase by the Fund (consistent with the Fund's investment
policies and restrictions) and that have a value that is readily
ascertainable in accordance with the Trust's valuation policies.
These transactions will be effected only if PIMCO Advisors or a
Sub-Adviser intends to retain the security in the Fund as an
investment. Assets purchased by a Fund in such a transaction will
be valued in generally the same manner as they would be valued for
purposes of pricing the Fund's shares, if such assets were
included in the Fund's assets at the time of purchase. The Trust
reserves the right to amend or terminate this practice at any
time.
. Retirement Plans. Shares of the Funds are available for
purchase by retirement and savings plans, including Keogh plans,
401(k) plans, 403(b) custodial accounts, and Individual Retirement
Accounts. The administrator of a plan or employee benefits office
can provide participants or employees with detailed information on
how to participate in the plan and how to elect a Fund as an
investment option. Participants in a retirement or savings plan
may be permitted to elect different investment options, alter the
amounts
61 PIMCO Funds: Multi-Manager Series
<PAGE>
contributed to the plan, or change how contributions are allocated
among investment options in accordance with the plan's specific
provisions. The plan administrator or employee benefits office
should be consulted for details. For questions about participant
accounts, participants should contact their employee benefits
office, the plan administrator, or the organization that provides
recordkeeping services for the plan. Investors who purchase shares
through retirement plans should be aware that plan administrators
may aggregate purchase and redemption orders for participants in
the plan. Therefore, there may be a delay between the time the
investor places an order with the plan administrator and the time
the order is forwarded to the Transfer Agent for execution.
. Fund Reimbursement Fees. Investors in Institutional Class and
Administrative Class shares of the Structured Emerging Markets and
Tax-Efficient Structured Emerging Markets Funds are subject to a
"Fund Reimbursement Fee," both at the time of purchase and at the
time of redemption, equal to 1.00% of the net asset value of the
shares purchased or redeemed. Fund Reimbursement Fees are not paid
separately, but are deducted automatically from the amount
invested or the amount to be received in connection with a
redemption. Fund Reimbursement Fees are paid to and retained by
the Funds to defray certain costs described below and are not paid
to or retained by PIMCO Advisors, the Fund's Sub-Adviser, or the
Distributor. Fund Reimbursement Fees are not sales loads or
contingent deferred sales charges. Reinvestment of dividends and
capital gains distributions paid to shareholders by the Funds are
not subject to Fund Reimbursement Fees, but redemptions and
exchanges of shares acquired by these reinvestments are subject to
Fund Reimbursement Fees unless a waiver applies.
The purpose of the Fund Reimbursement Fees is to defray the costs
associated with investing the proceeds of the sale of the Fund's
shares (in the case of purchases) or the costs associated with the
sale of portfolio securities to satisfy redemption requests (in
the case of redemptions), thereby insulating existing shareholders
from such costs. The amount of a Fund Reimbursement Fee represents
the Sub-Adviser's estimate of the costs reasonably anticipated to
be incurred by the Funds in connection with the purchase or sale
of portfolio securities, including international stocks,
associated with an investor's purchase or redemption. These costs
include brokerage costs, market impact costs (i.e., the increase
in market prices which may result when a Fund purchases or sells
thinly traded stocks) and the effect of "bid/asked" spreads in
international markets. Transaction costs incurred when purchasing
or selling stocks of companies in foreign countries, and
particularly emerging market countries, may be significantly
higher than those in more developed countries. This is due, in
part, to less competition among brokers, underutilization of
technology on the part of foreign exchanges and brokers, the lack
of less expensive investment options (such as derivative
instruments) and lower levels of liquidity in foreign and
underdeveloped markets.
Waiver of Fund Reimbursement Fees. Former participants in the
Parametric Portfolio Associates Emerging Markets Trust will not be
subject to Fund Reimbursement Fees with respect to any shares of
the Structured Emerging Markets and Tax-Efficient Structured
Emerging Markets Funds they acquired through June 30, 1998, and
will not be subject to Fund Reimbursement Fees upon the subsequent
redemption (including any redemption in connection with an
exchange) of any shares acquired by any such participant through
June 30, 1998. Such participants will be subject to such Fund
Reimbursement Fees to the same extent as any other shareholder on
any shares of either Fund acquired (whether by reinvestment of
dividends or capital gain distributions or otherwise) after June
30, 1998.
Redeeming
Shares
. Redemptions by Mail. An investor may redeem (sell)
Institutional Class and Administrative Class shares by submitting
a written request to PIMCO Funds at 840 Newport Center Drive,
Suite 300, Newport Beach, California 92660. The redemption request
should state the Fund from which the shares are to be redeemed,
the class of shares, the number or dollar amount of the shares to
be redeemed and the account number. The request must be signed
exactly as the names of the registered owners appear on the
Trust's account records,
Prospectus 62
<PAGE>
and the request must be signed by the minimum number of persons
designated on the Client Registration Application that are
required to effect a redemption.
. Redemptions by Telephone or Other Wire Communication. An
investor that elects this option on the Client Registration
Application (or subsequently in writing) may request redemptions
of shares by calling the Trust at 1-800-927-4648, by sending a
facsimile to 1-949-725-6830, or by other means of wire
communication (excluding electronic mail). Investors should state
the Fund and class from which the shares are to be redeemed, the
number or dollar amount of the shares to be redeemed, the account
number and the signature of an authorized signatory. Redemption
requests of an amount of $10 million or more may be initiated by
telephone, but must be confirmed in writing by an authorized party
prior to processing.
In electing a telephone redemption, the investor authorizes
Pacific Investment Management Company LLC and the Transfer Agent
to act on telephone instructions from any person representing
himself to be the investor, and reasonably believed by Pacific
Investment Management Company LLC or the Transfer Agent to be
genuine. Neither the Trust nor the Transfer Agent may be liable
for any loss, cost or expense for acting on instructions (whether
in writing or by telephone) believed by the party receiving such
instructions to be genuine and in accordance with the procedures
described in this Prospectus. Shareholders should realize that by
electing the telephone or wire redemption option, they may be
giving up a measure of security that they might have if they were
to redeem their shares in writing. Furthermore, interruptions in
telephone service may mean that a shareholder will be unable to
effect a redemption by telephone when desired. The Transfer Agent
also provides written confirmation of transactions initiated by
telephone as a procedure designed to confirm that telephone
instructions are genuine (written confirmation is also provided
for redemption requests received in writing). All telephone
transactions are recorded, and Pacific Investment Management
Company LLC or the Transfer Agent may request certain information
in order to verify that the person giving instructions is
authorized to do so. The Trust or Transfer Agent may be liable for
any losses due to unauthorized or fraudulent telephone
transactions if it fails to employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
All redemptions, whether initiated by letter or telephone, will be
processed in a timely manner, and proceeds will be forwarded by
wire in accordance with the redemption policies of the Trust
detailed below. See "Other Redemption Information."
Shareholders may decline telephone exchange or redemption
privileges after an account is opened by instructing the Transfer
Agent in writing at least seven business days prior to the date
the instruction is to be effective. Shareholders may experience
delays in exercising telephone redemption privileges during
periods of abnormal market activity. During periods of volatile
economic or market conditions, shareholders may wish to consider
transmitting redemption orders by telegram, facsimile or overnight
courier.
Defined contribution plan participants may request redemptions by
contacting the employee benefits office, the plan administrator or
the organization that provides recordkeeping services for the
plan.
. Other Redemption Information. Redemption requests for Fund
shares are effected at the NAV per share next determined after
receipt of a redemption request by the Trust or its designee. The
request must properly identify all relevant information, such as
account number, redemption amount (in dollars or shares) and the
Fund name, and must be executed or initialed by the appropriate
signatories. A redemption request received by the Trust or its
designee prior to the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern time), on a day the
Trust is open for business, is effective on that day. A redemption
request received after that time becomes effective on the next
business day.
Unless eligible for a waiver, shareholders of the Structured
Emerging Markets and Tax-Efficient Structured Emerging Markets
Funds who redeem their shares will pay a Fund Reimbursement Fee
equal to 1.00% of the NAV of the shares redeemed. See "Fund
Reimbursement Fees" above.
63 PIMCO Funds: Multi-Manager Series
<PAGE>
Redemption proceeds will ordinarily be wired to the investor's
bank within three business days after the redemption request, but
may take up to seven business days. Redemption proceeds will be
sent by wire only to the bank name designated on the Client
Registration Application. The Trust may suspend the right of
redemption or postpone the payment date at times when the New York
Stock Exchange is closed, or during certain other periods as
permitted under the federal securities laws.
For shareholder protection, a request to change information
contained in an account registration (for example, a request to
change the bank designated to receive wire redemption proceeds)
must be received in writing, signed by the minimum number of
persons designated on the Client Registration Application that are
required to effect a redemption, and accompanied by a signature
guarantee from any eligible guarantor institution, as determined
in accordance with the Trust's procedures. Shareholders should
inquire as to whether a particular institution is an eligible
guarantor institution. A signature guarantee cannot be provided by
a notary public. In addition, corporations, trusts, and other
institutional organizations are required to furnish evidence of
the authority of the persons designated on the Client Registration
Application to effect transactions for the organization.
Due to the relatively high cost of maintaining small accounts,
the Trust reserves the right to redeem Institutional Class and
Administrative Class shares in any account for their then-current
value (which will be promptly paid to the investor) if at any
time, due to redemption by the investor, the shares in the account
do not have a value of at least $100,000. A shareholder will
receive advance notice of a mandatory redemption and will be given
at least 30 days to bring the value of its account up to at least
$100,000. This mandatory redemption policy does not apply to
participants in PIMCO Advisors Portfolio Strategies, a managed
product sponsored by PIMCO Advisors.
The Trust agrees to redeem shares of each Fund solely in cash up
to the lesser of $250,000 or 1% of the Fund's net assets during
any 90-day period for any one shareholder. In consideration of the
best interests of the remaining shareholders, the Trust reserves
the right to pay any redemption proceeds exceeding this amount in
whole or in part by a distribution in kind of securities held by a
Fund in lieu of cash. Except for Funds with a tax-efficient
management strategy, it is highly unlikely that shares would ever
be redeemed in kind. When shares are redeemed in kind, the
redeeming shareholder should expect to incur transaction costs
upon the disposition of the securities received in the
distribution.
Redemptions of Fund shares may be suspended when trading on the
New York Stock Exchange is restricted or during an emergency which
makes it impracticable for the Funds to dispose of their
securities or to determine fairly the value of their net assets,
or during any other period as permitted by the Securities and
Exchange Commission for the protection of investors. Under these
and other unusual circumstances, the Trust may suspend redemptions
or postpone payment for more than seven days, as permitted by law.
Exchange
Privilege Except as provided below, an investor may exchange Institutional
Class or Administrative Class shares of a Fund for shares of the
same class of any other Fund or other series of the Trust that
offers that class based on the respective NAVs of the shares
involved. An exchange may be made by following the redemption
procedure described above under "Redemptions by Mail" or, if the
investor has elected the telephone redemption option, by calling
the Trust at 1-800-927-4648. An investor may also exchange shares
of a Fund for shares of the same class of a series of PIMCO Funds:
Pacific Investment Management Series, an affiliated mutual fund
family composed primarily of fixed income portfolios managed by
Pacific Investment Management Company LLC, subject to any
restrictions on exchanges set forth in the applicable series'
prospectus(es). Shareholders interested in such an exchange may
request a prospectus for these other series by contacting PIMCO
Funds: Pacific Investment Management Series at the same address
and telephone number as the Trust.
Prospectus 64
<PAGE>
Unless eligible for a waiver, shareholders who exchange their
Institutional Class or Administrative Class shares of a Fund for
the same class of shares of the Structured Emerging Markets or
Tax-Efficient Structured Emerging Markets Fund will be subject to
a Fund Reimbursement Fee of 1.00% of the NAV of the shares of
these Funds acquired in connection with the exchange. Also,
shareholders who exchange shares of the Structured Emerging
Markets Fund or Tax-Efficient Structured Emerging Markets Fund for
shares of any other Fund will be subject to a Fund Reimbursement
Fee of 1.00% of the NAV of the shares of these Funds redeemed in
connection with the exchange. See "Fund Reimbursement Fees" above.
An investor may exchange shares only with respect to Funds or
other eligible series that are registered in the investor's state
of residence or where an exemption from registration is available.
In addition, an exchange is generally a taxable event which will
generate capital gains or losses, and special rules may apply in
computing tax basis when determining gain or loss. See "Tax
Consequences" in this Prospectus and "Taxation" in the Statement
of Additional Information.
The Trust reserves the right to refuse exchange purchases if, in
the judgment of PIMCO Advisors, the purchase would adversely
affect a Fund and its shareholders. In particular, a pattern of
exchanges characteristic of "market-timing" strategies may be
deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. Currently, the Trust limits the number of "round
trip" exchanges investors may make. An investor makes a "round
trip" exchange when the investor purchases shares of a particular
Fund, subsequently exchanges those shares for shares of a
different PIMCO Fund, and then exchanges back into the originally
purchased Fund. The Trust has the right to refuse any exchange for
any investor who completes (by making the exchange back into the
shares of the originally purchased Fund) more than six round trip
exchanges in any twelve-month period. The Trust reserves the right
to impose additional restrictions on exchanges at any time,
although it will attempt to give shareholders 30 days' prior
notice whenever it is reasonably able to do so.
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Institutional and
Administrative Class shares is determined by dividing the total
value of a Fund's portfolio investments and other assets
attributable to that class, less any liabilities, by the total
number of shares outstanding of that class.
For purposes of calculating the NAV, portfolio securities and
other assets for which market quotes are available are stated at
market value. Market value is generally determined on the basis of
last reported sales prices, or if no sales are reported, based on
quotes obtained from a quotation reporting system, established
market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily
available may be valued, pursuant to procedures established by the
Board of Trustees, with reference to other securities or indices.
Short-term investments having a maturity of 60 days or less are
generally valued at amortized cost. Exchange traded options,
futures and options on futures are valued at the settlement price
determined by the exchange. Other securities for which market
quotes are not readily available are valued at fair value as
determined in good faith by the Board of Trustees or persons
acting at their direction.
Investments initially valued in currencies other than the U.S.
dollar are converted to U.S. dollars using exchange rates obtained
from pricing services. As a result, the NAV of a Fund's shares may
be affected by changes in the value of currencies in relation to
the U.S. dollar. The value of securities traded in markets outside
the United States or denominated in currencies other than the U.S.
dollar may be affected significantly on a day that the New York
Stock Exchange is closed and an investor is not able to purchase,
redeem or exchange shares. In particular, calculation of the NAV
of the Global Innovation, Select International, Structured
Emerging Markets, Tax-Efficient Structured Emerging Markets and
International Funds may not take place contemporaneously with the
determination of the prices of foreign securities used in NAV
calculations.
65 PIMCO Funds: Multi-Manager Series
<PAGE>
Fund shares are valued at the close of regular trading (normally
4:00 p.m., Eastern time) (the "NYSE Close") on each day that the
New York Stock Exchange is open. For purposes of calculating the
NAV, the Funds normally use pricing data for domestic equity
securities received shortly after the NYSE Close and do not
normally take into account trading, clearances or settlements that
take place after the NYSE Close. Domestic fixed income and foreign
securities are normally priced using data reflecting the earlier
closing of the principal markets for those securities. Information
that becomes known to the Funds or their agents after the NAV has
been calculated on a particular day will not generally be used to
retroactively adjust the price of a security or the NAV determined
earlier that day.
In unusual circumstances, instead of valuing securities in the
usual manner, the Funds may value securities at fair value or
estimate their value as determined in good faith by the Board of
Trustees or persons acting at their direction pursuant to
procedures approved by the Board of Trustees. Fair valuation may
also be used by the Board of Trustees if extraordinary events
occur after the close of the relevant market but prior to the NYSE
Close.
Under certain circumstances, the per share NAV of the
Administrative Class shares of the Funds may be lower than the per
share NAV of the Institutional Class shares as a result of the
daily expense accruals of the service and/or distribution fees
paid by Administrative Class shares. Generally, for Funds that pay
income dividends, those dividends are expected to differ over time
by approximately the amount of the expense accrual differential
between the two classes.
Fund Distributions
Each Fund distributes substantially all of its net investment
income to shareholders in the form of dividends. A shareholder
begins earning dividends on Fund shares the day after the Trust
receives the shareholder's purchase payment. Dividends paid by
each Fund with respect to each class of shares are calculated in
the same manner and at the same time, but dividends on
Administrative Class shares are expected to be lower than
dividends on Institutional Class shares as a result of the service
and/or distribution fees applicable to Administrative Class
shares. The following shows when each Fund intends to declare and
distribute income dividends to shareholders of record.
<TABLE>
<CAPTION>
Fund At Least Annually Quarterly
----------------------------------------------------------------
<S> <C> <C>
Equity Income, Value and .
Renaissance Funds
----------------------------------------------------------------
All other Funds .
----------------------------------------------------------------
</TABLE>
In addition, each Fund distributes any net capital gains it earns
from the sale of portfolio securities to shareholders no less
frequently than annually. Net short-term capital gains may be paid
more frequently.
A Fund's dividend and capital gain distributions with respect to
a particular class of shares will automatically be reinvested in
additional shares of the same class of the Fund at NAV unless the
shareholder elects to have the distributions paid in cash. A
shareholder may elect to have distributions paid in cash on the
Client Registration Application or by submitting a written
request, signed by the appropriate signatories, indicating the
account number, Fund name(s) and wiring instructions.
Shareholders do not pay any sales charges or other fees
(including Fund Reimbursement Fees) on the receipt of shares
received through the reinvestment of Fund distributions. However,
shareholders of the Structured Emerging Markets and Tax-Efficient
Structured Emerging Markets Funds who receive additional shares
through the reinvestment of distributions will pay a Fund
Reimbursement Fee if they subsequently redeem or exchange those
shares. See "Purchases, Redemptions and Exchanges--Fund
Reimbursement Fees."
For further information on distribution options, please contact
the Trust at 1-800-927-4648.
Prospectus 66
<PAGE>
Tax Consequences
. Taxes on Fund Distributions. A shareholder subject to U.S.
federal income tax will be subject to tax on Fund distributions
whether they are paid in cash or reinvested in additional shares
of the Funds. For federal income tax purposes, Fund distributions
will be taxable to the shareholder as either ordinary income or
capital gains.
Fund dividends (i.e., distributions of investment income) are
taxable to shareholders as ordinary income. Federal taxes on Fund
distributions of gains are determined by how long the Fund owned
the investments that generated the gains, rather than how long the
shareholder owned the shares. Distributions of gains from
investments that a Fund owned for more than 12 months will
generally be taxable to shareholders as capital gains.
Distributions of gains from investments that the Fund owned for 12
months or less will generally be taxable as ordinary income.
Fund distributions are taxable to shareholders even if they are
paid from income or gains earned by a Fund prior to the
shareholder's investment and thus were included in the price paid
for the shares. For example, a shareholder who purchases shares on
or just before the record date of a Fund distribution will pay
full price for the shares and may receive a portion of his or her
investment back as a taxable distribution.
. Taxes on Redemptions or Exchanges of Shares. Any gain
resulting from the sale of Fund shares will generally be subject
to federal income tax. When a shareholder exchanges shares of a
Fund for shares of another series, the transaction generally will
be treated as a sale of the Fund shares for these purposes, and
any gain on those shares will generally be subject to federal
income tax.
. A Note on the Tax-Efficient Equity and Tax-Efficient
Structured Emerging Markets Funds. The Tax-Efficient Equity and
Tax-Efficient Structured Emerging Markets Funds utilize a number
of tax-efficient management techniques designed to minimize
taxable distributions. For instance, the Funds generally seek to
minimize realized gains and, when realizing gains, attempt to
realize gains that will be taxed as capital gains (i.e., as gains
on investments owned for more than 12 months) when distributed to
shareholders. Although the Funds attempt to minimize taxable
distributions, they may be expected to earn and distribute taxable
income and realize and distribute capital gains from time to time.
. A Note on Foreign Investments. A Fund's investment in foreign
securities may be subject to foreign withholding taxes. In that
case, the Fund's yield on those securities would be decreased. In
addition, a Fund's investments in foreign securities or foreign
currencies may increase or accelerate the Fund's recognition of
ordinary income and may affect the timing or amount of the Fund's
distributions. Shareholders of the Global Innovation, Select
International, Structured Emerging Markets, Tax-Efficient
Structured Emerging Markets and International Funds may be
entitled to claim a credit or deduction with respect to foreign
taxes.
This section relates only to federal income tax; the consequences
under other tax laws may differ. Shareholders should consult their
tax advisors as to the possible application of foreign, state and
local income tax laws to Fund dividends and capital distributions.
Please see the Statement of Additional Information for additional
information regarding the tax aspects of investing in the Funds.
Characteristics and Risks of Securities and Investment Techniques
This section provides additional information about some of the
principal investments and related risks of the Funds identified
under "Summary Information" above. It also describes
characteristics and risks of additional securities and investment
techniques that are not necessarily principal investments or
strategies but may be
67 PIMCO Funds: Multi-Manager Series
<PAGE>
used by the Funds from time to time. Most of these securities and
investment techniques are discretionary, which means that the
portfolio managers can decide whether to use them or not. This
Prospectus does not attempt to disclose all of the various types
of securities and investment techniques that may be used by the
Funds. As with any mutual fund, investors in the Funds must rely
on the professional investment judgment and skill of PIMCO
Advisors, the Sub-Advisers and the individual portfolio managers.
Please see "Investment Objectives and Policies" in the Statement
of Additional Information for more detailed information about the
securities and investment techniques described in this section and
about other strategies and techniques that may be used by the
Funds.
Fixed Fixed income securities are obligations of the issuer to make
Income payments of principal and/or interest on future dates, and include
Securities corporate and government bonds, notes, certificates of deposit,
and commercial paper, convertible securities and mortgage-backed and
Defensive other asset-backed securities.
Strategies
Aside from the cash management practices described below, the
Mega-Cap, Capital Appreciation, Mid-Cap, Micro-Cap, Enhanced
Equity and Tax-Efficient Equity Funds intend to be as fully
invested in common stocks as practicable at all times. The
Structured Emerging Markets and Tax-Efficient Structured Emerging
Markets Funds normally invest substantially all of their assets in
common stocks and other equity and equity-linked securities, but
may invest up to 5% of their assets in fixed income securities of
emerging market issuers. For cash management purposes, each of
these Funds may maintain a portion of its assets (normally not
more than 10%) in U.S. Government securities, high quality fixed
income securities, money market obligations and cash to pay
certain Fund expenses and to meet redemption requests. None of the
Funds listed in this paragraph will make defensive investments in
response to unfavorable market and other conditions and therefore
may be particularly vulnerable to general declines in stock prices
and/or other categories of securities in which they invest.
Under normal circumstances, the Small-Cap Value Fund intends to
be fully invested in common stocks (aside from cash management
practices), except that the Fund may temporarily hold up to 10% of
its assets in cash and cash equivalents for defensive purposes in
response to unfavorable market and other conditions. The Equity
Income, Value, Renaissance, Growth, Select Growth, Target,
Opportunity, Innovation, Global Innovation, Select International
and International Funds will each invest primarily in common
stocks, and may also invest in other kinds of equity securities,
including preferred stocks and securities (including fixed income
securities and warrants) convertible into or exercisable for
common stocks. Each of these Funds may invest a portion of its
assets in fixed income securities. These Funds may temporarily
hold up to 100% of their assets in short-term U.S. Government
securities and other money market instruments for defensive
purposes in response to unfavorable market and other conditions.
The Growth & Income Fund will invest primarily in common stocks,
but may also invest significant portions of its assets in
preferred stocks, fixed income securities, convertible securities
and Real Estate Investment Trusts, or "REITs." The Growth & Income
Fund may temporarily hold up to 100% of its assets in short-term
U.S. Government securities and other money market instruments for
defensive purposes in response to unfavorable market and other
conditions. The Select International and International Funds may
also hold up to 100% of their assets in other domestic fixed
income, foreign fixed income and equity securities principally
traded in the U.S., including obligations issued or guaranteed by
a foreign government or its agencies, authorities or
instrumentalities, corporate bonds and American Depository
Receipts, for temporary defensive purposes. The temporary
defensive strategies described in this paragraph would be
inconsistent with the investment objective and principal
investment strategies of each of the noted Funds and may adversely
affect the Fund's ability to achieve its investment objective.
Companies
With
Smaller
Market
Capitalizations
Each of the Funds may invest in securities of companies with
market capitalizations that are small compared to other publicly
traded companies. The Micro-Cap Fund, in particular, and the
Opportunity and Small-Cap Value Funds generally invest primarily
in smaller companies and are especially sensitive to the risks
described
Prospectus 68
<PAGE>
below. In addition, the Innovation and Global Innovation Funds
generally have substantial exposure to these risks. The Target,
Growth & Income, Select International and Mid-Cap Funds also have
significant exposure to these risks because they invest primarily
in companies with medium-sized market capitalizations, which are
smaller and generally less well-known or seasoned than the largest
companies.
Companies which are smaller and less well-known or seasoned than
larger, more widely held companies may offer greater opportunities
for capital appreciation, but may also involve risks different
from, or greater than, risks normally associated with larger
companies. Larger companies generally have greater financial
resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater
depth of management and technical personnel than smaller
companies. Smaller companies may have limited product lines,
markets or financial resources or may depend on a small,
inexperienced management group. Securities of smaller companies
may trade less frequently and in lesser volume than more widely
held securities and their values may fluctuate more abruptly or
erratically than securities of larger companies. They may also
trade in the over-the-counter market or on a regional exchange, or
may otherwise have limited liquidity. These securities may
therefore be more vulnerable to adverse market developments than
securities of larger companies. Also, there may be less publicly
available information about smaller companies or less market
interest in their securities as compared to larger companies, and
it may take longer for the prices of the securities to reflect the
full value of a company's earnings potential or assets.
Because securities of smaller companies may have limited
liquidity, a Fund may have difficulty establishing or closing out
its positions in smaller companies at prevailing market prices. As
a result of owning large positions in this type of security, a
Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if
redemptions require the Fund to liquidate its securities
positions. For these reasons, it may be prudent for a Fund with a
relatively large asset size to limit the number of relatively
small positions it holds in securities having limited liquidity in
order to minimize its exposure to such risks, to minimize
transaction costs, and to maximize the benefits of research. As a
consequence, as a Fund's asset size increases, the Fund may reduce
its exposure to illiquid smaller capitalization securities, which
could adversely affect performance.
The Funds may purchase securities in initial public offerings
(IPOs). These securities are subject to many of the same risks of
investing in companies with smaller market capitalizations.
Securities issued in IPOs have no trading history, and information
about the companies may be available for very limited periods. In
addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in
IPOs to the extent desired because, for example, only a small
portion of the securities being offered in an IPO may be made
available to the Fund or because under certain market conditions
few companies may issue securities in IPOs.
Foreign The Select International, Structured Emerging Markets, Tax-
(non- Efficient Structured Emerging Markets and International Funds
U.S.) normally invest principally in securities of foreign issuers,
Securities securities traded principally in securities markets outside the
United States and/or securities denominated in foreign currencies
(together, "foreign securities"). The Global Innovation Fund will
invest in the securities of issuers located in at least three
countries (one of which may be the United States). The Equity
Income, Value, Renaissance, Growth, Select Growth, Target, Growth
& Income, Opportunity and Innovation Funds may invest up to 15% of
their respective assets in foreign securities, and may invest
without limit in ADRs (defined below). The Enhanced Equity Fund
may invest in common stocks of foreign issuers if included in the
S&P 500 Index.
All of the Funds may invest in American Depository Receipts
("ADRs"). In addition, the Equity Income, Value, Renaissance,
Growth, Select Growth, Target, Growth & Income, Opportunity,
Innovation, Global Innovation, Select International, Structured
Emerging Markets, Tax-Efficient Structured Emerging Markets
69 PIMCO Funds: Multi-Manager Series
<PAGE>
and International Funds may invest in European Depository Receipts
(EDRs) and Global Depository Receipts (GDRs). ADRs are dollar-
denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign
issuer, and are publicly traded on exchanges or over-the-counter
in the United States. EDRs are receipts similar to ADRs and are
issued and traded in Europe. GDRs may be offered privately in the
United States and also traded in public or private markets in
other countries.
Investing in foreign securities involves special risks and
considerations not typically associated with investing in U.S.
securities and shareholders should consider carefully the
substantial risks involved for Funds that invest in these
securities. These risks include: differences in accounting,
auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the
possibility of nationalization, expropriation or confiscatory
taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign
economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rate
of inflation, capital reinvestment, resources, self-sufficiency
and balance of payments position. The securities markets, values
of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign
securities and dividends and interest payable on those securities
may be subject to foreign taxes, including taxes withheld from
payments on those securities. Foreign securities often trade with
less frequency and volume than domestic securities and therefore
may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic
investments and additional transaction costs with respect to
foreign currency conversions. Changes in foreign exchange rates
also will affect the value of securities denominated or quoted in
foreign currencies.
Emerging
Market Each of the Funds that may invest in foreign securities may invest
Securities in securities of issuers based in or that trade principally in
countries with developing (or "emerging market") economies. The
Structured Emerging Markets and Tax-Efficient Structured Emerging
Markets Funds normally invest most of their assets in emerging
market securities. The Global Innovation, Select International and
International Funds may also invest significant portions of their
assets in emerging market securities. Investing in emerging market
securities imposes risks different from, or greater than, risks of
investing in domestic securities or in foreign, developed
countries. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative
illiquidity; significant price volatility; restrictions on foreign
investment; and possible repatriation of investment income and
capital. In addition, foreign investors may be required to
register the proceeds of sales, and future economic or political
crises could lead to price controls, forced mergers, expropriation
or confiscatory taxation, seizure, nationalization or the creation
of government monopolies. The currencies of emerging market
countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in
these currencies by a Fund. Inflation and rapid fluctuations in
inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain
emerging market countries.
Additional risks of emerging market securities may include:
greater social, economic and political uncertainty and
instability; more substantial governmental involvement in the
economy; less governmental supervision and regulation;
unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial
reporting standards, which may result in unavailability of
material information about issuers; and less developed legal
systems. In addition, emerging securities markets may have
different clearance and settlement procedures, which may be unable
to keep pace with the volume of securities transactions or
otherwise make it difficult to engage in such transactions.
Settlement problems may cause a Fund to miss attractive investment
opportunities, hold a portion of its assets in cash pending
investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of
the security.
Prospectus 70
<PAGE>
Special Risks of Investing in Russian and Other Eastern European
Securities. Each of the Global Innovation, Select International,
Structured Emerging Markets, Tax-Efficient Structured Emerging
Markets and International Funds may invest a portion of its assets
in securities of issuers located in Russia and in other Eastern
European countries. While investments in securities of such
issuers are subject generally to the same risks associated with
investments in other emerging market countries described above,
the political, legal and operational risks of investing in Russian
and other Eastern European issuers, and of having assets custodied
within these countries, may be particularly acute. A risk of
particular note with respect to direct investment in Russian
securities is the way in which ownership of shares of companies is
normally recorded. When a Fund invests in a Russian issuer, it
will normally receive a "share extract," but that extract is not
legally determinative of ownership. The official record of
ownership of a company's share is maintained by the company's
share registrar. Such share registrars are completely under the
control of the issuer, and investors are provided with few legal
rights against such registrars.
Foreign
Currencies A Fund that invests directly in foreign currencies or in
securities that trade in, and receive revenues in, foreign
currencies will be subject to currency risk. The Global
Innovation, Select International, Structured Emerging Markets,
Tax-Efficient Structured Emerging Markets and International Funds
are particularly sensitive to this risk.
Foreign currency exchange rates may fluctuate significantly over
short periods of time. They generally are determined by supply and
demand and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other
complex factors. Currency exchange rates also can be affected
unpredictably by intervention (or the failure to intervene) by
U.S. or foreign governments or central banks, or by currency
controls or political developments. For example, significant
uncertainty surrounds the recent introduction of the euro (a
common currency unit for the European Union) in January 1999 and
the effect it may have on the value of securities denominated in
local European currencies. These and other currencies in which the
Funds' assets are denominated may be devalued against the U.S.
dollar, resulting in a loss to the Funds.
Foreign Currency Transactions. The Equity Income, Value,
Renaissance, Growth, Select Growth, Target, Growth & Income,
Opportunity, Innovation, Global Innovation, Select International,
Structured Emerging Markets, Tax-Efficient Structured Emerging
Markets and International Funds may enter into forward foreign
currency exchange contracts to reduce the risks of adverse changes
in foreign exchange rates. In addition, the Global Innovation,
Select International, Structured Emerging Markets, Tax-Efficient
Structured Emerging Markets and International Funds may buy and
sell foreign currency futures contracts and options on foreign
currencies and foreign currency futures. A forward foreign
currency exchange contract, which involves an obligation to
purchase or sell a specific currency at a future date at a price
set at the time of the contract, reduces a Fund's exposure to
changes in the value of the currency it will deliver and increases
its exposure to changes in the value of the currency it will
receive for the duration of the contract. The effect on the value
of a Fund is similar to selling securities denominated in one
currency and purchasing securities denominated in another
currency. Contracts to sell foreign currency would limit any
potential gain which might be realized by a Fund if the value of
the hedged currency increases. A Fund may enter into these
contracts to hedge against foreign exchange risk arising from the
Fund's investment or anticipated investment in securities
denominated in foreign currencies. Suitable hedging transactions
may not be available in all circumstances and there can be no
assurance that a Fund will engage in such transactions at any
given time or from time to time. Also, such transactions may not
be successful and may eliminate any chance for a Fund to benefit
from favorable fluctuations in relevant foreign currencies.
The Global Innovation, Select International, Structured Emerging
Markets, Tax-Efficient Structured Emerging Markets and
International Funds may also enter into these contracts for
purposes of increasing exposure to a foreign currency or to shift
exposure to foreign currency fluctuations from one currency to
another. To the extent that it does so, a Fund will be subject to
the additional risk that the relative value of
71 PIMCO Funds: Multi-Manager Series
<PAGE>
currencies will be different than anticipated by the Fund's
portfolio manager. The Global Innovation, Select International,
Structured Emerging Markets, Tax-Efficient Structured Emerging
Markets and International Funds may use one currency (or a basket
of currencies) to hedge against adverse changes in the value of
another currency (or a basket of currencies) when exchange rates
between the two currencies are positively correlated. Each Fund
will segregate assets determined to be liquid by PIMCO Advisors or
a Sub-Adviser in accordance with procedures established by the
Board of Trustees to cover its obligations under forward foreign
currency exchange contracts entered into for non-hedging purposes.
Corporate debt securities are subject to the risk of the issuer's
Corporate inability to meet principal and interest payments on the
Debt obligation and may also be subject to price volatility due to
Securities factors such as interest rate sensitivity, market perception of
the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities
can be expected to decline. Debt securities with longer durations
tend to be more sensitive to interest rate movements than those
with shorter durations.
Convertible Each Fund may invest in convertible securities. The Growth &
Securities Income Fund may place particular emphasis on convertible
securities. Convertible securities are generally preferred stocks
and other securities, including fixed income securities and
warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a
convertible security will normally vary in some proportion to
changes in the price of the underlying common stock because of
this conversion or exercise feature. However, the value of a
convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally
also provide income and is subject to interest rate risk. While
convertible securities generally offer lower interest or dividend
yields than non-convertible fixed income securities of similar
quality, their value tends to increase as the market value of the
underlying stock increases and to decrease when the value of the
underlying stock decreases. Also, a Fund may be forced to convert
a security before it would otherwise choose, which may have an
adverse effect on the Fund's ability to achieve its investment
objective.
Derivatives Each Fund (except the Mega-Cap, Capital Appreciation, Mid-Cap,
Micro-Cap and Small-Cap Value Funds) may, but is not required to,
use a number of derivative instruments for risk management
purposes or as part of its investment strategies. Generally,
derivatives are financial contracts whose value depends upon, or
is derived from, the value of an underlying asset, reference rate
or index, and may relate to stocks, bonds, interest rates,
currencies or currency exchange rates, commodities, and related
indexes. A portfolio manager may decide not to employ any of these
strategies and there is no assurance that any derivatives strategy
used by a Fund will succeed.
Examples of derivative instruments include options contracts,
futures contracts, options on futures contracts and swap
agreements. The Equity Income, Value, Renaissance, Growth, Select
Growth, Target, Growth & Income, Opportunity, Innovation, Global
Innovation, Select International, Tax-Efficient Equity, Structured
Emerging Markets, Tax-Efficient Structured Emerging Markets and
International Funds may purchase and sell (write) call and put
options on securities, securities indexes and foreign currencies.
Each of these Funds may purchase and sell futures contracts and
options thereon with respect to securities, securities indexes and
foreign currencies. The Enhanced Equity Fund may purchase and
write options on securities indexes and enter into securities
index futures contracts and options on securities index futures
contracts. The Global Innovation, Select International, Tax-
Efficient Equity, Structured Emerging Markets and Tax-Efficient
Structured Emerging Markets may enter into swap agreements with
respect to securities indexes. A description of these and other
derivative instruments that the Funds may use are described under
"Investment Objectives and Policies" in the Statement of
Additional Information.
A Fund's use of derivative instruments involves risks different
from, or greater than, the risks associated with investing
directly in securities and other more traditional investments. A
description of various risks associated with particular derivative
instruments is included in "Investment Objectives and Policies" in
the
Prospectus 72
<PAGE>
Statement of Additional Information. The following provides a more
general discussion of important risk factors relating to all
derivative instruments that may be used by the Funds.
Management Risk Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of
a derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit
of observing the performance of the derivative under all possible
market conditions.
Credit Risk The use of a derivative instrument involves the risk
that a loss may be sustained as a result of the failure of another
party to the contract (usually referred to as a "counterparty") to
make required payments or otherwise comply with the contract's
terms.
Liquidity Risk Liquidity risk exists when a particular derivative
instrument is difficult to purchase or sell. If a derivative
transaction is particularly large or if the relevant market is
illiquid (as is the case with many privately negotiated
derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage
component, adverse changes in the value or level of the underlying
asset, reference rate or index can result in a loss substantially
greater than the amount invested in the derivative itself. Certain
derivatives have the potential for unlimited loss, regardless of
the size of the initial investment. When a Fund uses derivatives
for leverage, investments in that Fund will tend to be more
volatile, resulting in larger gains or losses in response to
market changes. To limit leverage risk, each Fund will segregate
assets determined to be liquid by PIMCO Advisors or a Sub-Adviser
in accordance with procedures established by the Board of Trustees
(or, as permitted by applicable regulation, enter into certain
offsetting positions) to cover its obligations under derivative
instruments.
Lack of Availability Because the markets for certain derivative
instruments (including markets located in foreign countries) are
relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk
management or other purposes. There is no assurance that a Fund
will engage in derivatives transactions at any time or from time
to time. A Fund's ability to use derivatives may also be limited
by certain regulatory and tax considerations.
Market and Other Risks Like most other investments, derivative
instruments are subject to the risk that the market value of the
instrument will change in a way detrimental to a Fund's interest.
If a portfolio manager incorrectly forecasts the values of
securities, currencies or interest rates or other economic factors
in using derivatives for a Fund, the Fund might have been in a
better position if it had not entered into the transaction at all.
While some strategies involving derivative instruments can reduce
the risk of loss, they can also reduce the opportunity for gain or
even result in losses by offsetting favorable price movements in
other Fund investments. A Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is
legally required to maintain offsetting positions or asset
coverage in connection with certain derivatives transactions.
Other risks in using derivatives include the risk of mispricing
or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates
and indexes. Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Fund. Also, the value of
derivatives may not correlate perfectly, or at all, with the value
of the assets, reference rates or indexes they are designed to
closely track. In addition, a Fund's use of derivatives may cause
the Fund to realize higher amounts of short-term capital gains
(taxed at ordinary income tax rates when distributed to
shareholders who are individuals) than if the Fund had not used
such instruments.
73 PIMCO Funds: Multi-Manager Series
<PAGE>
Equity-
Linked Each of the Structured Emerging Markets and Tax-Efficient
Securities Structured Emerging Markets Funds may invest up to 15% of its net
assets in equity-linked securities. The Select International and
International Funds may invest up to 5% of their assets in equity-
linked securities. Equity-linked securities are privately issued
securities whose investment results are designed to correspond
generally to the performance of a specified stock index or
"basket" of stocks, or sometimes a single stock. To the extent
that a Fund invests in equity-linked securities whose return
corresponds to the performance of a foreign securities index or
one or more of foreign stocks, investing in equity-linked
securities will involve risks similar to the risks of investing in
foreign equity securities. See "Foreign Securities" above. In
addition, an investing Fund bears the risk that the issuer of an
equity-linked security may default on its obligations under the
security. Equity-linked securities may be considered illiquid and
thus subject to the Funds' restrictions on investments in illiquid
securities.
The Funds may invest in securities based on their credit ratings
Credit assigned by rating agencies such as Moody's Investors Service,
Ratings Inc. ("Moody's") and Standard & Poor's Ratings Services ("S&P").
and Moody's, S&P and other rating agencies are private services that
Unrated provide ratings of the credit quality of fixed income securities,
Securities including convertible securities. The Appendix to the Statement of
Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a
rating agency are not absolute standards of credit quality and do
not evaluate market risk. Rating agencies may fail to make timely
changes in credit ratings and an issuer's current financial
condition may be better or worse than a rating indicates. A Fund
will not necessarily sell a security when its rating is reduced
below its rating at the time of purchase. PIMCO Advisors and the
Sub-Advisers do not rely solely on credit ratings, and develop
their own analysis of issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a
rating agency) if its portfolio manager determines that the
security is of comparable quality to a rated security that the
Fund may purchase. Unrated securities may be less liquid than
comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security's
comparative credit rating.
High Securities rated lower than Baa by Moody's or lower than BBB by
Yield S&P are sometimes referred to as "high yield" securities or "junk
Securities bonds". The Funds, particularly the Growth & Income Fund, may
invest in these securities. Investing in high yield securities
involves special risks in addition to the risks associated with
investments in higher-rated fixed income securities. While
offering a greater potential opportunity for capital appreciation
and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-
rated securities. High yield securities may be regarded as
predominately speculative with respect to the issuer's continuing
ability to meet principal and interest payments. They may also be
more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities.
Loans of For the purpose of achieving income, each Fund may lend its
Portfolio portfolio securities to brokers, dealers, and other financial
Securities institutions provided a number of conditions are satisfied,
including that the loan is fully collateralized. Please see
"Investment Objectives and Policies" in the Statement of
Additional Information for details. When a Fund lends portfolio
securities, its investment performance will continue to reflect
changes in the value of the securities loaned, and the Fund will
also receive a fee or interest on the collateral. Securities
lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to
return the security loaned or becomes insolvent. A Fund may pay
lending fees to the party arranging the loan.
Short
Sales Each Fund may make short sales as part of its overall portfolio
management strategies or to offset a potential decline in the
value of a security. A short sale involves the sale of a security
that is borrowed from a broker or other institution to complete
the sale. A Fund may only enter into short selling transactions if
the security sold short is held in the Fund's portfolio or if the
Fund has the right to acquire the security without the payment of
Prospectus 74
<PAGE>
further consideration. For these purposes, a Fund may also hold or
have the right to acquire securities which, without the payment of
any further consideration, are convertible into or exchangeable
for the securities sold short. Short sales expose a Fund to the
risk that it will be required to acquire, convert or exchange
securities to replace the borrowed securities (also known as
"covering" the short position) at a time when the securities sold
short have appreciated in value, thus resulting in a loss to the
Fund.
When- Each Fund may purchase securities which it is eligible to purchase
Issued, on a when-issued basis, may purchase and sell such securities for
Delayed delayed delivery and may make contracts to purchase such
Delivery securities for a fixed price at a future date beyond normal
and settlement time (forward commitments). When-issued transactions,
Forward delayed delivery purchases and forward commitments involve a risk
Commitment of loss if the value of the securities declines prior to the
Transactionssettlement date. This risk is in addition to the risk that the
Fund's other assets will decline in value. Therefore, these
transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues
on securities a Fund has committed to purchase prior to the time
delivery of the securities is made, although a Fund may earn
income on securities it has segregated to cover these positions.
Repurchase Each Fund may enter into repurchase agreements, in which the Fund
Agreements purchases a security from a bank or broker-dealer that agrees to
repurchase the security at the Fund's cost plus interest within a
specified time. If the party agreeing to repurchase should
default, the Fund will seek to sell the securities which it holds.
This could involve procedural costs or delays in addition to a
loss on the securities if their value should fall below their
repurchase price. Those Funds whose investment objectives do not
include the earning of income will invest in repurchase agreements
only as a cash management technique with respect to that portion
of its portfolio maintained in cash. Repurchase agreements
maturing in more than seven days are considered illiquid
securities.
Reverse Each Fund may enter into reverse repurchase agreements, subject to
Repurchase the Fund's limitations on borrowings. A reverse repurchase
Agreements agreement involves the sale of a security by a Fund and its
and Other agreement to repurchase the instrument at a specified time and
Borrowings price, and may be considered a form of borrowing for some
purposes. A Fund will segregate assets determined to be liquid by
PIMCO Advisors or a Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations
under reverse repurchase agreements. A Fund also may borrow money
for investment purposes subject to any policies of the Fund
currently described in this Prospectus or in the Statement of
Additional Information. Reverse repurchase agreements and other
forms of borrowings may create leveraging risk for a Fund.
Illiquid Each Fund may invest in securities that are illiquid so long as
Securities not more than 15% of the value of the Fund's net assets (taken at
market value at the time of investment) would be invested in such
securities. Certain illiquid securities may require pricing at
fair value as determined in good faith under the supervision of
the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by the
Fund, and transactions in illiquid securities may entail
registration expenses and other transaction costs that are higher
than those for transactions in liquid securities. The term
"illiquid securities" for this purpose means securities that
cannot be disposed of within seven days in the ordinary course of
business at approximately the amount at which a Fund has valued
the securities. Please see "Investment Objectives and Policies" in
the Statement of Additional Information for a listing of various
securities that are generally considered to be illiquid for these
purposes. Restricted securities, i.e., securities subject to legal
or contractual restrictions on resale, may be illiquid. However,
some restricted securities (such as securities issued pursuant to
Rule 144A under the Securities Act of 1933 and certain commercial
paper) may be treated as liquid, although they may be less liquid
than registered securities traded on established secondary
markets.
Investment
in Other
Investment
Companies
The Select International and International Funds may invest up to
10% of their assets in securities of other investment companies,
such as closed-end management investment companies, or in pooled
accounts or other investment vehicles which invest in foreign
markets. Each of the other Funds may invest up to 5% of its assets
75 PIMCO Funds: Multi-Manager Series
<PAGE>
in other investment companies. As a shareholder of an investment
company, a Fund may indirectly bear service and other fees which
are in addition to the fees the Fund pays its service providers.
Portfolio With the exception of the Tax-Efficient Equity and Tax-Efficient
Turnover Structured Emerging Markets Funds, the length of time a Fund has
held a particular security is not generally a consideration in
investment decisions. A change in the securities held by a Fund is
known as "portfolio turnover." Each Fund may engage in active and
frequent trading of portfolio securities to achieve its investment
objective and principal investment strategies, particularly during
periods of volatile market movements, although the Tax-Efficient
Equity and Tax-Efficient Structured Emerging Markets Funds will
generally attempt to limit portfolio turnover as part of their
tax-efficient management strategies. High portfolio turnover
(e.g., over 100%) involves correspondingly greater expenses to a
Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestments in
other securities. Such sales may also result in realization of
taxable capital gains, including short-term capital gains (which
are taxed at ordinary income tax rates when distributed to
shareholders who are individuals). The trading costs and tax
effects associated with portfolio turnover may adversely affect a
Fund's performance.
Changes
in The investment objective of each of the Renaissance, Growth,
Investment Select Growth, Target, Opportunity, Innovation, Global Innovation,
Objectives Growth & Income, Select International, Mega-Cap, Tax-Efficient
and Equity, Tax-Efficient Structured Emerging Markets and
Policies International Funds described in this Prospectus may be changed by
the Board of Trustees without shareholder approval. The investment
objective of each other Fund is fundamental and may not be changed
without shareholder approval. Unless otherwise stated in the
Statement of Additional Information, all investment policies of
the Funds may be changed by the Board of Trustees without
shareholder approval. If there is a change in a Fund's investment
objective or policies, including a change approved by shareholder
vote, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial
position and needs.
New and In addition to the risks described under "Summary of Principal
Smaller- Risks" above and in this section, several of the Funds are newly
Sized formed and therefore have no performance history for investors to
Funds evaluate. Also, it is possible that newer Funds and smaller-sized
Funds may invest in securities offered in initial public offerings
and other types of transactions (such as private placements)
which, because of the Funds' size, may have a disproportionate
impact on the Funds' performance results. The Funds would not
necessarily have achieved the same performance results if their
aggregate net assets had been greater.
Percentage Unless otherwise stated, all percentage limitations on Fund
Investment investments listed in this Prospectus will apply at the time of
Limitations investment. A Fund would not violate these limitations unless an
excess or deficiency occurs or exists immediately after and as a
result of an investment.
Other The Funds may invest in other types of securities and use a
Investments variety of investment techniques and strategies which are not
and described in this Prospectus. These securities and techniques may
Techniques subject the Funds to additional risks. Please see the Statement of
Additional Information for additional information about the
securities and investment techniques described in this Prospectus
and about additional securities and techniques that may be used by
the Funds.
Prospectus 76
<PAGE>
Financial Highlights
The financial highlights table is intended to help a shareholder
understand the financial performance of Institutional and
Administrative Class shares of each Fund for the past 5 years or,
if the class is less than 5 years old, since the class of shares
was first offered. Certain information reflects financial results
for a single Fund share. The total returns in the table represent
the rate that an investor would have earned or lost on an
investment in a particular class of shares of a Fund, assuming
reinvestment of all dividends and distributions. Except as
provided in the next sentence, this information has been audited
by PricewaterhouseCoopers LLP, whose report, along with each
Fund's financial statements, are included in the Trust's annual
report to shareholders. The annual report is incorporated by
reference in the Statement of Additional Information and is
available free of charge upon request from the Distributor.
[To be updated in a subsequent post-effective amendment.]
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends Dividends in Distributions
Year or Value Net Unrealized Income from from Net Excess of Net from Net
Period Beginning Investment Gain (Loss) on Investment Investment Investment Realized
Ended of Period Income (Loss) Investments Operations Income Income Capital Gains
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Income Fund (i)
Institutional Class
06/30/99 $16.09 $ 0.44 (a) $ 1.28 (a) $ 1.72 $(0.43) $ 0.00 $(1.76)
06/30/98 15.41 0.44 (a) 2.75 (a) 3.19 (0.42) 0.00 (2.09)
06/30/97 14.36 0.40 3.17 3.57 (0.55) 0.00 (1.97)
11/01/95-06/30/96 13.09 0.78 1.31 2.09 (0.34) 0.00 (0.48)
10/31/95 11.75 0.46 1.67 2.13 (0.46) 0.00 (0.33)
10/31/94 11.95 0.42 (0.16) 0.26 (0.42) 0.00 (0.04)
Administrative Class
06/30/99 16.08 0.41 (a) 1.28 (a) 1.69 (0.40) 0.00 (1.76)
06/30/98 15.40 0.40 (a) 2.75 (a) 3.15 (0.38) 0.00 (2.09)
06/30/97 14.35 0.27 3.26 3.53 (0.51) 0.00 (1.97)
11/01/95-06/30/96 13.13 0.75 1.31 2.06 (0.36) 0.00 (0.48)
11/30/94-10/31/95 11.12 0.39 2.35 2.74 (0.40) 0.00 (0.33)
Value Fund (i)
Institutional Class
06/30/99 $15.66 $ 0.28 (a) $ 1.36 (a) $ 1.64 $(0.28) $ 0.00 $(1.72)
06/30/98 14.81 0.25 (a) 2.47 (a) 2.72 (0.24) 0.00 (1.63)
06/30/97 12.46 1.05 2.11 3.16 (0.31) 0.00 (0.50)
11/01/95-06/30/96 12.53 0.25 1.62 1.87 (0.17) 0.00 (1.77)
10/31/95 11.55 0.30 2.18 2.48 (0.30) 0.00 (1.20)
10/31/94 11.92 0.30 (0.28) 0.02 (0.29) 0.00 (0.10)
Administrative Class
06/30/99 15.65 0.26 (a) 1.32 (a) 1.58 (0.25) 0.00 (1.72)
08/21/97-06/30/98 15.66 0.19 (a) 1.65 (a) 1.84 (0.22) 0.00 (1.63)
Renaissance Fund (ii)
Institutional Class
06/30/99 19.07 0.06 (a) 1.43 (a) 1.49 0.00 0.00 (2.33)
12/30/97-06/30/98 16.73 0.05 2.29 2.34 0.00 0.00 0.00
Administrative Class
08/31/98-06/30/99 15.37 0.02 (a) 5.12 (a) 5.14 0.00 0.00 (2.33)
Growth Fund (ii)
Institutional Class
03/31/99-06/30/99 $31.27 $(0.01)(a) $(0.02)(a) $(0.03) $ 0.00 $ 0.00 $ 0.00
Administrative Class
03/31/99-06/30/99 31.27 (0.04)(a) 0.00 (a) (0.04) 0.00 0.00 0.00
Select Growth Fund
(ii)(iii)
Institutional Class
12/31/99+ $24.86 $ 0.08 (a) $ 1.92 (a) $ 2.00 $(0.02) $ 0.00 $(3.72)
06/30/99 20.39 (0.04)(a) 5.24 (a) 5.20 0.00 0.00 (0.73)
06/30/98 15.55 0.03 (a) 6.11 (a) 6.14 0.00 0.00 (1.30)
06/30/97 13.55 0.03 (a) 2.78 (a) 2.81 (0.02) 0.00 (0.79)
11/01/95-06/30/96 12.72 0.51 0.65 1.16 (0.04) (0.01) (0.28)
12/28/94-10/31/95 10.00 0.07 2.71 2.78 (0.06) 0.00 0.00
</TABLE>
-------
* Annualized
+ Unaudited
(a) Per share amounts based on average number of shares outstanding during
the period.
(i) The information provided for the Equity Income and Value Funds reflects
the results of operations under the Funds' former Sub-Adviser through
May 8, 2000; the Funds would not necessarily have achieved the results
shown above under their current investment management arrangements.
(ii) The information provided for the Renaissance, Growth and Select Growth
Funds reflects results of operations under the Funds' former Sub-Adviser
through May 7, March 6, and June 30, 1999, respectively; the Funds would
not necessarily have achieved the performance results shown above under
their current investment management arrangements.
(iii) Formerly the PIMCO Core Equity Fund. The Fund changed its investment
objective and policies on April 1, 2000; the performance results shown
above would not necessarily have been achieved had the Fund's current
objective and policies been in effect during the periods shown. In
addition, the performance results shown above reflect the Fund's
advisory fee level in effect prior to April 1, 2000; these results would
have been lower had the Fund's current advisory fee level then been in
effect.
77 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Fund Ratio of Net
Distributions Reimbursement Ratio of Investment
in Excess of Tax Basis Fee Added To Net Asset Net Assets Expenses to Income (Loss)
Net Realized Return of Total Paid-In- Value End End of Average Net to Average
Capital Gains Capital Distributions Capital of Period Total Return Period (000s) Assets Net Assets
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 $ (2.19) $ 0.00 $15.62 12.56 % $123,012 0.71% 3.00%
0.00 0.00 (2.51) 0.00 16.09 21.84 138,650 0.71 2.71
0.00 0.00 (2.52) 0.00 15.41 27.67 121,138 0.72 3.03
0.00 0.00 (0.82) 0.00 14.36 16.35 116,714 0.70* 3.41 *
0.00 0.00 (0.79) 0.00 13.09 19.36 118,015 0.70 3.83
0.00 0.00 (0.46) 0.00 11.75 2.25 92,365 0.70 3.77
0.00 0.00 (2.16) 0.00 15.61 12.31 13,797 0.96 2.80
0.00 0.00 (2.47) 0.00 16.08 21.58 11,699 0.96 2.45
0.00 0.00 (2.48) 0.00 15.40 27.40 8,145 0.97 2.79
0.00 0.00 (0.84) 0.00 14.35 16.08 6,097 0.95* 3.19 *
0.00 0.00 (0.73) 0.00 13.13 25.69 140 0.95* 3.43 *
$0.00 $0.00 $ (2.00) $ 0.00 $15.30 12.30 % $ 69,181 0.71% 1.99%
0.00 0.00 (1.87) 0.00 15.66 19.35 83,219 0.71 1.59
0.00 0.00 (0.81) 0.00 14.81 26.38 74,613 0.73 2.02
0.00 0.00 (1.94) 0.00 12.46 16.24 52,727 0.70* 2.40*
0.00 0.00 (1.50) 0.00 12.53 24.98 14,443 0.70 2.50
0.00 0.00 (0.39) 0.00 11.55 0.15 15,442 0.70 2.34
0.00 0.00 (1.97) 0.00 15.26 11.91 23,164 0.95 1.81
0.00 0.00 (1.85) 0.00 15.65 12.71 10,349 0.96* 1.40*
$0.00 $0.00 $ (2.33) $ 0.00 $18.23 10.24% $ 136 0.86% 0.38%
0.00 0.00 0.00 0.00 19.07 13.99 851 0.86* 0.55*
0.00 0.00 (2.33) 0.00 18.18 36.41 427 1.09* 0.13*
$0.00 $0.00 $ 0.00 $ 0.00 $31.24 (0.10)% $ 948 0.74%* (0.19)%*
0.00 0.00 0.00 0.00 31.23 (0.13) 6,164 0.97* (0.53)*
$0.00 $0.00 $ (3.74) $ 0.00 $23.12 8.87% $ 1,498 0.98%(b)* 0.29%*
0.00 0.00 (0.73) 0.00 24.86 26.34 1,184 1.01(b) (0.20)
0.00 0.00 (1.30) 0.00 20.39 41.83 1,915 0.83 0.20
0.00 0.00 (0.81) 0.00 15.55 21.59 6,444 0.87 0.23
0.00 0.00 (0.33) 0.00 13.55 9.41 10,452 0.82* 0.53*
0.00 0.00 (0.06) 0.00 12.72 27.86 7,791 0.82* 0.79*
<CAPTION>
Distributions
in Excess of
Net Realized Portfolio
Capital Gains Turnover Rate
---------------------------------------------------------------------------------------------------------------------
<S> <C>
$0.00 76%
0.00 45
0.00 45
0.00 52
0.00 46
0.00 36
0.00 76
0.00 45
0.00 45
0.00 52
0.00 43
$0.00 101%
0.00 77
0.00 71
0.00 29
0.00 71
0.00 44
0.00 101
0.00 77
$0.00 221%
0.00 192
0.00 221
$0.00 131%
0.00 131
$0.00 142%
0.00 95
0.00 120
0.00 139
0.00 73
0.00 123
</TABLE>
(b) Ratio of expenses to average net assets excluding interest expense is
0.82%.
Prospectus 78
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends Dividends in Distributions
Year or Value Net Unrealized Income from from Net Excess of Net from Net
Period Beginning Investment Gain (Loss) on Investment Investment Investment Realized
Ended of Period Income (Loss) Investments Operations Income Income Capital Gains
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Select Growth Fund
(cont.)
Administrative Class
12/31/99+ $24.67 $ 0.00 (a) $ 1.89 (a) $1.89 $ (0.03) $0.00 $(3.72)
06/30/99 20.32 (0.03)(a) 5.11 (a) 5.08 0.00 0.00 (0.73)
06/30/98 15.53 (0.01)(a) 6.10 (a) 6.09 0.00 0.00 (1.30)
06/30/97 13.56 0.00 (a) 2.77 (a) 2.77 (0.01) 0.00 (0.79)
11/01/95-06/30/96 12.73 0.49 0.65 1.14 (0.02) (0.01) (0.28)
05/31/95-10/31/95 11.45 0.02 1.28 1.30 (0.02) 0.00 0.00
Target Fund (iv)
Institutional Class
12/31/99+ $17.74 $(0.06)(a) $ 8.88 (a) $8.82 $ 0.00 $0.00 $(1.80)
03/31/99-06/30/99 16.34 (0.02)(a) 1.42 (a) 1.40 0.00 0.00 0.00
Administrative Class
12/31/99+ 17.73 (0.08)(a) 8.89 (a) 8.81 0.00 0.00 (1.80)
03/31/99-06/30/99 16.34 (0.03)(a) 1.42 (a) 1.39 0.00 0.00 0.00
Growth & Income Fund
(iv)
Institutional Class
12/31/99+ $15.84 $(0.05)(a) $ 4.50 (a) $4.45 $ (0.11) $0.00 $(8.60)
06/30/99 13.53 (0.03)(a) 2.99 (a) 2.96 0.00 0.00 (0.65)
06/30/98 14.04 (0.03)(a) 3.61 (a) 3.58 0.00 0.00 (4.09)
06/30/97 14.66 (0.06)(a) 1.31 (a) 1.25 0.00 0.00 (1.87)
11/01/95-06/30/96 12.92 0.49 1.62 2.11 0.00 0.00 (0.37)
12/28/94-10/31/95 10.00 0.02 2.92 2.94 (0.02) 0.00 0.00
Administrative Class
07/01/98-05/27/99(b) 13.50 (0.05)(a) 1.71 (a) 1.66 0.00 0.00 (0.65)
08/21/97-06/30/98 15.27 (0.05)(a) 2.37 (a) 2.32 0.00 0.00 (4.09)
Opportunity Fund (iv)
Institutional Class
03/31/99-06/30/99 $21.40 $(0.03)(a) $ 2.89 (a) $2.86 $ 0.00 $0.00 $ 0.00
Administrative Class
03/31/99-06/30/99 21.40 (0.05)(a) 2.91 (a) 2.86 0.00 0.00 0.00
Innovation Fund (iv)
Institutional Class
03/05/99-06/30/99 $32.73 $(0.05)(a) $ 4.82 (a) $4.77 $ 0.00 $0.00 $ 0.00
Select International
Fund (iv)
Institutional Class
06/30/99 $13.55 $(0.02)(a) $ 3.56 (a) $3.54 $ (0.02) $0.00 $(1.03)
12/31/97-06/30/98 10.00 0.00 (a) 3.55 (a) 3.55 0.00 0.00 0.00
Capital Appreciation
Fund
Institutional Class
06/30/99 $26.13 $ 0.16 (a) $ 2.35 (a) $2.51 $ (0.15) $0.00 $(1.65)
06/30/98 21.19 0.15 (a) 6.59 (a) 6.74 (0.12) 0.00 (1.68)
06/30/97 18.10 0.24 5.08 5.32 (0.10) 0.00 (2.13)
11/01/95-06/30/96 16.94 0.35 1.99 2.34 (0.15) 0.00 (1.03)
10/31/95 13.34 0.18 3.60 3.78 (0.18) 0.00 0.00
10/31/94 13.50 0.14 (0.12) 0.02 (0.14) 0.00 (0.04)
Administrative Class
06/30/99 25.99 0.09 (a) 2.34 (a) 2.43 (0.13) 0.00 (1.65)
06/30/98 21.16 0.10 (a) 6.55 (a) 6.65 (0.14) 0.00 (1.68)
07/31/96-06/30/97 17.19 0.16 6.03 6.19 (0.09) 0.00 (2.13)
Mid-Cap Fund (v)
Institutional Class
06/30/99 $24.09 $ 0.12 (a) $(0.11)(a) $0.01 $ (0.02) $0.00 $(1.07)
06/30/98 20.28 0.11 (a) 5.11 (a) 5.22 (0.07) (0.01) (1.33)
06/30/97 19.44 (0.07) 5.25 5.18 (0.05) 0.00 (4.29)
11/01/95-06/30/96 18.16 0.32 1.53 1.85 (0.14) 0.00 (0.43)
10/31/95 13.97 0.07 4.19 4.26 (0.07) 0.00 0.00
10/31/94 13.97 0.06 0.01 0.07 (0.06) 0.00 (0.01)
Administrative Class
06/30/99 23.96 0.06 (a) (0.06)(a) 0.00 (0.01) 0.00 (1.07)
06/30/98 20.24 0.05 (a) 5.08 (a) 5.13 (0.07) (0.01) (1.33)
06/30/97 19.44 (0.13) 5.25 5.12 (0.03) 0.00 (4.29)
11/01/95-06/30/96 18.17 0.28 1.53 1.81 (0.11) 0.00 (0.43)
11/30/94-10/31/95 13.31 0.03 4.85 4.88 (0.02) 0.00 0.00
</TABLE>
-------
* Annualized
+ Unaudited
(a) Per share amounts based on average number of shares outstanding during
the period.
(b) All Administrative Class shares of the Growth & Income Fund were redeemed
on May 27, 1999.
(iv) The Growth & Income Fund was formerly the Mid-Cap Equity Fund. The
International Fund was formerly the International Growth Fund. The
information provided for the Target, Growth & Income, Opportunity,
Innovation and Select International Fund's reflects results of operations
under the Fund's former Sub-Advisers through March 6, June 30, March 6
and March 6, 1999 and November 1, 2000, respectively; the Funds would not
necessarily have achieved the performance results shown above under their
current investment management arrangements.
(v) The Mid-Cap Fund was formerly the Mid-Cap Growth Fund.
79 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Fund Ratio of Net
Distributions Reimbursement Ratio of Investment
in Excess of Tax Basis Fee Added to Net Asset Net Assets Expenses to Income (Loss)
Net Realized Return of Total Paid-In- Value End End of Average Net to Average
Capital Gains Capital Distributions Capital of Period Total Return Period (000s) Assets Net Assets
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ 0.00 $ (3.75) $ 0.00 $ 22.81 8.50% $ 42 1.23%(c)* 0.06%*
0.00 0.00 (0.73) 0.00 24.67 25.84 15 1.08 (0.17)
0.00 0.00 (1.30) 0.00 20.32 41.54 128,666 1.08 (0.07)
0.00 0.00 (0.80) 0.00 15.53 21.20 29,332 1.13 (0.03)
0.00 0.00 (0.31) 0.00 13.56 9.23 33,575 1.07* 0.28 *
0.00 0.00 (0.02) 0.00 12.73 11.34 24,645 1.06* 0.34 *
$ 0.00 $ 0.00 $ (1.80) $ 0.00 $ 24.76 51.15% $ 4,654 0.80%* (0.58)%*
0.00 0.00 0.00 0.00 17.74 8.57 1,298 0.79* (0.39)*
0.00 0.00 (1.80) 0.00 24.74 51.12 8,307 1.05* (0.81)*
0.00 0.00 0.00 0.00 17.73 8.51 5,513 1.02* (0.61)*
$ 0.00 $ 0.00 $ (8.71) $ 0.00 $ 11.58 33.22% $ 5,455 1.10%(d)* (0.66)%*
0.00 0.00 (0.65) 0.00 15.84 23.18 7,399 0.89 (0.22)
0.00 0.00 (4.09) 0.00 13.53 30.40 8,488 0.89 (0.25)
0.00 0.00 (1.87) 0.00 14.04 9.61 7,591 1.15 (0.43)
0.00 0.00 (0.37) 0.00 14.66 16.72 8,378 0.88* (0.32)*
0.00 0.00 (0.02) 0.00 12.92 29.34 8,357 0.88* 0.24*
0.00 0.00 (0.65) 0.00 14.51 13.12 0 1.14* (0.45)*
0.00 0.00 (4.09) 0.00 13.50 19.65 2,371 1.13* (0.49)*
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 24.26 13.36% $ 417 0.88%* (0.54)%*
0.00 0.00 0.00 0.00 24.26 13.36 2,010 1.12* (0.82)*
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 37.50 14.57% $ 444 0.88%* (0.15)%*
$ 0.00 $ 0.00 $ (1.05) $ 0.00 $ 16.04 28.62% $ 8,408 1.39% (0.15)%
0.00 0.00 0.00 0.00 13.55 35.50 6,822 1.36* 0.08*
$ 0.00 $ 0.00 $ (1.80) $ 0.00 $ 26.84 10.57% $645,967 0.71% 0.64 %
0.00 0.00 (1.80) 0.00 26.13 32.97 805,856 0.71 0.64
0.00 0.00 (2.23) 0.00 21.19 31.52 536,187 0.71 1.02
0.00 0.00 (1.18) 0.00 18.10 14.65 348,728 0.70* 1.33*
0.00 0.00 (0.18) 0.00 16.94 28.47 236,220 0.70 1.22
0.00 0.00 (0.18) 0.00 13.34 0.15 165,441 0.70 1.17
0.00 0.00 (1.78) 0.00 26.64 10.30 229,831 0.95 0.38
0.00 0.00 (1.82) 0.00 25.99 32.55 132,384 0.96 0.39
0.00 0.00 (2.22) 0.00 21.16 38.26 3,115 0.96* 0.66*
$ 0.00 $ 0.00 $ (1.09) $ 0.00 $ 23.01 0.33% $581,544 0.70% 0.54 %
0.00 0.00 (1.41) 0.00 24.09 26.16 437,985 0.71 0.46
0.00 0.00 (4.34) 0.00 20.28 30.58 291,374 0.71 0.53
0.00 0.00 (0.57) 0.00 19.44 10.37 231,011 0.70* 1.11*
0.00 0.00 (0.07) 0.00 18.16 30.54 189,320 0.70 0.43
0.00 0.00 (0.07) 0.00 13.97 0.58 121,791 0.70 0.45
0.00 0.00 (1.08) 0.00 22.88 0.31 104,337 0.95 0.30
0.00 0.00 (1.41) 0.00 23.96 25.75 73,614 0.95 0.22
0.00 0.00 (4.32) 0.00 20.24 30.23 2,066 0.96 0.28
0.00 0.00 (0.54) 0.00 19.44 10.17 1,071 0.95* 0.89*
0.00 0.00 (0.02) 0.00 18.17 36.64 892 0.94* 0.23*
<CAPTION>
Distributions
in Excess of
Net Realized Portfolio
Capital Gains Turnover Rate
---------------------------------------------------------------------------------------------------------------------
<S> <C>
$ 0.00 142%
0.00 95
0.00 120
0.00 139
0.00 73
0.00 58
$ 0.00 59%
0.00 229
0.00 59
0.00 229
$ 0.00 123%
0.00 273
0.00 268
0.00 202
0.00 97
0.00 132
0.00 273
0.00 268
$ 0.00 175%
0.00 175
$ 0.00 119%
$ 0.00 269%
0.00 60
$ 0.00 120%
0.00 75
0.00 87
0.00 73
0.00 83
0.00 77
0.00 120
0.00 75
0.00 87
$ 0.00 85%
0.00 66
0.00 82
0.00 79
0.00 78
0.00 61
0.00 85
0.00 66
0.00 82
0.00 79
0.00 72
</TABLE>
-------
(c) Ratio of expenses to average net assets excluding interest expense is
1.07%.
(d) Ratio of expenses to average net assets excluding interest expense is
0.88%.
Prospectus 80
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends Dividends in Distributions
Year or Value Net Unrealized Income from from Net Excess of Net from Net
Period Beginning Investment Gain (Loss) on Investment Investment Investment Realized
Ended of Period Income (Loss) Investments Operations Income Income Capital Gains
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Micro-Cap Fund (vi)
Institutional Class
06/30/99 $23.66 $(0.14)(a) $(2.89 )(a) $(3.03) $ 0.00 $0.00 $ 0.00
06/30/98 19.85 (0.11)(a) 6.54 (a) 6.43 0.00 0.00 (2.62)
06/30/97 18.47 0.00 3.41 3.41 0.00 0.00 (2.03)
11/01/95-06/30/96 15.38 0.00 3.43 3.43 0.00 0.00 (0.34)
10/31/95 11.87 (0.04) 3.55 3.51 0.00 0.00 0.00
10/31/94 11.06 (0.03) 0.84 0.81 0.00 0.00 0.00
Administrative Class
06/30/99 23.52 (0.19)(a) (2.88)(a) (3.07) 0.00 0.00 0.00
06/30/98 19.78 (0.17)(a) 6.53 (a) 6.36 0.00 0.00 (2.62)
06/30/97 18.46 (0.06) 3.41 3.35 0.00 0.00 (2.03)
04/01/96-06/30/96 16.73 0.03 1.70 1.73 0.00 0.00 0.00
Small-Cap Value Fund
Institutional Class
06/30/99 $17.68 $0.32 (a) $(1.29)(a) $(0.97) $(0.21) $0.00 $ 0.00
06/30/98 15.78 0.29 (a) 2.50 (a) 2.79 (0.13) 0.00 (0.76)
06/30/97 14.20 0.46 3.63 4.09 (0.13) 0.00 (2.38)
11/01/95-06/30/96 13.10 0.56 1.49 2.05 (0.21) 0.00 (0.74)
10/31/95 12.07 0.28 1.92 2.20 (0.28) 0.00 (0.89)
10/31/94 12.81 0.29 (0.65) (0.36) (0.29) 0.00 (0.09)
Administrative Class
06/30/99 17.63 0.29 (a) (1.30)(a) (1.01) (0.20) 0.00 0.00
06/30/98 15.76 0.25 (a) 2.49 (a) 2.74 (0.11) 0.00 (0.76)
06/30/97 14.20 0.38 3.68 4.06 (0.12) 0.00 (2.38)
11/01/95-06/30/96 13.16 0.54 1.43 1.97 (0.19) 0.00 (0.74)
Enhanced Equity Fund
Institutional Class
06/30/99 $12.64 $ 0.08 (a) $ 1.91 (a) $ 1.99 $(0.06) $0.00 $(1.61)
06/30/98 16.46 0.11 (a) 3.91 (a) 4.02 (0.11) 0.00 (7.73)
06/30/97 15.91 1.18 3.10 4.28 (0.10) 0.00 (3.63)
11/01/95-06/30/96 14.44 0.34 1.67 2.01 (0.16) 0.00 (0.38)
10/31/95 11.99 0.25 2.62 2.87 (0.25) 0.00 (0.17)
10/31/94 12.08 0.25 (0.04) 0.21 (0.25) 0.00 (0.05)
Administrative Class
06/30/99 12.59 0.05 (a) 1.90 (a) 1.95 (0.06) 0.00 (1.61)
08/21/97-06/30/98 17.53 0.05 (a) 2.85 (a) 2.90 (0.11) 0.00 (7.73)
Tax-Efficient Equity
Fund
Administrative Class
09/30/98-06/30/99 $ 8.65 $0.03 (a) $ 2.93 (a) $ 2.96 $ 0.00 $0.00 $ 0.00
Structured Emerging
Markets Fund
Institutional Class
09/30/98-06/30/99 $10.00 $0.15 (a) $ 2.57 (a) $ 2.72 $(0.07) $0.00 $(0.28)
Tax-Efficient Structured
Emerging Markets Fund
Institutional Class
09/30/98-06/30/99 $10.00 $0.16 (a) $ 3.10 (a) $ 3.26 $(0.06) $0.00 $ 0.00
International Fund
Institutional Class
09/30/98-12/31/98 $10.47 $ 0.14 (a) $ 2.16 (a) $ 2.30 $ 0.00 $0.00 $(1.15)
Administrative Class
09/30/98-12/31/98 10.47 0.09 (a) 2.15 (a) 2.24 0.00 0.00 (1.15)
</TABLE>
-------
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
(vi) The Micro-Cap Fund was formerly the Micro-Cap Growth Fund.
81 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Fund Ratio of Net
Distributions Reimbursement Ratio of Investment
in Excess of Tax Basis Fee Added to Net Asset Net Assets Expenses to Income (Loss)
Net Realized Return of Total Paid-In- Value End End of Average Net to Average Portfolio
Capital Gains Capital Distributions Capital of Period Total Return Period (000s) Assets Net Assets Turnover Rate
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.63) $0.00 $ (0.63) $ 0.00 $20.00 (12.66)% $234,439 1.50% (0.71)% 73%
0.00 0.00 (2.62) 0.00 23.66 33.95 257,842 1.51 (0.50) 72
0.00 0.00 (2.03) 0.00 19.85 20.05 164,139 1.52 (0.49) 84
0.00 0.00 (0.34) 0.00 18.47 22.64 83,973 1.50* (0.45)* 54
0.00 0.00 0.00 0.00 15.38 29.54 69,775 1.50 (0.37) 87
0.00 0.00 0.00 0.00 11.87 7.31 32,605 1.50 (0.25) 59
(0.63) 0.00 (0.63) 0.00 19.82 (12.91) 3,000 1.75 (0.97) 73
0.00 0.00 (2.62) 0.00 23.52 33.70 4,779 1.76 (0.74) 72
0.00 0.00 (2.03) 0.00 19.78 19.72 2,116 1.77 (0.74) 84
0.00 0.00 0.00 0.00 18.46 10.34 566 1.73* (0.74)* 54
$(0.45) $0.00 $ (0.66) $ 0.00 $16.05 (5.11)% $ 59,132 0.85% 2.12% 60%
0.00 0.00 (0.89) 0.00 17.68 17.77 47,432 0.85 1.65 41
0.00 0.00 (2.51) 0.00 15.78 31.99 34,639 0.90 1.92 48
0.00 0.00 (0.95) 0.00 14.20 16.35 29,017 0.85* 2.12* 35
0.00 0.00 (1.17) 0.00 13.10 19.88 35,093 0.85 2.25 50
0.00 0.00 (0.38) 0.00 12.07 (2.89) 31,236 0.85 2.23 48
(0.45) 0.00 (0.65) 0.00 15.97 (5.40) 21,002 1.10 1.92 60
0.00 0.00 (0.87) 0.00 17.63 17.41 10,751 1.10 1.39 41
0.00 0.00 (2.50) 0.00 15.76 31.70 5,916 1.16 1.68 48
0.00 0.00 (0.93) 0.00 14.20 15.64 4,433 1.10* 1.86* 35
$ 0.00 $0.00 $ (1.67) $ 0.00 $12.96 17.95 % $ 42,619 0.71% 0.66% 34%
0.00 0.00 (7.84) 0.00 12.64 32.33 36,584 0.71 0.63 65
0.00 0.00 (3.73) 0.00 16.46 31.45 44,838 0.74 1.31 91
0.00 0.00 (0.54) 0.00 15.91 14.21 83,425 0.70* 1.58* 53
0.00 0.00 (0.42) 0.00 14.44 24.46 73,999 0.70 1.91 21
0.00 0.00 (0.30) 0.00 11.99 1.83 65,915 0.70 2.20 44
0.00 0.00 (1.67) 0.00 12.87 17.63 24,015 0.96 0.41 34
0.00 0.00 (7.84) 0.00 12.59 23.85 10,409 0.95* 0.47* 65
$ 0.00 $0.00 $ 0.00 $ 0.00 $11.61 34.28 % $ 3,391 0.92%* 0.31%* 13%
$ 0.00 $0.00 $ (0.35) $ 0.05 $12.42 29.21 % $ 46,577 0.95% 1.56% 30%
$ 0.00 $0.00 $ (0.06) $ 0.05 $13.25 33.39 % $ 72,509 0.95% 1.57% 28%
$ 0.00 $0.00 $ (1.15) $ 0.00 $11.62 23.07 % $ 3,627 1.09%* 1.70%* 55%
0.00 0.00 (1.15) 0.00 11.56 22.47 15,797 1.34* 1.06* 55
</TABLE>
Prospectus 82
<PAGE>
(This page left blank intentionally)
83 PIMCO Funds: Multi-Manager Series
<PAGE>
-------------------------------------------------------------------
PIMCO INVESTMENT ADVISER AND ADMINISTRATOR
Funds: PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA
Multi- 92660
Manager
Series
-------------------------------------------------------------------
CUSTODIAN
State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO
64105
-------------------------------------------------------------------
TRANSFER AGENT
National Financial Data Services, 330 W. 9th Street, 4th Floor,
Kansas City, MO 64105
-------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
-------------------------------------------------------------------
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
-------------------------------------------------------------------
<PAGE>
The Trust's Statement of Additional Information ("SAI") and annual and
semi-annual reports to shareholders include additional information about the
Funds. The SAI and the financial statements included in the funds' most recent
annual report to shareholders are incorporated by reference into this
Prospectus, which means they are part of this Prospectus for legal purposes. The
Funds' annual report discusses the market conditions and investment strategies
that significantly affected each Fund's performance during its last fiscal year.
File No. 811-6161
You may get free copies of any of these materials, request other information
about a Fund, or make shareholder inquiries by calling the Trust at
1-800-927-4648 or PIMCO Infolink Audio Response Network at 1-800-987-4626, or by
writing to:
PIMCO Funds:
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust on the EDGAR database on the Commission's Web site
at www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or by electronic request at the following e-mail
address: [email protected]. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-6161
P I M C O
F U N D S
PIMCO Funds
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
PY001.04/00
<PAGE>
PIMCO Funds Prospectus
PIMCO
Funds: This Prospectus describes 15 mutual funds offered by PIMCO Funds:
Multi- Multi-Manager Series. The Funds provide access to the professional
Manager investment advisory services offered by PIMCO Advisors L.P. and
Series its investment management affiliates. As of September 30, 2000,
PIMCO Advisors and its affiliates managed approximately
$[ ] billion, including assets for [ ] of the [ ] largest U.S.
corporations.
November 1,
2000
The Prospectus explains what you should know about the Funds
Share before you invest. Please read it carefully.
Classes
A, B
and C
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
1 PIMCO Funds: Multi-Manager Series
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information.............................................. 3
Fund Summaries
Capital Appreciation Fund...................................... 5
Equity Income Fund............................................. 7
Global Innovation Fund......................................... 9
Growth Fund.................................................... 11
Growth & Income Fund........................................... 13
Innovation Fund................................................ 15
International Fund............................................. 17
Mid-Cap Fund................................................... 19
Opportunity Fund............................................... 21
Renaissance Fund............................................... 23
Select Growth Fund............................................. 25
Small-Cap Value Fund........................................... 27
Target Fund.................................................... 29
Tax-Efficient Equity Fund...................................... 31
Value Fund..................................................... 33
Summary of Principal Risks....................................... 35
Management of the Funds.......................................... 37
Investment Options - Class A, B and C Shares .................... 43
How Fund Shares Are Priced....................................... 45
How to Buy and Sell Shares....................................... 46
Fund Distributions............................................... 50
Tax Consequences................................................. 51
Characteristics and Risks of Securities and Investment
Techniques...................................................... 51
Financial Highlights............................................. 59
</TABLE>
Prospectus 2
<PAGE>
Summary Information
The table below lists the investment objectives and compares certain
investment characteristics of the Funds. Other important characteristics are
described in the individual Fund Summaries beginning on page 5.
<TABLE>
<CAPTION>
Approximate Approximate
PIMCO Investment Main Number of Capitalization
Fund Objective Investments Holdings Range
--------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C>
Growth Stock Growth Long-term growth of capital; Common stocks of 35-40 At least $5 billion
Funds income is an incidental companies with
consideration market
capitalizations
of at least $5
billion
-----------------------------------------------------------------------------------------------------------------
Select Growth Long-term growth of capital; Common stocks of 15-25 At least $10 billion
income is an incidental companies with
consideration market
capitalizations
of at least $10
billion
-----------------------------------------------------------------------------------------------------------------
Target Capital appreciation; no Common stocks of 40-60 Between $1 billion
consideration is given to income companies with and $10 billion
market
capitalizations
of between $1
billion and
$10 billion
-----------------------------------------------------------------------------------------------------------------
Opportunity Capital appreciation; no Common stocks of 60-100 Between $100 million
consideration is given to income companies with and $2 billion
market
capitalizations
of between $100
million and $2
billion
--------------------------------------------------------------------------------------------------------------------------------
Blend Stock Capital Appreciation Growth of capital Common stocks of 60-100 At least $1 billion
Funds companies with
market
capitalizations
of at least $1
billion that
have improving
fundamentals and
whose stock is
reasonably
valued by the
market
-----------------------------------------------------------------------------------------------------------------
Growth & Income Seeks long-term growth Securities of 40-60 At least $1 billion
of capital; current income companies with
is a secondary objective market
capitalizations
of at least $1
billion
-----------------------------------------------------------------------------------------------------------------
Mid-Cap Growth of capital Common stocks of 60-100 More than $500 million
companies with (excluding the largest
market 200 companies)
capitalizations
of more than
$500 million
(excluding the
largest 200
companies) that
have improving
fundamentals and
whose stock is
reasonably
valued by the
market
--------------------------------------------------------------------------------------------------------------------------------
Value Stock Equity Income Current income as a primary Income-producing 40-50 More than $2 billion
Funds objective; long-term growth of common stocks of
capital as a secondary objective companies with
market
capitalizations
of more than $2
billion
-----------------------------------------------------------------------------------------------------------------
Renaissance Long-term growth of capital Common stocks of 50-80 All capitalizations
and income companies with
below-average
valuations whose
business
fundamentals are
expected to
improve
-----------------------------------------------------------------------------------------------------------------
Value Long-term growth of capital Common stocks of 40 More than $5 billion
and income companies with
market
capitalizations
of more than $5
billion and
below-average
valuations whose
business
fundamentals are
expected to
improve
-----------------------------------------------------------------------------------------------------------------
Small-Cap Value Long-term growth of capital Common stocks of 100 Between $100 million
and income companies with and $1.5 billion
market
capitalizations
of between $100
million and $1.5
billion and
below-average
price-to-
earnings ratios
relative to the
market and their
industry groups
--------------------------------------------------------------------------------------------------------------------------------
Enhanced Index Tax-Efficient Equity Maximum after-tax growth A broadly More than 200 More than $5 billion
Stock Funds of capital diversified
portfolio of at
least 200 common
stocks of
companies
represented in
the S&P 500
Index with
market
capitalizations
of more than $5
billion
--------------------------------------------------------------------------------------------------------------------------------
International International Capital appreciation through Common stocks of 200-250 More than $500 million
Stock Funds investment in an international foreign (non-
portfolio; income is an incidental U.S.) issuers
consideration (developed and
emerging markets)
with market
capitalizations
of more than
$500 million
--------------------------------------------------------------------------------------------------------------------------------
Sector-Related Innovation Capital appreciation; no Common stocks of 40 More than $200 million
Stock Funds consideration is given to income technology-
related
companies with
market
capitalizations
of more than
$200 million
-----------------------------------------------------------------------------------------------------------------
Global Innovation Capital appreciation; no Common stocks of 30-60 More than $200 million
consideration is given to income U.S. and non-
U.S. technology-
related
companies with
market
capitalizations
of more than
$200 million
</TABLE>
Prospectus 3
<PAGE>
Summary Information (continued)
Fund The Funds provide a broad range of investment choices. The
Descriptions, following Fund Summaries identify each Fund's investment
Performance objective, principal investments and strategies, principal risks,
and Fees performance information and fees and expenses. A more detailed
"Summary of Principal Risks" describing principal risks of
investing in the Funds begins after the Fund Summaries.
It is possible to lose money on investments in the Funds. The Fact
that a fund had good performance in the past (for example, during
the year ended 1999) is no assurance that the value of the Fund's
investments will not decline in the future or appreciate at a
slower rate. An investment in a Fund is not a deposit of a bank
and is not guaranteed or insured by the Federal Deposit Insurance
Corporation or any other government agency.
Prospectus 4
<PAGE>
PIMCO Capital Appreciation Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Fund Focus Approximate
Investments Objective Larger Capitalization Range
and Seeks growth capitalization At least
Strategies of capital common stocks $1 billion
Fund Category Approximate Dividend Frequency
Blend Stocks Number of Holdings At least annually
</TABLE> 60-100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with larger market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers the 1,000 largest publicly traded
companies (in terms of market capitalization) in the U.S. The team
screens the stocks in this universe for a series of growth
criteria, such as dividend growth, earnings growth, relative
growth of earnings over time (earnings momentum) and the company's
history of meeting earnings targets (earnings surprise), and also
value criteria, such as price-to-earnings, price-to-book and
price-to-cash flow ratios. The team then selects individual stocks
by subjecting the top 10% of the stocks in the screened universe
to a rigorous analysis of company factors, such as strength of
management, competitive industry position, and business prospects,
and financial statement data, such as earnings, cash flows and
profitability. The team may interview company management in making
investment decisions. The Fund's capitalization criteria applies
at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 2% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Growth . Focused
. Issuer Risk Securities Risk Investment Risk
. Value Securities . Credit Risk
Risk . Management Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A, B and C shares
(1/20/97), performance information shown in the bar chart and
tables for those classes is based on the performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual sales charges (in the Average
Annual Total Returns table only), distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
A, B and C shares. Past performance is no guarantee of future
results.
5 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Capital Appreciation Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 23.73%
--------------------
Lowest (7/1/98-
9/30/98) -14.22%
[GRAPH]
1992 7.08%
1993 17.24%
1994 -4.64%
1995 36.61%
1996 26.29%
1997 33.72%
1998 17.18%
1999 22.19%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (3/8/91)(/3/)
--------------------------------------------------------------------
Class A 15.47% 25.57% 18.84%
--------------------------------------------------------------------
Class B 16.31% 25.92% 18.89%
--------------------------------------------------------------------
Class C 20.32% 26.07% 18.72%
--------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 19.75%
--------------------------------------------------------------------
Lipper Multi-Cap Core Funds Average(/2/) % % %
--------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Multi-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 3/8/91. Index comparisons begin
on 2/28/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.45% 0.25% 0.40% 1.10%
-----------------------------------------------------------------
Class B 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
Class C 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $656 $880 $1,123 $1,816 $656 $880 $1,123 $1,816
-----------------------------------------------------------------------------------------------------------
Class B 688 882 1,201 1,876 188 582 1,001 1,876
-----------------------------------------------------------------------------------------------------------
Class C 288 582 1,001 2,169 188 582 1,001 2,169
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 6
<PAGE>
PIMCO Equity Income Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments Seeks current income Income producing More than
and as a primary common stocks with $2 billion
Strategies objective, and long- potential for
term growth of capital appreciation
capital as a
secondary objective
Fund Category Approximate Number Dividend
Value Stocks of Holdings Frequency
</TABLE> 40-50 Quarterly
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in income-producing (e.g.,
dividend-paying) common stocks of companies with market
capitalizations of more than $2 billion at the time of investment.
The Fund may also invest in convertible securities and preferred
stocks.
The Fund's initial selection universe consists of the 1,000
largest publicly traded companies (in terms of market
capitalization) in the U.S. The portfolio managers classify the
universe by industry. They then identify the most undervalued
stocks in each industry based mainly on relative P/E ratios,
calculated both with respect to trailing operating earnings and
forward earnings estimates. From this group of stocks, the Fund
buys approximately 25 stocks with the highest dividend yields. The
portfolio managers then screen the most undervalued companies in
each industry by dividend yield to identify the highest yielding
stocks in each industry. From this group, the Fund buys
approximately 25 additional stocks with the lowest P/E ratios.
In selecting stocks, the portfolio managers consider quantitative
factors such as price momentum (based on changes in stock price
relative to changes in overall market prices), earnings momentum
(based on analysts' earnings per share estimates and revisions to
those estimates), relative dividend yields, valuation relative to
the overall market and trading liquidity. The portfolio managers
may replace a stock when a stock within the same industry group
has a considerably higher dividend yield or lower valuation than
the Fund's current holding.
The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs). In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in high-quality fixed income securities. This
would be inconsistent with the Fund's investment objective and
principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C> <C>
. Market Risk . Foreign Investment . Credit Risk
. Issuer Risk Risk . Management Risk
. Value Securities . Currency Risk
</TABLE> Risk . Interest Rate Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A, B and C shares
(1/20/97), performance information shown in the bar chart and
tables for those classes is based on the performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual sales charges (in the Average
Annual Total Returns table only), distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
A, B and C shares. Prior to May 8, 2000, the Fund had a different
sub-adviser and would not necessarily have achieved the
performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
7 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Equity Income Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00-
9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4/1/99-
6/30/99) 16.00%
--------------------
Lowest (7/1/98-
9/30/98) -10.98%
[GRAPH]
1992 14.29%
1993 8.03%
1994 -2.00%
1995 32.94%
1996 21.00%
1997 30.88%
1998 8.03%
1999 -2.31%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (3/8/91)(/3/)
--------------------------------------------------------------------
Class A -7.67% 15.99% 13.09%
--------------------------------------------------------------------
Class B -6.71% 16.26% 13.14%
--------------------------------------------------------------------
Class C -3.81% 16.45% 12.97%
--------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 19.75%
--------------------------------------------------------------------
Lipper Equity Income Funds Average(/2/) 4.77% 18.02% 14.57%
--------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Equity Income Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that seek relatively high current income and
growth of income through investing 65% or more of their
portfolios in dividend-paying equities. It does not take into
account sales charges.
(3) The Fund began operations on 3/8/91. Index comparisons begin
on 2/28/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.45% 0.25% 0.40% 1.10%
-----------------------------------------------------------------
Class B 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
Class C 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $656 $880 $1,123 $1,816 $656 $880 $1,123 $1,816
-----------------------------------------------------------------------------------------------------------
Class B 688 882 1,201 1,876 188 582 1,001 1,876
-----------------------------------------------------------------------------------------------------------
Class C 288 582 1,001 2,169 188 582 1,001 2,169
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 8
<PAGE>
PIMCO Global Innovation Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Common stocks of Capitalization Range
and Seeks capital U.S. and non- More than $200
Strategies appreciation; no U.S. technology- million
consideration is related
given to income companies Dividend Frequency
At least
Fund Category Approximate Number annually
Sector-Related of Holdings
Stocks 30-60
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of U.S. and
non-U.S. companies which utilize new, creative or different, or
"innovative," technologies to gain a strategic competitive
advantage in their industry, as well as companies that provide and
service those technologies. The Fund identifies its investment
universe of technology-related companies primarily by reference to
classifications made by independent firms, such as Standard &
Poor's (for example, companies classified as "Information
Technology" companies), and by identifying companies that derive a
substantial portion of their revenues from the manufacture, sale
and/or service of technological products. Although the Fund
emphasizes companies which utilize technologies, it is not
required to invest exclusively in a particular business sector or
industry.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify
technology-related companies with well-defined "wealth creating"
characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition,
through fundamental research, the portfolio manager seeks to
identify companies that are gaining market share, have superior
management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution
systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if
the company does not meet or exceed consensus estimates on
revenues and/or earnings or if an alternative investment is more
attractive.
Although the Fund invests principally in common stocks, the Fund
may also invest in other types of equity securities, including
preferred stocks and convertible securities. The Fund will invest
in the securities of issuers located in at least three countries
(one of which may be the United States). Although the Fund
normally invests in securities traded principally in the
securities markets of developed countries, the Fund has no
prescribed limits on geographic asset distribution and may invest
in any foreign securities market in the world, including in
emerging markets. The Fund may utilize foreign currency exchange
contracts and derivative instruments (such as stock index futures
contracts), primarily for risk management or hedging purposes.
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Derivatives Risk .Leveraging Risk
.Issuer Risk .Foreign Investment .Credit Risk
.Growth Securities Risk Risk .Management Risk
.Smaller Company Risk .Emerging Markets
.Liquidity Risk Risk
.Currency Risk
.Focused Investment
Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The Fund commenced operations in December 1999 and does not yet
Information have a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
9 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Global Innovation Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 1.00% 0.25% 0.60% 1.85%
-----------------------------------------------------------------
Class B 1.00 1.00 0.60 2.60
-----------------------------------------------------------------
Class C 1.00 1.00 0.60 2.60
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.60% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------------------------------------------------
Class A 728 $ 1,100 $728 $1,100
------------------------------------------------------------------------------------------------------------
Class B 763 1,108 263 808
------------------------------------------------------------------------------------------------------------
Class C 363 808 263 808
------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 10
<PAGE>
PIMCO Growth Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Larger Capitalization
and Seeks long-term capitalization Range
Strategies growth of common stocks At least $5
capital; income billion
is an Approximate Number
incidental of Holdings Dividend
consideration 35-40 Frequency
At least
Fund Category annually
Growth Stocks
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of at least $5 billion at
the time of investment.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Foreign Investment Risk .Credit Risk
.Issuer Risk .Currency Risk .Management Risk
.Growth Securities Risk .Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class C shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A shares (10/26/90)
and Class B shares (5/23/95), performance information shown in the
Average Annual Total Returns table for those classes is based on
the performance of the Fund's Class C shares. The prior Class C
performance has been adjusted to reflect the actual sales charges,
distribution and/or service (12b-1) fees, administrative fees and
other expenses paid by Class A and B shares. Prior to March 6,
1999, the Fund had a different sub-adviser and would not
necessarily have achieved the performance results shown on the
next page under its current investment management arrangements.
Past performance is no guarantee of future results.
11 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Growth Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 36.21%
--------------------
Lowest (7/1/90-
9/30/90) -13.14%
[GRAPH]
1990 0.29%
1991 41.88%
1992 2.08%
1993 9.32%
1994 -0.75%
1995 27.47%
1996 17.52%
1997 21.84%
1998 38.90%
1999 39.83%
Calendar Year End (through12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (2/24/84)(/3/)
------------------------------------------------------------------
Class A 33.33% 28.36% 18.99% 19.71%
------------------------------------------------------------------
Class B 34.78% 28.65% 19.06% 19.75%
------------------------------------------------------------------
Class C 38.83% 28.80% 18.77% 19.25%
------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 18.21% 18.60%
------------------------------------------------------------------
Lipper Large-Cap Growth Funds
Average(/2/) % % % %
------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 2/24/84. Index comparisons begin
on 2/29/84.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.50% 0.25% 0.40% 1.15%
-----------------------------------------------------------------
Class B 0.50 1.00 0.40 1.90
-----------------------------------------------------------------
Class C 0.50 1.00 0.40 1.90
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholder may, depending upon
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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $661 $895 $1,148 $1,871 $661 $895 $1,148 $1,871
-----------------------------------------------------------------------------------------------------------
Class B 693 897 1,226 1,930 193 597 1,026 1,930
-----------------------------------------------------------------------------------------------------------
Class C 293 597 1,026 2,222 193 597 1,026 2,222
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 12
<PAGE>
PIMCO Growth & Income Fund
--------------------------------------------------------------------------------
Principal Investment Fund
Investments Objective Focus Approximate
and Capitalization Range
Strategies
Seeks long-term Medium and large
growth of capitalization More than $1
capital; stocks billion
current income
is a secondary
objective
Dividend Frequency
At least
annually
Approximate Number of Holdings
40-60
Fund
Category
Blend Stocks
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in securities of companies
with market capitalizations of at least $1 billion at the time of
investment. The Fund may invest up to 75% of its assets in
securities selected for their growth potential. The Fund will
normally invest at least 25% of its assets in securities selected
for their income potential, including dividend-paying common
stocks, preferred stocks, corporate bonds, convertible securities
and REITs.
When selecting securities for the Fund's "growth" segment, the
portfolio managers seek to identify companies with well-defined
"wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market
as a whole), high profitability and consistent, predictable
earnings. In addition, through fundamental research, the portfolio
managers seek to identify companies that are gaining market share,
have superior management and possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The Fund's portfolio managers may choose to
sell a stock in the "growth" segment when they believe that its
earnings will be disappointing or that market sentiment on the
company will turn negative. The portfolio managers will also
consider selling a stock if the company does not meet the
managers' estimates on revenues and/or earnings, or if an
alternative investment is deemed to be more attractive.
When selecting stocks for the Fund's "Income" segment, the
portfolio managers seek to identify companies with strong
operating fundamentals that offer potential for capital
appreciation and that also have a dividend yield in excess of the
yield on the S&P 500 Index. The portfolio managers may replace an
"income" security when another security with a similar risk-to-
reward profile offers either better potential for capital
appreciation or a higher yield than the Fund's current holding. To
achieve its income objective, the Fund may also invest in
preferred stocks, corporate bonds, convertible securities and
REITs. The Fund may invest up to 10% of its assets in corporate
bonds, which will typically consist of investment grade securities
of varying maturities but may also include high yield securities
("junk bonds") rated at least B by Standard & Poor's Rating
Services or Moody's Investors Service, Inc. or, if unrated,
determined by the Adviser to be of comparable quality.
The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all
of its assets in high-quality fixed income securities. This would
be inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Liquidity Risk . High Yield Risk
. Issuer Risk . Foreign Investment . Credit Risk
. Growth Securities . Risk . Management Risk
. Risk . Currency Risk
. Value Securities . Focused Investment
Risk Risk
. Smaller Company . Interest Rate Risk
. Risk
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares,
which are offered in a different prospectus. This is because the
Fund did not offer Class A, B or C shares during the periods
shown. Although Institutional Class and Class A, B and C shares
would have similar annual returns (because all the Fund's shares
represent interests in the same portfolio of securities),
Institutional Class performance would be higher than Class A, B or
C performance because of the lower expenses and no sales charges
paid by Institutional Class shares. The Average Annual Total
Returns table also shows estimated historical performance for
Class A, B, and C shares based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the actual sales
charges (loads), distribution and/or service (12b-1) fees,
administrative fees and other expenses paid by Class A. B and C
shares. The performance information on the next page reflects the
Fund's advisory fee rate in effect prior to August 1, 2000 (0.63%
per annum). Prior to July 1, 1999, the Fund had a different sub-
adviser and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. In addition, the Fund changed its
investment objective and policies on August 1, 2000; the
performance results shown on the next page would not necessarily
have been achieved had the Fund's current objective and policies
then been in effect. Past performance is no guarantee of future
results.
13 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Growth & Income Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00-
9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 40.12%
--------------------
Lowest (3rd Qtr.
'98) -11.53%
[GRAPH]
1990 -15.50%
1991 19.92%
1992 -5.84%
1993 33.47%
1994 -8.16%
1995 5.79%
1996 5.76%
1997 1.85%
1998 8.27%
1999 27.00%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/28/94)(/3/)
-----------------------------------------------------------------------
Institutional Class 51.81% 28.77% 28.72%
-----------------------------------------------------------------------
Class A 42.90% 26.82% 26.77%
-----------------------------------------------------------------------
Class B 45.99% 27.17% 27.20%
-----------------------------------------------------------------------
Class C 49.30% 27.32% 27.27%
-----------------------------------------------------------------------
S&P Mid-Cap 400 Index(/1/) 14.73% 23.05% 23.05%
-----------------------------------------------------------------------
Lipper Large-Cap Core Funds
Average(/2/) 22.29% 25.53% 25.53%
-----------------------------------------------------------------------
</TABLE>
(1) The S&P Mid-Cap 400 Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges. The Lipper Large-Cap
Core Funds Average replaced the Lipper Mid-Cap Fund Average (a
total return performance average of funds tracked by Lipper
Analytical Services, Inc. that invest primarily in companies
with market capitalizations of less than $5 billion at the
time of investment) because PIMCO Advisors believes the Large-
Cap Core Funds Average is more representative of the Fund's
investtment strategies. For periods ended December 31, 1999,
the 1 Year, 5 Years and Fund Inception average annual total
returns of the Lipper Mid-Cap Fund Average were 39.38%, 23.07%
and 23.07%, respectively.
(3) The Fund began operations on 12/28/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees(/1/) (12b-1) Fees (/2/) Expenses(/3/) Expenses
-------------------------------------------------------------------
Class A 0.60% 0.25% 0.50% 1.35%
-------------------------------------------------------------------
Class B 0.60 1.00 0.50 2.10
-------------------------------------------------------------------
Class C 0.60 1.00 0.50 2.10
-------------------------------------------------------------------
</TABLE>
(1) On August 1, 2000, the Fund's advisory fee rate decreased by
0.03% to 0.60% per annum.
(2) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(3) Other Expenses reflects a 0.50% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at the
end of each period Example: Assuming you do not redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
----------------------------------------------------------------------------------------------------------
Class A $680 $954 $ 1,249 $2,085 $680 $954 $1,249 $2,085
----------------------------------------------------------------------------------------------------------
Class B 713 958 1,329 2,144 213 658 1,129 2,144
----------------------------------------------------------------------------------------------------------
Class C 313 658 1,129 2,431 213 658 1,129 2,431
----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 14
<PAGE>
PIMCO Innovation Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Common stocks of Capitalization Range
and Seeks capital technology- More than $200
Strategies appreciation; no related million
consideration is companies
given to income
Fund Category Approximate Number Dividend Frequency
Sector-Related of Holdings At least annually
Stocks 40
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
which utilize new, creative or different, or "innovative,"
technologies to gain a strategic competitive advantage in their
industry, as well as companies that provide and service those
technologies. The Fund identifies its investment universe of
technology-related companies primarily by reference to
classifications made by independent firms, such as Standard &
Poor's (for example, companies classified as "Information
Technology" companies), and by identifying companies that derive a
substantial portion of their revenues from the manufacture, sale
and/or service of technological products. Although the Fund
emphasizes companies which utilize technologies, it is not
required to invest exclusively in companies in a particular
business sector or industry.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify
technology-related companies with well-defined "wealth creating"
characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition,
through fundamental research, the portfolio manager seeks to
identify companies that are gaining market share, have superior
management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution
systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if
the company does not meet or exceed consensus estimates on
revenues and/or earnings or if an alternative investment is more
attractive.
Although the Fund invests principally in common stocks, the Fund
may also invest in other kinds of equity securities, including
preferred stocks and convertible securities. The Fund may invest
up to 15% of its assets in foreign securities, except that it may
invest without limit in American Depository Receipts (ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Smaller Company Risk .Currency Risk
.Issuer Risk .Liquidity Risk .Credit Risk
.Focused Investment .Foreign Investment .Management Risk
Risk Risk
.Growth Securities
Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class B shares (5/22/95),
performance information shown in the Average Annual Total Returns
table for that class is based on the performance of the Fund's
Class A shares. The prior Class A performance has been adjusted to
reflect the actual sales charges, distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
B shares. Prior to March 6, 1999, the Fund had a different sub-
adviser and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. Past performance is no guarantee of
future results.
15 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Innovation Fund (continued)
Calendar Year Total Returns -- Class A
More Recent
Return
Information
------------------
1/1/00-
9/30/00 [ ]%
Highest and
Lowest Quarter
Returns
(for periods
shown in the bar
chart)
------------------
Highest (10/1/99-
12/31/99) 80.12%
------------------
Lowest (1/1/97-
3/31/97) -12.56%
[GRAPH]
1995 45.33%
1996 23.60%
1997 9.03%
1998 69.54%
1999 139.40%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/22/94)(/3/)
-----------------------------------------------------------------------------
Class A 126.24% 51.38% 51.01%
-----------------------------------------------------------------------------
Class B 133.51% 51.98% 51.65%
-----------------------------------------------------------------------------
Class C 137.44% 52.05% 51.68%
-----------------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 28.56%
-----------------------------------------------------------------------------
Lipper Science and Technology Fund Average(/2/) 134.99% 40.91% 40.91%
-----------------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Science and Technology Fund Average is a total
return performance average of funds tracked by Lipper
Analytical Services, Inc. that invest at least 65% of their
assets in science and technology stocks. It does not take into
account sales charges.
(3) The Fund began operations on 12/22/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.65% 0.25% 0.40% 1.30%
-----------------------------------------------------------------
Class B 0.65 1.00 0.40 2.05
-----------------------------------------------------------------
Class C 0.65 1.00 0.40 2.05
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-------------------------------------------------------------------------------------------------------
Class A $675 $939 $1,224 $2,032 $675 $939 $1,224 $2,032
-------------------------------------------------------------------------------------------------------
Class B 708 943 1,303 2,091 208 643 1,103 2,091
-------------------------------------------------------------------------------------------------------
Class C 308 643 1,103 2,379 208 643 1,103 2,379
-------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 16
<PAGE>
PIMCO International Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Common stocks of Capitalization Range
and Seeks capital foreign (non- More than $500
Strategies appreciation U.S.) issuers million
through
investment in an
international
portfolio; income
is an incidental
consideration
Fund Category Approximate Number Dividend Frequency
International of Holdings At least annually
Stocks 200-250
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio
of common stocks, which may or may not pay dividends. The Fund
normally invests in securities traded principally in developed
foreign securities markets, but may also invest up to 30% of its
assets in developing or "emerging" markets. The Fund has no
prescribed limits on geographic asset distribution and may invest
in any foreign securities market in the world. The Fund may also
invest in securities of foreign issuers traded on U.S. securities
markets, but will normally not invest in U.S. issuers. The Fund
invests most of its assets in foreign securities which trade in
currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager uses a "top down" investment approach. He
first determines regional and country weightings for the Fund by
considering such factors as the condition and growth potential of
the various economies and securities markets, currency and
taxation considerations and other financial, social, national and
political factors. The Sub-Adviser's country specialists then
select individual stocks to fill out the desired country
weightings. In selecting stocks, the specialists analyze a broad
range of company fundamentals, such as price-to-earnings, price-
to-book value and price-to-cash flow ratios (value factors),
earnings, dividend and profit growth (growth factors) and balance
sheet strength and return on assets (quality factors). The
portfolio manager sells stocks in order to adjust or rebalance the
Fund's regional and country weightings or to replace companies
with weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts)
primarily for risk management or hedging purposes. The Fund may
also invest in equity securities other than common stocks (such as
preferred stocks and convertible securities) and may invest up to
10% of its assets in other investment companies. In response to
unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in foreign and
domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund's investment
objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Foreign Investment .Growth Securities .Focused Investment
Risk Risk Risk
.Currency Risk .Smaller Companies .Leveraging Risk
.Market Risk Risk .Credit Risk
.Issuer Risk .Liquidity Risk .Management Risk
.Value Securities .Derivatives Risk
Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class C shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A shares (2/1/91) and
Class B shares (5/22/95), performance information shown in the
Average Annual Total Returns table for those classes is based on
the performance of the Fund's Class C shares. The prior Class C
performance has been adjusted to reflect the actual sales charges,
distribution and/or service (12b-1) fees, administrative fees and
other expenses paid by Class A and B shares. The Fund had
different sub-advisers during the periods prior to November 15,
1994 and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. Past performance is no guarantee of
future results.
17 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO International Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 21.58%
--------------------
Lowest (7/1/98-
9/30/98) -22.16%
[GRAPH]
1990 -15.50%
1991 19.92%
1992 -5.84%
1993 33.47%
1994 -8.16%
1995 5.79%
1996 5.76%
1997 1.85%
1998 8.27%
1999 27.00%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (8/25/86)(/3/)
--------------------------------------------------------------
Class A 20.59% 8.96% 6.43% 8.17%
--------------------------------------------------------------
Class B 21.97% 9.13% 6.49% 8.21%
--------------------------------------------------------------
Class C 26.00% 9.40% 6.24% 7.83%
--------------------------------------------------------------
MSCI EAFE Index 27.31% 13.15% 7.34% 10.35%
--------------------------------------------------------------
Lipper International Fund
Average(/2/) 40.86% 15.08% 10.22% 11.57%
--------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) ("MSCI EAFE") Index is a widely
recognized, unmanaged index of issuers in countries of Europe,
Australia and Asia. It is not possible to invest directly in
the index.
(2) The Lipper International Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest their assets in securities whose
primary trading markets are outside of the United States. It
does not take into account sales charges.
(3) The Fund began operations on 8/25/86. Index comparisons begin
on 8/31/86.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees (/1/) Expenses(/2/) Expenses
------------------------------------------------------------------
Class A 0.55% 0.25% 0.65% 1.45%
------------------------------------------------------------------
Class B 0.55 1.00 0.65 2.20
------------------------------------------------------------------
Class C 0.55 1.00 0.65 2.20
------------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.65% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at the
end of each period Example: Assuming you do not redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
----------------------------------------------------------------------------------------------------------
Class A $689 $983 $1,299 $2,190 $689 $983 $1,299 $2,190
----------------------------------------------------------------------------------------------------------
Class B 723 988 1,380 2,249 223 688 1,180 2,249
----------------------------------------------------------------------------------------------------------
Class C 323 688 1,180 2,534 223 688 1,180 2,534
----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 18
<PAGE>
PIMCO Mid-Cap Fund
--------------------------------------------------------------------------------
Principal Investment Fund Approximate
Investments Objective Focus Capitalization Range
and Seeks growth of Medium More than $500
Strategies capital capitalization million
common stocks (excluding the
largest 200
companies)
Fund Approximate Number Dividend Frequency
Category of Holdings At least annually
Blend Stocks 60-100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with medium market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers companies in the U.S. market with market
capitalizations of more than $500 million, but excluding the 200
largest capitalization companies. The team screens the stocks in
this universe for a series of growth criteria, such as dividend
growth, earnings growth, relative growth of earnings over time
(earnings momentum) and the company's history of meeting earnings
targets (earnings surprise), and also value criteria, such as
price-to-earnings, price-to-book and price-to-cash flow ratios.
The team then selects individual stocks by subjecting the top 10%
of the stocks in the screened universe to a rigorous analysis of
company factors, such as strength of management, competitive
industry position, and business prospects, and financial statement
data, such as earnings, cash flows and profitability. The team may
interview company management in making investment decisions. The
Fund's capitalization criteria applies at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 2% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Growth Securities . Credit Risk
. Issuer Risk Risk . Management Risk
. Value Securities . Smaller Company Risk . Focused Investment
Risk . Liquidity Risk Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A, B and C shares
(1/13/97), performance information shown in the bar chart and
tables for those classes is based on the performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual sales charges (in the Average
Annual Total Returns table only), distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
A, B and C shares. Past performance is no guarantee of future
results.
19 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Mid-Cap Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 22.92%
--------------------
Lowest (7/1/98-
9/30/98) -14.50%
[GRAPH]
1992 8.75%
1993 15.32%
1994 -2.75%
1995 36.76%
1996 22.87%
1997 33.62%
1998 7.46%
1999 12.54%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (8/26/91)(/3/)
------------------------------------------------------------------
Class A 6.35% 20.74% 16.33%
------------------------------------------------------------------
Class B 6.68% 21.03% 16.39%
------------------------------------------------------------------
Class C 10.68% 21.22% 16.25%
------------------------------------------------------------------
Russell Mid-Cap Index(/1/) 18.23% 21.85% 17.31%
------------------------------------------------------------------
Lipper Mid-Cap Core Funds Average(/2/) % % %
------------------------------------------------------------------
</TABLE>
(1) The Russell Mid-Cap Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Mid-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of less than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 8/26/91. Index comparisons begin
on 8/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.45% 0.25% 0.40% 1.10%
-----------------------------------------------------------------
Class B 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
Class C 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $656 $880 $1,123 $1,816 $656 $880 $1,123 $1,816
-----------------------------------------------------------------------------------------------------------
Class B 688 882 1,201 1,876 188 582 1,001 1,876
-----------------------------------------------------------------------------------------------------------
Class C 288 582 1,001 2,169 188 582 1,001 2,169
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 20
<PAGE>
PIMCO Opportunity Fund
--------------------------------------------------------------------------------
Principal Investment Fund Approximate Capitalization Range
Investments Objective Focus Between $100
and Seeks capital Smaller million and $2
Strategies appreciation; capitalization billion
no common stocks
consideration
is given to
income
Fund Approximate Dividend
Category Number of Frequency
Growth Stocks Holdings At least
60-100 annually
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of between $100 million and
$2 billion at the time of investment.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Foreign Investment Risk .Management Risk
.Growth Securities Risk .Currency Risk .Focused Investment Risk
.Smaller Company Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class C shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A shares (12/17/90)
and Class B shares (4/1/99), performance information shown in the
Average Annual Total Returns table for those classes is based on
the performance of the Fund's Class C shares. The prior Class C
performance has been adjusted to reflect the actual sales charges,
distribution and/or service (12b-1) fees, administrative fees and
other expenses paid by Class A and B shares. Prior to March 6,
1999, the Fund had a different sub-adviser and would not
necessarily have achieved the performance results shown on the
next page under its current investment management arrangements.
Past performance is no guarantee of future results.
21 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Opportunity Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/01/99-
12/31/99) 45.70%
--------------------
Lowest (7/1/98-
9/30/98) -25.78%
[GRAPH]
1990 -7.34%
1991 68.08%
1992 28.46%
1993 36.16%
1994 -4.74%
1995 41.43%
1996 11.54%
1997 -4.75%
1998 1.29%
1999 63.99%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (2/24/84)(/3/)
-------------------------------------------------------------------
Class A 55.98% 19.60% 20.73% 19.37%
-------------------------------------------------------------------
Class B 58.95% 19.90% 20.80% 19.40%
-------------------------------------------------------------------
Class C 62.99% 20.09% 20.55% 18.93%
-------------------------------------------------------------------
Russell 2000 Index(/1/) 21.25% 16.69% 13.40% 12.49%
-------------------------------------------------------------------
Lipper Small-Cap Growth
Funds Average(/2/) % % % %
-------------------------------------------------------------------
</TABLE>
(1) The Russell 2000 Index is a capitalization weighted broad
based index of 2,000 small capitalization U.S. stocks. It is
not possible to invest directly in the index.
(2) The Lipper Small-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of less than 250% of the dollar-weighted
median market capitalization of the S&P Small-Cap 600 Index.
It does not take into account sales charges.
(3) The Fund began operations on 2/24/84. Index comparisons begin
on 2/29/84.
--------------------------------------------------------------------------------
Fees and
Expenses These tables describe the fees and expenses you may pay if you buy
of the and hold Class A, B or C shares of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.65% 0.25% 0.40% 1.30%
-----------------------------------------------------------------
Class B 0.65 1.00 0.40 2.05
-----------------------------------------------------------------
Class C 0.65 1.00 0.40 2.05
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $675 $939 $1,224 $2,032 $675 $939 $1,224 $2,032
-----------------------------------------------------------------------------------------------------------
Class B 708 943 1,303 2,091 208 643 1,103 2,091
-----------------------------------------------------------------------------------------------------------
Class C 308 643 1,103 2,379 208 643 1,103 2,379
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 22
<PAGE>
PIMCO Renaissance Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Undervalued All capitalizations
and Seeks long-term stocks with
Strategies growth of capital improving
and income business
fundamentals
Fund Category Approximate Dividend Frequency
Value Stocks Number of Quarterly
Holdings
50-80
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with below-average valuations whose business fundamentals are
expected to improve. Although the Fund typically invests in
companies with market capitalizations of $1 billion to $10 billion
at the time of investment, it may invest in companies in any
capitalization range. To achieve income, the Fund invests a
portion of its assets in income-producing (e.g., dividend-paying)
stocks.
The portfolio manager selects stocks for the Fund using a "value"
style. The portfolio manager invests primarily in common stocks of
companies having below-average valuations whose business
fundamentals, such as market share, strength of management and
competitive position, are expected to improve. The portfolio
manager determines valuation based on characteristics such as
price-to-earnings, price-to-book, and price-to-cash flow ratios.
The portfolio manager analyzes stocks and seeks to identify the
key drivers of financial results and catalysts for change, such as
new management and new or improved products, that indicate a
company may demonstrate improving fundamentals in the future. The
portfolio manager looks to sell a stock when he believes that the
company's business fundamentals are weakening or when the stock's
valuation has become excessive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Foreign Investment Risk .Credit Risk
.Issuer Risk .Currency Risk .Management Risk
.Value Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class C shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A shares (2/1/91) and
Class B shares (5/22/95), performance information shown in the
Average Annual Total Returns table for those classes is based on
the performance of the Fund's Class C shares. The prior Class C
performance has been adjusted to reflect the actual sales charges,
distribution and/or service (12b-1) fees, administrative fees and
other expenses paid by Class A and B shares. Prior to May 7, 1999,
the Fund had a different sub-adviser and would not necessarily
have achieved the performance results shown on the next page under
its current investment management arrangements. Past performance
is no guarantee of future results.
23 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Renaissance Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/98-
12/31/98) 18.37%
--------------------
Lowest (7/1/98-
9/30/98) -16.77%
[GRAPH]
1990 -15.46%
1991 33.24%
1992 7.78%
1993 21.23%
1994 -5.05%
1995 27.61%
1996 24.40%
1997 34.90%
1998 10.72%
1999 9.02%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (4/18/88)(/3/)
-----------------------------------------------------------------
Class A 3.79% 20.45% 13.92% 13.45%
-----------------------------------------------------------------
Class B 4.66% 20.70% 13.97% 13.49%
-----------------------------------------------------------------
Class C 8.16% 20.92% 13.70% 13.15%
-----------------------------------------------------------------
Russell Mid-Cap Value
Index(/1/) % % % %
-----------------------------------------------------------------
Lipper Multi-Cap Value Funds
Average(/2/) % % % %
-----------------------------------------------------------------
</TABLE>
(1) The Russell Mid-Cap Value Index is an unmanaged index that
measures the performance of medium capitalization companies in
the Russell 1000 Index with lower price-to-book ratios and
lower forecasted growth values. It is not possible to invest
directly in the index. The Russell Mid-Cap Value Index
replaced the Russell 1000 Value Index (an unmanaged index that
measures the performance of companies in the Russell 1000
Index considered to have less than average growth orientation)
and the S&P 500 Index (an unmanaged index of large
capitalization common stocks) as the Fund's comparative index
because PIMCO Advisors believes the Russell Mid-Cap Value
Index is more representative of the Fund's investment
strategies. For periods ended December 31, 1999, the 1 Year, 5
Years, 10 Years and Fund Inception average annual total
returns of the Russell 1000 Value Index were 7.34%, 23.08%,
15.60% and 15.38%, respectively, and of the S&P 500 Index were
21.04%, 28.56%, 18.21% and 19.06%, respectively.
(2) The Lipper Multi-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time.
(3) The Fund began operations on 4/18/88. Index comparisons begin
on 4/30/88.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.60% 0.25% 0.40% 1.25%
-----------------------------------------------------------------
Class B 0.60 1.00 0.40 2.00
-----------------------------------------------------------------
Class C 0.60 1.00 0.40 2.00
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $670 $925 $1,199 $1,978 $670 $925 $1,199 $1,978
-----------------------------------------------------------------------------------------------------------
Class B 703 927 1,278 2,038 203 627 1,078 2,038
-----------------------------------------------------------------------------------------------------------
Class C 303 627 1,078 2,327 203 627 1,078 2,327
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 24
<PAGE>
PIMCO Select Growth Fund
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Larger At least $10
and Seeks long-term capitalization billion
Strategies growth of common stocks
capital; income
is an incidental
consideration
Fund Category Approximate Dividend Frequency
Growth Stocks Number of At least
Holdings annually
15-25
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of at least $10 billion at
the time of investment. The Fund normally invests in the
securities of 15 to 25 issuers.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund is "non-diversified," which means that it invests in a
relatively small number of issuers.
The Fund may invest up to 25% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs). In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in high-quality fixed income securities. This
would be inconsistent with the Fund's investment objective and
principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Growth Securities Risk .Credit Risk
.Issuer Risk .Foreign Investment Risk .Management Risk
.Focused Investment Risk .Currency Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares,
which are offered in a different prospectus. This is because the
Fund did not offer Class A, B or C shares during the periods
shown. Although Institutional Class and Class A, B and C shares
would have similar annual returns (because all the Fund's shares
represent interests in the same portfolio of securities),
Institutional Class performance would be higher than Class A, B or
C performance because of the lower expenses and no sales charges
(loads) paid by Institutional Class shares. The Average Annual
Total Returns table also shows estimated historical performance
for Class A, B and C shares based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the actual sales
charges, distribution and/or service (12b-1) fees, administrative
fees and other expenses paid by Class A, B and C shares. The
performance information on the next page reflects the Fund's
advisory fee rate in effect prior to April 1, 2000 (0.57% per
annum); these results would have been lower had the Fund's current
advisory fee rate (0.60% per annum) then been in effect. Prior to
July 1, 1999, the Fund had a different sub-adviser and would not
necessarily have achieved the performance results shown on the
next page under its current investment management arrangements. In
addition, the Fund changed its investment objective and policies
on April 1, 2000; the performance results shown on the next page
would not necessarily have been achieved had the Fund's current
objective and policies then been in effect. Past performance is no
guarantee of future results.
25 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Select Growth Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/01/98-
12/31/98) 24.90%
--------------------
Lowest (7/1/98-
9/30/98) -11.38%
[GRAPH]
1995 27.96%
1996 17.95%
1997 25.32%
1998 41.06%
1999 24.27%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/28/94)(/3/)
--------------------------------------------------------------------
Institutional Class 24.27% 27.09% 27.06%
--------------------------------------------------------------------
Class A 16.97% 25.17% 25.14%
--------------------------------------------------------------------
Class B 17.86% 25.50% 25.55%
--------------------------------------------------------------------
Class C 21.86% 25.66% 25.63%
--------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 28.56%
--------------------------------------------------------------------
Lipper Large-Cap Growth Funds
Average(/2/) % % %
--------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 12/28/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Share Advisory and/or Service Other Fund Operating
Class Feess(/1/) (12b-1) Fees(/2/) Expenses(/3/) Expenses
--------------------------------------------------------------------
Class
A 0.60% 0.25% 0.40% 1.25%
--------------------------------------------------------------------
Class
B 0.60 1.00 0.40 2.00
--------------------------------------------------------------------
Class
C 0.60 1.00 0.40 2.00
--------------------------------------------------------------------
</TABLE>
(1) On April 1, 2000, the Fund's advisory fee rate increased by
0.03% to 0.60% per annum.
(2) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(3) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $670 $925 $1,199 $1,978 $670 $925 $1,199 $1,978
-----------------------------------------------------------------------------------------------------------
Class B 703 927 1,278 2,038 203 627 1,078 2,038
-----------------------------------------------------------------------------------------------------------
Class C 303 627 1,078 2,327 203 627 1,078 2,327
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 26
<PAGE>
PIMCO Small-Cap Value Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Undervalued
and Seeks long-term smaller Between $100
Strategies growth of capitalization million and$1.5
capital and common stocks billion
income
Fund Category Approximate Dividend Frequency At least
Value Stocks Number of annually
Holdings
100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of between $100 million and $1.5
billion at the time of investment and below average P/E ratios
relative to the market and their respective industry groups. To
achieve income, the Fund invests a portion of its assets in
income-producing (or dividend-paying) common stocks.
The Fund's initial selection universe consists of approximately
4,500 stocks of companies within the Fund's capitalization range.
The portfolio managers screen this universe to identify
approximately 500 undervalued stocks representing approximately
160 industry groups. This screening process is based on a number
of valuation factors, including P/E ratios (calculated both with
respect to trailing operating earnings and forward earnings
estimates) and price-to-sales, price-to-book value, and price-to-
cash flow ratios. These factors are considered both on a relative
basis (compared to other stocks in the same industry group) and on
an absolute basis (compared to the overall market).
From this narrowed universe, the portfolio managers select
approximately 100 stocks for the Fund, each of which has close to
equal weighting in the portfolio. They select stocks based on a
quantitative analysis of factors including price momentum (based
on changes in stock price relative to changes in overall market
prices), earnings momentum (based on analysts' earnings per share
estimates and revisions to those estimates), relative dividend
yields and trading liquidity. The portfolio is also structured to
have a maximum weighting of no more than 10% in any one industry.
The portfolio managers may replace a stock if its market
capitalization becomes excessive, if its valuation exceeds the
average valuation of stocks represented in the S&P 500 Index, or
when a stock within the same industry group has a considerably
lower valuation than the Fund's current holding.
Under normal circumstances, the Fund intends to be fully invested
in common stocks (aside from certain cash management practices).
The Fund may temporarily hold up to 10% of its assets in cash and
cash equivalents for defensive purposes in response to unfavorable
market and other conditions. This would be inconsistent with the
Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Smaller Company Risk .Credit Risk
.Issuer Risk .Liquidity Risk .Management Risk
.Value Securities Risk .Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A, B and C shares
(1/20/97), performance information shown in the bar chart and
tables for those classes is based on the performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual sales charges (in the Average
Annual Total Returns table only), distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
A, B and C shares. Past performance is no guarantee of future
results.
27 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Small-Cap Value Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
-------------------
1/1/00-9/30/0__[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
-------------------
Highest (4/1/99-
6/30/99) 16.28%
-------------------
Lowest (7/1/98-
9/30/98) -18.71%
[GRAPH]
1992 18.27%
1993 13.39%
1994 -4.07%
1995 24.98%
1996 27.22%
1997 34.47%
1998 -9.48%
1999 -6.82%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (9/30/91)(/3/)
-------------------------------------------------------------------
Class A -11.95% 11.25% 10.77%
-------------------------------------------------------------------
Class B -12.08% 11.42% 10.83%
-------------------------------------------------------------------
Class C - 8.39% 11.69% 10.71%
-------------------------------------------------------------------
Russell 2000 Index(/1/) 21.25% 16.69% 14.97%
-------------------------------------------------------------------
Lipper Small-Cap Value Funds
Average(/2/) % % %
-------------------------------------------------------------------
</TABLE>
(1) The Russell 2000 Index is a capitalization weighted broad
based index of 2,000 small capitalization U.S. stock. It is
not possible to invest directly in the index.
(2) The Lipper Small-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of less than 250% of the dollar-weighted
median market capitalization of the S&P Small-Cap 600 Index.
It does not take into account sales charges.
(3) The Fund began operations on 9/30/91. Index comparisons begin
on 10/1/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.60% 0.25% 0.40% 1.25%
-----------------------------------------------------------------
Class B 0.60 1.00 0.40 2.00
-----------------------------------------------------------------
Class C 0.60 1.00 0.40 2.00
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average
daily net assets attributable in the aggregate to the Fund's
Class A, B and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $670 $925 $1,199 $1,978 $670 $925 $1,199 $1,978
-----------------------------------------------------------------------------------------------------------
Class B 703 927 1,278 2,038 203 627 1,078 2,038
-----------------------------------------------------------------------------------------------------------
Class C 303 627 1,078 2,327 203 627 1,078 2,327
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 28
<PAGE>
PIMCO Target Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Medium Capitalization Range
and Seeks capital capitalization Between $1
Strategies appreciation; no common stocks billion and $10
consideration is billion
given to income
Fund Category Approximate Number Dividend Frequency
Growth Stocks of Holdings At least
40-60 annually
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of between $1 billion and
$10 billion at the time of investment.
The portfolio managers select stocks for the Fund using a
"growth" style. The portfolio managers seek to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio managers seek to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio managers believe that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest to a limited degree in other kinds of
equity securities, including preferred stocks and convertible
securities. The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Smaller Company Risk .Currency Risk
.Issuer Risk .Liquidity Risk .Credit Risk
.Growth Securities Risk .Foreign Investment Risk .Management Risk
.Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class B shares (5/22/95),
performance information shown in the Average Annual Total Returns
table for that class is based on the performance of the Fund's
Class A shares. The prior Class A performance has been adjusted to
reflect the actual sales charges, distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
B shares. Prior to March 6, 1999, the Fund had a different sub-
adviser and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. Past performance is no guarantee of
future results.
29 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Target Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00-9/30/0___[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 53.05%
--------------------
Lowest (7/1/98-
9/30/98) -13.15%
[GRAPH]
1993 24.52%
1994 3.09%
1995 30.31%
1996 15.68%
1997 15.44%
1998 23.27%
1999 66.25%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/17/92)(/3/)
--------------------------------------------------------------------
Class A 57.10% 28.28% 24.13%
--------------------------------------------------------------------
Class B 60.05% 28.62% 24.19%
--------------------------------------------------------------------
Class C 64.05% 28.77% 24.19%
--------------------------------------------------------------------
S&P Mid-Cap 400 Index(/1/) 14.73% 23.05% 17.55%
--------------------------------------------------------------------
Lipper Multi-Cap Growth Funds
Average(/2/) % % %
--------------------------------------------------------------------
</TABLE>
(1) The S&P Mid-Cap 400 Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest directly
in the index.
(2) The Lipper Multi-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. Companies
with market capitalizations of less than $5 billion at the time
of investment. It does not take into account sales charges.
(3) The Fund began operations on 12/17/92. Index comparisons begin
on 12/31/92.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.55% 0.25% 0.40% 1.20%
-----------------------------------------------------------------
Class B 0.55 1.00 0.40 1.95
-----------------------------------------------------------------
Class C 0.55 1.00 0.40 1.95
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average
daily net assets attributable in the aggregate to the Fund's
Class A, B and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $666 $910 $1,173 $1,925 $666 $910 $1,173 $1,925
-----------------------------------------------------------------------------------------------------------
Class B 698 912 1,252 1,984 198 612 1,052 1,984
-----------------------------------------------------------------------------------------------------------
Class C 298 612 1,052 2,275 198 612 1,052 2,275
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 30
<PAGE>
PIMCO Tax-Efficient Equity Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective A portion of the Capitalization Range
and Seeks maximum common stocks More than $5
Strategies after-tax growth represented in billion
of capital the S&P 500 Index
Fund Category Approximate Number Dividend Frequency
Enhanced Index of Holdings At least
More than 200 annually
The Fund attempts to provide a total return which exceeds the
return of the S&P 500 Index by investing in a broadly diversified
portfolio of at least 200 common stocks. The Fund also attempts to
achieve superior after-tax returns for its shareholders by using a
variety of tax-efficient management strategies.
The Fund seeks to achieve its investment objective by normally
investing at least 95% of its assets in stocks represented in the
S&P 500 Index. The Fund's portfolio is designed to have certain
characteristics that are similar to those of the index, including
such measures as dividend yield, P/E ratio, relative volatility,
economic sector exposure, return on equity and market price-to-
book value ratio. The Fund's return is intended to correlate
highly with the return of the S&P 500 Index, but the portfolio
managers attempt to produce a higher total return than the index
by selecting a portion of the stocks represented in the index
using the quantitative techniques described below. The portfolio
managers also use these techniques to make sell decisions.
Notwithstanding these strategies, there is no assurance that the
Fund's investment performance will equal or exceed that of the S&P
500 Index.
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
Quantitative Techniques. The portfolio managers use a proprietary
quantitative model that ranks companies based on long-term (5-10
years) price appreciation potential. They analyze factors such as
growth of sustainable earnings and dividend behavior. Stocks in
the top 50% of the model's ranking are considered for purchase by
the Fund. The Fund looks to sell stocks selected from the bottom
20% of the model's ranking based on cost, current market value and
anticipated benefit of replacement. The portfolio managers' sell
discipline also focuses on reducing realized capital gains as
indicated below.
Tax-Efficient Strategies. The portfolio managers utilize a range
of active tax management strategies designed to minimize the
Fund's taxable distributions, including low portfolio turnover and
favoring investments in low-dividend, growth-oriented companies.
The portfolio managers also identify specific shares of stock to
be sold that have the lowest tax cost. When prudent, stocks are
also sold to realize capital losses in order to offset realized
capital gains. In limited circumstances, the Fund may also
distribute appreciated securities to shareholders to meet
redemption requests so as to avoid realizing capital gains.
Despite the use of these tax-efficient strategies, the Fund may
realize gains and shareholders will incur tax liability from time
to time.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Growth Securities Risk . Credit Risk
. Issuer Risk . Leveraging Risk . Management Risk
. Value Securities Risk . Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
Past performance is no guarantee of future results.
31 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Tax-Efficient Equity Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00-9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/98-
12/31/98) 21.73%
--------------------
Lowest (7/1/99-
9/30/99) -7.25%
[GRAPH]
99 17.38%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (7/10/98)(/3/)
---------------------------------------------------------------------
Class A 10.95% 11.10%
---------------------------------------------------------------------
Class B 11.49% 11.99%
---------------------------------------------------------------------
Class C 15.49% 14.54%
---------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 20.42%
---------------------------------------------------------------------
Lipper Large-Cap Core Funds Average(/2/) % %
---------------------------------------------------------------------
</TABLE>
(1) The S&P 500 index is an unmanaged index of large
capitalization U.S. stocks. It is not possible to invest directly
in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 7/10/98. Index comparisons begin
on 6/30/98.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.45% 0.25% 0.40% 1.10%
-----------------------------------------------------------------
Class B 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
Class C 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $656 $880 $1,123 $1,816 $656 $880 $1,123 $1,816
-----------------------------------------------------------------------------------------------------------
Class B 688 882 1,201 1,876 188 582 1,001 1,876
-----------------------------------------------------------------------------------------------------------
Class C 288 582 1,001 2,169 188 582 1,001 2,169
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 32
<PAGE>
PIMCO Value Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Undervalued Capitalization Range
and Seeks long-term larger More than $5
Strategies growth of capitalization billion
capital and stocks with
income improving
fundamentals
Fund Category Approximate Dividend Frequency
Value Stocks Number Quarterly
of Holdings
40
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of more than $5 billion at the time of
investment and below-average valuations whose business
fundamentals are expected to improve. To achieve income, the Fund
invests a portion of its assets in income-producing (e.g.,
dividend-paying) common stocks.
The portfolio manager selects stocks for the Fund using a "value"
style. The portfolio manager invests primarily in stocks of
companies having below-average valuations whose business
fundamentals are expected to improve. The portfolio manager
determines valuation based on characteristics such as price-to-
earnings, price-to-book, and price-to-cash flow ratios. The
portfolio manager analyzes stocks and seeks to identify the key
drivers of financial results and catalysts for change, such as new
management and new or improved products, that indicate a company
may demonstrate improving fundamentals in the future. The
portfolio manager looks to sell a stock when he believes that the
company's business fundamentals are weakening or when the stock's
valuation has become excessive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs). In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its
assets in high-quality fixed income securities. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Foreign Investment Risk .Credit Risk
. Issuer Risk . Currency Risk . Management Risk
. Value Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Class A shares, but the
returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
For periods prior to the inception of Class A, B and C shares
(1/13/97), performance information shown in the bar chart and
tables for those classes is based on the performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual sales charges (in the Average
Annual Total Returns table only), distribution and/or service
(12b-1) fees, administrative fees and other expenses paid by Class
A, B and C shares. Prior to May 8, 2000, the Fund had a different
sub-adviser and would not necessarily have achieved the
performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
33 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Value Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00-
9/30/00 %
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4/1/99-
6/30/99) 17.73%
--------------------
Lowest (7/1/98-
9/30/98) -13.27%
[GRAPH]
1992 12.70%
1993 15.94%
1994 -4.46%
1995 38.37%
1996 19.87%
1997 25.71%
1998 9.76%
1999 3.81%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/30/91)(/3/)
------------------------------------------------------------------
Class A -1.90% 17.55% 13.84%
------------------------------------------------------------------
Class B -1.16% 17.80% 13.91%
------------------------------------------------------------------
Class C 2.21% 18.02% 13.81%
------------------------------------------------------------------
Russell 1000 Value Index (/1/) % % %
------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average
(/2/) % % %
------------------------------------------------------------------
</TABLE>
(1) The Russell 1000 Value Index is an unmanaged index that
measures the performance of companies in the Russell 1000
Index considered to have less than average growth orientation.
It is not possible to invest directly in the index. The
Russell 1000 Value Index replaced the S&P 500 Index (an
unmanaged index of large capitalization common stocks.) as the
Fund's comparative index because PIMCO Advisors believes that
the Russell 1000 Value Index is more representative of the
Fund's investment strategies. For periods ended December 31,
1999, the 1 Year, 5 Year and Fund Inception average annual
total returns of the S&P 500 Index were 21.04%, 28.56% and
19.70%, respectively.
(2) The Lipper Multi-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges, without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 12/30/91. Index comparisons begin
on 12/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.45% 0.25% 0.40% 1.10%
-----------------------------------------------------------------
Class B 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
Class C 0.45 1.00 0.40 1.85
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.40% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $656 $880 $1,123 $1,816 $656 $880 $1,123 $1,816
-----------------------------------------------------------------------------------------------------------
Class B 688 882 1,201 1,876 188 582 1,001 1,876
-----------------------------------------------------------------------------------------------------------
Class C 288 582 1,001 2,169 188 582 1,001 2,169
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 34
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of
that Fund's investments. Many factors can affect those values. The
factors that are most likely to have a material effect on a
particular Fund's portfolio as a whole are called "principal
risks." The principal risks of each Fund are identified in the
Fund Summaries and are summarized in this section. Each Fund may
be subject to additional principal risks and risks other than
those described below because the types of investments made by a
Fund can change over time. Securities and investment techniques
mentioned in this summary and described in greater detail under
"Characteristics and Risks of Securities and Investment
Techniques" appear in bold type. That section and "Investment
Objectives and Policies" in the Statement of Additional
Information also include more information about the Funds, their
investments and the related risks. There is no guarantee that a
Fund will be able to achieve its investment objective.
Market The market price of securities owned by a Fund may go up or down,
Risk sometimes rapidly or unpredictably. Each of the Funds normally
invests most of its assets in common stocks and/or other equity
securities. A principal risk of investing in each Fund is that the
equity securities in its portfolio will decline in value due to
factors affecting equity securities markets generally or
particular industries represented in those markets. The values of
equity securities may decline due to general market conditions
which are not specifically related to a particular company, such
as real or perceived adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may
also decline due to factors which affect a particular industry or
industries, such as labor shortages or increased production costs
and competitive conditions within an industry. Equity securities
generally have greater price volatility than fixed income
securities.
Issuer The value of a security may also decline for a number of reasons
Risk which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the
issuer's goods or services.
Value
Securities Each Fund may invest in companies that may not be expected to
Risk experience significant earnings growth, but whose securities its
portfolio manager believes are selling at a price lower than their
true value. The Capital Appreciation, Equity Income, Growth &
Income, Mid-Cap, Renaissance, Small-Cap Value and Value Funds
place particular emphasis on value securities. Companies that
issue value securities may have experienced adverse business
developments or may be subject to special risks that have caused
their securities to be out of favor. If a portfolio manager's
assessment of a company's prospects is wrong, or if the market
does not recognize the value of the company, the price of its
securities may decline or may not approach the value that the
portfolio manager anticipates.
Growth
Securities Each Fund may invest in equity securities of companies that its
Risk portfolio manager believes will experience relatively rapid
earnings growth. The Capital Appreciation, Global Innovation,
Growth, Growth & Income, Innovation, Mid-Cap, Opportunity, Select
Growth and Target Funds place particular emphasis on growth
securities. Growth securities typically trade at higher multiples
of current earnings than other securities. Therefore, the values
of growth securities may be more sensitive to changes in current
or expected earnings than the values of other securities.
Smaller
Company
Risk The general risks associated with equity securities and liquidity
risk are particularly pronounced for securities of companies with
smaller market capitalizations. These companies may have limited
product lines, markets or financial resources or they may depend
on a few key employees. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or
on a regional exchange, or may otherwise have limited liquidity.
The Global Innovation, Innovation, Opportunity and Small-Cap Value
Funds generally have substantial exposure to this risk. The Growth
& Income, Mid-Cap and Target Funds also have significant exposure
to this risk because they invest substantial assets in companies
with medium-sized market capitalizations, which are smaller and
generally less-seasoned than the largest companies.
Liquidity
Risk
All of the Funds are subject to liquidity risk. Liquidity risk
exists when particular investments are difficult to purchase or
sell, possibly preventing a Fund from selling such illiquid
securities at an advantageous time or price. Funds with principal
investment strategies that involve securities of companies with
smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have
the greatest exposure to liquidity risk.
35 PIMCO Funds: Multi-Manager Series
<PAGE>
Derivatives All Funds except the Capital Appreciation, Mid-Cap and Small-Cap
Risk Value Funds may use derivatives, which are financial contracts
whose value depends on, or is derived from, the value of an
underlying asset, reference rate or index. The various derivative
instruments that the Funds may use are referenced under
"Characteristics and Risks of Securities and Investment
Techniques--Derivatives" in this Prospectus and described in more
detail under "Investment Objectives and Policies" in the Statement
of Additional Information. The Funds may sometimes use derivatives
as part of a strategy designed to reduce exposure to other risks,
such as interest rate or currency risk. The Funds may also use
derivatives for leverage, which increases opportunities for gain
but also involves greater risk of loss due to leveraging risk. A
Fund's use of derivative instruments involves risks different
from, or possibly greater than, the risks associated with
investing directly in securities and other traditional
investments. Derivatives are subject to a number of risks
described elsewhere in this section, such as liquidity risk,
market risk, credit risk and management risk. They also involve
the risk of mispricing or improper valuation and the risk that
changes in the value of the derivative may not correlate perfectly
with the underlying asset, rate or index. In addition, a Fund's
use of derivatives may increase or accelerate the amount of taxes
payable by shareholders. A Fund investing in a derivative
instrument could lose more than the principal amount invested.
Also, suitable derivative transactions may not be available in all
circumstances and there can be no assurance that a Fund will
engage in these transactions to reduce exposure to other risks
when that would be beneficial.
Foreign A Fund that invests in foreign securities, and particularly the
(non- Global Innovation and International Funds, may experience more
U.S.) rapid and extreme changes in value than Funds that invest
Investment exclusively in securities of U.S. issuers or securities that trade
Risk exclusively in U.S. markets. The securities markets of many
foreign countries are relatively small, with a limited number of
companies representing a small number of industries. Additionally,
issuers of foreign securities are usually not subject to the same
degree of regulation as U.S. issuers. Reporting, accounting and
auditing standards of foreign countries differ, in some cases
significantly, from U.S. standards. Also, nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely
affect a Fund's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Fund could
lose its entire investment in foreign securities. To the extent
that a Fund, such as the Global Innovation Fund or International
Fund, invests a significant portion of its assets in a narrowly
defined area such as Europe, Asia or South America, the Fund will
generally have more exposure to regional economic risks associated
with foreign investments. Adverse conditions in certain regions
(such as Southeast Asia) can also adversely affect securities of
other countries whose economies appear to be unrelated. In
addition, special U.S. tax considerations may apply to a Fund's
investment in foreign securities.
Emerging Foreign investment risk may be particularly high to the extent
Markets that a Fund invests in emerging market securities of issuers based
Risk in countries with developing economies. These securities may
present market, credit, currency, liquidity, legal, political and
other risks different from, or greater than, the risks of
investing in developed foreign countries. The Global Innovation
and International Funds may invest significant portions of their
assets in emerging market securities.
Currency Funds that invest directly in foreign currencies or in securities
Risk that trade in, and receive revenues in, foreign currencies are
subject to the risk that those currencies will decline in value
relative to the U.S. Dollar, or, in the case of hedging positions,
that the U.S. Dollar will decline in value relative to the
currency being hedged. The Global Innovation and International
Funds are particularly sensitive to currency risk. Currency rates
in foreign countries may fluctuate significantly over short
periods of time for a number of reasons, including changes in
interest rates, intervention (or the failure to intervene) by U.S.
or foreign governments, central banks or supranational entities
such as the International Monetary Fund, or by the imposition of
currency controls or other political developments in the U.S. or
abroad.
Focused
Investment
Risk Focusing Fund investments in a small number of issuers, industries
or foreign currencies increases risk. Funds, such as the Select
Growth Fund, that are "non-diversified" because they invest in a
relatively small number of issuers may have more risk because
changes in the value of a single security or the impact of a
single economic, political or regulatory occurrence may have a
greater adverse impact on the Fund's net asset value. Some of
those issuers also may present substantial credit or other risks.
The Global Innovation and International Funds may be subject to
increased risk to the extent that they focus their investments in
securities denominated in a particular foreign currency or in a
narrowly defined geographic area outside the U.S., because
companies in these areas may share common characteristics and
react similarly to market developments. Similarly, the Global
Innovation and Innovation Funds are vulnerable to events affecting
companies which use innovative technologies to
Prospectus 36
<PAGE>
gain a strategic, competitive advantage in their industry and
companies that provide and service those technologies because
these Funds normally "concentrate" their investments in those
companies. Also, the Funds may from time to time have greater risk
to the extent they invest a substantial portion of their assets in
related industries such as "technology" or "financial and business
services," which may share common characteristics and react
similarly to market developments.
Leveraging The Funds, and in particular the Global Innovation, International
Risk and Tax-Efficient Equity Funds, may engage in transactions or
purchase instruments that give rise to forms of leverage. Such
transactions and instruments may include, among others, the use of
reverse repurchase agreements and other borrowings, the investment
of collateral from loans of portfolio securities, or the use of
when-issued, delayed-delivery or forward commitment transactions.
The use of derivatives may also involve leverage. Leverage,
including borrowing, will cause the value of a Fund's shares to be
more volatile than if the Fund did not use leverage. This is
because leverage tends to exaggerate the effect of any increase or
decrease in the value of a Fund's portfolio securities. The use of
leverage may also cause a Fund to liquidate portfolio positions
when it would not be advantageous to do so in order to satisfy its
obligations or to meet segregation requirements.
Interest
Rate Risk To the extent that Funds purchase fixed income securities for
investment or defensive purposes, they will be subject to interest
rate risk, a market risk relating to investments in fixed income
securities such as bonds and notes. The Growth & Income Fund is
particularly sensitive to this risk because it may invest in
interest rate sensitive securities such as corporate bonds.
As interest rates rise, the value of fixed income securities in a
Fund's portfolio are likely to decrease. Securities with longer
"durations" (defined below) tend to be more sensitive to changes
in interest rates, usually making them more volatile than
securities with shorter durations. Duration is a measure of the
expected life of a fixed income security that is used to determine
the sensitivity of a security's price to changes in interest
rates. Generally, a Fund with a longer average portfolio duration
will be more sensitive to changes in interest rates than a Fund
with a shorter average portfolio duration.
High Funds that invest in high yield securities and unrated securities
Yield of similar quality (commonly known as "junk bonds") may be subject
Risk to greater levels of interest rate, credit and liquidity risk than
Funds that do not invest in such securities. The Growth & Income
Fund is particularly susceptible to this risk. High yield
securities are considered predominantly speculative with respect
to the issuer's continuing ability to make principal and interest
payments. An economic downturn or period of rising interest rates
could adversely affect the market for high yield securities and
reduce a Fund's ability to sell its high yield securities.
Credit All of the Funds are subject to credit risk. This is the risk that
Risk the issuer or the guarantor of a fixed income security, or the
counterparty to a derivatives contract, repurchase agreement or a
loan of portfolio securities, is unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor
its obligations. Securities are subject to varying degrees of
credit risk, which are often reflected in their credit ratings.
Management
Risk Each Fund is subject to management risk because it is an actively
managed investment portfolio. PIMCO Advisors, the Sub-Advisers and
each individual portfolio manager will apply investment techniques
and risk analyses in making investment decisions for the Funds,
but there can be no guarantee that these will produce the desired
results.
Management of the Funds
Investment
Adviser
and
Administrator
PIMCO Advisors serves as the investment adviser and the
administrator (serving in its capacity as administrator, the
"Administrator") for the Funds. Subject to the supervision of the
Board of Trustees, PIMCO Advisors is responsible for managing,
either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other
administrative matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport
Beach, California 92660. Organized in 1987, PIMCO Advisors
provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual
funds. As of September 30, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $[ ] billion in assets under
management.
37 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Advisors has retained investment management firms ("Sub-
Advisers") to manage each Fund's investments, except that the
PIMCO Equity Advisors division of PIMCO Advisors manages the
investments of the Equity Income, Global Innovation, Growth,
Growth & Income, Innovation, Opportunity, Renaissance, Select
Growth, Target and Value Funds. (PIMCO Equity Advisors is also
referred to as a "Sub-Adviser" in this capacity.) See "Sub-
Advisers" below.
PIMCO Advisors has retained its affiliate, Pacific Investment
Management Company LLC, to provide various administrative and
other services required by the Funds in its capacity as sub-
administrator. PIMCO Advisors and the sub-administrator may retain
other affiliates to provide certain of these services.
Advisory Each Fund pays PIMCO Advisors fees in return for providing or
Fees arranging for the provision of investment advisory services. In
the case of Funds for which PIMCO Advisors has retained a separate
Sub-Adviser, PIMCO Advisors (and not the Fund) pays a portion of
the advisory fees it receives to the Sub-Adviser in return for its
services.
For the fiscal year ended June 30, 2000, the Funds paid monthly
advisory fees to PIMCO Advisors at the following annual rates
(stated as a percentage of the average daily net assets of each
Fund taken separately):
<TABLE>
<CAPTION>
Fund Advisory Fees
-----------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation, Equity Income, Mid-Cap,
Tax-Efficient Equity and Value Funds 0.45%
Growth Fund 0.50%
International and Target Funds 0.55%
Select Growth 0.57%*
Renaissance and Small-Cap Value Funds 0.60%
Growth & Income Fund 0.63%*
Innovation and Opportunity Funds 0.65%
</TABLE>
* On April 1, 2000, the advisory fee rate for the Select Growth
Fund increased to 0.60% per annum. On August 1, 2000, the
advisory fee rate for the Growth & Income Fund decreased to
0.60% per annum.
The Global Innovation Fund was not operational during the entire
fiscal year ended June 30, 2000. The annual investment advisory
fee rate payable by this Fund is 1.00% (stated as a percentage of
the average daily net assets of the Fund).
Administrative
Fees
Each Fund pays for the administrative services it requires under a
fee structure which is essentially fixed. Class A, Class B and
Class C shareholders of each Fund pay an administrative fee to
PIMCO Advisors, computed as a percentage of the Fund's assets
attributable in the aggregate to those classes of shares. PIMCO
Advisors, in turn, provides or procures administrative services
for Class A, Class B and Class C shareholders and also bears the
costs of various third-party services required by the Funds,
including audit, custodial, portfolio accounting, legal, transfer
agency and printing costs. The result of this fee structure is an
expense level for Class A, Class B and Class C shareholders of
each Fund that, with limited exceptions, is precise and
predictable under ordinary circumstances.
Class A, B and C shareholders of the Funds pay PIMCO Advisors
monthly administrative fees at the following annual rates (stated
as a percentage of the average daily net assets attributable in
the aggregate to the Fund's Class A, Class B and Class C shares):
<TABLE>
<CAPTION>
Fund Administrative Fees*
---------------------------------------------
<S> <C> <C>
International Fund 0.65%
Global Innovation Fund 0.60%
All Other Funds 0.40%
</TABLE>
* The Administrative Fee rate for each Fund is subject to a
reduction of 0.05% per year on average daily net assets
attributable in the aggregate to the Fund's Class A, B and C
shares in excess of $2.5 billion.
Prospectus 38
<PAGE>
Sub- Each Sub-Adviser has full investment discretion and makes all
Advisers determinations with respect to the investment of a Fund's assets.
The following provides summary information about each Sub-Adviser,
including the Fund(s) it manages.
<TABLE>
<CAPTION>
Sub-Adviser* Funds
-------------------------------------------------------------------------
<S> <C>
PIMCO Equity Advisors Global Innovation, Equity Income, Growth, Growth &
division of PIMCO Income, Innovation, Opportunity, Renaissance,
Advisors ("PIMCO Equity Select Growth, Target and Value
Advisors")
1345 Avenue of the
Americas, 50th Floor
New York, NY 10105
-------------------------------------------------------------------------
Cadence Capital Capital Appreciation and Mid-Cap
Management ("Cadence")
Exchange Place, 53 State
Street
Boston, MA 02109
-------------------------------------------------------------------------
NFJ Investment Group Small-Cap Value
("NFJ")
2121 San Jacinto, Suite
1840
Dallas, TX 75201
-------------------------------------------------------------------------
Parametric Portfolio Tax-Efficient Equity
Associates
("Parametric")
7310 Columbia Center,
701 Fifth Avenue
Seattle, WA 98104
-------------------------------------------------------------------------
Blairlogie Capital International
Management
("Blairlogie")
4th Floor, 125 Princes
Street
Edinburgh EH2 4AD,
Scotland
</TABLE>
* PIMCO Equity Advisors is a division of PIMCO Advisors. With the
exception of Blairlogie, each of the other Sub-Advisers is an
affiliated sub-partnership of PIMCO Advisors.
The following provides additional information about each Sub-
Adviser and the individual portfolio
managers who have or share primary responsibility for managing the
Funds' investments.
PIMCO A division of PIMCO Advisors, PIMCO Equity Advisors provides
Equity equity-related advisory services to mutual funds and institutional
Advisors accounts. See "Investment Adviser and Administrator" above for
additional information about PIMCO Advisors.
39 PIMCO Funds: Multi-Manager Series
<PAGE>
The following individuals at PIMCO Equity Advisors have primary
responsibility for the noted Funds. A different sub-advisory firm
served as Sub-Adviser for the Growth, Innovation, Opportunity and
Target Funds prior to March 6, 1999, for the Renaissance Fund
prior to May 7, 1999, for the Select Growth and Growth & Income
Funds prior to July 1, 1999, and for the Equity Income and Value
Funds prior to May 8, 2000.
<TABLE>
<CAPTION>
Fund Portfolio Managers Since Recent Professional Experience
-------------------------------------------------------------------------------------------
<C> <C> <C> <S>
Equity Income Kenneth W. Corba 2000 Managing Director and
Chief Investment Officer
of PIMCO Equity Advisors
and a Member of the
Management Board of
PIMCO Advisors. Prior to
joining PIMCO Advisors,
he was with Eagle Asset
Management from 1995 to
1998, serving in various
capacities including as
Chief Investment Officer
and Portfolio Manager.
He was with Stein Roe
and Farnham Inc. from
1984 to 1995, serving in
various capacities
including as Director of
the Capital Management
Group, Senior Vice
President and Portfolio
Manager.
Global Innovation Dennis P. McKechnie 1999 (inception)+ Portfolio Manager of
PIMCO Equity Advisors.
Prior to joining PIMCO
Advisors, he was with
Columbus Circle
Investors from 1991 to
1999, where he managed
equity accounts and
served in various
capacities including as
Portfolio Manager for
the Innovation Fund.
Jiyoung Kim 2000 Senior Research Analyst
for PIMCO Innovation
Fund, where she covers
biotechnology,
telecommunications
equipment,
semiconductors and
networking. Prior to
joining PIMCO Equity
Advisors in [ ], she
was a Senior Research
Analyst at Fred Alger
Management from [ ] to
[ ]. Prior to that,
she was a Senior
Research Technician at
Repligen, a [ ]
company.
Growth Mr. Corba 1999 See above.
Growth & Income Mr. Corba 1999 See above.
Peter C. Thoms 2000 Investment Analyst at
Federated Investors from
July 1998 to May 1999.
Previously, he received
his M.B.A. at the
University of Virginia's
Darden School of
Business.
Innovation Mr. McKechnie 1998 See above.
Opportunity Michael F. Gaffney 1999 Managing Director of
PIMCO Equity Advisors,
where he manages the
Opportunity Fund and
other small-cap
products. Prior to
joining PIMCO Advisors,
he was with Alliance
Capital Management L.P.
from 1993 to 1999,
serving in various
capacities including as
Senior Vice President
and Portfolio Manager.
Renaissance John K. Schneider 1999 Senior Portfolio Manager
of PIMCO Equity
Advisors. Prior to
joining PIMCO Advisors,
he was a partner and
Portfolio Manager of
Schneider Capital
Management from 1996 to
1999, where he managed
equity accounts for
various institutional
clients. Prior to that
he was a member of the
Equity Policy Committee
and Director of Research
at Newbold's Asset
Management from 1991 to
1996.
Select Growth Messrs. Corba and Schneider 1999 See above.
Target Mr. Corba 1999 See above.
Jeff Parker 1999 Assistant Portfolio
Manager and Research
Analyst for PIMCO Equity
Advisors. Prior to
joining PIMCO Equity
Advisors, he managed
equity accounts as an
Assistant Portfolio
Manager at Eagle Asset
Management from 1996 to
1998. He was a Senior
Consultant with Andersen
Consulting, specializing
in healthcare and
technology, from 1991 to
1994.
Value Mr. Schneider 2000 See above.
</TABLE>
-------
+ Prior to PIMCO Advisors and PIMCO Equity Advisors assuming their
positions as Adviser and Sub-Adviser, respectively, of the
Global Innovation Fund, Mr. McKechnie managed the Fund's
portfolio in his capacity as an officer of the Trust.
Prospectus 40
<PAGE>
Cadence
An affiliated subpartnership of PIMCO Advisors, Cadence provides
advisory services to mutual funds and institutional accounts.
Cadence Capital Management Corporation, the predecessor investment
adviser to Cadence, commenced operations in 1988. Accounts managed
by Cadence had combined assets as of September 30, 2000 of
approximately $[ ] billion.
The following individuals at Cadence share primary responsibility
for each of the noted Funds.
<TABLE>
<CAPTION>
Recent Professional
Fund Portfolio Managers Since Experience
---------------------------------------------------------------------------------------
<C> <C> <C> <S>
Capital Appreciation David B. Breed 1991 (Inception) Managing Director, Chief
Executive Officer, Chief
Investment Officer and
founding partner of
Cadence. Member of the
Management Board of
PIMCO Advisors. He is a
research generalist and
has lead the team of
portfolio managers and
analysts since 1988. Mr.
Breed has managed
separate equity accounts
for many institutional
clients and has lead the
team that manages the
PIMCO Funds sub-advised
by Cadence since those
Funds' inception dates.
William B. Bannick 1992 Managing Director and
Executive Vice President
at Cadence. Mr. Bannick
is a research generalist
and Senior Portfolio
Manager for the Cadence
team. He has managed
separately managed
equity accounts for
various Cadence
institutional clients
and has been a member of
the team that manages
the PIMCO Funds sub-
advised by Cadence since
joining Cadence in 1992.
Katherine A. Burdon 1993 Managing Director and
Senior Portfolio Manager
at Cadence. Ms. Burdon
is a research generalist
and has managed
separately managed
equity accounts for
various Cadence
institutional clients
and has been a member of
the team that manages
the PIMCO Funds sub-
advised by Cadence since
joining Cadence in 1993.
Peter B. McManus 1994 Director, Account
Management at Cadence.
He has been a member of
the investment team at
Cadence and handles
client relationships of
separately managed
accounts, and has been a
member of the team that
manages the PIMCO Funds
sub-advised by Cadence
since joining Cadence in
1994. Previously, he
served as a Vice
President of Bank of
Boston from 1991 to
1994.
Mid-Cap Messrs. Breed, Bannick and Same as Capital See above.
McManus and Ms. Burdon Appreciation Fund
</TABLE>
NFJ
An affiliated sub-partnership of PIMCO Advisors, NFJ provides
advisory services to mutual funds and institutional accounts. NFJ
Investment Group, Inc., the predecessor investment adviser to NFJ,
commenced operations in 1989. Accounts managed by NFJ had combined
assets as of September 30, 2000 of approximately $[ ] billion.
41 PIMCO Funds: Multi-Manager Series
<PAGE>
The following individuals at NFJ share primary responsibility for
the noted Fund.
<TABLE>
<CAPTION>
Fund Portfolio Managers Since
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Small-Cap Chris Najork 1991 (Inception)
Value
Fund
Recent Professional Experience
---------------------------------------------------------------------------------------------------------------
Benno J. Fischer 1991 (Inception)
Small-Cap Managing Director and founding partner of NFJ. He has 30 years" experience
Value encompassing equity research and portfolio management. Prior to the formation of
NFJ in 1989, he was a Senior Vice President, Senior Portfolio Manager and analyst
at NationsBank, which he joined in 1974.
ManagingPDirectoraandufoundinglpartnerAof.NFJ.MHeahasg32nyears"uexperiencesinon 1995
portfolio management, investment analysis and research. Prior to the formation of
NFJ in 1989, he was Chief Investment Officer (institutional and fixed income), Senior
Vice President and Senior Portfolio Manager at NationsBank, which he joined in
1971. Prior to joining NationsBank, Mr. Fischer was a securities analyst at Chase
Manhattan Bank and Clark, Dodge.
Principal at NFJ. He is a Portfolio Manager and Senior Research Analyst with
14 years' experience in equity analysis and portfolio management. Prior to joining
NFJ in 1992, he was an Assistant Vice President at NationsBank, which he joined in
1985. Within the Trust Investment Quantitative Services Division of NationsBank, he
was responsible for equity analytics and structured fund management.
Parametric An affiliated sub-partnership of PIMCO Advisors, Parametric
provides advisory services to mutual funds and institutional
accounts. Parametric Portfolio Associates, Inc., the predecessor
investment adviser to Parametric, commenced operations in 1987.
Accounts managed by Parametric had combined assets as of September
30, 2000 of approximately $[ ] billion.
The following individuals at Parametric share primary
responsibility for the Tax-Efficient Equity Fund.
<CAPTION>
Fund Portfolio Managers Since
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tax- David Stein 1998 (Inception)
Efficient
Equity
Tom Seto 1998 (Inception)
<CAPTION>
Fund Recent Professional Experience
---------------------------------------------------------------------------------------------------------------
<S> <C>
Tax- Managing Director of Parametric. He has been with Parametric since 1996
Efficient where he leads the investment, research and product development activities.
Equity Previously, he served in Investment Research at GTE Corporation from 1995
to 1996, in Equity Research at Vanguard Group from 1994 to 1995 and in
Investment Research at IBM Corporation from 1977 to 1994.
Vice President and Portfolio Manager of Parametric. Since joining Parametric
in 1998, he has been responsible for management of Parametric's active U.S.
equity strategies and has managed structured equity portfolios. Previously, he
was with Barclays Global Investors from 1991 to 1998, serving in various
capacities including as head of U.S. Equity Index Investments and Portfolio
Manager.
Blairlogie Blairlogie provides advisory services to mutual funds and
institutional accounts. Blairlogie Capital Management Ltd., the
predecessor investment adviser to Blairlogie, commenced operations
in 1992. Accounts managed by Blairlogie had combined assets as of
September 30, 2000 of approximately $[ ] billion.
Blairlogie is an indirect majority-owned subsidiary of the
Alleghany Corporation, and is not an affiliate of PIMCO Advisors.
Blairlogie was formerly an affiliated sub-partnership of PIMCO
Advisors. On April 30, 1999, PIMCO Advisors sold all of its
ownership interest in Blairlogie to subsidiaries of the Alleghany
Corporation. PIMCO Advisors retained Blairlogie as the Sub-Adviser
of the International Fund both prior and subsequent to this
transaction.
The following individual at Blairlogie has primary responsibility
for the International Fund.
<CAPTION>
Fund Portfolio Manager Since
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
International James Smith 1994
<CAPTION>
Fund Recent Professional Experience
---------------------------------------------------------------------------------------------------------------
<S> <C>
International Chief Investment Officer of Blairlogie since 1992, responsible for setting investment
policy, asset allocation, managing the investment team and stock selection in Latin
America.
</TABLE>
Adviser/Sub-
Adviser Shareholders of each Fund (except the Innovation and Mid-Cap
Relationship Funds) have approved a proposal permitting PIMCO Advisors to enter
into new or amended sub-advisory agreements with one or more sub-
advisers with respect to each Fund without obtaining shareholder
approval of such agreements, subject to the conditions of an
exemptive order that has been granted by the Securities Exchange
Commission. One of the conditions requires the Board of Trustees
to approve any such agreement. In addition, the exemptive order
prohibits PIMCO Advisors from entering into sub-advisory
agreements with affiliates of PIMCO Advisors without shareholder
approval, unless those affiliates are substantially wholly-owned
by PIMCO Advisors.
Distributor
The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly
owned subsidiary of PIMCO Advisors. The Distributor, located at
2187 Atlantic Street, Stanford, CT 06902, is a broker-dealer
registered with the Securities and Exchange Commission.
Prospectus 42
<PAGE>
Investment Options -- Class A, B and C Shares
The Trust offers investors Class A, Class B and Class C shares of
each Fund in this Prospectus. Each class of shares is subject to
different types and levels of sales charges than the other classes
and bears a different level of expenses.
The class of shares that is best for you depends upon a number of
factors, including the amount and the intended length of your
investment. The following summarizes key information about each
class to help you make your investment decision, including the
various expenses associated with each class. More extensive
information about the Trust's multi-class arrangements is included
in the PIMCO Funds Shareholders' Guide for Class A, B and C Shares
(the "Guide"), which is included as part of the Statement of
Additional Information and can be obtained free of charge from the
Distributor. See "How to Buy and Sell Shares--PIMCO Funds
Shareholders' Guide" below.
Class A . You pay an initial sales charge of up to 5.50% when you buy
Shares Class A shares. The sales charge is deducted from your
investment so that not all of your purchase payment is invested.
. You may be eligible for a reduction or a complete waiver of the
initial sales charge under a number of circumstances. For
example, you normally pay no sales charge if you purchase
$1,000,000 or more of Class A shares. Please see the Guide for
details.
. Class A shares are subject to lower 12b-1 fees than Class B or
Class C shares. Therefore, Class A shareholders generally pay
lower annual expenses and receive higher dividends than Class B
or Class C shareholders.
. You normally pay no contingent deferred sales charge ("CDSC")
when you redeem Class A shares, although you may pay a 1% CDSC
if you purchase $1,000,000 or more of Class A shares (and
therefore pay no initial sales charge) and then redeem the
shares during the first 18 months after your initial purchase.
The Class A CDSC is waived for certain categories of investors
and does not apply if you are otherwise eligible to purchase Class
A shares without a sales charge. Please see the Guide for details.
Class B . You do not pay an initial sales charge when you buy Class B
Shares shares. The full amount of your purchase payment is invested
initially.
. You normally pay a CDSC of up to 5% if you redeem Class B shares
during the first six years after your initial purchase. The
amount of the CDSC declines the longer you hold your Class B
shares. You pay no CDSC if you redeem during the seventh year
and thereafter. The Class B CDSC is waived for certain categories
of investors. Please see the Guide for details.
. Class B shares are subject to higher 12b-1 fees than Class A
shares for the first seven years they are held. During this
time, Class B shareholders normally pay higher annual expenses
and receive lower dividends than Class A shareholders.
. Class B shares automatically convert into Class A shares after
they have been held for seven years. After the conversion takes
place, the shares are subject to the lower 12b-1 fees paid by
Class A shares.
Class C . You do not pay an initial sales charge when you buy Class C
Shares shares. The full amount of your purchase payment is invested
initially.
. You normally pay a CDSC of 1% if you redeem Class C shares
during the first year after your initial purchase. The Class C
CDSC is waived for certain categories of investors. Please see
the Guide for details.
. Class C shares are subject to higher 12b-1 fees than Class A
shares. Therefore, Class C shareholders normally pay higher
annual expenses and receive lower dividends than Class A
shareholders.
. Class C shares do not convert into any other class of shares.
Because Class B shares convert into Class A shares after seven
years, Class C shares will normally be subject to higher
expenses and will pay lower dividends than Class B shares if the
shares are held for more than seven years.
The following provides additional information about the sales
charges and other expenses associated with Class A, Class B and
Class C shares.
43 PIMCO Funds: Multi-Manager Series
<PAGE>
--------------------------------------------------------------------------------
Initial Unless you are eligible for a waiver, the public offering price
Sales you pay when you buy Class A shares of the Funds is the net asset
Charges-- value ("NAV") of the shares plus an initial sales charge. The
Class A initial sales charge varies depending upon the size of your
Shares purchase, as set forth below. No sales charge is imposed where
Class A shares are issued to you pursuant to the automatic
reinvestment of income dividends or capital gains distributions.
All Funds
<TABLE>
<S> <C> <C>
Initial Sales Charge Initial Sales Charge
Amount of as % of Net as % of Public
Purchase Amount Invested Offering Price
-------------------------------------------------------------------
$0-$49,999 5.82% 5.50%
-------------------------------------------------------------------
$50,000-$99,999 4.71% 4.50%
-------------------------------------------------------------------
$100,000-$249,999 3.63% 3.50%
-------------------------------------------------------------------
$250,000-$499,999 2.56% 2.50%
-------------------------------------------------------------------
$500,000-$999,999 2.04% 2.00%
-------------------------------------------------------------------
$1,000,000 + 0.00%* 0.00%*
-------------------------------------------------------------------
*As shown, investors that purchase $1,000,000 or more of any
Fund's Class A shares will not pay any initial sales charge on the
purchase. However, purchasers of $1,000,000 or more of Class A
shares may be subject to a CDSC of 1% if the shares are redeemed
during the first 18 months after their purchase. See "CDSCs on
Class A Shares" below.
-------------------------------------------------------------------------------
Contingent Unless you are eligible for a waiver, if you sell (redeem) your
Deferred Class B or Class C shares within the time periods specified below,
Sales you will pay a CDSC according to the following schedules.
Charges
(CDSCs)
-- Class
B and
Class C
Shares
Class B Years Since Purchase Percentage Contingent
Shares Payment was Made Deferred Sales Charge
-------------------------------------------------------------------
First 5
-------------------------------------------------------------------
Second 4
-------------------------------------------------------------------
Third 3
-------------------------------------------------------------------
Fourth 3
-------------------------------------------------------------------
Fifth 2
-------------------------------------------------------------------
Sixth 1
-------------------------------------------------------------------
Seventh 0*
-------------------------------------------------------------------
*After the seventh year, Class B shares convert into Class A
shares.
Class C Years Since Purchase Percentage Contingent
Shares Payment was Made Deferred Sales Charge
-------------------------------------------------------------------
First 1
-------------------------------------------------------------------
Thereafter 0
-------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
CDSCs on Unless a waiver applies, investors who purchase $1,000,000 or more
Class A of Class A shares (and, thus, pay no initial sales charge) will be
Shares subject to a 1% CDSC if the shares are redeemed within 18 months
of their purchase. The Class A CDSC does not apply if you are
otherwise eligible to purchase Class A shares without an initial
sales charge or if you are eligible for a waiver of the CDSC. See
"Reductions and Waivers of Initial Sales Charges and CDSCs" below.
--------------------------------------------------------------------------------
How CDSCs A CDSC is imposed on redemptions of Class B and Class C shares
are (and where applicable, Class A shares) on the amount of the
Calculated redemption which causes the current value of your account for the
particular class of shares of a Fund to fall below the total
dollar amount of your purchase payments subject to the CDSC.
However, no CDSC is imposed if the shares redeemed have been
acquired through the reinvestment of dividends or capital gains
distributions or if the amount redeemed is derived from increases
in the value of your account above the amount of the purchase
payments subject to the CDSC. CDSCs are deducted from the proceeds
of your redemption, not from amounts remaining in your account. In
determining whether a CDSC is payable, it is assumed that the
purchase payment from which the redemption is made is the earliest
purchase payment for the particular class of shares in your
account (from which a redemption or exchange has not already been
effected).
Prospectus 44
<PAGE>
For instance, the following example illustrates the operation of
the Class B CDSC:
. Assume that an individual opens an account and makes a purchase
payment of $10,000 for Class B shares of a Fund and that six
months later the value of the investor's account for that Fund
has grown through investment performance and reinvestment of
distributions to $11,000. The investor then may redeem up to
$1,000 from that Fund ($11,000 minus $10,000) without incurring
a CDSC. If the investor should redeem $3,000, a CDSC would be
imposed on $2,000 of the redemption (the amount by which the
investor's account for the Fund was reduced below the amount of
the purchase payment). At the rate of 5%, the Class B CDSC would
be $100.
In determining whether an amount is available for redemption
without incurring a CDSC, the purchase payments made for all
shares of a particular class of a Fund in the shareholder's
account are aggregated, and the current value of all such shares
is aggregated.
--------------------------------------------------------------------------------
Reductions The initial sales charges on Class A shares and the CDSCs on Class
and A, Class B and Class C shares may be reduced or waived under
Waivers certain purchase arrangements and for certain categories of
of investors. Please see the Guide for details. The Guide is
Initial available free of charge from the Distributor. See "How to Buy and
Sales Sell Shares--PIMCO Funds Shareholders' Guide" below.
Charges
and CDSCs
--------------------------------------------------------------------------------
DistributionThe Funds pay fees to the Distributor on an ongoing basis as
and compensation for the services the Distributor renders and the
Servicing expenses it bears in connection with the sale and distribution of
(12b-1) Fund shares ("distribution fees") and/or in connection with
Plans personal services rendered to Fund shareholders and the
maintenance of shareholder accounts ("servicing fees"). These
payments are made pursuant to Distribution and Servicing Plans
("12b-1 Plans") adopted by each Fund pursuant to Rule 12b-1 under
the Investment Company Act of 1940.
There is a separate 12b-1 Plan for each class of shares offered
in this Prospectus. Class A shares pay only servicing fees. Class
B and Class C shares pay both distribution and servicing fees. The
following lists the maximum annual rates at which the distribution
and/or servicing fees may be paid under each 12b-1 Plan
(calculated as a percentage of each Fund's average daily net
assets attributable to the particular class of shares):
<TABLE>
<S> <C> <C>
Servicing Distribution
All Funds Fee Fee
------------------------------------------------------------------------------------
Class A 0.25% None
------------------------------------------------------------------------------------
Class B 0.25% 0.75%
------------------------------------------------------------------------------------
Class C 0.25% 0.75%
------------------------------------------------------------------------------------
</TABLE>
Because 12b-1 fees are paid out of a Fund's assets on an ongoing
basis, over time these fees will increase the cost of your
investment and may cost you more than sales charges which are
deducted at the time of investment. Therefore, although Class B
and Class C shares do not pay initial sales charges, the
distribution fees payable on Class B and Class C shares may, over
time, cost you more than the initial sales charge imposed on Class
A shares. Also, because Class B shares convert into Class A shares
after they have been held for seven years and are not subject to
distribution fees after the conversion, an investment in Class C
shares may cost you more over time than an investment in Class B
shares.
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Class A, Class B and Class
C shares is determined by dividing the total value of a Fund's
portfolio investments and other assets attributable to that class,
less any liabilities, by the total number of shares outstanding of
that class.
For purposes of calculating the NAV, portfolio securities and
other assets for which market quotes are available are stated at
market value. Market value is generally determined on the basis of
last reported sales prices, or if no sales are reported, based on
quotes obtained from a quotation reporting system, established
market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily
available may be valued, pursuant to procedures established by the
Board of Trustees, with reference to other securities or indices.
Short-term investments having a maturity of 60 days or less are
generally valued at amortized cost. Exchange traded options,
futures and options on futures are valued at the settlement price
determined by the exchange. Other securities for which
45 PIMCO Funds: Multi-Manager Series
<PAGE>
market quotes are not readily available are valued at fair value
as determined in good faith by the Board of Trustees or persons
acting at their direction.
Investments initially valued in currencies other than the U.S.
dollar are converted to U.S. dollars using exchange rates obtained
from pricing services. As a result, the NAV of a Fund's shares may
be affected by changes in the value of currencies in relation to
the U.S. dollar. The value of securities traded in markets outside
the United States or denominated in currencies other than the U.S.
dollar may be affected significantly on a day that the New York
Stock Exchange is closed and an investor is not able to purchase,
redeem or exchange shares. In particular, calculation of the NAV
of the Global Innovation and International Funds may not take
place contemporaneously with the determination of the prices of
foreign securities used in NAV calculations.
Fund shares are valued at the close of regular trading (normally
4:00 p.m., Eastern time) (the "NYSE Close") on each day that the
New York Stock Exchange is open. For purposes of calculating the
NAV, the Funds normally use pricing data for domestic equity
securities received shortly after the NYSE Close and do not
normally take into account trading, clearances or settlements that
take place after the NYSE Close. Domestic fixed income and foreign
securities are normally priced using data reflecting the earlier
closing of the principal markets for those securities. Information
that becomes known to the Funds or their agents after the NAV has
been calculated on a particular day will not generally be used to
retroactively adjust the price of a security or the NAV determined
earlier that day.
In unusual circumstances, instead of valuing securities in the
usual manner, the Funds may value securities at fair value or
estimate their value as determined in good faith by the Board of
Trustees or persons acting at their direction pursuant to
procedures approved by the Board of Trustees. Fair valuation may
also be used by the Board of Trustees if extraordinary events
occur after the close of the relevant market but prior to the NYSE
Close.
How to Buy and Sell Shares
The following section provides basic information about how to buy,
sell (redeem) and exchange shares of the Funds.
PIMCO
Funds
Shareholders'
Guide
More detailed information about the Trust's purchase, sale and
exchange arrangements for Fund shares is provided in the PIMCO
Funds Shareholders' Guide, which is included in the Statement of
Additional Information and can be obtained free of charge from the
Distributor by written request or by calling 1-800-426-0107. The
Guide provides technical information about the basic arrangements
described below and also describes special purchase, sale and
exchange features and programs offered by the Trust, including:
. Automated telephone and wire transfer procedures
. Automatic purchase, exchange and withdrawal programs
. Programs that establish a link from your Fund account to your
bank account
. Special arrangements for tax-qualified retirement plans
. Investment programs which allow you to reduce or eliminate the
initial sales charges on Class A shares
. Categories of investors that are eligible for waivers or
reductions of initial sales charges and CDSCs
Calculation When you buy shares of the Funds, you pay a price equal to the NAV
of Share of the shares, plus any applicable sales charge. When you sell
Price and (redeem) shares, you receive an amount equal to the NAV of the
Redemption shares, minus any applicable CDSC. NAVs are determined at the
Payments close of regular trading (normally, 4:00 p.m., Eastern time) on
the New York Stock Exchange on each day the New York Stock
Exchange is open. See "How Fund Shares Are Priced" above for
details. Generally, purchase and redemption orders for Fund shares
are processed at the NAV next calculated after your order is
received by the Distributor. There are certain exceptions where an
order is received by a broker or dealer prior to the close of
regular trading on the New York Stock Exchange and then
transmitted to the Distributor after the NAV has been calculated
for that day (in which case the order may be processed at that
day's NAV). Please see the Guide for details.
The Trust does not calculate NAVs or process orders on days when
the New York Stock Exchange is closed. If your purchase or
redemption order is received by the Distributor on a day when the
New York Stock Exchange is closed, it will be processed on the
next succeeding day when the New York Stock Exchange is open (at
the succeeding day's NAV).
Prospectus 46
<PAGE>
Buying You can buy Class A, Class B or Class C shares of the Funds in the
Shares following ways:
. Through your broker, dealer or other financial intermediary.
Your broker, dealer or other intermediary may establish higher
minimum investment requirements than the Trust and may also
independently charge you transaction fees and additional
amounts (which may vary) in return for its services, which will
reduce your return. Shares you purchase through your broker,
dealer or other intermediary will normally be held in your
account with that firm.
. Directly from the Trust. To make direct investments, you must
open an account with the Distributor and send payment for your
shares either by mail or through a variety of other purchase
options and plans offered by the Trust.
If you wish to invest directly by mail, please send a check
payable to PIMCO Funds Distributors LLC, along with a completed
application form to:
PIMCO Funds Distributors LLC
P.O. Box 9688
Providence, RI 02940-0926
The Trust accepts all purchases by mail subject to collection of
checks at full value and conversion into federal funds. You may
make subsequent purchases by mailing a check to the address above
with a letter describing the investment or with the additional
investment portion of a confirmation statement. Checks for
subsequent purchases should be payable to PIMCO Funds Distributors
LLC and should clearly indicate your account number. Please call
the Distributor at 1-800-426-0107 if you have any questions
regarding purchases by mail.
The Guide describes a number of additional ways you can make
direct investments, including through the PIMCO Funds Auto-Invest
and PIMCO Funds Fund Link programs. You can obtain a Guide free of
charge from the Distributor by written request or by calling 1-
800-426-0107. See "PIMCO Funds Shareholders' Guide" above.
The Distributor, in its sole discretion, may accept or reject any
order for purchase of Fund shares. No share certificates will be
issued unless specifically requested in writing.
Investment The following investment minimums apply for purchases of Class A,
Minimums Class B and Class C shares.
<TABLE>
<CAPTION>
Initial Investment Subsequent Investments
------------------ ----------------------
<S> <C>
$2,500 per Fund $100 per Fund
</TABLE>
Lower minimums may apply for certain categories of investors,
including certain tax-qualified retirement plans, and for special
investment programs and plans offered by the Trust, such as the
PIMCO Funds Auto-Invest and PIMCO Funds Fund Link programs. Please
see the Guide for details.
Small Because of the disproportionately high costs of servicing accounts
Account with low balances, if you have a direct account with the
Fee Distributor, you will be charged a fee at the annual rate of $16
if your account balance for any Fund falls below a minimum level
of $2,500, except for Uniform Gift to Minors, IRA, Roth IRA and
Auto-Invest accounts for which the limit is $1,000. The fee also
applies to employer-sponsored retirement plan accounts, Money
Purchase and/or Profit Sharing plans, 401(k) plans, 403(b)(7)
custodial accounts, SIMPLE IRAs, SEPs and SAR/SEPs. (A separate
custodial fee may apply to IRAs, Roth IRAs and other retirement
accounts.) However, you will not be charged this fee if the
aggregate value of all of your PIMCO Funds accounts is at least
$50,000. Any applicable small account fee will be deducted
automatically from your below-minimum Fund account in quarterly
installments and paid to the Administrator. Each Fund account will
normally be valued, and any deduction taken, during the last five
business days of each calendar quarter. Lower minimum balance
requirements and waivers of the small account fee apply for
certain categories of investors. Please see the Guide for details.
Minimum
Account
Size
Due to the relatively high cost to the Funds of maintaining small
accounts, you are asked to maintain an account balance in each
Fund in which you invest of at least the minimum investment
necessary to open the particular type of account. If your balance
for any Fund remains below the minimum for three months or longer,
the Administrator has the right (except in the case of employer-
sponsored retirement accounts) to redeem your remaining shares and
close that Fund account after giving you 60 days to increase your
balance. Your Fund account will not be liquidated if the reduction
in size is due solely to a decline in market value of your Fund
shares or if the aggregate value of all your PIMCO Funds accounts
exceeds $50,000.
47 PIMCO Funds: Multi-Manager Series
<PAGE>
Exchanging Except as provided below and/or in the applicable Funds' or
Shares series' prospectus(es), you may exchange your Class A, Class B or
Class C shares of any Fund for the same Class of shares of any
other Fund or of another series of the Trust or PIMCO Funds:
Pacific Investment Management Series. Shares are exchanged on the
basis of their respective NAVs next calculated after your exchange
order is received by the Distributor. Currently, the Trust does
not charge any exchange fees or charges. Exchanges are subject to
the $2,500 minimum initial purchase requirements for each Fund,
except with respect to tax-qualified programs and exchanges
effected through the PIMCO Funds Auto-Exchange plan. In addition,
an exchange is generally a taxable event which will generate
capital gains or losses, and special rules may apply in computing
tax basis when determining gain or loss. If you maintain your
account with the Distributor, you may exchange shares by
completing a written exchange request and sending it to PIMCO
Funds Distributors LLC, P.O. Box 9688, Providence, RI 02940-0926.
You can get an exchange form by calling the Distributor at 1-800-
426-0107.
The Trust reserves the right to refuse exchange purchases if, in
the judgment of PIMCO Advisors, the purchase would adversely
affect a Fund and its shareholders. In particular, a pattern of
exchanges characteristic of "market-timing" strategies may be
deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. Currently, the Trust limits the number of "round
trip" exchanges an investor may make. An investor makes a "round
trip" exchange when the investor purchases shares of a particular
Fund, subsequently exchanges those shares for shares of a
different PIMCO Fund and then exchanges back into the originally
purchased Fund. The Trust has the right to refuse any exchange for
any investor who completes (by making the exchange back into the
shares of the originally purchased Fund) more than six round trip
exchanges in any twelve-month period. Although the Trust has no
current intention of terminating or modifying the exchange
privilege other than as set forth in the preceeding sentence, it
reserves the right to do so at any time. Except as otherwise
permitted by the Securities and Exchange Commission, the Trust
will give you 60 days' advance notice if it exercises its right to
terminate or materially modify the exchange privilege with respect
to Class A, B and C shares.
The Guide provides more detailed information about the exchange
privilege, including the procedures you must follow and additional
exchange options. You can obtain a Guide free of charge from the
Distributor by written request or by calling 1-800-426-0107. See
"PIMCO Funds Shareholders' Guide" above.
Selling You can sell (redeem) Class A, Class B or Class C shares of the
Shares Funds in the following ways:
. Through your broker, dealer or other financial intermediary.
Your broker, dealer or other intermediary may independently charge
you transaction fees and additional amounts (which may vary) in
return for its services, which will reduce your return.
. Directly from the Trust by Written Request. To redeem shares
directly from the Trust by written request (whether or not the
shares are represented by certificates), you must send the
following items to the Trust's Transfer Agent, PFPC, Inc., P.O.
Box 9688, Providence, RI 02940-0926:
(1) a written request for redemption signed by all registered
owners exactly as the account is registered on the Transfer
Agent's records, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of
shares to be redeemed;
(2) for certain redemptions described below, a guarantee of all
signatures on the written request or on the share certificate or
accompanying stock power, if required, as described under
"Signature Guarantee" below;
(3) any share certificates issued for any of the shares to be
redeemed (see "Certificated Shares" below); and
(4) any additional documents which may be required by the
Transfer Agent for redemption by corporations, partnerships or
other organizations, executors, administrators, trustees,
custodians or guardians, or if the redemption is requested by
anyone other than the shareholder(s) of record. Transfers of
shares are subject to the same requirements.
A signature guarantee is not required for redemptions requested
by and payable to all shareholders of record for the account that
is to be sent to the address of record for that account. To avoid
delay in redemption or transfer, if you have any questions about
these requirements you should contact th e Transfer Agent in
writing or call 1-800-426-0107 before submitting a request.
Written redemption or
transfer requests will not be honored until all required documents
in the proper form have been received by the Transfer Agent. You
can not redeem your shares by written request to the Trust if they
are held in broker "street name" accounts--you must redeem through
your broker.
Prospectus 48
<PAGE>
If the proceeds of your redemption (i) are to be paid to a person
other than the record owner, (ii) are to be sent to an address
other than the address of the account on the Transfer Agent's
records, or (iii) are to be paid to a corporation, partnership,
trust or fiduciary, the signature(s) on the redemption request and
on the certificates, if any, or stock power must be guaranteed as
described under "Signature Guarantee" below. The Distributor may,
however, waive the signature guarantee requirement for redemptions
up to $2,500 by a trustee of a qualified retirement plan, the
administrator for which has an agreement with the Distributor.
The Guide describes a number of additional ways you can redeem
your shares, including:
. Telephone requests to the Transfer Agent
. PIMCO Funds Automated Telephone System (ATS)
. Expedited wire transfers
. Automatic Withdrawal Plan
. PIMCO Funds Fund Link
Unless you specifically elect otherwise, your initial account
application permits you to redeem shares by telephone subject to
certain requirements. To be eligible for ATS, expedited wire
transfer, Automatic Withdrawal Plan, and Fund Link privileges, you
must specifically elect the particular option on your account
application and satisfy certain other requirements. The Guide
describes each of these options and provides additional
information about selling shares. You can obtain a Guide free of
charge from the Distributor by written request or by calling 1-
800-426-0107.
Other than an applicable CDSC, you will not pay any special fees
or charges to the Trust or the Distributor when you sell your
shares. However, if you sell your shares through your broker,
dealer or other financial intermediary, that firm may charge you a
commission or other fee for processing your redemption request.
Redemptions of Fund shares may be suspended when trading on the
New York Stock Exchange is restricted or during an emergency which
makes it impracticable for the Funds to dispose of their
securities or to determine fairly the value of their net assets,
or during any other period as permitted by the Securities and
Exchange Commission for the protection of investors. Under these
and other unusual circumstances, the Trust may suspend redemptions
or postpone payments for more than seven days, as permitted by
law.
Timing of Redemption proceeds will normally be mailed to the redeeming
Redemption shareholder within seven calendar days or, in the case of wire
Payments transfer or Fund Link redemptions, sent to the designated bank
account within one business day. Fund Link redemptions may be
received by the bank on the second or third business day. In cases
where shares have recently been purchased by personal check,
redemption proceeds may be withheld until the check has been
collected, which may take up to 15 days. To avoid such
withholding, investors should purchase shares by certified or bank
check or by wire transfer. Under unusual circumstances, the Trust
may delay your redemption payments for more than seven days, as
permitted by law.
Redemptions The Trust had agreed to redeem shares of each Fund solely in cash
In Kind up to the lesser of $250,000 or 1% of the Fund's net assets during
any 90-day period for any one shareholder. In consideration of the
best interests of the remaining shareholders, the Trust may pay
any redemption proceeds exceeding this amount in whole or in part
by a distribution in kind of securities held by a Fund in lieu of
cash. Except for Funds with a tax-efficient management strategy,
it is highly unlikely that your shares would ever be redeemed in
kind. If your shares are redeemed in kind, you should expect to
incur transaction costs upon the disposition of the securities
received in the distribution.
CertificatedIf you are redeeming shares for which certificates have been
Shares issued, the certificates must be mailed to or deposited with the
Trust, duly endorsed or accompanied by a duly endorsed stock power
or by a written request for redemption. Signatures must be
guaranteed as described under "Signature Guarantee" below. The
Trust may request further documentation from institutions or
fiduciary accounts, such as corporations, custodians (e.g., under
the Uniform Gifts to Minors Act), executors, administrators,
trustees or guardians. Your redemption request and stock power
must be signed exactly as the account is registered, including
indication of any special capacity of the registered owner.
Signature
Guarantee
When a signature guarantee is called for, you should have
"Signature Guaranteed" stamped under your signature and guaranteed
by any of the following entities: U.S. banks, foreign banks having
a U.S. correspondent bank, credit unions, savings associations,
U.S. registered dealers and brokers,
49 PIMCO Funds: Multi-Manager Series
<PAGE>
municipal securities dealers and brokers, government securities
dealers and brokers, national securities exchanges, registered
securities associations and clearing agencies (each an "Eligible
Guarantor Institution"). The Distributor reserves the right to
reject any signature guarantee pursuant to its written signature
guarantee standards or procedures, which may permit it to reject
signature guarantees from Eligible Guarantor Institutions that do
not, based on credit guidelines, satisfy such written standards or
procedures.
Beginning January 1, 2001, when a signature guarantee is called
for, a "medallion" signature guarantee will be required. A
medallion signature guarantee may be obtained from a domestic bank
or trust company, broker, dealer, clearing agency, savings
association or other financial institution which is participating
in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are the
Securities Transfer Agents Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP) and New York Stock Exchange,
Inc. Medallion Signature Program (NYSE MSP). Signature guarantees
from financial institutions which are not participating in one of
these programs will not be accepted. Please note that financial
institutions participating in a recognized medallion program may
still be ineligible to provide a signature guarantee for
transactions of greater than a specified dollar amount. The Trust
may change the signature guarantee requirements from time to time
upon notice to shareholders, which may be given by means of a new
or supplemented Prospectus or a new supplemented guide.
Shareholders should contact the Distributor for additional details
regarding the Funds' signature guarantee requirements.
Fund Distributions
Each Fund distributes substantially all of its net investment
income to shareholders in the form of dividends. You begin earning
dividends on Fund shares the day after the Trust receives your
purchase payment. Dividends paid by each Fund with respect to each
class of shares are calculated in the same manner and at the same
time, but dividends on Class B and Class C shares are expected to
be lower than dividends on Class A shares as a result of the
distribution fees applicable to Class B and Class C shares. The
following shows when each Fund intends to declare and distribute
income dividends to shareholders of record.
<TABLE>
<CAPTION>
Fund At Least Annually Quarterly
-------------------------------------------------------------
<S> <C> <C>
Equity Income, Renaissance and .
Value Funds
-------------------------------------------------------------
All other Funds .
-------------------------------------------------------------
</TABLE>
In addition, each Fund distributes any net capital gains it earns
from the sale of portfolio securities to shareholders no less
frequently than annually. Net short-term capital gains may be paid
more frequently.
You can choose from the following distribution options:
. Reinvest all distributions in additional shares of the same
class of your Fund at NAV. This will be done unless you elect
another option.
. Invest all distributions in shares of the same class of any
other Fund or another series of the Trust or PIMCO Funds:
Pacific Investment Management Series which offers that class at
NAV. You must have an account existing in the Fund or series
selected for investment with the identical registered name. You
must elect this option on your account application or by a
telephone request to the Transfer Agent at 1-800-426-0107.
. Receive all distributions in cash (either paid directly to you
or credited to your account with your broker or other financial
intermediary). You must elect this option on your account
application or by a telephone request to the Transfer Agent at 1-
800-426-0107.
You do not pay any sales charges on shares you receive through
the reinvestment of Fund distributions.
If you elect to receive Fund distributions in cash and the postal
or other delivery service is unable to deliver checks to your
address of record, the Trust's Transfer Agent will hold the
returned checks for your benefit in a non-interest bearing
account.
For further information on distribution options, please contact
your broker or call the Distributor at 1-800-426-0107.
Prospectus 50
<PAGE>
Tax Consequences
. Taxes on Fund distributions. If you are subject to U.S. federal
income tax, you will be subject to tax on Fund distributions
whether you received them in cash or reinvested them in additional
shares of the Funds. For federal income tax purposes, Fund
distributions will be taxable to you as either ordinary income or
capital gains.
Fund dividends (i.e., distributions of investment income) are
taxable to you as ordinary income. Federal taxes on Fund
distributions of gains are determined by how long the Fund owned
the investments that generated the gains, rather than how long you
have owned your shares. Distributions of gains from investments
that a Fund owned for more than 12 months will generally be
taxable to you as capital gains. Distributions of gains from
investments that the Fund owned for 12 months or less will
generally be taxable to you as ordinary income.
Fund distributions are taxable to you even if they are paid from
income or gains earned by a Fund prior to your investment and thus
were included in the price you paid for your shares. For example,
if you purchase shares on or just before the record date of a Fund
distribution, you will pay full price for the shares and may
receive a portion of your investment back as a taxable
distribution.
. Taxes when you sell (redeem) or exchange your shares. Any gain
resulting from the sale of Fund shares will generally be subject
to federal income tax. When you exchange shares of a Fund for
shares of another series, the transaction generally will be
treated as a sale of the Fund shares for these purposes, and any
gain on those shares will generally be subject to federal income
tax.
. A Note on the Tax-Efficient Equity Fund. The Tax-Efficient
Equity Fund utilizes a number of tax-efficient management
techniques designed to minimize taxable distributions. For
instance, the Fund generally seeks to minimize realized gains and,
when realizing gains, attempts to realize gains that will be taxed
as capital gains (i.e., as gains on investments owned for more
than 12 months) when distributed to shareholders. Although the
Fund attempts to minimize taxable distributions, it may be
expected to earn and distribute taxable income and realize and
distribute capital gains from time to time.
. A Note on Foreign Investments. A Fund's investment in foreign
securities may be subject to foreign withholding taxes. In that
case, the Fund's yield on those securities would be decreased. In
addition, a Fund's investments in foreign securities or foreign
currencies may increase or accelerate the Fund's recognition of
ordinary income and may affect the timing or amount of the Fund's
distributions. Shareholders of the Global Innovation and
International Funds may be entitled to claim a credit or deduction
with respect to foreign taxes.
This section relates only to federal income tax consequences of
investing in the Funds; the consequences under other tax laws may
differ. You should consult your tax advisor as to the possible
application of foreign, state and local income tax laws to Fund
dividends and capital distributions. Please see the Statement of
Additional Information for additional information regarding the
tax aspects of investing in the Funds.
Characteristics and Risks of Securities and Investment Techniques
This section provides additional information about some of the
principal investments and related risks of the Funds identified
under "Summary Information" above. It also describes
characteristics and risks of additional securities and investment
techniques that are not necessarily principal investments or
strategies but may be used by the Funds from time to time. Most of
these securities and investment techniques are discretionary,
which means that the portfolio managers can decide whether to use
them or not. This Prospectus does not attempt to disclose all of
the various types of securities and investment techniques that may
be used by the Funds. As with any mutual fund, investors in the
Funds must rely on the professional investment judgment and skill
of PIMCO Advisors, the Sub-Advisers and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the
Statement of Additional Information for more detailed information
about the securities and investment techniques described in this
section and about other strategies and techniques that may be used
by the Funds.
51 PIMCO Funds: Multi-Manager Series
<PAGE>
Fixed Fixed income securities are obligations of the issuer to make
Income payments of principal and/or interest on future dates, and include
Securities corporate and government bonds, notes, certificates of deposit,
and commercial paper, convertible securities and mortgage-backed and
Defensive other asset-backed securities.
Strategies
The Capital Appreciation, Mid-Cap and Tax-Efficient Equity Funds
intend to be as fully invested in common stocks as practicable at
all times, although, for cash management purposes, each of these
Funds may maintain a portion of its assets (normally not more than
10%) in U.S. Government securities, high quality fixed income
securities, money market obligations and cash to pay certain Fund
expenses and to meet redemption requests. None of these Funds will
make defensive investments in response to unfavorable market and
other conditions and therefore may be particularly vulnerable to
general declines in stock prices and/or other categories of
securities in which they invest.
Under normal circumstances, the Small-Cap Value Fund intends to
be fully invested in common stocks (aside from cash management
practices), except that the Fund may temporarily hold up to 10% of
its assets in cash and cash equivalents for defensive purposes in
response to unfavorable market and other conditions. The Equity
Income, Global Innovation, Growth, Innovation, International,
Opportunity, Renaissance, Select Growth, Target and Value Funds
will each invest primarily in common stocks, and may also invest
in other kinds of equity securities, including preferred stocks
and securities (including fixed income securities and warrants)
convertible into or exercisable for common stocks. Each of these
Funds may invest a portion of its assets in fixed income
securities. These Funds may temporarily hold up to 100% of their
assets in short-term U.S. Government securities and other money
market instruments for defensive purposes in response to
unfavorable market and other conditions. The Growth & Income Fund
will invest primarily in common stocks, but may also invest
significant portions of its assets in preferred stocks, fixed
income securities, convertible securities and Real Estate
Investment Trusts, or "REITs." The Growth & Income Fund may
temporarily hold up to 100% of its assets in short-term U.S.
Government securities and other money market instruments for
defensive purposes in response to unfavorable market and other
conditions. The International Fund may also hold up to 100% of its
assets in other domestic fixed income, foreign fixed income and
equity securities principally traded in the U.S., including
obligations issued or guaranteed by a foreign government or its
agencies, authorities or instrumentalities, corporate bonds and
American Depository Receipts, for temporary defensive purposes.
The temporary defensive strategies described in this paragraph
would be inconsistent with the investment objective and principal
investment strategies of each of the noted Funds and may adversely
affect the Fund's ability to achieve its investment objective.
Companies
With
Smaller
Market
Capitalizations
Each of the Funds may invest in securities of companies with
market capitalizations that are small compared to other publicly
traded companies. The Opportunity and Small-Cap Value Funds invest
primarily in smaller companies and are especially sensitive to the
risks described below. In addition, the Global Innovation and
Innovation Funds generally have substantial exposure to these
risks. The Growth & Income, Mid-Cap and Target Funds also have
significant exposure to these risks because they invest primarily
in companies with medium-sized market capitalizations, which are
smaller and generally less well-known or seasoned than the largest
companies.
Companies which are smaller and less well-known or seasoned than
larger, more widely held companies may offer greater opportunities
for capital appreciation, but may also involve risks different
from, or greater than, risks normally associated with larger
companies. Larger companies generally have greater financial
resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater
depth of management and technical personnel than smaller
companies. Smaller companies may have limited product lines,
markets or financial resources or may depend on a small,
inexperienced management group. Securities of smaller companies
may trade less frequently and in lesser volume than more widely
held securities and their values may fluctuate more abruptly or
erratically than securities of larger companies. They may also
trade in the over-the-counter market or on a regional exchange, or
may otherwise have limited liquidity. These securities may
therefore be more vulnerable to adverse market developments than
securities of larger companies. Also, there may be less publicly
available information about smaller companies or less market
interest in their securities as compared to larger companies, and
it may take longer for the prices of the securities to reflect the
full value of a company's earnings potential or assets.
Because securities of smaller companies may have limited
liquidity, a Fund may have difficulty establishing or closing out
its positions in smaller companies at prevailing market prices. As
a result of owning large positions in this type of security, a
Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if
redemptions require the Fund to liquidate its securities
positions. For these reasons, it may be prudent for a Fund with a
relatively large
Prospectus 52
<PAGE>
asset size to limit the number of relatively small positions it
holds in securities having limited liquidity in order to minimize
its exposure to such risks, to minimize transaction costs, and to
maximize the benefits of research. As a consequence, as a Fund's
asset size increases, the Fund may reduce its exposure to illiquid
smaller capitalization securities, which could adversely affect
performance.
The Funds may purchase securities in initial public offerings
(IPOs). These securities are subject to many of the same risks of
investing in companies with smaller market capitalizations.
Securities issued in IPOs have no trading history, and information
about the companies may be available for very limited periods. In
addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in
IPOs to the extent desired because, for example, only a small
portion of the securities being offered in an IPO may be made
available to the Fund or because under certain market conditions
few companies may issue securities in IPOs.
Foreign The International Fund normally invests principally in securities
(non- of foreign issuers, securities traded principally in securities
U.S.) markets outside the United States and/or securities denominated in
Securities foreign currencies (together, "foreign securities"). The Global
Innovation Fund will invest in the securities of issuers located
in at least three countries (one of which may be the United
States). The Equity Income, Growth, Growth & Income, Innovation,
Opportunity, Renaissance, Select Growth, Target and Value Funds
may invest up to 15% of their respective assets in foreign
securities, and may invest without limit in ADRs (defined below).
All of the Funds may invest in American Depository Receipts
("ADRs"). In addition, the Equity Income, Global Innovation,
Growth, Growth & Income Innovation, International, Opportunity,
Renaissance, Select Growth, Target and Value Funds may invest in
European Depository Receipts (EDRs) and Global Depository Receipts
(GDRs). ADRs are dollar-denominated receipts issued generally by
domestic banks and representing the deposit with the bank of a
security of a foreign issuer, and are publicly traded on exchanges
or over-the-counter in the United States. EDRs are receipts
similar to ADRs and are issued and traded in Europe. GDRs may be
offered privately in the United States and also traded in public
or private markets in other countries.
Investing in foreign securities involves special risks and
considerations not typically associated with investing in U.S.
securities and shareholders should consider carefully the
substantial risks involved for Funds that invest in these
securities. These risks include: differences in accounting,
auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the
possibility of nationalization, expropriation or confiscatory
taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign
economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rate
of inflation, capital reinvestment, resources, self-sufficiency
and balance of payments position. The securities markets, values
of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign
securities and dividends and interest payable on those securities
may be subject to foreign taxes, including taxes withheld from
payments on those securities. Foreign securities often trade with
less frequency and volume than domestic securities and therefore
may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic
investments and additional transaction costs with respect to
foreign currency conversions. Changes in foreign exchange rates
also will affect the value of securities denominated or quoted in
foreign currencies.
Emerging Each of the Funds that may invest in foreign securities may invest
Market in securities of issuers based in or that trade principally in
Securities countries with developing (or "emerging market") economies. The
Global Innovation and International Funds may invest significant
portions of their assets in emerging market securities. Investing
in emerging market securities imposes risks different from, or
greater than, risks of investing in domestic securities or in
foreign, developed countries. These risks include: smaller market
capitalization of securities markets, which may suffer periods of
relative illiquidity; significant price volatility; restrictions
on foreign investment; and possible repatriation of investment
income and capital. In addition, foreign investors may be required
to register the proceeds of sales, and future economic or
political crises could lead to price controls, forced mergers,
expropriation or confiscatory taxation, seizure, nationalization
or the creation of government monopolies. The currencies of
emerging market countries may experience significant declines
against the U.S. dollar, and devaluation may occur subsequent to
investments in these currencies by a Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to
have, negative effects on the economies and securities markets of
certain emerging market countries.
53 PIMCO Funds: Multi-Manager Series
<PAGE>
Additional risks of emerging market securities may include:
greater social, economic and political uncertainty and
instability; more substantial governmental involvement in the
economy; less governmental supervision and regulation;
unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial
reporting standards, which may result in unavailability of
material information about issuers; and less developed legal
systems. In addition, emerging securities markets may have
different clearance and settlement procedures, which may be unable
to keep pace with the volume of securities transactions or
otherwise make it difficult to engage in such transactions.
Settlement problems may cause a Fund to miss attractive investment
opportunities, hold a portion of its assets in cash pending
investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of
the security.
Special Risks of Investing in Russian and Other Eastern European
Securities. The Global Innovation and International Funds may
invest a portion of their assets in securities of issuers located
in Russia and in other Eastern European countries. While
investments in securities of such issuers are subject generally to
the same risks associated with investments in other emerging
market countries described above, the political, legal and
operational risks of investing in Russian and other Eastern
European issuers, and of having assets custodied within these
countries, may be particularly acute. A risk of particular note
with respect to direct investment in Russian securities is the way
in which ownership of shares of companies is normally recorded.
When a Fund invests in a Russian issuer, it will normally receive
a "share extract," but that extract is not legally determinative
of ownership. The official record of ownership of a company's
share is maintained by the company's share registrar. Such share
registrars are completely under the control of the issuer, and
investors are provided with few legal rights against such
registrars.
Foreign A Fund that invests directly in foreign currencies or in
Currencies securities that trade in, and receive revenues in, foreign
currencies will be subject to currency risk. The Global Innovation
and International Funds are particularly sensitive to this risk.
Foreign currency exchange rates may fluctuate significantly over
short periods of time. They generally are determined by supply and
demand and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other
complex factors. Currency exchange rates also can be affected
unpredictably by intervention (or the failure to intervene) by
U.S. or foreign governments or central banks, or by currency
controls or political developments. For example, significant
uncertainty surrounds the recent introduction of the euro (a
common currency unit for the European Union) in January 1999 and
the effect it may have on the value of securities denominated in
local European currencies. These and other currencies in which the
Funds' assets are denominated may be devalued against the U.S.
dollar, resulting in a loss to the Funds.
Foreign Currency Transactions. The Equity Income, Global
Innovation, Growth, Growth & Income, Innovation, International,
Opportunity, Renaissance, Select Growth, Target and Value Funds
may enter into forward foreign currency exchange contracts to
reduce the risks of adverse changes in foreign exchange rates. In
addition, the Global Innovation and International Funds may buy
and sell foreign currency futures contracts and options on foreign
currencies and foreign currency futures. A forward foreign
currency exchange contract, which involves an obligation to
purchase or sell a specific currency at a future date at a price
set at the time of the contract, reduces a Fund's exposure to
changes in the value of the currency it will deliver and increases
its exposure to changes in the value of the currency it will
receive for the duration of the contract. The effect on the value
of a Fund is similar to selling securities denominated in one
currency and purchasing securities denominated in another
currency. Contracts to sell foreign currency would limit any
potential gain which might be realized by a Fund if the value of
the hedged currency increases. A Fund may enter into these
contracts to hedge against foreign exchange risk arising from the
Fund's investment or anticipated investment in securities
denominated in foreign currencies. Suitable hedging transactions
may not be available in all circumstances and there can be no
assurance that a Fund will engage in such transactions at any
given time or from time to time. Also, such transactions may not
be successful and may eliminate any chance for a Fund to benefit
from favorable fluctuations in relevant foreign currencies.
The Global Innovation and International Funds may also enter into
these contracts for purposes of increasing exposure to a foreign
currency or to shift exposure to foreign currency fluctuations
from one currency to another. To the extent that it does so, a
Fund will be subject to the additional risk that the relative
value of currencies will be different than anticipated by the
Fund's portfolio manager. The Global Innovation and International
Funds may use one currency (or a basket of currencies) to hedge
against adverse changes in the value of another currency (or a
basket of currencies) when exchange
Prospectus 54
<PAGE>
rates between the two currencies are positively correlated. Each
Fund will segregate assets determined to be liquid by PIMCO
Advisors or the Fund's Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations
under forward foreign currency exchange contracts entered into for
non-hedging purposes.
Corporate Corporate debt securities are subject to the risk of the issuer's
Debt inability to meet principal and interest payments on the
Securities obligation and may also be subject to price volatility due to
factors such as interest rate sensitivity, market perception of
the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities
can be expected to decline. Debt securities with longer durations
tend to be more sensitive to interest rate movements than those
with shorter durations.
Convertible
Securities Each Fund may invest in convertible securities. The Growth &
Income Fund may place particular emphasis on convertible
securities. Convertible securities are generally preferred stocks
and other securities, including fixed income securities and
warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a
convertible security will normally vary in some proportion to
changes in the price of the underlying common stock because of
this conversion or exercise feature. However, the value of a
convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally
also provide income and is subject to interest rate risk. While
convertible securities generally offer lower interest or dividend
yields than non-convertible fixed income securities of similar
quality, their value tends to increase as the market value of the
underlying stock increases and to decrease when the value of the
underlying stock decreases. Also, a Fund may be forced to convert
a security before it would otherwise choose, which may have an
adverse effect on the Fund's ability to achieve its investment
objective.
Derivatives Each Fund (except the Capital Appreciation, Mid-Cap and Small-Cap
Value Funds) may, but is not required to, use a number of
derivative instruments for risk management purposes or as part of
its investment strategies. Generally, derivatives are financial
contracts whose value depends upon, or is derived from, the value
of an underlying asset, reference rate or index, and may relate to
stocks, bonds, interest rates, currencies or currency exchange
rates, commodities, and related indexes. A portfolio manager may
decide not to employ any of these strategies and there is no
assurance that any derivatives strategy used by a Fund will
succeed.
Examples of derivative instruments include options contracts,
futures contracts, options on futures contracts and swap
agreements. The Equity Income, Global Innovation, Growth, Growth &
Income, Innovation, International, Opportunity, Renaissance,
Select Growth, Target, Tax-Efficient Equity and Value Funds may
purchase and sell (write) call and put options on securities,
securities indexes and foreign currencies. Each of these Funds may
purchase and sell futures contracts and options thereon with
respect to securities, securities indexes and foreign currencies.
The Global Innovation and Tax-Efficient Equity Funds may enter
into swap agreements with respect to securities indexes. A
description of these and other derivative instruments that the
Funds may use are described under "Investment Objectives and
Policies" in the Statement of Additional Information.
A Fund's use of derivative instruments involves risks different
from, or greater than, the risks associated with investing
directly in securities and other more traditional investments. A
description of various risks associated with particular derivative
instruments is included in "Investment Objectives and Policies" in
the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all
derivative instruments that may be used by the Funds.
Management Risk Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of
a derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit
of observing the performance of the derivative under all possible
market conditions.
Credit Risk The use of a derivative instrument involves the risk
that a loss may be sustained as a result of the failure of another
party to the contract (usually referred to as a "counterparty") to
make required payments or otherwise comply with the contract's
terms.
Liquidity Risk Liquidity risk exists when a particular derivative
instrument is difficult to purchase or sell. If a derivative
transaction is particularly large or if the relevant market is
illiquid (as is the case with many privately negotiated
derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
55 PIMCO Funds: Multi-Manager Series
<PAGE>
Leveraging Risk Because many derivatives have a leverage
component, adverse changes in the value or level of the underlying
asset, reference rate or index can result in a loss substantially
greater than the amount invested in the derivative itself. Certain
derivatives have the potential for unlimited loss, regardless of
the size of the initial investment. When a Fund uses derivatives
for leverage, investments in that Fund will tend to be more
volatile, resulting in larger gains or losses in response to
market changes. To limit leverage risk, each Fund will segregate
assets determined to be liquid by PIMCO Advisors or a Sub-Adviser
in accordance with procedures established by the Board of Trustees
(or, as permitted by applicable regulation, enter into certain
offsetting positions) to cover its obligations under derivative
instruments.
Lack of Availability Because the markets for certain derivative
instruments (including markets located in foreign countries) are
relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk
management or other purposes. There is no assurance that a Fund
will engage in derivatives transactions at any time or from time
to time. A Fund's ability to use derivatives may also be limited
by certain regulatory and tax considerations.
Market and Other Risks Like most other investments, derivative
instruments are subject to the risk that the market value of the
instrument will change in a way detrimental to a Fund's interest.
If a portfolio manager incorrectly forecasts the values of
securities, currencies or interest rates or other economic factors
in using derivatives for a Fund, the Fund might have been in a
better position if it had not entered into the transaction at all.
While some strategies involving derivative instruments can reduce
the risk of loss, they can also reduce the opportunity for gain or
even result in losses by offsetting favorable price movements in
other Fund investments. A Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is
legally required to maintain offsetting positions or asset
coverage in connection with certain derivatives transactions.
Other risks in using derivatives include the risk of mispricing
or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates
and indexes. Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Fund. Also, the value of
derivatives may not correlate perfectly, or at all, with the value
of the assets, reference rates or indexes they are designed to
closely track. In addition, a Fund's use of derivatives may cause
the Fund to realize higher amounts of short-term capital gains
(taxed at ordinary income tax rates when distributed to
shareholders who are individuals) than if the Fund had not used
such instruments.
Equity- The International Fund may invest up to 5% of its assets in
Linked equity-linked securities. Equity-linked securities are privately
Securities issued securities whose investment results are designed to
correspond generally to the performance of a specified stock index
or "basket" of stocks, or sometimes a single stock. To the extent
that the Fund invests in equity-linked securities whose return
corresponds to the performance of a foreign securities index or
one or more of foreign stocks, investing in equity-linked
securities will involve risks similar to the risks of investing in
foreign equity securities. See "Foreign Securities" above. In
addition, the Fund bears the risk that the issuer of an equity-
linked security may default on its obligations under the security.
Equity-linked securities may be considered illiquid and thus
subject to the Fund's restrictions on investments in illiquid
securities.
Credit The Funds may invest in securities based on their credit ratings
Ratings assigned by rating agencies such as Moody's Investors Service,
and Inc. ("Moody's") and Standard and Poor's Ratings Services ("S&P").
Unrated Moody's, S&P and other rating agencies are private services that
Securities provide ratings of the credit quality of fixed income securities,
including convertible securities. The Appendix to the Statement of
Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a
rating agency are not absolute standards of credit quality and do
not evaluate market risk. Rating agencies may fail to make timely
changes in credit ratings and an issuer's current financial
condition may be better or worse than a rating indicates. A Fund
will not necessarily sell a security when its rating is reduced
below its rating at the time of purchase. PIMCO Advisors and the
Sub-Advisers do not rely solely on credit ratings, and develop
their own analysis of issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a
rating agency) if its portfolio manager determines that the
security is of comparable quality to a rated security that the
Fund may purchase. Unrated securities may be less liquid than
comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security's
comparative credit rating.
Prospectus 56
<PAGE>
High Securities rated lower than Baa by Moody's or lower than BBB by
Yield S&P are sometimes referred to as "high yield" securities or "junk
Securities bonds." The Funds, particularly the Growth & Income Fund, may
invest in these securities. Investing in high yield securities
involves special risks in addition to the risks associated with
investments in higher-rated fixed income securities. While
offering a greater potential opportunity for capital appreciation
and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-
rated securities. High yield securities may be regarded as
predominately speculative with respect to the issuer's continuing
ability to meet principal and interest payments. They may also be
more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities.
Loans of For the purpose of achieving income, each Fund may lend its
Portfolio portfolio securities to brokers, dealers, and other financial
Securities institutions provided a number of conditions are satisfied,
including that the loan is fully collateralized. Please see
"Investment Objectives and Policies" in the Statement of
Additional Information for details. When a Fund lends portfolio
securities, its investment performance will continue to reflect
changes in the value of the securities loaned, and the Fund will
also receive a fee or interest on the collateral. Securities
lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to
return the security loaned or becomes insolvent. A Fund may pay
lending fees to the party arranging the loan.
Short Each Fund may make short sales as part of its overall portfolio
Sales management strategies or to offset a potential decline in the
value of a security. A short sale involves the sale of a security
that is borrowed from a broker or other institution to complete
the sale. A Fund may only enter into short selling transactions if
the security sold short is held in the Fund's portfolio or if the
Fund has the right to acquire the security without the payment of
further consideration. For these purposes, a Fund may also hold or
have the right to acquire securities which, without the payment of
any further consideration, are convertible into or exchangeable
for the securities sold short. Short sales expose a Fund to the
risk that it will be required to acquire, convert or exchange
securities to replace the borrowed securities (also known as
"covering" the short position) at a time when the securities sold
short have appreciated in value, thus resulting in a loss to the
Fund.
When- Each Fund may purchase securities which it is eligible to purchase
Issued, on a when-issued basis, may purchase and sell such securities for
Delayed delayed delivery and may make contracts to purchase such
Delivery securities for a fixed price at a future date beyond normal
and settlement time (forward commitments). When-issued transactions,
Forward delayed delivery purchases and forward commitments involve a risk
Commitment of loss if the value of the securities declines prior to the
Transactionssettlement date. This risk is in addition to the risk that the
Fund's other assets will decline in value. Therefore, these
transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues
on securities a Fund has committed to purchase prior to the time
delivery of the securities is made, although a Fund may earn
income on securities it has segregated to cover these positions.
Repurchase Each Fund may enter into repurchase agreements, in which the Fund
Agreements purchases a security from a bank or broker-dealer that agrees to
repurchase the security at the Fund's cost plus interest within a
specified time. If the party agreeing to repurchase should
default, the Fund will seek to sell the securities which it holds.
This could involve procedural costs or delays in addition to a
loss on the securities if their value should fall below their
repurchase price. Those Funds whose investment objectives do not
include the earning of income will invest in repurchase agreements
only as a cash management technique with respect to that portion
of its portfolio maintained in cash. Repurchase agreements
maturing in more than seven days are considered illiquid
securities.
Reverse Each Fund may enter into reverse repurchase agreements, subject to
Repurchase the Fund's limitations on borrowings. A reverse repurchase
Agreements agreement involves the sale of a security by a Fund and its
And Other agreement to repurchase the instrument at a specified time and
Borrowings price, and may be considered a form of borrowing for some
purposes. A Fund will segregate assets determined to be liquid by
PIMCO Advisors or a Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations
under reverse repurchase agreements. A Fund also may borrow money
for investment purposes subject to any policies of the Fund
currently described in this Prospectus or in the Statement of
Additional Information. Reverse repurchase agreements and other
forms of borrowings may create leveraging risk for a Fund.
57 PIMCO Funds: Multi-Manager Series
<PAGE>
Illiquid Each Fund may invest in securities that are illiquid so long as
Securities not more than 15% of the value of the Fund's net assets (taken at
market value at the time of investment) would be invested in such
securities. Certain illiquid securities may require pricing at
fair value as determined in good faith under the supervision of
the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by a
Fund, and transactions in illiquid securities may entail
registration expenses and other transaction costs that are higher
than those for transactions in liquid securities. The term
"illiquid securities" for this purpose means securities that
cannot be disposed of within seven days in the ordinary course of
business at approximately the amount at which a Fund has valued
the securities. Please see "Investment Objectives and Policies" in
the Statement of Additional Information for a listing of various
securities that are generally considered to be illiquid for these
purposes. Restricted securities, i.e., securities subject to legal
or contractual restrictions on resale, may be illiquid. However,
some restricted securities (such as securities issued pursuant to
Rule 144A under the Securities Act of 1933 and certain commercial
paper) may be treated as liquid, although they may be less liquid
than registered securities traded on established secondary
markets.
Investment The International Fund may invest up to 10% of its assets in
in Other securities of other investment companies, such as closed-end
Investment management investment companies, or in pooled accounts or other
Companies investment vehicles which invest in foreign markets. Each of the
other Funds may invest up to 5% of its assets in other investment
companies. As a shareholder of an investment company, a Fund may
indirectly bear service and other fees which are in addition to
the fees the Fund pays its service providers.
Portfolio With the exception of the Tax-Efficient Equity Fund, the length of
Turnover time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities
held by a Fund is known as "portfolio turnover." Each Fund may
engage in active and frequent trading of portfolio securities to
achieve its investment objective and principal investment
strategies, particularly during periods of volatile market
movements, although the Tax-Efficient Equity Fund will generally
attempt to limit portfolio turnover as part of its tax-efficient
management strategies. High portfolio turnover (e.g., over 100%)
involves correspondingly greater expenses to a Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable
capital gains, including short-term capital gains (which are taxed
at ordinary income tax rates when distributed to shareholders who
are individuals). The trading costs and tax effects associated
with portfolio turnover may adversely affect a Fund's performance.
Changes
in The investment objective of each of the Global Innovation, Growth,
Investment Growth & Income, Innovation, International, Opportunity,
Objectives Renaissance, Select Growth, Target and Tax-Efficient Equity Funds
and described in this Prospectus may be changed by the Board of
Policies Trustees without shareholder approval. The investment objective of
each other Fund is fundamental and may not be changed without
shareholder approval. Unless otherwise stated in the Statement of
Additional Information, all investment policies of the Funds may
be changed by the Board of Trustees without shareholder approval.
If there is a change in a Fund's investment objective or policies,
including a change approved by shareholder vote, shareholders
should consider whether the Fund remains an appropriate investment
in light of their then current financial position and needs.
New and In addition to the risks described under "Summary of Principal
Smaller- Risks" above and in this section, several of the Funds are newly
Sized formed and therefore have no performance history for investors to
Funds evaluate. Also, it is possible that newer Funds and smaller-sized
Funds may invest in securities offered in initial public offerings
and other types of transactions (such as private placements)
which, because of the Funds' size, may have a disproportionate
impact on the Funds' performance results. The Funds would not
necessarily have achieved the same performance results if their
aggregate net assets had been greater.
Percentage
Investment Unless otherwise stated, all percentage limitations on Fund
Limitations investments listed in this Prospectus will apply at the time of
investment. A Fund would not violate these limitations unless an
excess or deficiency occurs or exists immediately after and as a
result of an investment.
Other
Investments
and
Techniques The Funds may invest in other types of securities and use a
variety of investment techniques and strategies which are not
described in this Prospectus. These securities and techniques may
subject the Funds to additional risks. Please see the Statement of
Additional Information for additional information about the
securities and investment techniques described in this Prospectus
and about additional securities and techniques that may be used by
the Funds.
Prospectus 58
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand
the financial performance of Class A, Class B and Class C shares
of each Fund for the past 5 years or, if the class is less than 5
years old, since the class of shares was first offered. Certain
information reflects financial results for a single Fund share.
The total returns in the table represent the rate that an investor
would have earned or lost on an investment in a particular class
of shares of a Fund, assuming reinvestment of all dividends and
distributions. Except as provided in the next sentence, this
information has been audited by PricewaterhouseCoopers LLP, whose
report, along with each Fund's financial statements, are included
in the Trust's annual report to shareholders. The annual report is
incorporated by reference in the Statement of Additional
Information and is available free of charge upon request from the
Distributor.
The information provided for each of the Growth, Innovation,
International, Opportunity, Renaissance and Target Funds reflects
the operational history of a corresponding series of PIMCO
Advisors Funds which reorganized as a series of the Trust on
January 17, 1997. In connection with the reorganizations, these
Funds changed their fiscal year ends from September 30 to June 30.
The expense ratios provided for these Funds for periods prior to
January 17, 1997 reflect fee arrangements of PIMCO Advisors Funds
previously in effect which differ from the current fee
arrangements of the Trust. The Growth & Income Fund did not offer
Class A, B or C shares during the periods ended June 30, 2000.
[To be updated in a subsequent post-effective amendment]
<TABLE>
<CAPTION>
Year or Net Realized/ Dividends Dividends in Distributions
Period Net Asset Value Net Unrealized Total Income From Net Excess of Net From Net
Ended Beginning Investment Gain (Loss) on From Investment Investment Investment Realized Capital
of Period Income (Loss) Investments Operations Income Income Gains
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Appreci-
ation Fund
Class A
06/30/99 $26.01 $0.06 (a) $2.33 (a) $2.39 $(0.10) $0.00 $(1.65)
06/30/98 21.16 0.07 (a) 6.55 (a) 6.62 (0.09) 0.00 (1.68)
01/20/97-
06/30/97 19.31 0.09 1.76 1.85 0.00 0.00 0.00
Class B
06/30/99 25.75 (0.13)(a) 2.32 (a) 2.19 0.00 0.00 (1.65)
06/30/98 21.10 (0.11)(a) 6.51 (a) 6.40 (0.07) 0.00 (1.68)
01/20/97-
06/30/97 19.31 0.01 1.78 1.79 0.00 0.00 0.00
Class C
06/30/99 25.78 (0.13)(a) 2.31 (a) 2.18 0.00 0.00 (1.65)
06/30/98 21.10 (0.12)(a) 6.53 (a) 6.41 (0.05) 0.00 (1.68)
01/20/97-
06/30/97 19.31 0.02 1.77 1.79 0.00 0.00 0.00
<CAPTION>
Year or Distributions
Period in Excess of
Ended Net Realized
Capital Gains
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
Capital Appreci-
ation Fund
Class A
06/30/99 $0.00
06/30/98 0.00
01/20/97-
06/30/97 0.00
Class B
06/30/99 0.00
06/30/98 0.00
01/20/97-
06/30/97 0.00
Class C
06/30/99 0.00
06/30/98 0.00
01/20/97-
06/30/97 0.00
Equity Income
Fund (i)
Class A
06/30/99 $16.04 $0.39 (a) $1.29 (a) $1.68 $(0.38) $0.00 $(1.76)
06/30/98 15.39 0.39 (a) 2.73 (a) 3.12 (0.38) 0.00 (2.09)
01/20/97-
06/30/97 13.94 0.15 1.48 1.63 (0.18) 0.00 0.00
Class B
06/30/99 15.99 0.28 (a) 1.27 (a) 1.55 (0.28) 0.00 (1.76)
06/30/98 15.37 0.26 (a) 2.73 (a) 2.99 (0.28) 0.00 (2.09)
01/20/97-
06/30/97 13.94 0.11 1.48 1.59 (0.16) 0.00 0.00
Class C
06/30/99 16.01 0.27 (a) 1.27 (a) 1.54 (0.27) 0.00 (1.76)
06/30/98 15.37 0.26 (a) 2.74 (a) 3.00 (0.27) 0.00 (2.09)
01/20/97-
06/30/97 13.94 0.11 1.48 1.59 (0.16) 0.00 0.00
Equity Income
Fund (i)
Class A
06/30/99 $0.00
06/30/98 0.00
01/20/97-
06/30/97 0.00
Class B
06/30/99 0.00
06/30/98 0.00
01/20/97-
06/30/97 0.00
Class C
06/30/99 0.00
06/30/98 0.00
01/20/97-
06/30/97 0.00
Global Innova-
tion [to be
added]
Growth Fund (ii)
Class A
06/30/99 $32.62 $(0.14)(a) $5.56 (a) $5.42 $0.00 $0.00 $(3.92)
06/30/98 27.03 (0.08)(a) 9.99 (a) 9.91 0.00 0.00 (4.32)
10/01/96-
06/30/97 26.58 0.69 3.27 3.96 0.00 0.00 (3.51)
09/30/96 25.73 0.06 3.72 3.78 0.00 0.00 (2.93)
09/30/95 22.01 0.12 4.79 4.91 0.00 0.00 (1.19)
09/30/94 23.64 0.12 0.12 0.24 0.00 0.00 (1.87)
Class B
06/30/99 30.34 (0.35)(a) 5.08 (a) 4.73 0.00 0.00 (3.92)
06/30/98 25.59 (0.28)(a) 9.35 (a) 9.07 0.00 0.00 (4.32)
10/01/96-
06/30/97 25.46 0.35 3.29 3.64 0.00 0.00 (3.51)
09/30/96 24.94 (0.07) 3.52 3.45 0.00 0.00 (2.93)
05/23/95-
09/30/95 22.63 (0.03) 2.34 2.31 0.00 0.00 0.00
Global Innova-
tion [to be
added]
Growth Fund (ii)
Class A
06/30/99 $0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Class B
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
05/23/95-
09/30/95 0.00
</TABLE>
-------
* Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
(i) The information provided for the Equity Income Fund reflects the results
of operations under the Fund's former Sub-Adviser through May 8, 2000; the
Fund would not necessarily have achieved the results shown above under its
current investment management arrangements.
(ii) The information provided for the Growth Fund reflects results of
operations under the Fund's former Sub-Adviser through March 6, 2000; the
Fund would not necessarily have achieved the performance results shown
above under its current investment management arrangements.
59 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Tax Basis Net Asset Expenses to Income (Loss) to
Return of Total Value End of Net Assets End Average Net Average Net Portfolio
Capital Distributions Period Total Return of Period (000s) Assets Assets Turnover Rate
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0.00 $(1.75) $26.65 10.14% $91,296 1.10% 0.24% 120%
0.00 (1.77) 26.01 32.39 72,803 1.10 0.27 75
0.00 0.00 21.16 9.58 6,534 1.11* 0.59* 87
0.00 (1.65) 26.29 9.39 55,094 1.85 (0.52) 120
0.00 (1.75) 25.75 31.39 40,901 1.85 (0.47) 75
0.00 0.00 21.10 9.27 3,022 1.85* (0.26)* 87
0.00 (1.65) 26.31 9.34 81,097 1.85 (0.52) 120
0.00 (1.73) 25.78 31.40 71,481 1.85 (0.49) 75
0.00 0.00 21.10 9.27 13,093 1.86* (0.23)* 87
$0.00 $(2.14) $15.58 12.26% $17,342 1.10% 2.64% 76%
0.00 (2.47) 16.04 21.35 12,954 1.11 2.39 45
0.00 (0.18) 15.39 11.77 1,756 1.13* 2.85* 45
0.00 (2.04) 15.50 11.35 21,732 1.85 1.89 76
0.00 (2.37) 15.99 20.47 15,178 1.85 1.63 45
0.00 (0.16) 15.37 11.45 2,561 1.87* 2.11* 45
0.00 (2.03) 15.52 11.28 26,016 1.85 1.86 76
0.00 (2.36) 16.01 20.51 23,122 1.85 1.60 45
0.00 (0.16) 15.37 11.42 6,624 1.87* 2.15* 45
$0.00 $(3.92) $34.12 18.65% $227,638 1.16% (0.44)% 131%
0.00 (4.32) 32.62 41.03 180,119 1.16 (0.27) 123
0.00 (3.51) 27.03 15.93 147,276 1.11* 0.13* 94
0.00 (2.93) 26.58 16.11 151,103 1.11 0.24 104
0.00 (1.19) 25.73 23.70 134,819 1.10 0.50 111
0.00 (1.87) 22.01 1.30 107,269 1.10 0.60 115
0.00 (3.92) 31.15 17.72 133,850 1.90 (1.19) 131
0.00 (4.32) 30.34 39.97 80,719 1.91 (1.02) 123
0.00 (3.51) 25.59 15.32 55,626 1.86* (0.62)* 94
0.00 (2.93) 25.46 15.22 37,256 1.86 (0.51) 104
0.00 0.00 24.94 10.20 7,671 1.90* (0.40)* 111
</TABLE>
Prospectus 60
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION> Net Realized/ Dividends Dividends in Distributions
Year or Net Asset Value Net Unrealized Total Income From Net Excess of Net From Net
Period Beginning Investment Gain (Loss) on From Investment Investment Investment Realized Capital
Ended of Period Income (Loss) Investments Operations Income Income Gains
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth Fund
(Cont.)
Class C
06/30/99 $30.33 $(0.35)(a) $5.09 (a) $4.74 $0.00 $0.00 $(3.92)
06/30/98 25.58 (0.28)(a) 9.35 (a) 9.07 0.00 0.00 (4.32)
10/01/96-
06/30/97 25.46 0.45 3.18 3.63 0.00 0.00 (3.51)
09/30/96 24.94 (0.12) 3.57 3.45 0.00 0.00 (2.93)
09/30/95 21.52 (0.04) 4.65 4.61 0.00 0.00 (1.19)
09/30/94 23.32 (0.04) 0.11 0.07 0.00 0.00 (1.87)
Innovation Fund
(iii)
Class A
06/30/99 $24.28 $(0.28)(a) $14.72 (a) $14.44 $0.00 $0.00 $(1.26)
06/30/98 17.43 (0.19)(a) 8.21 (a) 8.02 0.00 0.00 (0.99)
10/01/96-
06/30/97 17.26 0.07 0.36 0.43 0.00 0.00 (0.26)
9/30/96 14.74 (0.07) 2.94 2.87 0.00 0.00 (0.35)
12/22/94-
9/30/95 10.00 (0.06) 4.80 4.74 0.00 0.00 0.00
Class B
06/30/99 23.60 (0.49)(a) 14.24 (a) 13.75 0.00 0.00 (1.26)
06/30/98 17.10 (0.33)(a) 8.00 (a) 7.67 0.00 0.00 (0.99)
10/01/96-
06/30/97 17.04 (0.03) 0.35 0.32 0.00 0.00 (0.26)
9/30/96 14.66 (0.11) 2.84 2.73 0.00 0.00 (0.35)
5/22/95-
9/30/95 11.81 (0.08) 2.93 2.85 0.00 0.00 0.00
Class C
06/30/99 23.59 (0.48)(a) 14.23 (a) 13.75 0.00 0.00 (1.26)
06/30/98 17.09 (0.33)(a) 8.00 (a) 7.67 0.00 0.00 (0.99)
10/01/96-
06/30/97 17.04 (0.02) 0.33 0.31 0.00 0.00 (0.26)
9/30/96 14.65 (0.15) 2.89 2.74 0.00 0.00 (0.35)
12/22/94-
9/30/95 10.00 (0.13) 4.78 4.65 0.00 0.00 0.00
<CAPTION>
Distributions
Year or in Excess of
Period Net Realized
Ended Capital Gains
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
Growth Fund
(Cont.)
Class C
06/30/99 $0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Innovation Fund
(iii)
Class A
06/30/99 $0.00
06/30/98 (0.18)
10/01/96-
06/30/97 0.00
9/30/96 0.00
12/22/94-
9/30/95 0.00
Class B
06/30/99 0.00
06/30/98 (0.18)
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/22/95-
9/30/95 0.00
Class C
06/30/99 0.00
06/30/98 (0.18)
10/01/96-
06/30/97 0.00
9/30/96 0.00
12/22/94-
9/30/95 0.00
International
Fund (iv)
Class A
06/30/99 $14.33 $0.01 (a) $(0.74)(a) $(0.73) $0.00 $0.00 $(1.15)
06/30/98 14.26 0.06 (a) 1.13 (a) 1.19 0.00 0.00 (0.82)
10/01/96-
06/30/97 13.03 0.29 1.33 1.62 0.00 0.00 (0.39)
9/30/96 12.19 0.07 0.77 0.84 0.00 0.00 0.00
9/30/95 12.92 0.07 (0.56) (0.49) 0.00 0.00 (0.24)
9/30/94 12.17 0.04 0.94 0.98 0.00 0.00 (0.23)
Class B
06/30/99 13.46 (0.08)(a) (0.72)(a) (0.80) 0.00 0.00 (1.15)
06/30/98 13.56 (0.05)(a) 1.07 (a) 1.02 0.00 0.00 (0.82)
10/01/96-
06/30/97 12.48 0.16 1.31 1.47 0.00 0.00 (0.39)
9/30/96 11.75 0.00 (a) 0.73 (a) 0.73 0.00 0.00 0.00
5/22/95-
9/30/95 11.30 0.00 0.45 0.45 0.00 0.00 0.00
Class C
06/30/99 13.45 (0.09)(a) (0.71)(a) (0.80) 0.00 0.00 (1.15)
06/30/98 13.55 (0.06)(a) 1.08 (a) 1.02 0.00 0.00 (0.82)
10/01/96-
06/30/97 12.47 0.18 1.29 1.47 0.00 0.00 (0.39)
9/30/96 11.75 (0.05) 0.77 0.72 0.00 0.00 0.00
9/30/95 12.56 (0.02) (0.55) (0.57) 0.00 0.00 (0.24)
9/30/94 11.92 (0.06) 0.93 0.87 0.00 0.00 (0.23)
International
Fund (iv)
Class A
06/30/99 $0.00
06/30/98 (0.30)
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
Class B
06/30/99 0.00
06/30/98 (0.30)
10/01/96-
06/30/97 0.00
9/30/96 0.00
5/22/95-
9/30/95 0.00
Class C
06/30/99 0.00
06/30/98 (0.30)
10/01/96-
06/30/97 0.00
9/30/96 0.00
9/30/95 0.00
9/30/94 0.00
Mid-Cap Fund (v)
Class A
06/30/99 $24.00 $0.03 (a) $(0.13)(a) $(0.10) $(0.01) $0.00 $(1.07)
06/30/98 20.24 0.02 (a) 5.11 (a) 5.13 (0.04) 0.00 (1.33)
01/13/97-
06/30/97 18.14 (0.04) 2.14 2.10 0.00 0.00 0.00
Class B
06/30/99 23.77 (0.13)(a) (0.14)(a) (0.27) 0.00 0.00 (1.07)
06/30/98 20.17 (0.16)(a) 5.09 (a) 4.93 0.00 0.00 (1.33)
01/13/97-
06/30/97 18.14 (0.11) 2.14 2.03 0.00 0.00 0.00
Mid-Cap Fund (v)
Class A
06/30/99 $0.00
06/30/98 0.00
01/13/97-
06/30/97 0.00
Class B
06/30/99 0.00
06/30/98 0.00
01/13/97-
06/30/97 0.00
</TABLE>
-------
* Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
(b) Ratio of expenses to average net assets excluding interest expense is
1.45%.
(c) Ratio of expenses to average net assets excluding interest expense is
2.20%.
(d) Ratio of expenses to average net assets excluding interest expense is
2.20%.
(iii) The information provided for the Innovation Fund reflects results of
operations under the Fund's former Sub-Adviser through March 6, 1999;
the Fund would not necessarily have achieved the performance results
shown above under its current investment management arrangements.
(iv) The information provided for the International Fund reflects results of
operations under the Fund's former Sub-Advisers through November 15,
1994; the Fund would not necessarily have achieved the performance
results shown above under its current investment management
arrangements.
(v) Formerly the Mid-Cap Growth Fund.
61 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Tax Basis Net Asset Expenses to Income (Loss) to
Return of Total Value End of Net Assets End Average Net Average Net Portfolio
Capital Distributions Period Total Return of Period (000s) Assets Assets Turnover Rate
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $(3.92) $31.15 17.76 % $2,064,450 1.90% (1.18)% 131%
0.00 (4.32) 30.33 39.99 1,853,002 1.91 (1.02) 123
0.00 (3.51) 25.58 15.27 1,514,432 1.86* (0.61)* 94
0.00 (2.93) 25.46 15.22 1,450,216 1.86 (0.51) 104
0.00 (1.19) 24.94 22.80 1,290,152 1.90 (0.20) 111
0.00 (1.87) 21.52 0.50 1,085,427 1.90 (0.20) 115
$0.00 $(1.26) $37.46 61.36 % $313,946 1.30% (0.90)% 119%
0.00 (1.17) 24.28 48.10 85,800 1.31 (0.94) 100
0.00 (0.26) 17.43 2.41 56,215 1.28* (0.68)* 80
0.00 (0.35) 17.26 19.86 50,067 1.31 (0.61) 123
0.00 0.00 14.74 47.40 28,239 1.40* (0.60)* 86
0.00 (1.26) 36.09 60.17 351,876 2.05 (1.64) 119
0.00 (1.17) 23.60 46.95 81,130 2.06 (1.69) 100
0.00 (0.26) 17.10 1.79 51,472 2.03* (1.43)* 80
0.00 (0.35) 17.04 18.99 33,778 2.06 (1.36) 123
0.00 0.00 14.66 24.10 6,509 2.30* (1.70)* 86
0.00 (1.26) 36.08 60.20 580,251 2.05 (1.65) 119
0.00 (1.17) 23.59 46.97 219,258 2.06 (1.69) 100
0.00 (0.26) 17.09 1.73 162,889 2.03* (1.43)* 80
0.00 (0.35) 17.04 19.08 137,752 2.06 (1.36) 123
0.00 0.00 14.65 46.50 63,952 2.20* (1.40)* 86
$0.00 $(1.15) $12.45 (4.31)% $18,865 1.55%(b) 0.05% 55%
0.00 (1.12) 14.33 9.95 12,510 1.48 0.41 60
0.00 (0.39) 14.26 12.82 18,287 1.51* 0.58* 59
0.00 0.00 13.03 6.89 20,056 1.41 0.49 110
0.00 (0.24) 12.19 (3.70) 17,951 1.50 0.60 170
0.00 (0.23) 12.92 8.20 23,289 1.40 0.30 55
0.00 (1.15) 11.51 (5.15) 9,478 2.29 (c) (0.67) 55
0.00 (1.12) 13.46 9.17 8,956 2.22 (0.37) 60
0.00 (0.39) 13.56 12.17 8,676 2.26* 0.18* 59
0.00 0.00 12.48 6.21 5,893 2.16 (0.26) 110
0.00 0.00 11.75 4.00 503 2.30* (0.10)* 170
0.00 (1.15) 11.50 (5.15) 101.320 2.30 (d) (0.75) 55
0.00 (1.12) 13.45 9.18 132,986 2.22 (0.43) 60
0.00 (0.39) 13.55 12.18 168,446 2.25* (0.25)* 59
0.00 0.00 12.47 6.13 203,544 2.16 (0.26) 110
0.00 (0.24) 11.75 (4.50) 215,349 2.20 (0.20) 170
0.00 (0.23) 12.56 7.40 294,492 2.20 (0.50) 55
$0.00 $(1.08) $22.82 (0.13)% $124,680 1.10% 0.15% 85%
0.00 (1.37) 24.00 25.71 57,164 1.11 0.07 66
0.00 0.00 20.24 11.58 12,184 1.11* 0.17* 82
0.00 (1.07) 22.43 (0.86) 84,698 1.85 (0.62) 85
0.00 (1.33) 23.77 24.76 84,535 1.86 (0.68) 66
0.00 0.00 20.17 11.19 28,259 1.85* (0.58)* 82
</TABLE>
Prospectus 62
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Net Realized/ Dividends Dividends in Distributions
Year or Net Asset Value Net Unrealized Total Income From Net Excess of Net From Net
Period Beginning Investment Gain (Loss) on From Investment Investment Investment Realized Capital
Ended of Period Income (Loss) Investments Operations Income Income Gains
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mid-Cap Fund
(Cont.)
Class C
06/30/99 $23.77 $(0.13)(a) $(0.13)(a) $(0.26) $0.00 $0.00 $(1.07)
06/30/98 20.18 (0.16)(a) 5.08 (a) 4.92 0.00 0.00 (1.33)
01/13/97
06/30/97 18.14 (0.10) 2.14 2.04 0.00 0.00 0.00
<CAPTION>
Distributions
Year or in Excess of
Period Net Realized
Ended Capital Gains
-------------------------------------------------------------------------------------------------------------------------
Mid-Cap Fund
(Cont.)
Class C
06/30/99 $0.00
06/30/98 0.00
01/13/97-
06/30/97 0.00
Opportunity Fund
(vi)
Class A
06/30/99 $31.33 $(0.21)(a) $0.46 (a) $0.25 $0.00 $0.00 $(4.62)
06/30/98 29.35 (0.27)(a) 4.19 (a) 3.92 0.00 0.00 (1.94)
10/01/96-
06/30/97 37.36 0.00 (3.10) (3.10) 0.00 0.00 (4.91)
09/30/96 39.08 (0.11) 6.12 6.01 0.00 0.00 (7.73)
09/30/95 28.87 (0.11) 11.19 11.08 0.00 0.00 (0.87)
09/30/94 33.43 (0.17) (2.02) (2.19) 0.00 0.00 (2.26)
Class B
03/31/99-
06/30/99 21.40 (0.09)(a) 2.89 (a) 2.80 0.00 0.00 0.00
Class C
06/30/99 28.86 (0.37)(a) 0.32 (a) (0.05) 0.00 0.00 (4.62)
06/30/98 27.38 (0.46)(a) 3.88 (a) 3.42 0.00 0.00 (1.94)
10/01/96-
06/30/97 35.38 (0.04) (3.05) (3.09) 0.00 0.00 (4.91)
09/30/96 37.64 (0.35) 5.82 5.47 0.00 0.00 (7.73)
09/30/95 28.04 (0.34) 10.81 10.47 0.00 0.00 (0.87)
09/30/94 32.77 (0.38) (1.98) (2.36) 0.00 0.00 (2.26)
Opportunity Fund
(vi)
Class A
06/30/99 $0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Class B
03/31/99-
06/30/99 0.00
Class C
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Renaissance Fund
(vii)
Class A
06/30/99 $19.10 $(0.01)(a) $ 1.45 (a) $1.44 $0.00 $0.00 $(2.33)
06/30/98 17.73 0.07 (a) 4.91 (a) 4.98 (0.08) 0.00 (3.53)
10/01/96-
06/30/97 16.08 0.12 (a) 3.90 (a) 4.02 (0.12) 0.00 (2.25)
09/30/96 14.14 0.23 2.79 3.02 (0.23) (0.07) (0.78)
09/30/95 12.50 0.36 1.61 1.97 (0.33) 0.00 0.00
09/30/94 12.88 0.34 (0.17) 0.17 (0.33) 0.00 (0.22)
Class B
06/30/99 19.06 (0.13)(a) 1.39 (a) 1.26 0.00 0.00 (2.33)
06/30/98 17.77 (0.07)(a) 4.91 (a) 4.84 (0.02) 0.00 (3.53)
10/01/96-
06/30/97 16.12 0.03 (a) 3.92 (a) 3.95 (0.05) 0.00 (2.25)
09/30/96 14.13 0.09 2.83 2.92 (0.11) (0.04) (0.78)
05/22/95-
09/30/95 12.55 0.11 1.55 1.66 (0.08) 0.00 0.00
Class C
06/30/99 18.96 (0.13)(a) 1.41 (a) 1.28 0.00 0.00 (2.33)
06/30/98 17.69 (0.07)(a) 4.88 (a) 4.81 (0.01) 0.00 (3.53)
10/01/96-
06/30/97 16.05 0.03 (a) 3.90 (a) 3.93 (0.04) 0.00 (2.25)
09/30/96 14.09 0.12 2.78 2.90 (0.13) (0.03) (0.78)
09/30/95 12.47 0.27 1.59 1.86 (0.24) 0.00 0.00
09/30/94 12.85 0.24 (0.16) 0.08 (0.24) 0.00 (0.22)
Renaissance Fund
(vii)
Class A
06/30/99 $0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Class B
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
05/22/95-
09/30/95 0.00
Class C
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
</TABLE>
-------
* Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
(vi) The information provided for the Opportunity Fund reflects results of
operations under the Fund's former Sub-Adviser through March 6, 1999;
the Fund would not necessarily have achieved the performance results
shown above under its current investment management arrangements.
(vii) The information provided for the Renaissance Fund reflects results of
operations under the Fund's former Sub-Adviser through May 7, 1999; the
Fund would not necessarily have achieved the performance results shown
above under its current investment management arrangements.
63 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Tax Basis Net Asset Expenses to Income to
Return of Total Value End of Net Assets End Average Net Average Net Portfolio
Capital Distributions Period Total Return of Period (000s) Assets Assets Turnover Rate
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0.00 $(1.07) $22.44 (0.82)% $112,507 1.85% (0.63)% 85%
0.00 (1.33) 23.77 24.70 140,438 1.86 (0.68) 66
0.00 0.00 20.18 11.25 53,686 1.86* (0.58)* 82
$0.00 $(4.62) $26.96 3.98 % $121,507 1.31% (0.86)% 175%
0.00 (1.94) 31.33 13.87 200,935 1.31 (0.88) 86
0.00 (4.91) 29.35 (8.87) 213,484 1.25* (0.12)* 69
0.00 (7.73) 37.36 18.35 134,859 1.13 (0.32) 91
0.00 (0.87) 39.08 39.70 120,830 1.20 (0.40) 102
(0.11) (2.37) 28.87 (6.70) 95,261 1.10 (0.60) 78
0.00 0.00 24.20 13.08 251 2.03* (1.65)* 175
0.00 (4.62) 24.19 3.20 308,877 2.06 (1.62) 175
0.00 (1.94) 28.86 13.01 500,011 2.06 (1.63) 86
0.00 (4.91) 27.38 (9.40) 629,446 1.97* (0.95)* 69
0.00 (7.73) 35.38 17.47 800,250 1.88 (1.07) 91
0.00 (0.87) 37.64 38.60 715,191 1.90 (1.10) 102
(0.11) (2.37) 28.04 (7.40) 553,460 1.90 (1.40) 78
$0.00 $(2.33) $18.21 9.94 % $90,445 1.26% (0.04)% 221%
0.00 (3.61) 19.10 30.98 85,562 1.26 0.35 192
0.00 (2.37) 17.73 27.53 33,606 1.23* 0.95* 131
0.00 (1.08) 16.08 22.37 20,631 1.25 1.60 203
0.00 (0.33) 14.14 16.10 12,933 1.30 2.90 177
0.00 (0.55) 12.50 1.40 14,942 1.30 2.70 175
0.00 (2.33) 17.99 8.94 126,576 2.00 (0.78) 221
0.00 (3.55) 19.06 29.99 100,688 2.01 (0.39) 192
0.00 (2.30) 17.77 26.88 37,253 1.97* 0.20* 131
0.00 (0.93) 16.12 21.54 15,693 2.00 0.85 203
0.00 (0.08) 14.13 13.30 1,760 2.10* 2.20* 177
0.00 (2.33) 17.91 9.12 442,049 2.00 (0.79) 221
0.00 (3.54) 18.96 29.98 469,797 2.01 (0.37) 192
0.00 (2.29) 17.69 26.86 313,226 1.97* 0.21* 131
0.00 (0.94) 16.05 21.52 230,058 2.00 0.85 203
0.00 (0.24) 14.09 15.20 174,316 2.10 2.10 177
0.00 (0.46) 12.47 0.70 178,892 2.00 2.00 175
</TABLE>
Prospectus 64
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Year or Net Realized/ Dividends Dividends in Distributions
Period Net Asset Value Net Unrealized Total Income From Net Excess of Net From Net
Ended Beginning Investment Gain (Loss) on From Investment Investment Investment Realized Capital
of Period Income (Loss) Investments Operations Income Income Gains
------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year or Distributions
Period in Excess of
Ended Net Realized
Capital Gains
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Small-Cap Value
Fund
Class A
06/30/99 $17.58 $0.26 (a) $(1.29)(a) $(1.03) $(0.17) $0.00 $0.00
06/30/98 15.75 0.23 (a) 2.49 (a) 2.72 (0.13) 0.00 (0.76)
01/20/97-
06/30/97 14.02 0.10 1.63 1.73 0.00 0.00 0.00
Class B
06/30/99 17.43 0.14 (a) (1.27)(a) (1.13) (0.06) 0.00 0.00
06/30/98 15.71 0.09 (a) 2.48 (a) 2.57 (0.09) 0.00 (0.76)
01/20/97-
06/30/97 14.02 0.08 1.61 1.69 0.00 0.00 0.00
Class C
06/30/99 17.44 0.14 (a) (1.27)(a) (1.13) (0.04) 0.00 0.00
06/30/98 15.71 0.09 (a) 2.49 (a) 2.58 (0.09) 0.00 (0.76)
01/20/97-
06/30/97 14.02 0.08 1.61 1.69 0.00 0.00 0.00
Target Fund
(viii)
Class A
12/31/99+ $17.72 $(0.09)(a) $ 8.91 (a) $ 8.82 $ 0.00 $0.00 $(1.80)
06/30/99 16.35 (0.09)(a) 2.44 (a) 2.35 0.00 0.00 (0.98)
06/30/98 16.82 (0.08)(a) 4.06 (a) 3.98 0.00 0.00 (4.45)
10/01/96-
06/30/97 17.11 (0.04)(a) 1.82 (a) 1.78 0.00 0.00 (2.07)
09/30/96 16.40 (0.05) 2.54 2.49 0.00 0.00 (1.78)
09/30/95 13.13 (0.02) 3.45 3.43 0.00 0.00 (0.16)
09/30/94 12.72 (0.04) 0.57 0.53 0.00 0.00 (0.12)
Class B
12/31/99+ 16.44 (0.16)(a) 8.22 (a) 8.06 0.00 0.00 (1.80)
06/30/99 15.34 (0.19)(a) 2.27 (a) 2.08 0.00 0.00 (0.98)
06/30/98 16.14 (0.19)(a) 3.84 (a) 3.65 0.00 0.00 (4.45)
10/01/96-
06/30/97 16.58 (0.12)(a) 1.75 (a) 1.63 0.00 0.00 (2.07)
09/30/96 16.06 (0.09) 2.39 2.30 0.00 0.00 (1.78)
05/22/95-
09/30/95 13.93 (0.05) 2.18 2.13 0.00 0.00 0.00
Class C
12/31/99+ 16.43 (0.15)(a) 8.22 (a) 8.07 0.00 0.00 (1.80)
06/30/99 15.34 (0.19)(a) 2.26 (a) 2.07 0.00 0.00 (0.98)
06/30/98 16.13 (0.19)(a) 3.85 (a) 3.66 0.00 0.00 (4.45)
10/01/96-
06/30/97 16.58 (0.12)(a) 1.74 (a) 1.62 0.00 0.00 (2.07)
09/30/96 16.05 (0.16) 2.47 2.31 0.00 0.00 (1.78)
09/30/95 12.95 (0.12) 3.38 3.26 0.00 0.00 (0.16)
09/30/94 12.65 (0.14) 0.56 0.42 0.00 0.00 (0.12)
Tax-Efficient
Equity Fund
Class A
07/10/98-
06/30/99 $10.00 $0.03 (a) $1.56 (a) $1.59 $0.00 $0.00 $0.00
Class B
07/10/98-
06/30/99 10.00 (0.05)(a) 1.56 (a) 1.51 0.00 0.00 0.00
Class C
07/10/98-
06/30/99 10.00 (0.05)(a) 1.56 (a) 1.51 0.00 0.00 0.00
Value Fund (ix)
Class A
06/30/99 $15.64 $0.24 (a) $1.35 (a) $1.59 $(0.22) $0.00 $(1.72)
06/30/98 14.80 0.19 (a) 2.46 (a) 2.65 (0.18) 0.00 (1.63)
01/13/97-
06/30/97 13.17 0.47 1.26 1.73 (0.10) 0.00 0.00
Class B
06/30/99 15.63 0.12 (a) 1.35 (a) 1.47 (0.12) 0.00 (1.72)
06/30/98 14.80 0.07 (a) 2.46 (a) 2.53 (0.07) 0.00 (1.63)
01/13/97-
06/30/97 13.16 0.44 1.26 1.70 (0.06) 0.00 0.00
Class C
06/30/99 15.63 0.12 (a) 1.35 (a) 1.47 (0.12) 0.00 (1.72)
06/30/98 14.80 0.07 (a) 2.46 (a) 2.53 (0.07) 0.00 (1.63)
01/13/97-
06/30/97 13.15 0.43 1.28 1.71 (0.06) 0.00 0.00
<S> <C>
Small-Cap Value
Fund
Class A
06/30/99 $(0.45)
06/30/98 0.00
01/20/97-
06/30/97 0.00
Class B
06/30/99 (0.45)
06/30/98 0.00
01/20/97-
06/30/97 0.00
Class C
06/30/99 (0.45)
06/30/98 0.00
01/20/97-
06/30/97 0.00
Target Fund
(viii)
Class A
12/31/99+ $ 0.00
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Class B
12/31/99+ 0.00
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
05/22/95-
09/30/95 0.00
Class C
12/31/99+ 0.00
06/30/99 0.00
06/30/98 0.00
10/01/96-
06/30/97 0.00
09/30/96 0.00
09/30/95 0.00
09/30/94 0.00
Tax-Efficient
Equity Fund
Class A
07/10/98-
06/30/99 $0.00
Class B
07/10/98-
06/30/99 0.00
Class C
07/10/98-
06/30/99 0.00
Value Fund (ix)
Class A
06/30/99 $0.00
06/30/98 0.00
01/13/97-
06/30/97 0.00
Class B
06/30/99 0.00
06/30/98 0.00
01/13/97-
06/30/97 0.00
Class C
06/30/99 0.00
06/30/98 0.00
01/13/97-
06/30/97 0.00
</TABLE>
-------
* Annualized
+ Unaudited
(a) Per share amounts based upon average number of shares outstanding during
the period.
(viii) The information provided for the Target Fund reflects results of
operations under the Fund's former Sub-Adviser through March 6, 1999; the Fund
would not necessarily have achieved the performance results shown above under
its current investment management arrangements.
(ix)The information provided for the Value Fund reflects the results of
operations under the Fund's former Sub-Adviser through May 8, 2000; the Fund
would not necessarily have achieved the results shown above under its current
investment management arrangements.
65 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Tax Basis Net Asset Expenses to Income (Loss) to
Return of Total Value End of Net Assets End Average Net Average Net Portfolio
Capital Distributions Period Total Return of Period (000s) Assets Assets Turnover Rate
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0.00 $(0.62) $15.93 (5.50)% $107,569 1.25% 1.74 % 60%
0.00 (0.89) 17.58 17.33 75,070 1.25 1.27 41
0.00 0.00 15.75 12.34 6,563 1.30* 1.94* 48
0.00 (0.51) 15.79 (6.22) 96,994 2.00 0.95 60
0.00 (0.85) 17.43 16.40 110,833 2.00 0.53 41
0.00 0.00 15.71 12.05 11,077 2.04* 1.23* 48
0.00 (0.49) 15.82 (6.21) 112,926 2.00 0.95 60
0.00 (0.85) 17.44 16.42 130,466 2.00 0.52 41
0.00 0.00 15.71 12.05 20,637 2.05* 1.13* 48
$0.00 $(1.80) $24.74 51.23 % $221,955 1.20%* (0.96)%* 59%
0.00 (0.98) 17.72 15.69 170,277 1.21 (0.57) 229
0.00 (4.45) 16.35 27.49 157,277 1.22 (0.49) 226
0.00 (2.07) 16.82 11.19 150,689 1.20* (0.31)* 145
0.00 (1.78) 17.11 16.50 156,027 1.18 (0.34) 141
0.00 (0.16) 16.40 26.50 121,915 1.20 (0.10) 128
0.00 (0.12) 13.13 4.20 90,527 1.20 (0.30) 104
0.00 (1.80) 22.70 50.60 125,134 1.95* (1.72)* 59
0.00 (0.98) 16.44 14.93 78,659 1.95 (1.31) 229
0.00 (4.45) 15.34 26.45 76,194 1.96 (1.24) 226
0.00 (2.07) 16.14 10.58 67,531 1.94* (1.05)* 145
0.00 (1.78) 16.58 15.58 49,851 1.93 (1.09) 141
0.00 0.00 16.06 15.30 7,554 2.00* (0.90)* 128
0.00 (1.80) 22.70 50.69 1,307,105 1.95* (1.71)* 59
0.00 (0.98) 16.43 14.86 910,494 1.95 (1.31) 229
0.00 (4.45) 15.34 26.53 952,728 1.96 (1.24) 226
0.00 (2.07) 16.13 10.52 969,317 1.94* (1.06)* 145
0.00 (1.78) 16.58 15.66 974,948 1.93 (1.09) 141
0.00 (0.16) 16.05 25.60 780,355 2.00 (0.90) 128
0.00 (0.12) 12.95 3.40 556,043 2.00 (1.10) 104
$0.00 $0.00 $11.59 15.90% $6,579 1.11%* 0.25%* 13%
0.00 0.00 11.51 15.10 6,370 1.85* (0.50)* 13
0.00 0.00 11.51 15.10 10,742 1.84* (0.52)* 13
$0.00 $(1.94) $15.29 11.93 % $22,267 1.11% 1.68 % 101%
0.00 (1.81) 15.64 18.86 21,742 1.11 1.19 77
0.00 (0.10) 14.80 13.19 15,648 1.11* 1.71* 71
0.00 (1.84) 15.26 11.05 36,314 1.85 0.85 101
0.00 (1.70) 15.63 17.98 35,716 1.86 0.45 77
0.00 (0.06) 14.80 12.93 25,433 1.86* 0.96* 71
0.00 (1.84) 15.26 11.04 80,594 1.85 0.83 101
0.00 (1.70) 15.63 17.98 88,235 1.86 0.45 77
0.00 (0.06) 14.80 13.02 64,110 1.86* 0.97* 71
</TABLE>
Prospectus 66
<PAGE>
PIMCO Funds: Multi-Manager Series
The Trust's Statement of Additional Information ("SAI") and annual
and semi-annual reports to shareholders include additional
information about the Funds. The SAI and the financial statements
included in the Funds' most recent annual report to shareholders
are incorporated by reference into this Prospectus, which means
they are part of this Prospectus for legal purposes. The Funds'
annual report discusses the market conditions and investment
strategies that significantly affected each Fund's performance
during its last fiscal year.
The SAI includes the PIMCO Funds Shareholders' Guide for Class A,
B and C Shares, a separate booklet which contains more detailed
information about Fund purchase, redemption and exchange options
and procedures and other information about the Funds. You can get
a free copy of the Guide together with or separately from the rest
of the SAI.
You may get free copies of any of these materials, request other
information about a Fund, or make shareholder inquiries by calling
1-800-426-0107, or by writing to:
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, Connecticut 06902
You may review and copy information about the Trust, including its
SAI, at the Securities and Exchange Commission's public reference
room in Washington, D.C. You may call the Commission at 1-202-942-
8090 for information about the operation of the public reference
room. You may also access reports and other information about the
Trust on the EDGAR database on the Commssion's Web site at
www.sec.gov. You may get copies of this information, with payment
of a duplication fee, by electronic request at the following e-
mail address: [email protected], or by writing the Public
Reference Section of the Commission, Washington, D.C. 20549-6009.
You may need to refer to the Trust's file number under the
Investment Company Act, which is 811-6161.
You can also visit our Web site at www.pimcofunds.com for
additional information about the Funds.
[LOGO OF PIMCO FUNDS APPEARS HERE]
File No. 811-6161
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated [ ], 2000
to the
Prospectus for Class A, B and C Shares
Dated [ ], 2000
Disclosure Relating to PIMCO Select International Fund
(formerly PIMCO International Growth Fund)
Effective November 1, 2000, PIMCO Funds: Multi-Manager Series
intends to offer Class A, B, and C shares of PIMCO Select
International Fund (formerly known as "PIMCO International Growth
Fund"). In connection with this, the following Fund Summary is added
to the Prospectus.
1
<PAGE>
PIMCO Select International Fund
--------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks capital Common stocks of Capitalization Range
and appreciation non-U.S. issuers More than $1 billion
Strategies
Fund Category Approximate Number Dividend Frequency
International of Holdings At least annually
Stocks 50-60
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio
of common stocks and other equity securities of companies located
outside of the United States. Although the Fund normally invests
in issuers from at least five different countries, it may at times
invest in fewer than five countries, or even a single country. The
Fund typically invests in approximately 50 to 60 stocks, with each
stock usually constituting from 1.25% to 4.0% of the Fund's
portfolio. The Fund may invest in both developed and developing,
or "emerging," markets. The Fund has no other limits on geographic
asset distribution and may invest in any foreign securities market
in the world. The Fund may also invest in securities of foreign
issuers traded on U.S. securities markets, but will normally not
invest in U.S. issuers. The Fund invests most of its assets in
foreign securities which trade in currencies other than the U.S.
dollar and may invest directly in foreign currencies
The portfolio manager selects securities for the Fund using the
Sub-Adviser's "Best Research" investment style. The Best Research
style uses a research-driven "bottom-up" approach that seeks to
utilize the Sub-Adviser's global research capabilities to identify
companies with above-average long-term growth prospects and
attractive valuations and that possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The portfolio manager seeks to select those
stocks with the best long-term performance expectations, using a
broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures,
dividend and profit growth, balance sheet strength and return on
assets. The portfolio managers sell stocks in order to adjust or
rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts)
primarily for portfolio management and hedging purposes. The Fund
may also invest in equity securities other than common stocks
(such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in foreign and domestic fixed income
securities and in equity securities of U.S. issuers. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
. Foreign . Growth Securities . Focused
Investment Risk Risk Investment Risk
. Emerging Market . Value Securities . Leveraging Risk
Risk Risk . Credit Risk
. Currency Risk . Smaller Company . Management Risk
. Market Risk Risk
. Issuer Risk . Liquidity Risk
. Derivatives Risk
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart and the information to its
right show performance of the Fund's Institutional Class shares,
which are offered in a different prospectus. This is because the
Fund did not offer Class A, B or C shares during the periods
shown. Although Institutional Class and Class A, B and C shares
would have similar annual returns (because all the Fund's shares
represent interests in the same portfolio of securities),
Institutional Class performance would be higher than Class A, B or
C performance because of the lower expenses and no sales charges
paid by Institutional Class shares. The Average Annual Total
Returns table also shows estimated historical performance for
Class A, B and C shares based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the actual sales
charges (loads), distribution and/or service (12b-1) fees,
administrative fees and other expenses paid by Class A, B and C
shares. The performance information on the next page reflects the
Fund's advisory fee rate in effect prior to May 8, 2000 (0.85% per
annum). Prior to November 1, 2000, the Fund had different sub-
advisers and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. In addition, the Fund changed its
investment objective and policies on November 1, 2000; the
performance results shown on the next page would not necessarily
have been achieved had the Fund's current objective and policies
then been in effect. Past performance is no guarantee of future
results.
2
<PAGE>
PIMCO Select International Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 47.11%
--------------------
Lowest (3rd Qtr.
'98) -17.79%
[GRAPH]
'98 39.40%
'99 109.71%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (12/31/97)(/3/)
---------------------------------------------------------------------
Institutional Class 109.71% 70.98%
---------------------------------------------------------------------
Class A % %
---------------------------------------------------------------------
Class B % %
---------------------------------------------------------------------
Class C % %
---------------------------------------------------------------------
MSCI EAFE Index(/1/) 27.30% 23.77%
---------------------------------------------------------------------
Lipper International Fund Average(/2/) 40.91% 25.73%
---------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) ("MSCI EAFE") Index is a widely
recognized, unmanaged index of issuers in countries of
Europe, Australia and the Far East. It is not possible to
invest directly in the index.
(2) The Lipper International Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest their assets in securities whose
primary trading markets are outside of the United States. It does
not take into account sales charges.
(3) The Fund began operations on 12/31/97. Index comparisons begin
on 12/31/97.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class A, B or C shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
-----------------------------------------------------------------
Class A 0.75% 0.25% 0.70% 1.70%
-----------------------------------------------------------------
Class B 0.75 1.00 0.70 2.45
-----------------------------------------------------------------
Class C 0.75 1.00 0.70 2.45
-----------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) Other Expenses reflects a 0.50% Administrative Fee paid by the
class, which is subject to a reduction of 0.05% on average daily
net assets attributable in the aggregate to the Fund's Class A, B
and C shares in excess of $2.5 billion.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Fund with the costs
of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods
indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $[ ] $[ ] $[ ] $[ ] $[ ] $[ ] $[ ] [ ]
-----------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-----------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-----------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Changes to "Management of the Funds"; "Investment Options--
Class A, B and C Shares"; "How Fund Shares are Priced"; "How
to Buy and Sell Shares"; "Fund Distributions"; and "Tax
Consequences"
Disclosure for PIMCO Select International Fund for the
sections of the Prospectus listed above is incorporated by
reference from the corresponding sections of the Prospectus.
Except as expressly set forth herein or therein or as the
context otherwise requires, references to a "Fund" or the
"Funds" in these sections and the sections captioned "Summary
of Principal Risks" and "Characteristics and Risks of
Securities and Investment Techniques" are deemed to refer to
PIMCO Select International Fund.
PIMCO Advisors serves as Investment Adviser and
Administrator for the Fund. The Fund pays monthly advisory
fees to PIMCO Advisors at the annual rate of 0.75% of the
average daily net assets of the Fund. The Fund pays PIMCO
Advisors monthly administrative fees at the annual rate of
0.70% of the average daily net assets attributable in the
aggregate to the Fund's Class A, B and C shares, subject to a
reduction of 0.05% per year on average daily net assets
attributable in the aggregate to the Fund's Class A, B and C
shares in excess of $2.5 billion.
PIMCO/Allianz International Advisors LLC ("PAIA") serves as
sub-adviser to the Fund. PAIA is a wholly-owned subsidiary of
PIMCO Advisors. As sub-adviser, PAIA will have full investment
discretion and will make all determinations with respect to
the investment of the Fund's assets. Summary information about
PAIA and the individuals who will have primary investment
management responsibility for the Fund is provided below.
Name and Address
PIMCO/Allianz Investment Advisors LLC
1345 Avenue of the Americas
50th Floor
New York, NY 10105
Portfolio Managers
Udo Frank
Gerd Wolfgang Hintz
Recent Professional Experience
Mr. Frank. Managing Director and Chief Investment Officer of
Allianz Asset Advisory and Management GmbH ("Allianz AAM"),
responsible for the entire investment area (since 1997), and
Chief Executive Officer and Chief Investment Officer of
Allianz PIMCO Asset Management. Previously, Mr. Frank served
as the Chief Investment Officer of Allianz KAG (since 1994).
Mr. Hintz. Managing Director of the Equity Research
Department at Allianz AAM since 1998. In addition, Mr. Hintz
has been responsible for Allianz AAM's trading department
since January 2000. Previously, he was the head of Research
and Investor Relations of Allianz AG.
The Fund intends to declare and distribute income dividends
to shareholders of record at least annually.
4
<PAGE>
Changes to "Summary of Principal Risks"
The section of the Prospectus captioned "Summary of Principal
Risks" is amended as follows:
1. The subsections captioned "Growth Securities Risk" and "Value
Securities Risk" are revised to indicate that PIMCO Select
International Fund is particularly susceptible to these risks.
2. The subsection captioned "Smaller Company Risk" is revised to
indicate that PIMCO Select International Fund has significant
exposure to this risk because it may invest significantly in
companies with medium-sized market capitalizations, which are
smaller and generally less-seasoned than the largest companies.
3. The subsection "Foreign (non-U.S.) Investment Risk" is revised to
indicate that PIMCO Select International Fund is particularly
susceptible to the risks described in that subsection.
4. The subsection "Currency Risk" is revised to indicate that PIMCO
Select International Fund is particularly susceptible to the risks
described in that subsection.
5. The subsection "Focused Investment Risk" is revised to indicate
that PIMCO Select International Fund may be subject to increased
risk to the extent that it focuses its investments in securities
denominated in a particular foreign currency or in a narrowly
defined geographic area outside the U.S.
6. The subsection "Emerging Markets Risk" is revised to indicate
that PIMCO Select International Fund may invest a significant
portion of its assets in emerging market securities.
Changes to "Characteristics and Risks of Securities and Investment Techniques"
The section of the Prospectus captioned "Characteristics and Risks
of Securities and Investment Techniques" is amended as follows:
1. The subsection captioned "Fixed Income Securities and Defensive
Strategies" is amended by adding the following disclosure:
"The Select International Fund will invest primarily in common
stocks, and may also invest in other kinds of equity
securities, including preferred stocks and securities
(including fixed income securities and warrants) convertible
into or exercisable for common stocks. The Select
International Fund may invest a portion of its assets in fixed
income securities. The Fund may temporarily hold up to 100% of
its assets in short-term U.S. Government securities and other
money market instruments for defensive purposes in response to
unfavorable market and other conditions, and may also hold up
to 100% of its assets in other domestic fixed income, foreign
fixed income and equity securities principally traded in the
U.S., including obligations issued or guaranteed by a foreign
government or its agencies, authorities or instrumentalities,
corporate bonds and American Depository Receipts, for
temporary defensive purposes."
2. The subsection captioned "Foreign Securities" is amended to
indicate that PIMCO Select International Fund normally invests
principally in securities of foreign issuers, securities traded
principally in securities markets outside the United States and/or
securities denominated in foreign currencies, and may invest in
ADRs, EDRs and GDRs.
3. The subsection captioned "Emerging Market Securities" is revised
to indicate that PIMCO Select International Fund may invest
significant portions of its assets in emerging market securities,
including securities of issuers located in Russia and in other
Eastern European countries.
4. The subsection captioned "Foreign Currencies" is amended to
indicate that PIMCO Select International Fund may invest in foreign
currencies to the same extent as PIMCO International Fund, and is
particularly sensitive to foreign currency risk.
5. The subsection captioned "Derivatives" is amended to indicate
that PIMCO Select International Fund may purchase and sell (write)
call and put options on securities, securities indexes and foreign
currencies. PIMCO Select International Fund may also purchase and
sell futures contracts and options thereon with respect to
securities, securities indexes and foreign currencies, and may enter
into swap agreements with respect to securities indexes.
5
<PAGE>
6. The subsection captioned "Companies with Smaller Market
Capitalizations" is revised to indicate that PIMCO Select
International Fund has significant exposure to the risks discussed
in this section because it may invest significantly in companies
with medium-sized market capitalizations, which are smaller and
generally less-seasoned than the largest companies.
7. The subsection captioned "Investment in Other Investment
Companies" is revised to indicate that PIMCO Select International
Fund may invest up to 10% of its assets in securities of other
investment companies, such as closed-end management investment
companies, or in pooled accounts or other investment vehicles which
invest in foreign markets.
8. The subsection captioned "Changes in Investment Objectives and
Policies" is revised by adding the following disclosure:
The investment objective of the Select International Fund may
be changed by the Board of Trustees without shareholder
approval.
Financial Highlights
The Fund did not offer Class A, B or C shares during the periods
indicated, and therefore Financial Highlights for the Fund are not
included.
6
<PAGE>
PIMCO Funds Prospectus
PIMCO
Funds: This Prospectus describes 12 mutual funds offered by PIMCO Funds:
Multi- Multi-Manager Series. The Funds provide access to the professional
Manager investment advisory services offered by PIMCO Advisors L.P. and
Series its investment management affiliates. As of September 30, 2000,
PIMCO Advisors and its affiliates managed approximately
$[ ] billion, including assets for [ ] of the [ ] largest U.S.
corporations.
November
1, 2000
The Prospectus explains what you should know about the Funds
before you invest. Please read it carefully.
Share
Class D
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
1 PIMCO Funds: Multi-Manager Series
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information.............................................. 3
Fund Summaries
Capital Appreciation Fund...................................... 5
Equity Income Fund............................................. 7
Global Innovation Fund......................................... 9
Growth Fund.................................................... 11
Growth & Income Fund........................................... 13
Innovation Fund................................................ 16
Mid-Cap Fund................................................... 18
Renaissance Fund............................................... 20
Select Growth Fund............................................. 22
Target Fund.................................................... 24
Tax-Efficient Equity Fund...................................... 26
Value Fund..................................................... 28
Summary of Principal Risks....................................... 30
Management of the Funds.......................................... 32
How Fund Shares Are Priced....................................... 36
How to Buy and Sell Shares....................................... 37
Fund Distributions............................................... 39
Tax Consequences................................................. 39
Characteristics and Risks of Securities and Investment
Techniques...................................................... 40
Financial Highlights............................................. 47
</TABLE>
Prospectus 2
<PAGE>
Summary Information
The table below lists the investment objectives and compares
certain investment characteristics of the Funds. Other important
characteristics are described in the individual Fund Summaries
beginning on page 5.
<TABLE>
<CAPTION>
Approximate
PIMCO Investment Main Number of
Fund Objective Investments Holdings
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Stock Growth Long-term growth of Common stocks of companies with 35-40
Funds capital; income is market capitalizations of at least $5 billion
an incidental
consideration
----------------------------------------------------------------------------------------------------------------
Select Growth Long-term growth of Common stocks of companies with 15-25
capital; income is an market capitalizations of at least $10 billion
incidental consideration
----------------------------------------------------------------------------------------------------------------
Target Capital appreciation; Common stocks of companies with 40-60
no consideration is market capitalizations of between $1 billion
given to income and $10 billion
---------------------------------------------------------------------------------------------------------------------------
Blend Stock Capital Appreciation Growth of capital Common stocks of companies with market 60-100
Funds capitalizations of at least $1 billion that
have improving fundamentals and whose stock is
reasonably valued by the market
----------------------------------------------------------------------------------------------------------------
Growth & Income Seeks long-term growth Securities of companies with market 40-60
of capital; current income capitalizations of at least $1 billion
is a secondary objective
----------------------------------------------------------------------------------------------------------------
Mid-Cap Growth of capital Common stocks of companies with market 60-100
capitalizations of more than $500 million
(excluding the largest 200 companies) that have
improving fundamentals and whose stock is
reasonably valued by the market
---------------------------------------------------------------------------------------------------------------------------
Value Stock Equity Income Current income as a Income-producing common stocks of 40-50
Funds primary objective; companies with market capitalizations of
long-term growth of more than $2 billion
capital as a secondary
objective
----------------------------------------------------------------------------------------------------------------
Renaissance Long-term growth of Common stocks of companies with below-average 50-80
capital and income valuations whose business fundamentals are
expected to improve
----------------------------------------------------------------------------------------------------------------
Value Long-term growth of Common stocks of companies with market 40
capital and income capitalizations of more than $5 billion and
below-average valuations whose business
fundamentals are expected to improve
---------------------------------------------------------------------------------------------------------------------------
Enhanced Index Tax-Efficient Equity Maximum after-tax A broadly diversified portfolio of at least 200 More than
Stock Funds growth of capital common stocks of companies represented in 200
the S&P 500 Index with market capitalizations
of more than $5 billion
---------------------------------------------------------------------------------------------------------------------------
Sector-Related Innovation Capital appreciation; Common stocks of technology-related 40
Stock Funds no consideration is companies with market capitalizations of more
given to income than $200 million
----------------------------------------------------------------------------------------------------------------
Global Innovation Capital appreciation; Common stocks of U.S. and non-U.S. 30-60
no consideration is technology-related companies with market
given to income capitalizations of more than $200 million
<CAPTION>
Approximate
Capitalization
Range
---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Growth Stock At least $5 billion
Funds
----------------------------------------------------------------------------------------------------------------
At least $10 billion
----------------------------------------------------------------------------------------------------------------
Between $1 billion and
$10 billion
---------------------------------------------------------------------------------------------------------------------------
Blend Stock At least $1 billion
Funds
----------------------------------------------------------------------------------------------------------------
At least $1 billion
----------------------------------------------------------------------------------------------------------------
More than $500 million
(excluding the largest
200 companies)
---------------------------------------------------------------------------------------------------------------------------
Value Stock More than $2 billion
Funds
----------------------------------------------------------------------------------------------------------------
All capitalizations
----------------------------------------------------------------------------------------------------------------
More than $5 billion
---------------------------------------------------------------------------------------------------------------------------
Enhanced Index More than $5 billion
Stock Funds
---------------------------------------------------------------------------------------------------------------------------
Sector-Related More than $200 million
Stock Funds
----------------------------------------------------------------------------------------------------------------
More than $200 million
</TABLE>
Fund The Funds provide a broad range of investment choices. The
Descriptions,following Fund Summaries identify each Fund's investment
Performance objective, principal investments and strategies, principal risks,
and Fees performance information and fees and expenses. A more detailed
"Summary of Principal Risks" describing principal risks of
investing in the Funds begins after the Fund Summaries.
It is possible to lose money on investments in the Funds. The
fact that a Fund had good performance in the past (for example,
during the year ended 1999) is no assurance that the value of the
Fund's investments will not decline in the future or appreciate
at a slower rate. An investment in a Fund is not a deposit of a
bank and is not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
3 PIMCO Funds: Multi-Manager Series
<PAGE>
(This page left blank intentionally.)
Prospectus 4
<PAGE>
PIMCO Capital Appreciation Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Larger capitalization At least $1 billion
and Seeks growth common stocks
Strategies of capital
Fund Category Approximate Number Dividend Frequency
Blend Stocks of Holdings At least annually
</TABLE> 60-100
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with larger market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers the 1,000 largest publicly traded
companies (in terms of market capitalization) in the U.S. The team
screens the stocks in this universe for a series of growth
criteria, such as dividend growth, earnings growth, relative
growth of earnings over time (earnings momentum) and the company's
history of meeting earnings targets (earnings surprise), and also
value criteria, such as price-to-earnings, price-to-book and
price-to-cash flow ratios. The team then selects individual stocks
by subjecting the top 10% of the stocks in the screened universe
to a rigorous analyses of company factors, such as strength of
management, competitive industry position, and business prospects,
and financial statement data, such as earnings, cash flows and
profitability. The team may interview company management in making
investment decisions. The Fund's capitalization criteria applies
at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 2% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Growth . Management
. Issuer Risk Securities Risk Risk
. Value . Focused
Securities Risk Investment Risk
. Credit Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. For periods prior to the inception of the
Fund's Class D shares (4/8/98), performance information shown in
the bar chart (including the information to its right) and the
Average Annual Total Returns table is based on the performance of
the Fund's Institutional Class shares, which are offered in a
different prospectus. The prior Institutional Class performance
has been adjusted to reflect the actual distribution and/or
service (12b-1) fees and other expenses paid by Class D shares.
Past performance is no guarantee of future results.
5 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Capital Appreciation Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 - 9/30/00
________[ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 23.79%
--------------------
Lowest (7/1/98-
9/30/98) -14.22%
[GRAPH]
Annual Return
92 93 94 95 96 97 98 99
7.08% 17.24% -4.64% 36.61% 26.30% 33.70% 17.14% 22.24%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (3/8/91)(/3/)
--------------------------------------------------------------------
Class D 22.24% 26.99% 19.60%
--------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 19.75%
--------------------------------------------------------------------
Lipper Multi-Cap Core Funds Average(/2/) % % %
--------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Multi-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 3/8/91. Index comparisons begin
on 2/28/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.45% 0.25% 0.40% 1.10%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that its not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $112 $350 $606 $1,340
--------------------------------------------------------------------
</TABLE>
Prospectus 6
<PAGE>
PIMCO Equity Income Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Income More than $2
and Seeks current producing billion
Strategies income as a common
primary stocks with
objective, and potential
long-term for capital
growth of appreciation
capital as a
secondary
objective
Fund Approximate Number Dividend
Category of Holdings Frequency
Value Stocks 40-50 Quarterly
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in income-producing (e.g.,
dividend-paying) common stocks of companies with market
capitalizations of more than $2 billion at the time of investment.
The Fund may also invest in convertible securities and preferred
stocks.
The Fund's initial selection universe consists of the 1,000
largest publicly traded companies (in terms of market
capitalization) in the U.S. The portfolio managers classify the
universe by industry. They then identify the most undervalued
stocks in each industry based mainly on relative P/E ratios,
calculated both with respect to trailing operating earnings and
forward earnings estimates. From this group of stocks, the Fund
buys approximately 25 stocks with the highest dividend yields. The
portfolio managers then screen the most undervalued companies in
each industry by dividend yield to identify the highest yielding
stocks in each industry. From this group, the Fund buys
approximately 25 additional stocks with the lowest P/E ratios.
In selecting stocks, the portfolio managers consider quantitative
factors such as price momentum (based on changes in stock price
relative to changes in overall market prices), earnings momentum
(based on analysts' earnings per share estimates and revisions to
those estimates), relative dividend yields, valuation relative to
the overall market and trading liquidity. The portfolio managers
may replace a stock when a stock within the same industry group
has a considerably higher dividend yield or lower valuation than
the Fund's current holding.
The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs). In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in high-quality fixed income securities. This
would be inconsistent with the Fund's investment objective and
principal strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
.Market Risk .Foreign .Credit Risk
.Issuer Risk Investment Risk .Management
.Value Securities .Currency Risk Risk
Risk .Interest Rate
Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. For periods prior to the inception of the
Fund's Class D shares (4/8/98), performance information shown in
the bar chart (including the information to its right) and the
Average Annual Total Returns table is based on the performance of
the Fund's Institutional Class shares, which are offered in a
different prospectus. The prior Institutional Class performance
has been adjusted to reflect the actual distribution and/or
service (12b-1) fees and other expenses paid by Class D shares.
Prior to May 8, 2000, the Fund had a different sub-adviser and
would not necessarily have achieved the performance results shown
on the next page under its current investment management
arrangements. Past performance is no guarantee of future results.
7 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Equity Income Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 - 9/30/00
________[ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4/1/99-
6/30/99) 15.98%
--------------------
Lowest (7/1/98-
9/30/98) -10.99%
[GRAPH]
Annual Return
92 93 94 95 96 97 98 99
14.29% 8.04% -2.00% 32.94% 21.00% 30.87% 8.07% -2.22%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (3/8/91)(/3/)
-------------------------------------------------------------------
Class D -2.22% 17.34% 13.83%
-------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 19.75%
-------------------------------------------------------------------
Lipper Equity Income Funds Average(/2/) % % %
-------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Equity Income Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that seek relatively high current income and
growth of income through investing 65% or more of their
portfolios in dividend-paying equities. It does not take into
account sales charges.
(3) The Fund began operations on 3/8/91. Index comparisons begin
on 2/28/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.45% 0.25% 0.40% 1.10%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $112 $350 $606 $1,340
--------------------------------------------------------------------
</TABLE>
Prospectus 8
<PAGE>
PIMCO Global Innovation Fund
--------------------------------------------------------------------------------
Principal Investment Objective
Investments Fund Focus Approximate Capitalization
and Seeks capital Common stocks of Range Strategies
appreciation; no U.S. and non-
consideration is U.S. technology-
given to income related companies
Fund Category Approximate Number Dividend Frequency
Sector-Related of Holdings At least annually
Stocks 30-60
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of U.S. and
non-U.S. companies which utilize new, creative or different, or
"innovative," technologies to gain a strategic competitive
advantage in their industry, as well as companies that provide and
service those technologies. The Fund identifies its investment
universe of technology-related companies primarily by reference to
classifications made by independent firms, such as Standard &
Poor's (for example, companies classified as "Information
Technology" companies), and by identifying companies that derive a
substantial portion of their revenues from the manufacture, sale
and/or service of technological products. Although the Fund
emphasizes companies which utilize technologies, it is not
required to invest exclusively in a particular business sector or
industry.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify
technology-related companies with well-defined "wealth creating"
characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition,
through fundamental research, the portfolio manager seeks to
identify companies that are gaining market share, have superior
management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution
systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if
the company does not meet or exceed consensus estimates on
revenues and/or earnings or if an alternative investment is more
attractive.
Although the Fund invests principally in common stocks, the Fund
may also invest in other types of equity securities, including
preferred stocks and convertible securities. The Fund will invest
in the securities of issuers located in at least three countries
(one of which may be the United States). Although the Fund
normally invests in securities traded principally in the
securities markets of developed countries, the Fund has no
prescribed limits on geographic asset distribution and may invest
in any foreign securities market in the world, including in
emerging markets. The Fund may utilize foreign currency exchange
contracts and derivative instruments (such as stock index futures
contracts), primarily for risk management or hedging purposes.
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
.Market Risk .Derivatives Risk .Leveraging Risk
.Issuer Risk .Foreign Investment .Credit Risk
.Growth Securities Risk .Management Risk
Risk .Emerging Markets
.Growth Securities Risk
.Smaller Company Risk .Currency Risk
.Liquidity Risk .Focused Investment
Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information
The Fund commenced operations in December 1999 and does not yet
have a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
9 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Global Innovation Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
Class D 1.00% 0.25% 0.60% 1.85%
--------------------------------------------------------------------
</TABLE>
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of 0.85% per year under the administration
agreement regardless of whether a portion or none of the
0.25% authorized under the plan is paid under the plan.
Please see "Management of the Funds--Administrative Fees" for
details. The Fund intends to treat any fees paid under the
plan as "service fees" for purposes of applicable rules of
the National Association of Securities Dealers, Inc. (the
"NASD"). To the extent that such fees are deemed not to be
"service fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples below are intended to help you compare the
cost of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<TABLE>
<S> <C> <C> <C> <C>
Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
Class D $188 $582
-----------------------------------------------------------------------------------
</TABLE>
Prospectus 10
<PAGE>
PIMCO Growth Fund
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments Seeks long-term Larger capitalization At least $5 billion
and growth of capital; common stocks
Strategies income is an Dividend Frequency
incidental Approximate Number At least annually
consideration of Holdings
35-40
Fund Category
Growth Stocks
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of at least $5 billion at
the time of investment.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio manager seeks to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio manager believes that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Foreign Investment Risk
. Credit Risk . Management Risk
. Issuer Risk . Currency Risk
. Growth Securities Risk . Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Class C shares, which are offered in a different
prospectus. This is because the Fund has not had Class D shares
outstanding for a full calendar year. Although Class D and Class C
shares would have similar annual returns (because all of the
Fund's shares represent interests in the same portfolio of
securities), Class D performance would be higher than Class C
performance because of the lower expenses paid by Class D shares.
The Class C performance in the bar chart and the information to
its right do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance figures for Class C shares in the Average
Annual Total Returns table reflect the impact of sales charges.
For periods prior to the inception of Class D shares (11/1/99),
the Average Annual Total Returns table also shows estimated
historical performance for Class D shares based on the performance
of Class C shares, adjusted to reflect that there are no sales
charges and lower distribution and/or service (12b-1) fees paid by
Class D shares. Prior to March 6, 1999, the Fund had a different
sub-adviser and would not necessarily have achieved the
performance results shown on the next page under its current
investment management arrangements. Past performance is no
guarantee of future results.
11 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Growth Fund (continued)
Calendar Year Total Returns -- Class C
More Recent Return
Information
--------------------
1/1/00 -
9/30/0______[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 36.21%
--------------------
Lowest (7/1/90-
9/30/90) -13.14%
[GRAPH]
Total Returns
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
0.29% 41.88% 2.08% 9.32% 0.75% 27.47% 17.52% 21.84% 38.90% 39.83%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (2/24/84)(/3/)
------------------------------------------------------------------
Class C 38.83% 28.80% 18.77% 19.25%
------------------------------------------------------------------
Class D 40.86% 29.75% 19.66% 20.14%
------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 18.21% 18.60%
------------------------------------------------------------------
Lipper Large-Cap Growth Funds
Average(/2/) % % % %
------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 2/24/84. Index comparisons begin
on 2/29/84.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.50% 0.25% 0.40% 1.15%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $117 $365 $633 $1,398
--------------------------------------------------------------------
</TABLE>
Prospectus 12
<PAGE>
PIMCO Growth & Income Fund
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximately Capitalization Range
and Strategies Seeks long-term growth of capital; Medium and large More than $1 billion
current income is a secondary capitalization stocks
objective
Fund Category Approximately Number Dividend Frequency
Blend Stocks of Holdings At least annually
40-60
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in securities of companies
with market capitalizations of at least $1 billion at the time of
investment. The Fund may invest up to 75% of its assets in
securities selected for their growth potential. The Fund will
normally invest at least 25% of its assets in securities selected
for their income potential, including dividend-paying common
stocks, preferred stocks, corporate bonds, convertible securities
and REITs.
When selecting securities for the Fund's "growth" segment, the
portfolio managers seek to identify companies with well-defined
"wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market
as a whole), high profitability and consistent, predictable
earnings. In addition, through fundamental research, the portfolio
managers seek to identify companies that are gaining market share,
have superior management and possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The Fund's portfolio managers may choose to
sell a stock in the "growth" segment when they believe that its
earnings will be disappointing or that market sentiment on the
company will turn negative. The portfolio managers will also
consider selling a stock if the company does not meet the
managers' estimates on revenues and/or earnings, or if an
alternative investment is deemed to be more attractive.
When selecting stocks for the Fund's "income" segment, the
portfolio managers seek to identify companies with strong
operating fundamentals that offer potential for capital
appreciation and that also have a dividend yield in excess of the
yield on the S&P 500 Index. The portfolio managers may replace an
"income" security when another security with a similar risk-to-
reward profile offers either better potential for capital
appreciation or a higher yield than the Fund's current holding. To
achieve its income objective, the Fund may also invest in
preferred stocks, corporate bonds, convertible securities and
REITs. The Fund may invest up to 10% of its assets in corporate
bonds, which will typically consist of investment grade securities
of varying maturities but may also include high yield securities
("junk bonds") rated at least B by Standard & Poor's Rating
Services or Moody's Investors Service, Inc. or, if unrated,
determined by the Adviser to be of comparable quality.
The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all
of its assets in high-quality fixed income securities. This would
be inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
. Market Risk . Liquidity Risk . High Yield Risk
. Issuer Risk . Foreign Investment Risk . Credit Risk
. Growth Securities Risk . Currency Risk . Management Risk
. Value Securities Risk . Focused Investment Risk
. Smaller Company Risk . Interest Rate Risk
</TABLE>
13 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Growth & Income Fund (continued)
Performance The following shows summary performance information for the Fund
Information in a bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Fund by showing changes in its performance from year to year
and by showing how the Fund's average annual returns compare with
the returns of a broad-based securities market index and an index
of similar funds. The bar chart, the information to its right and
the Average Annual Total Returns table show performance of the
Fund's Institutional Class shares, which are offered in a
different prospectus. This is because the Fund did not offer Class
D shares during the periods shown. Although Class D and
Institutional Class shares would have similar annual returns
(because all the Fund's shares represent interests in the same
portfolio of securities), Class D performance would be lower than
Institutional Class performance because of the higher expenses
paid by Class D shares.
The Average Annual Total Returns table also shows estimated
historical performance for Class D shares. The estimated Class D
performance is based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Class D shares.
The performance information on the next page reflects the Fund's
advisory fee rate in effect prior to August 1, 2000 (0.63% per
annum). Prior to July 1, 1999, the Fund had a different sub-
adviser and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. In addition, the Fund changed its
investment objective and policies on August 1, 2000; the
performance results shown on the next page would not necessarily
have been achieved had the Fund's current objective and policies
then been in effect. Past performance is no guarantee of future
results.
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
---------------------
1/1/00-
9/30/0___[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
---------------------
Highest (4th Qtr.
'99_______40.12%)
---------------------
Lowest (3rd Qtr.
'98______-11.53%)
[GRAPH]
Total Returns
1995 1996 1997 1998 1999
31.72% 17.31% 16.22% 29.89% 51.81%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/28/94)(/3/)
-----------------------------------------------------------------------
Institutional Class 51.81% 28.77% 28.72%
-----------------------------------------------------------------------
Class D 51.22% 28.27% 28.21%
-----------------------------------------------------------------------
S&P Mid-Cap 400 Index(/1/) 14.73% 23.05% 23.05%
-----------------------------------------------------------------------
Lipper Large-Cap Core Funds
Average(/2/) 22.29% 25.53% 25.53%
-----------------------------------------------------------------------
</TABLE>
(1) The S&P Mid-Cap 400 Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges. The Lipper Large-Cap
Core Funds Average replaced the Lipper Mid-Cap Fund Average (a
total return performance average of funds tracked by Lipper
Analytical Services, Inc. that invest primarily in companies with
market capitalizations of less than $5 billion at the time of
investment). For periods ended December 31, 1999, the 1 Year, 5
Years and Fund Inception average annual total returns of the
Lipper Mid-Cap Fund Average were 39.38%, 23.07% and 23.07%,
respectively.
(3) The Fund began operations on 12/28/94. Index comparisons begin
on 12/31/94.
Prospectus 14
<PAGE>
PIMCO Growth & Income Fund (continued)
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees(/1/) (12b-1) Fees(/2/) Expenses(/3/) Expenses
------------------------------------------------------------------
Class D 0.60 0.25% 0.50% 1.35%
------------------------------------------------------------------
(1) On August 1, 2000, the Fund's advisory fee rate decreased by
0.03% to 0.60% per annum.
(2) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.75% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(3) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples below are intended to help you compare
the cost of investing in Class D shares of the Fund with the
costs of investing in other mutual funds. The Examples assume
that you invest $10,000 in Class D shares for the time periods
indicated, and then redeem all your shares at the end of those
periods. The Examples also assume that your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $137 $428 $739 $1,624
------------------------------------------------------------------
</TABLE>
15 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Innovation Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Common stocks of More than $200
and Seeks capital technology-related million
Strategies appreciation; companies
no consideration
is given to
income
Fund Approximate Number Dividend
Category of Holdings Frequency
Sector-Related 40 At least annually
Stocks
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
which utilize new, creative or different, or "innovative,"
technologies to gain a strategic competitive advantage in their
industry, as well as companies that provide and service those
technologies. The Fund identifies its investment universe of
technology-related companies primarily by reference to
classifications made by independent firms, such as Standard &
Poor's (for example, companies classified as "Information
Technology" companies), and by identifying companies that derive a
substantial portion of their revenues from the manufacture, sale
and or/service of technological products. Although the Fund
emphasizes companies which utilize technologies, it is not
required to invest exclusively in companies in a particular
business sector or industry.
The portfolio manager selects stocks for the Fund using a
"growth" style. The portfolio manager seeks to identify
technology-related companies with well-defined "wealth creating"
characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition,
through fundamental research, the portfolio manager seeks to
identify companies that are gaining market share, have superior
management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution
systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if
the company does not meet or exceed consensus estimates on
revenues and/or earnings or if an alternative investment is more
attractive.
Although the Fund invests principally in common stocks, the Fund
may also invest in other kinds of equity securities, including
preferred stocks and convertible securities. The Fund may invest
up to 15% of its assets in foreign securities, except that it may
invest without limit in American Depository Receipts (ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Smaller . Currency
. Issuer Risk Company Risk Risk
. Focused . Liquidity . Credit Risk
Investment Risk Risk . Management Risk
. Growth Securities . Foreign Investment
Risk Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. For periods prior to the inception of the
Fund's Class D shares (4/8/98), performance information shown in
the bar chart (including the information to its right) and the
Average Annual Total Returns table show performance of the Fund's
Class A shares, which are offered in a different prospectus. The
prior Class A performance has been adjusted to reflect that there
are no sales charges (loads) paid by Class D shares. Prior to
March 6, 1999, the Fund had a different sub-adviser and would not
necessarily have achieved the performance results shown on the
next page under its current investment management arrangements.
Past performance is no guarantee of future results.
Prospectus 16
<PAGE>
PIMCO Innovation Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 - 9/30/00
[ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 80.23%
--------------------
Lowest (1/1/97-
3/31/97) -12.56%
[GRAPH]
Annual Return
95 96 97 98 99
45.33% 23.60% 9.03% 79.65% 140.42%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/22/94)(/3/)
-----------------------------------------------------------------------------
Class D 140.42% 53.27% 52.89%
-----------------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 28.56%
-----------------------------------------------------------------------------
Lipper Science and Technology Fund Average(/2/) 134.77% 40.91% 40.91%
-----------------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Science and Technology Fund Average is a total
return performance average of funds tracked by Lipper
Analytical Services, Inc. that invest at least 65% of their
assets in science and technology stocks. It does not take into
account sales charges.
(3) The Fund began operations on 12/22/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.65% 0.25% 0.40% 1.30%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fees paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund will
pay a total of 0.65% per year under the administration
agreement regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $132 $412 $713 $1,568
--------------------------------------------------------------------
</TABLE>
17 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Mid-Cap Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Medium More than $500
and Seeks growth of capitalization million (excluding
Strategies capital common stocks the largest 200
companies)
Fund Approximate Number Dividend Frequency
Category of Holdings At least annually
Blend Stocks 60-100
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with medium market capitalizations that have improving
fundamentals (based on growth criteria) and whose stock is
reasonably valued by the market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers companies in the U.S. market with market
capitalizations of more than $500 million, but excluding the 200
largest capitalization companies. The team screens the stocks in
this universe for a series of growth criteria, such as dividend
growth, earnings growth, relative growth of earnings over time
(earnings momentum) and the company's history of meeting earnings
targets (earnings surprise), and also value criteria, such as
price-to-earnings, price-to-book and price-to-cash flow ratios.
The team then selects individual stocks by subjecting the top 10%
of the stocks in the screened universe to a rigorous analyses of
company factors, such as strength of management, competitive
industry position, and business prospects, and financial statement
data, such as earnings, cash flows and profitability. The team may
interview company management in making investment decisions. The
Fund's capitalization criteria applies at the time of investment.
The portfolio management team rescreens the universe frequently
and seeks to consistently achieve a favorable balance of growth
and value characteristics for the Fund. The team looks to sell a
stock when it falls below the median ranking, has negative
earnings surprises, or shows poor price performance relative to
all stocks in the Fund's capitalization range or to companies in
the same business sector. A stock may also be sold if its
weighting in the portfolio becomes excessive (normally above 2% of
the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Growth . Focused
. Issuer Risk Securities Risk Investment Risk
. Value Securities . Smaller Company . Credit Risk
Risk Risk . Management
. Liquidity Risk Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance Information
The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. For periods prior to the inception of the
Fund's Class D shares (4/8/98), performance information shown in
the bar chart (including the information to its right) and the
Average Annual Total Returns table show performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual distribution and/or service (12b-1)
fees and other expenses paid by Class D shares. Past performance
is no guarantee of future results.
Prospectus 18
<PAGE>
PIMCO Mid-Cap Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 - 9/30/00
[ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99)
22.91%
--------------------
Lowest (7/1/98-
9/30/98)
-14.46%
[GRAPH]
Annual Return
92 93 94 95 96 97 98 99
8.75% 15.32% -2.76% 36.76% 22.87% 33.65% 7.80% 12.52%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (8/26/91)(/3/)
------------------------------------------------------------------
Class D 12.52% 22.19% 17.16%
------------------------------------------------------------------
Russell Mid-Cap Index(/1/) 18.23% 21.85% 17.31%
------------------------------------------------------------------
Lipper Mid-Cap Core Funds Average(/2/) % % %
------------------------------------------------------------------
</TABLE>
(1) The Russell Mid-Cap Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Mid-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of less than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 8/26/91. Index comparisons begin
on 8/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.45% 0.25% 0.40% 1.10%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fees paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund will
pay a total of 0.65% per year under the administration
agreement regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $112 $350 $606 $1,340
--------------------------------------------------------------------
</TABLE>
19 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Renaissance Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective Undervalued All capitalizations
and Seeks long-term stocks with
Strategies growth of improving
capital and business
income fundamentals
Fund Category Approximate Number Dividend Frequency
Value Stocks of Holdings Quarterly
50-80
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with below-average valuations whose business fundamentals are
expected to improve. Although the Fund typically invests in
companies with market capitalizations of $1 billion to $10 billion
at the time of investment, it may invest in companies in any
capitalization range. To achieve income, the Fund invests a
portion of its assets in income-producing (e.g., dividend-paying)
stocks.
The portfolio manager selects stocks for the Fund using a "value"
style. The portfolio manager invests primarily in common stocks of
companies having below-average valuations whose business
fundamentals, such as market share, strength of management and
competitive position, are expected to improve. The portfolio
manager determines valuation based on characteristics such as
price-to-earnings, price-to-book, and price-to-cash flow ratios.
The portfolio manager analyzes stocks and seeks to identify the
key drivers of financial results and catalysts for change, such as
new management and new or improved products, that indicate a
company may demonstrate improving fundamentals in the future. The
portfolio manager looks to sell a stock when he believes that the
company's business fundamentals are weakening or when the stock's
valuation has become excessive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
. Market Risk . Foreign Investment . Credit Risk
. Issuer Risk Risk . Management Risk
. Value Securities Risk . Currency Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. For periods prior to the inception of the
Fund's Class D shares (4/8/98), performance information shown in
the bar chart (including the information to its right) and the
Average Annual Total Returns table show performance of the Fund's
Class C shares, which are offered in a different prospectus. The
prior Class C performance has been adjusted to reflect that there
are no sales charges (loads) and lower distribution and/or service
(12b-1) fees paid by Class D shares. Prior to March 6, 1999, the
Fund had a different sub-adviser and would not necessarily have
achieved the performance results shown on the next page under its
current investment management arrangements. Past performance is no
guarantee of future results.
The Average Annual Total Returns table also shows estimated
historical performance for Class D shares. Prior to the inception
of Class D shares (4/8/98), the performance is based on the
performance of the Fund's Class C shares, adjusted to reflect that
there are no sales charges and lower distribution and/or service
(12b-1) fees paid by Class D shares. Prior to May 7, 1999, the
Fund had a different sub-adviser and would not necessarily have
achieved the performance results shown on the next page under its
current investment management arrangements. Past performance is no
guarantee of future results.
Prospectus 20
<PAGE>
PIMCO Renaissance Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 -
9/30/0______[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/98-
12/31/98) 18.65%
--------------------
Lowest (7/1/98-
9/30/98) -16.60%
[GRAPH]
Annual Return
90 91 92 93 94 95 96 97 98 99
-14.82% 34.22% 8.58% 22.13% -4.34% 28.55% 25.32% 35.89% 11.66% 9.90%
Calendar Year End (through 12/31/99)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C> <C>
Fund Inception
1 Year 5 Years 10 Years (4/18/88)(/3/)
-----------------------------------------------------------------
Class D 9.90% 21.86% 14.57% 14.01%
-----------------------------------------------------------------
Russell Mid-Cap Value
Index(/1/) % % % %
-----------------------------------------------------------------
Lipper Multi-Cap Value Funds
Average(/2/) % % % %
-----------------------------------------------------------------
</TABLE>
(1) The Russell Mid-Cap Value Index is an unmanaged index that
measures the performance of medium capitalization companies in
the Russell 1000 Index with lower price-to-book ratios and
lower forecasted growth values. It is not possible to invest
directly in the index. The Mid-Cap Value Index replaced the
Russell 1000 Value Index (an unmanaged index that measures the
performance of companies in the Russell 1000 Index considered
to have less than average growth orientation) and the S&P 500
Index (an unmanaged index of large capitalization common
stocks) as one of the Fund's comparative indexes because PIMCO
Advisors believes the Russell Mid-Cap Value Index is more
representative of the Fund's investment strategies. For
periods ended December 31, 1999, the 1 Year, 5 Years, 10 Years
and Fund Inception average annual total returns of the Russell
1000 Value Index were 7.34%, 23.08%, 15.60% and 15.38%,
respectively, and of the S&P 500 Index were 21.04%, 28.56%,
18.21% and 19.06%, respectively. It is not possible to invest
directly in the index.
(2) The Lipper Multi-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 4/18/88. Index comparisons begin
on 4/30/88.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.60% 0.25% 0.40% 1.25%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds-- Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $127 $397 $686 $1,511
--------------------------------------------------------------------
</TABLE>
21 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Select Growth Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Fund Focus Approximate
Investments Objective Larger capitalization Capitalization Range
and Seeks long-term common stocks At least
Strategies growth of $10 billion
capital; income
is an incidental
consideration
Fund Category Approximate Number Dividend Frequency
Growth Stocks of Holdings At least annually
15-25
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of at least $10 billion at
the time of investment. The Fund normally invests in the
securities of 15 to 25 issuers.
The portfolio manager selects stocks for the Fund using a "growth"
style. The portfolio manager seeks to identify companies with
well-defined "wealth creating" characteristics, including superior
earnings growth (relative to companies in the same industry or the
market as a whole), high profitability and consistent, predictable
earnings. In addition, through fundamental research, the portfolio
manager seeks to identify companies that are gaining market share,
have superior management and possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the
portfolio manager believes that its earnings, market sentiment or
relative performance are disappointing or if an alternative
investment is more attractive. The Fund is "non-diversified,"
which means that it invests in a relatively small number of
issuers.
The Fund may invest up to 25% of its assets in foreign securities,
except that it may invest without limit in American Depository
Receipts (ADRs). In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all
of its assets in high-quality fixed income securities. This would
be inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
. Market Risk . Growth Securities Risk . Credit Risk
. Issuer Risk . Foreign Investment Risk . Management Risk
. Focused . Currency Risk
Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Institutional Class shares, which are offered in a
different prospectus. This is because the Fund did not offer Class
D shares during the periods shown. Although Class D and
Institutional Class shares would have similar annual returns
(because all the Fund's shares represent interests in the same
portfolio of securities), Class D performance would be lower than
Institutional Class performance because of the higher expenses
paid by Class D shares.
The Average Annual Total Returns table also shows estimated
historical performance for Class D shares. The estimated Class D
performance is based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Class D shares.
The performance information on the next page reflects the Fund's
advisory fee rate in effect prior to April 1, 2000 (0.57% per
annum); these results would have been lower had the Fund's current
advisory fee rate (0.60% per annum) then been in effect. Prior to
July 1, 1999, the Fund had a different sub-adviser and would not
necessarily have achieved the performance results shown on the
next page under its current investment management arrangements. In
addition, the Fund changed its investment objective and policies
on April 1, 2000; the performance results shown on the next page
would not necessarily have been achieved had the Fund's current
objective and policies then been in effect. Past performance is no
guarantee of future results.
Prospectus 22
<PAGE>
PIMCO Select Growth Fund (continued)
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00 - 9/30/00[ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/98-
12/31/98) 24.90%
--------------------
Lowest (7/1/98-
9/30/98) -11.38%
[GRAPH]
Annual Return
95 96 97 98 99
27.96% 17.95% 25.32% 41.06% 24.27%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/28/94)(/3/)
-----------------------------------------------------------------------
Institutional Class 24.27% 27.09% 27.06%
-----------------------------------------------------------------------
Class D 23.78% 26.59% 26.57%
-----------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 28.56% 28.56%
-----------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(/2/) % % %
-----------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 12/28/94. Index comparisons begin
on 12/31/94.
--------------------------------------------------------------------------------
Fees and
Expenses These tables describe the fees and expenses you may pay if you buy
of the and hold Class D shares of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees(/1/) (12b-1) Fees(/2/) Expenses(/3/) Expenses
------------------------------------------------------------------
Class D 0.60 0.25% 0.40% 1.25%
------------------------------------------------------------------
(1) On April 1, 2000, the Fund's advisory fee rate increased by
0.03% to 0.60% per annum.
(2) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(3) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples below are intended to help you compare the
cost of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $127 $397 $686 $1,511
------------------------------------------------------------------
</TABLE>
23 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Target Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Fund Category Fund Focus
Investments Objective
and Seeks capital Growth Stocks Medium capitalization
Strategies appreciation; no common stocks
consideration is
given to income
Approximate Number Approximate Dividend
of Holdings Capitalization Frequency
Range
40-60 Between $1 billion At least annually
and $10 billion
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of "growth"
companies with market capitalizations of between $1 billion and
$10 billion at the time of investment.
The portfolio managers select stocks for the Fund using a
"growth" style. The portfolio managers seek to identify companies
with well-defined "wealth creating" characteristics, including
superior earnings growth (relative to companies in the same
industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental
research, the portfolio managers seek to identify companies that
are gaining market share, have superior management and possess a
sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. The Fund looks to
sell a stock when the portfolio managers believe that its
earnings, market sentiment or relative performance are
disappointing or if an alternative investment is more attractive.
The Fund may also invest to a limited degree in other kinds of
equity securities, including preferred stocks and convertible
securities. The Fund may invest up to 15% of its assets in foreign
securities, except that it may invest without limit in American
Depository Receipts (ADRs).
In response to unfavorable market and other conditions, the Fund
may make temporary investments of some or all of its assets in
high-quality fixed income securities. This would be inconsistent
with the Fund's investment objective and principal strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
. Market Risk . Smaller Company . Currency Risk
. Issuer Risk Risk . Credit Risk
. Growth Securities . Liquidity Risk . Management
Risk . Foreign Investment Risk
. Focused Investment Risk
Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. The bar chart, the information to its
right and the Average Annual Total Returns table show performance
of the Fund's Class A shares, which are offered in a different
prospectus. This is because the Fund did not offer Class D shares
during the periods listed. Although Class D and Class A shares
would have similar annual returns (because all of the Fund's
shares represent interests in the same portfolio of securities),
Class D performance would be higher than Class A performance
because Class D shares do not pay any sales charges (loads). The
Class A performance in the bar chart and the information to its
right do not reflect the impact of sales charges. If they did, the
returns would be lower than those shown. Unlike the bar chart,
performance for Class A shares in the Average Annual Total Returns
table reflects the impact of sales charges.
The Average Annual Total Returns table also shows estimated
historical performance for Class D shares based on the performance
of the Fund's Class A shares, adjusted to reflect that there are
no sales charges paid by Class D shares. Prior to March 6, 1999,
the Fund had a different sub-adviser and would not necessarily
have achieved the performance results shown on the next page under
its current investment management arrangements. Past performance
is no guarantee of future results.
Prospectus 24
<PAGE>
PIMCO Target Fund (continued)
Calendar Year Total Returns -- Class A
More Recent Return
Information
--------------------
1/1/00 -
9/30/0______[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 53.05%
--------------------
Lowest (7/1/98-
9/30/98) -13.15%
[GRAPH]
Annual Return
93 94 95 96 97 98 99
25.51% 3.86% 31.24% 16.62% 16.37% 24.15% 66.25%
Calendar Year End (through 12/31/99)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/17/92)(/3/)
--------------------------------------------------------------------
Class A 57.10% 28.28% 24.13%
--------------------------------------------------------------------
Class D 66.25% 29.74% 25.13%
--------------------------------------------------------------------
S&P Mid-Cap 400 Index(/1/) 14.73% 23.05% 17.55%
--------------------------------------------------------------------
Lipper Multi-Cap Growth Funds
Average(/2/) % % %
--------------------------------------------------------------------
</TABLE>
(1) The S&P Mid-Cap 400 Index is an unmanaged index of middle
capitalization U.S. stocks. It is not possible to invest
directly in the index.
(2) The Lipper Multi-Cap Growth Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 12/17/92. Index comparisons begin
on 12/31/92.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.55% 0.25% 0.40% 1.20%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds-- Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $122 $381 $660 $1,455
--------------------------------------------------------------------
</TABLE>
25 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Tax-Efficient Equity Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Fund Focus Approximate Capitalization Range
Investments Objective A portion of the More than $5 billion
and Seeks maximum common stocks Dividend Frequency
Strategies after-tax represented in the S&P At least annually
growth of 500 Index
capital
Fund Approximate Number of Holdings
Category More than
Enhanced Index 200
</TABLE>
The Fund attempts to provide a total return which exceeds the
return of the S&P 500 Index by investing in a broadly diversified
portfolio of at least 200 common stocks. The Fund also attempts to
achieve superior after-tax returns for its shareholders by using a
variety of tax-efficient management strategies.
The Fund seeks to achieve its investment objective by normally
investing at least 95% of its assets in stocks represented in the
S&P 500 Index. The Fund's portfolio is designed to have certain
characteristics that are similar to those of the index, including
such measures as dividend yield, P/E ratio, relative volatility,
economic sector exposure, return on equity and market price-to-
book value ratio. The Fund's return is intended to correlate
highly with the return of the S&P 500 Index, but the portfolio
managers attempt to produce a higher total return than the index
by selecting a portion of the stocks represented in the index
using the quantitative techniques described below. The portfolio
managers also use these techniques to make sell decisions.
Notwithstanding these strategies, there is no assurance that the
Fund's investment performance will equal or exceed that of the S&P
500 Index.
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other
conditions.
Quantitative Techniques. The portfolio managers use a proprietary
quantitative model that ranks companies based on long-term (5-10
years) price appreciation potential. They analyze factors such as
growth of sustainable earnings and dividend behavior. Stocks in
the top 50% of the model's ranking are considered for purchase by
the Fund. The Fund looks to sell stocks selected from the bottom
20% of the model's ranking based on cost, current market value and
anticipated benefit of replacement. The portfolio managers' sell
discipline also focuses on reducing realized capital gains as
indicated below.
Tax-Efficient Strategies. The portfolio managers utilize a range
of active tax management strategies designed to minimize the
Fund's taxable distributions, including low portfolio turnover and
favoring investments in low-dividend, growth-oriented companies.
The portfolio managers also identify specific shares of stock to
be sold that have the lowest tax cost. When prudent, stocks are
also sold to realize capital losses in order to offset realized
capital gains. In limited circumstances, the Fund may also
distribute appreciated securities to shareholders to meet
redemption requests so as to avoid realizing capital gains.
Despite the use of these tax-efficient strategies, the Fund may
realize gains and shareholders will incur tax liability from time
to time.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C>
. Market Risk . Growth Securities Risk . Credit Risk
. Issuer Risk . Leveraging Risk . Management Risk
. Value Securities Risk . Focused Investment Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance The top of the next page shows summary performance information for
Information the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. Past performance is no guarantee of future
results.
Prospectus 26
<PAGE>
PIMCO Tax-Efficient Equity Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 -
9/30/0______[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99) 14.90%
--------------------
Lowest (07/01/99-
09/30/99) -7.33%
[GRAPH]
Annual Return
99
17.19%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (7/10/98)(/3/)
---------------------------------------------------------------------
Class D 17.19% 15.30%
---------------------------------------------------------------------
S&P 500 Index(/1/) 21.04% 20.42%
---------------------------------------------------------------------
Lipper Large-Cap Core Funds Average(/2/) % %
---------------------------------------------------------------------
</TABLE>
(1) The S&P 500 Index is an unmanaged index of large
capitalization common stocks. It is not possible to invest
directly in the index.
(2) The Lipper Large-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest primarily in companies with market
capitalizations of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 Index. It
does not take into account sales charges.
(3) The Fund began operations on 7/10/98. Index comparisons begin
on 6/30/98.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.45% 0.25% 0.40% 1.10%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $112 $350 $606 $1,340
--------------------------------------------------------------------
</TABLE>
27 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO Value Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments Seeks long-term Undervalued larger More than $5 billion
and growth of capitalization
Strategies capital and stocks with improving
income business
fundamentals
Fund Category Approximate Number of Holdings Dividend Frequency
Value Stocks 40 Quarterly
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of more than $5 billion at the time of
investment and below-average valuations whose business
fundamentals are expected to improve. To achieve income, the Fund
invests a portion of its assets in income-producing (e.g.,
dividend-paying) common stocks.
The portfolio manager selects stocks for the Fund using a "value"
style. The portfolio manager invests primarily in stocks of
companies having below-average valuations whose business
fundamentals are expected to improve. The portfolio manager
determines valuation based on characteristics such as price-to-
earnings, price-to-book, and price-to-cash flow ratios. The
portfolio manager analyzes stocks and seeks to identify the key
drivers of financial results and catalysts for change, such as new
management and new or improved products, that indicate a company
may demonstrate improving fundamentals in the future. The
portfolio manager looks to sell a stock when he believes that the
company's business fundamentals are weakening or when the stock's
valuation has become excessive.
The Fund may also invest in other kinds of equity securities,
including preferred stocks and convertible securities. The Fund
may invest up to 15% of its assets in foreign securities, except
that it may invest without limit in American Depository Receipts
(ADR's). In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its
assets in high-quality fixed income securities. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
. Market Risk . Foreign Investment Risk . Credit Risk
. Issuer Risk . Currency Risk . Management Risk
. Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information The top of the next page shows summary performance information for
the Fund in a bar chart and an Average Annual Total Returns table.
The information provides some indication of the risks of investing
in the Fund by showing changes in its performance from year to
year and by showing how the Fund's average annual returns compare
with the returns of a broad-based securities market index and an
index of similar funds. For periods prior to the inception of the
Fund's Class D shares (4/8/98), performance information shown in
the bar chart (including the information to its right) and the
Average Annual Total Returns table show performance of the Fund's
Institutional Class shares, which are offered in a different
prospectus. The prior Institutional Class performance has been
adjusted to reflect the actual distribution and/or service (12b-1)
fees and other expenses paid by Class D shares. Prior to May 8,
2000, the Fund had a different sub-adviser and would not
necessarily have achieved the performance results shown on the
next page under its current investment management arrangements.
Past performance is no guarantee of future results.
Prospectus 28
<PAGE>
PIMCO Value Fund (continued)
Calendar Year Total Returns -- Class D
More Recent Return
Information
--------------------
1/1/00 -
9/30/0______[ ]%0
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4/1/99-
6/30/99) 17.76%
--------------------
Lowest (7/1/98-
9/30/98) -13.27%
[GRAPH]
Annual Return
92 93 94 95 96 97 98 99
12.70% 15.95% -4.45% 38.37% 19.87% 25.71% 9.86% 3.88%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C> <C>
Fund Inception
1 Year 5 Years (12/30/91)(/3/)
--------------------------------------------------------------------
Class D 3.88% 18.93% 14.67%
--------------------------------------------------------------------
Russell 1000 Value Index(/1/) % % %
--------------------------------------------------------------------
Lipper Multi-Cap Value Funds
Average(/2/) % % %
--------------------------------------------------------------------
</TABLE>
(1) The Russell 1000 Value Index is an unmanaged index that
measures the performance of companies in the Russell 1000
Index considered to have less than average growth orientation.
It is not possible to invest directly in the index. The
Russell 1000 Value Index replaced the S&P 500 Index (an
unmanaged index of large capitalization common stocks) as the
Fund's comparative index because PIMCO Advisors believes that
the Russell 1000 Value Index is more representative of the
Fund's investment strategies. For periods ended December 31,
1999, the 1 Year, 5 Year and Fund Inception average annual
total returns of the S&P 500 Index were 21.04%, 28.56% and
19.70%, respectively.
(2) The Lipper Multi-Cap Value Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges, without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(3) The Fund began operations on 12/30/91. Fund comparisons begin
on 12/31/91.
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D 0.45% 0.25% 0.40% 1.10%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.65% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples are intended to help you compare the cost
of investing in Class D shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that you
invest $10,000 in Class D shares for the time periods indicated,
and then redeem all your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each
year, the reinvestment of all dividends and distributions, and the
Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, the Examples show what your costs
would be based on these assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $112 $350 $606 $1,340
--------------------------------------------------------------------
</TABLE>
29 PIMCO Funds: Multi-Manager Series
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of
that Fund's investments. Many factors can affect those values. The
factors that are most likely to have a material effect on a
particular Fund's portfolio as a whole are called "principal
risks." The principal risks of each Fund are identified in the
Fund Summaries and are summarized in this section. Each Fund may
be subject to additional principal risks and risks other than
those described below because the types of investments made by
each Fund can change over time. Securities and investment
techniques mentioned in this summary and described in greater
detail under "Characteristics and Risks of Securities and
Investment Techniques" appear in bold type. That section and
"Investment Objectives and Policies" in the Statement of
Additional Information also include more information about the
Funds, their investments and the related risks. There is no
guarantee that a Fund will be able to achieve its investment
objective.
Market The market price of securities owned by a Fund may go up or down,
Risk sometimes rapidly or unpredictably. Each of the Funds normally
invests most of its assets in common stocks and/or other equity
securities. A principal risk of investing in each Fund is that the
equity securities in its portfolio will decline in value due to
factors affecting equity securities markets generally or
particular industries represented in those markets. The values of
equity securities may decline due to general market conditions
which are not specifically related to a particular company, such
as real or perceived adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may
also decline due to factors which affect a particular industry or
industries, such as labor shortages or increased production costs
and competitive conditions within an industry. Equity securities
generally have greater price volatility than fixed income
securities.
Issuer The value of a security may decline for a number of reasons which
Risk directly relate to the issuer, such as management performance,
financial leverage and reduced demand for the issuer's goods or
services.
Value
Securities Each Fund may invest in companies that may not be expected to
Risk experience significant earnings growth, but whose securities its
portfolio manager believes are selling at a price lower than their
true value. The Capital Appreciation, Equity Income, Growth &
Income, Mid-Cap, Renaissance and Value Funds place particular
emphasis on value securities. Companies that issue value
securities may have experienced adverse business developments or
may be subject to special risks that have caused their securities
to be out of favor. If a portfolio manager's assessment of a
company's prospects is wrong, or if the market does not recognize
the value of the company, the price of its securities may decline
or may not approach the value that the portfolio manager
anticipates.
Growth
Securities Each Fund may invest in equity securities of companies that its
Risk portfolio manager believes will experience relatively rapid
earnings growth. The Capital Appreciation, Global Innovation,
Growth, Growth & Income, Mid-Cap, Innovation, Select Growth and
Target Funds place particular emphasis on growth securities.
Growth securities typically trade at higher multiples of current
earnings than other securities. Therefore, the values of growth
securities may be more sensitive to changes in current or expected
earnings than the values of other securities.
Smaller
Company The general risks associated with equity securities and liquidity
Risk risk are particularly pronounced for securities of companies with
smaller market capitalizations. These companies may have limited
product lines, markets or financial resources or they may depend
on a few key employees. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or
on a regional exchange, or may otherwise have limited liquidity.
The Global Innovation and Innovation Funds generally have
substantial exposure to this risk. The Growth & Income, Mid-Cap
and Target Funds have significant exposure to this risk because
they invest primarily in companies with medium-sized market
capitalizations, which are smaller and generally less-seasoned
than the largest companies.
Liquidity All of the Funds are subject to liquidity risk. Liquidity risk
Risk exists when particular investments are difficult to purchase or
sell, possibly preventing a Fund from selling such illiquid
securities at an advantageous time or price. Funds with principal
investment strategies that involve securities of companies with
smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have
the greatest exposure to liquidity risk.
Derivatives The Global Innovation, Growth, Innovation, Renaissance, Select
Risk Growth and Tax-Efficient Equity Funds may use derivatives, which
are financial contracts whose value depends on, or is derived
from, the value of an underlying asset, reference rate or index.
The various derivative instruments that the Funds may use are
referenced under "Characteristics and Risks of Securities and
Investment Techniques--Derivatives" in this Prospectus and
described in more detail under "Investment
Prospectus 30
<PAGE>
Objectives and Policies" in the Statement of Additional
Information. The Funds may sometimes use derivatives as part of a
strategy designed to reduce exposure to other risks, such as
interest rate or currency risk. The Funds may also use derivatives
for leverage, which increases opportunities for gain but also
involves greater risk of loss due to leveraging risk. A Fund's use
of derivative instruments involves risks different from, or
possibly greater than, the risks associated with investing
directly in securities and other traditional investments.
Derivatives are subject to a number of risks described elsewhere
in this section, such as liquidity risk, market risk, credit risk
and management risk. They also involve the risk of mispricing or
improper valuation and the risk that changes in the value of the
derivative may not correlate perfectly with the underlying asset,
rate or index. In addition, a Fund's use of derivatives may
increase or accelerate the amount of taxes payable by
shareholders. A Fund investing in a derivative instrument could
lose more than the principal amount invested. Also, suitable
derivative transactions may not be available in all circumstances
and there can be no assurance that a Fund will engage in these
transactions to reduce exposure to other risks when that would be
beneficial.
Foreign A Fund that invests in foreign securities, and particularly the
(non- Global Innovation Fund, may experience more rapid and extreme
U.S.) changes in value than Funds that invest exclusively in securities
Investment of U.S. issuers or securities that trade exclusively in U.S.
Risk markets. The securities markets of many foreign countries are
relatively small, with a limited number of companies representing
a small number of industries. Additionally, issuers of foreign
securities are usually not subject to the same degree of
regulation as U.S. issuers. Reporting, accounting and auditing
standards of foreign countries differ, in some cases
significantly, from U.S. standards. Also, nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely
affect a Fund's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Fund could
lose its entire investment in foreign securities. To the extent
that a Fund, such as the Global Innovation Fund, invests a
significant portion of its assets in a narrowly defined area such
as Europe, Asia or South America, the Fund will generally have
more exposure to regional economic risks associated with foreign
investments. Adverse developments in certain regions (such as
Southeast Asia) can also adversely affect securities of other
countries whose economies appear to be unrelated. In addition,
special U.S. tax considerations may apply to a Fund's investment
in foreign securities.
Emerging Foreign investment risk may be particularly high to the extent
Markets that a Fund invests in emerging market securities of issuers based
Risk in countries with developing economies. These securities may
present market, credit, currency, liquidity, legal, political and
other risks different from, or greater than, the risks of
investing in developed foreign countries. The Global Innovation
Fund may invest a significant portion of its assets in emerging
markets securities.
Currency Funds that invest directly in foreign currencies and in securities
Risk that trade in, or receive revenues in, foreign currencies are
subject to the risk that those currencies will decline in value
relative to the U.S. Dollar, or, in the case of hedging positions,
that the U.S. Dollar will decline in value relative to the
currency being hedged. The Global Innovation Fund is particularly
sensitive to Currency Risk. Currency rates in foreign countries
may fluctuate significantly over short periods of time for a
number of reasons, including changes in interest rates,
intervention (or the failure to intervene) by U.S. or foreign
governments, central banks or supranational entities such as the
International Monetary Fund, or by the imposition of currency
controls or other political developments in the U.S. or abroad.
Focused
Investment Focusing Fund investments in a small number of issuers, industries
Risk or foreign currencies increases risk. Funds, such as the Select
Growth Fund, that are "non-diversified" because they invest in a
relatively small number of issuers may have more risk because
changes in the value of a single security or the impact of a
single economic, political or regulatory occurrence may have a
greater adverse impact on the Fund's net asset value. Some of
those issuers also may present substantial credit or other risks.
The Global Innovation Fund may be subject to increased risk to the
extent that it focuses its investments in securities denominated
in a particular foreign currency or in a narrowly defined
geographic area outside the U.S., because companies in these areas
may share common characteristics and react similarly to market
developments. Similarly, the Global Innovation and Innovation
Funds are vulnerable to events affecting companies which use
innovative technologies to gain a strategic, competitive advantage
in their industry and companies that provide and service those
technologies because these Funds normally "concentrate" their
investments in those companies. Also, the Funds may from time to
time have greater risk to the extent they invest a substantial
portion of their assets in related industries such as "technology"
or "financial and business services," which may share common
characteristics and react similarly to market developments.
Leveraging The Funds, and in particular the Global Innovation and Tax-
Risk Efficient Equity Funds, may engage in transactions or purchase
instruments that give rise to forms of leverage. Such transactions
and instruments may include, among others, the use of reverse
repurchase agreements and other borrowings,
31 PIMCO Funds: Multi-Manager Series
<PAGE>
the investment of collateral from loans of portfolio securities,
or the use of when-issued, delayed-delivery or forward commitment
transactions. The use of derivatives may also involve leverage.
Leverage, including borrowing, will cause the value of a Fund's
shares to be more volatile than if the Fund did not use leverage.
This is because leverage tends to exaggerate the effect of any
increase or decrease in the value of a Fund's portfolio
securities. The use of leverage may also cause a Fund to liquidate
portfolio positions when it would not be advantageous to do so in
order to satisfy its obligations or to meet segregation
requirements.
Interest
Rate Risk To the extent that Funds purchase fixed income securities for
investment or defensive purposes, they will be subject to interest
rate risk, a market risk relating to investments in fixed income
securities such as bonds and notes. The Growth & Income Fund is
particularly sensitive to this risk because it may invest in
interest rate sensitive securities such as corporate bonds.
As interest rates rise, the value of fixed income securities in a
Fund's portfolio are likely to decrease. Securities with longer
"durations" (defined below) tend to be more sensitive to changes
in interest rates, usually making them more volatile than
securities with shorter durations. Duration is a measure of the
expected life of a fixed income security that is used to determine
the sensitivity of a security's price to changes in interest
rates. Generally, a Fund with a longer average portfolio duration
will be more sensitive to changes in interest rates than a Fund
with a shorter average portfolio duration.
High Funds that invest in high yield securities and unrated securities
Yield of similar quality (commonly known as "junk bonds") may be subject
Risk to greater levels of interest rate, credit and liquidity risk than
Funds that do not invest in such securities. The Growth & Income
Fund is particularly susceptible to this risk. High yield
securities are considered predominantly speculative with respect
to the issuer's continuing ability to make principal and interest
payments. An economic downturn or period of rising interest rates
could adversely affect the market for high yield securities and
reduce a Fund's ability to sell its high yield securities.
Credit All of the Funds are subject to credit risk. This is the risk that
Risk the issuer or the guarantor of a fixed income security, or the
counterparty to a derivatives contract, repurchase agreement or a
loan of portfolio securities, is unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor
its obligations. Securities are subject to varying degrees of
credit risk, which are often reflected in their credit ratings.
Management Each Fund is subject to management risk because it is an actively
Risk managed investment portfolio. PIMCO Advisors, the Sub-Advisers and
each individual portfolio manager will apply investment techniques
and risk analyses in making investment decisions for the Funds,
but there can be no guarantee that these will produce the desired
results.
Management of the Funds
Investment PIMCO Advisors serves as the investment adviser and the
Adviser administrator (serving in its capacity as administrator, the
and Ad- "Administrator") for the Funds. Subject to the supervision of the
ministrator Board of Trustees, PIMCO Advisors is responsible for managing,
either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other
administrative matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport
Beach, California 92660. Organized in 1987, PIMCO Advisors
provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual
funds. As of September 30, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $[ ] billion in assets under
management.
PIMCO Advisors has retained investment management firms ("Sub-
Advisers") to manage the investments of the Capital Appreciation,
Mid-Cap and Tax-Efficient Equity Funds. The PIMCO Equity Advisors
division of PIMCO Advisors manages the investments of the Equity
Income, Global Innovation, Growth, Growth & Income, Innovation,
Renaissance, Select Growth, Target and Value Funds. (PIMCO Equity
Advisors is also referred to as a "Sub-Adviser" in this capacity.)
See "Sub-Advisers" below.
PIMCO Advisors has retained its affiliate, Pacific Investment
Management Company LLC, to provide various administrative and
other services required by the Funds in its capacity as sub-
administrator. PIMCO Advisors and the sub-administrator may retain
other affiliates to provide certain of these services.
Advisory
Fees Each Fund pays PIMCO Advisors fees in return for providing or
arranging for the provision of investment advisory services. In
the case of Funds for which PIMCO Advisors has retained a separate
Sub-Adviser, PIMCO Advisors (and not the Fund) pays a portion of
the advisory fees it receives to the Sub-Adviser in return for its
services.
Prospectus 32
<PAGE>
For the fiscal year ended June 30, 2000, the Funds paid monthly
advisory fees to PIMCO Advisors at the following annual rates
(stated as a percentage of the average daily net assets of each
Fund taken separately):
<TABLE>
<CAPTION>
Fund Advisory Fees
--------------------------------------------------------------
<S> <C>
Capital Appreciation, Equity Income, Mid-Cap, Tax-
Efficient Equity and Value Funds 0.45%
Growth Fund 0.50%
Target Fund 0.55%
Select Growth Fund 0.57%*
Renaissance Fund 0.60%
Growth & Income Fund 0.63%*
Innovation Fund 0.65%
</TABLE>
* On April 1, 2000, the advisory fee rate for the Select Growth
Fund increased to 0.60% per annum. On August 1, 2000, the advisory
fee rate for the Growth & Income Fund decreased to 0.60% per
annum.
The Global Innovation was not operational during the entire
fiscal year ended June 30, 2000. The annual investment advisory
fee rate payable by this Fund is 1.00% (stated as a percentage of
the average daily net assets of the Fund).
Administrative
Fees
Each Fund pays for the administrative services it requires under a
fee structure which is essentially fixed. Class D shareholders of
each Fund pay an administrative fee to PIMCO Advisors, computed as
a percentage of the Fund's assets attributable in the aggregate to
Class D shares. PIMCO Advisors, in turn, provides or procures
administrative services for Class D shareholders and also bears
the costs of various third-party services required by the Funds,
including audit, custodial, portfolio accounting, legal, transfer
agency and printing costs. The result of this fee structure is an
expense level for Class D shareholders of each Fund that, with
limited exceptions, is precise and predictable under ordinary
circumstances.
PIMCO Advisors or an affiliate may pay financial service firms a
portion of the Class D administrative fees in return for the
firms' services (normally not to exceed an annual rate of 0.35% of
a Fund's average daily net assets attributable to Class D shares
purchased through such firms).
Class D shareholders of the Funds pay PIMCO Advisors monthly
administrative fees at the following annual rates (stated as a
percentage of the average daily net assets attributable in the
aggregate to the Fund's Class D shares):
<TABLE>
<CAPTION>
Fund Administrative Fees*
----------------------------------------------------------------
<S> <C>
Capital Appreciation, Equity Income, Growth,
Innovation, Mid-Cap, Renaissance, Select
Growth, Target, Tax-Efficient Equity and
Value Funds 0.65%
Growth & Income Fund 0.75%
Global Innovation Fund 0.85%
</TABLE>
*As described below under "12b-1 Plan for Class D Shares," the
administration agreement includes a plan adopted in conformity
with Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") which provides for the payment of up to 0.25% of the
0.65% (0.75% for the Growth & Income Fund and 0.85% for the
Global Innovation Fund) Administrative Fee as reimbursement for
expenses in respect of activities that may be deemed to be
primarily intended to result in the sale of Class D shares. In
the Fund Summaries above, the "Annual Fund Operating Expenses"
table provided under "Fees and Expenses of the Fund" for each
Fund shows the 0.65% (0.75% for the Growth & Income Fund and
0.85% for the Global Innovation Fund) Administrative Fee rate
under two separate columns entitled "Distribution and/or Service
(12b-1) Fees" (0.25%) and "Other Expenses" (0.40%) (0.50% for
the Growth & Income Fund and 0.60% for the Global Innovation
Fund).
12b-1 The Funds' administration agreement includes a plan for Class D
Plan for shares that has been adopted in conformity with the requirements
Class D set forth in Rule 12b-1 under the 1940 Act. The plan provides that
Shares up to 0.25% per annum of the Class D administrative fees paid
under the administration agreement may represent reimbursement for
expenses in respect of activities that may be deemed to be
primarily intended to result in the sale of Class D shares. The
principal types of activities for which such payments may be made
are services in connection with the distribution of Class D shares
and/or the provision of shareholder services. Because 12b-1 fees
would be paid out of a Fund's Class D share assets on an ongoing
basis, over time these fees would increase the cost of your
investment in Class D shares and may cost you more than other
types of sales charges.
33 PIMCO Funds: Multi-Manager Series
<PAGE>
Sub- Each Sub-Adviser has full investment discretion and makes all
Advisers determinations with respect to the investment of a Fund's assets.
The following provides summary information about each Sub-Adviser,
including the Fund(s) it manages.
<TABLE>
<CAPTION>
Sub-Adviser* Funds
-------------------------------------------------------------------------------------------------------------
<S> <C>
PIMCO Equity Advisors Equity Income, Global Innovation, Growth, Growth & Income, Innovation, Renaissance,
division of PIMCO Select Growth, Target and Value
Advisors ("PIMCO Equity Advisors")
1345 Avenue of the Americas,
50th Floor
New York, NY 10105
-------------------------------------------------------------------------------------------------------------
Cadence Capital Management Capital Appreciation and
("Cadence") Mid-Cap
Exchange Place, 53 State
Street
Boston, MA 02109
-------------------------------------------------------------------------------------------------------------
Parametric Portfolio Tax-Efficient Equity
Associates ("Parametric")
7310 Columbia Center, 701
Fifth Avenue
Seattle, WA 98104
</TABLE>
*PIMCO Equity Advisors is a division of PIMCO Advisors. Each of
the other Sub-Advisers is an affiliated sub-partnership of PIMCO
Advisors.
The following provides additional information about each Sub-
Adviser and the individual portfolio managers who have or share
primary responsibility for managing the Funds' investments.
PIMCO A division of PIMCO Advisors, PIMCO Equity Advisors provides
Equity equity-related advisory services to mutual funds and institutional
Advisors accounts. See "Investment Adviser and Administrator" above for
additional information about PIMCO Advisors.
The following individuals at PIMCO Equity Advisors have primary
responsibility for the noted Funds. Different sub-advisory firms
served as Sub-Adviser for the Growth, Innovation and Target Funds
prior to March 6, 1999, for the Renaissance Fund prior to May 7,
1999, for the Select Growth and Growth & Income Funds prior to
July 1, 1999 and for the Equity Income and Value Funds prior to
May 8, 2000.
<TABLE>
<CAPTION>
Recent Professional
Fund Portfolio Managers Since Experience
------------------------------------------------------------------------
<C> <C> <C> <S>
Equity Income Kenneth W. Corba 2000 Managing Director and
Chief Investment Officer
of PIMCO Equity Advisors
and a Member of the
Management Board of
PIMCO Advisors. Prior to
joining PIMCO Advisors,
he was with Eagle Asset
Management from 1995 to
1998, serving in various
capacities including as
Chief Investment Officer
and Portfolio Manager.
He was with Stein Roe
and Farnham Inc. from
1984 to 1995, serving in
various capacities
including as Director of
the Capital Management
Group, Senior Vice
President and Portfolio
Manager.
Global Innovation Dennis P. McKechnie 1999 Portfolio Manager of
(Inception)+ PIMCO Equity Advisors.
Prior to joining PIMCO
Advisors, he was with
Columbus Circle
Investors from 1991 to
1999, where he managed
equity accounts and
served in various
capacities including as
Portfolio Manager for
the Innovation Fund.
Jiyoung Kim 2000 Senior Research Analyst
for PIMCO Innovation
Fund, where she covers
biotechnology,
telecommunications
equipment,
semiconductors and
networking. Prior to
joining PIMCO Equity
Advisors in [ ], she
was a Senior Research
Analyst at Fred Alger
Management from [ ] to
[ ]. Prior to that, she
was a Senior Research
Technician at Repligen,
a [ ] company.
Growth Mr. Corba 1999 See above.
Growth & Income Mr. Corba 1999 See above.
Peter C. Thoms 2000 Investment Analyst at
Federated Investors from
July 1998 to May 1999.
Previously, he received
his M.B.A. at the
University of Virginia's
Darden School of
Business.
Innovation Mr. McKechnie 1998 See above.
Renaissance John K. Schneider 1999 Senior Portfolio Manager
of PIMCO Equity
Advisors. Prior to
joining PIMCO Advisors,
he was a partner and
Portfolio Manager of
Schneider Capital
Management from 1996 to
1999, where he managed
equity accounts for
various institutional
clients. Prior to that
he was a member of the
Equity Policy Committee
and Director of Research
at Newbold's Asset
Management from 1991 to
1996.
</TABLE>
Prospectus 34
<PAGE>
<TABLE>
<CAPTION>
Recent Professional
Fund Portfolio Managers Since Experience
-----------------------------------------------------------------------------------
<C> <C> <C> <S>
Select Growth Messrs. Corba and Schneider 1999 See above.
Target Mr. Corba 1999 See above.
Jeff Parker 1999 Assistant Portfolio
Manager and Research
Analyst for PIMCO Equity
Advisors. Prior to
joining PIMCO Equity
Advisors, he managed
equity accounts as an
Assistant Portfolio
Manager at Eagle Asset
Management from 1996 to
1998. He was a Senior
Consultant with Andersen
Consulting, specializing
in healthcare and
technology, from 1991 to
1994.
Value Mr. Schneider 2000 See above.
-------
+ Prior to PIMCO Advisors and PIMCO Equity Advisors assuming their
positions as Adviser and Sub-Adviser, respectively, of the
Global Innovation Fund, Mr. McKechnie managed the Fund's
portfolio in his capacity as an officer of the Trust.
Cadence An affiliated sub-partnership of PIMCO Advisors, Cadence provides
advisory services to mutual funds and institutional accounts.
Cadence Capital Management Corporation, the predecessor investment
adviser to Cadence, commenced operations in 1988. Accounts managed
by Cadence had combined assets as of September 30, 2000 of
approximately $[ ] billion.
The following individuals at Cadence share primary responsibility
for each of the noted Funds.
<CAPTION>
Recent Professional
Fund Portfolio Managers Since Experience
-----------------------------------------------------------------------------------
<C> <C> <C> <S>
Capital David B. Breed 1991 Managing Director, Chief
Appreciation (Inception) Executive Officer, Chief
Investment Officer and
founding partner of
Cadence. Member of the
Management Board of
PIMCO Advisors. He is a
research generalist and
has lead the team of
portfolio managers and
analysts since 1988. Mr.
Breed has managed
separate equity accounts
for many institutional
clients and has lead the
team that manages the
PIMCO Funds sub-advised
by Cadence since those
Funds' inception dates.
William B. Bannick 1992 Managing Director and
Executive Vice President
at Cadence. Mr. Bannick
is a research generalist
and Senior Portfolio
Manager for the Cadence
team. He has managed
separately managed
equity accounts for
various Cadence
institutional clients
and has been a member of
the team that manages
the PIMCO Funds sub-
advised by Cadence since
joining Cadence in 1992.
Katherine A. Burdon 1993 Managing Director and
Senior Portfolio Manager
at Cadence. Ms. Burdon
is a research generalist
and has managed
separately managed
equity accounts for
various Cadence
institutional clients
and has been a member of
the team that manages
the PIMCO Funds sub-
advised by Cadence since
joining Cadence in 1993.
Capital Peter B. McManus 1994 Director, Account
Appreciation (cont.) Management at Cadence.
He has been a member of
the investment team at
Cadence and handles
client relationships of
separately managed
accounts, and has been a
member of the team that
manages the PIMCO Funds
sub-advised by Cadence
since joining Cadence in
1994. Previously, he
served as a Vice
President of Bank of
Boston from 1991
to 1994.
Mid-Cap Messrs. Breed, Same as See above.
Bannick and Capital
McManus and Appreciation
Ms. Burdon Fund
</TABLE>
Parametric
An affiliated sub-partnership of PIMCO Advisors, Parametric
provides advisory services to mutual funds and institutional
accounts. Parametric Portfolio Associates, Inc., the predecessor
investment adviser to Parametric, commenced operations in 1987.
Accounts managed by Parametric had combined assets as of September
30, 2000 of approximately $[ ] billion.
35 PIMCO Funds: Multi-Manager Series
<PAGE>
The following individuals at Parametric share primary
responsibility for the Tax-Efficient Equity Fund.
<TABLE>
<CAPTION>
Recent Professional
Fund Portfolio Managers Since Experience
------------------------------------------------------------------------------
<C> <C> <C> <S>
Tax-Efficient Equity David Stein 1998 (Inception) Managing Director of
Parametric. He also
serves as a Senior
Porfolio Manager of
PIMCO Equity Advisors.
He has been with
Parametric since 1996
where he leads the
investment, research and
product development
activities. Previously,
he served in Investment
Research at GTE
Corporation from 1995 to
1996, in Equity Research
at Vanguard Group from
1994 to 1995 and in
Investment Research at
IBM Corporation from
1977 to 1994.
Tom Seto 1998 (Inception) Vice President and
Portfolio Manager of
Parametric. Since
joining Parametric in
1998, he has been
responsible for
management of
Parametric's active U.S.
equity strategies and
has managed structured
equity portfolios.
Previously, he was with
Barclays global
Investors from 1991 to
1998, serving in various
capacities including as
head of U.S. Equity
Index Investments and
Portfolio Manager.
</TABLE>
Adviser/Sub-Shareholders of each Fund (except the Innovation and Mid-Cap
Adviser Funds) have approved a proposal permitting PIMCO Advisors to enter
Relationshipinto new or amended sub-advisory agreements with one or more sub-
advisers with respect to each Fund without obtaining shareholder
approval of such agreements, subject to the conditions of an
exemptive order that has been granted by the Securities Exchange
Commission. One of the conditions requires the Board of Trustees
to approve any such agreement. In addition, the exemptive order
prohibits PIMCO Advisors from entering into sub-advisory
agreements with affiliates of PIMCO Advisors without shareholder
approval, unless those affiliates are substantially wholly-owned
by PIMCO Advisors.
Distributor The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly
owned subsidiary of PIMCO Advisors. The Distributor, located at
2187 Atlantic Street, Stamford, CT 06902, is a broker-dealer
registered with the Securities and Exchange Commission.
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Class D shares is
determined by dividing the total value of a Fund's portfolio
investments and other assets attributable to that class, less any
liabilities, by the total number of shares outstanding of that
class.
For purposes of calculating NAV, portfolio securities and other
assets for which market quotes are available are stated at market
value. Market value is generally determined on the basis of last
reported sales prices, or if no sales are reported, based on
quotes obtained from a quotation reporting system, established
market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily
available may be valued, pursuant to procedures established by the
Board of Trustees, with reference to other securities or indices.
Short-term investments having a maturity of 60 days or less are
generally valued at amortized cost. Exchange traded options,
futures and options on futures are valued at the settlement price
determined by the exchange. Other securities for which market
quotes are not readily available are valued at fair value as
determined in good faith by the Board of Trustees or persons
acting at their direction.
Investments initially valued in currencies other than the U.S.
dollar are converted to U.S. dollars using exchange rates obtained
from pricing services. As a result, the NAV of a Fund's shares may
be affected by changes in the value of currencies in relation to
the U.S. dollar. The value of securities traded in markets outside
the United States or denominated in currencies other than the U.S.
dollar may be affected significantly on a day that the New York
Stock Exchange is closed and an investor is not able to purchase,
redeem or exchange shares.
Fund shares are valued at the close of regular trading (normally
4:00 p.m., Eastern time) (the "NYSE Close") on each day that the
New York Stock Exchange is open. For purposes of calculating the
NAV, the Funds normally use pricing data for domestic equity
securities received shortly after the NYSE Close and do not
normally take into account trading, clearances or settlements that
take place after the NYSE Close. Domestic fixed income and foreign
securities are normally priced using data reflecting the earlier
closing of the principal markets for those securities. Information
that becomes known to the Funds or their agents after the NAV has
been calculated on a particular day will not generally be used to
retroactively adjust the price of a security or the NAV determined
earlier that day.
Prospectus 36
<PAGE>
In unusual circumstances, instead of valuing securities in the
usual manner, the Funds may value securities at fair value or
estimate their value as determined in good faith by the Board of
Trustees or persons acting at their direction pursuant to
procedures approved by the Board of Trustees. Fair valuation may
also be used by the Board of Trustees if extraordinary events
occur after the close of the relevant market but prior to the NYSE
Close.
How to Buy and Sell Shares
The following section provides basic information about how to buy,
sell (redeem) and exchange Class D shares of the Funds.
General . Financial Service Firms. Broker-dealers, registered investment
Information advisers and other financial service firms provide varying
investment products, programs or accounts, pursuant to
arrangements with the Distributor, through which their clients may
purchase and redeem Class D shares of the Funds. Firms will
generally provide or arrange for the provision of some or all of
the shareholder servicing and account maintenance services
required by your account, including, without limitation, transfers
of registration and dividend payee changes. Firms may also perform
other functions, including generating confirmation statements and
disbursing cash dividends, and may arrange with their clients for
other investment or administrative services. Your firm may
independently establish and charge you transaction fees and/or
other additional amounts for such services, which may change over
time. These fees and additional amounts could reduce your
investment returns on Class D shares of the Funds.
Your financial service firm may have omnibus accounts and similar
arrangements with the Trust and may be paid for providing sub-
transfer agency and other services. A firm may be paid for its
services directly or indirectly by the Funds, PIMCO Advisors or an
affiliate (normally not to exceed an annual rate of 0.35% of a
Fund's average daily net assets attributable to its Class D shares
and purchased through such firm for its clients). Your firm may
establish various minimum investment requirements for Class D
shares of the Funds and may also establish certain privileges with
respect to purchases, redemptions and exchanges of Class D shares
or the reinvestment of dividends. Please contact your firm for
information.
This Prospectus should be read in connection with your firm's
materials regarding its fees and services.
. Calculation of Share Price and Redemption Payments. When you
buy or sell (redeem) Class D shares of the Funds, you pay or
receive a price equal to the NAV of the shares. NAVs are
determined at the close of regular trading (normally, 4:00 p.m.,
Eastern time) on each day the New York Stock Exchange is open. See
"How Fund Shares Are Priced" above for details. Generally,
purchase and redemption orders for Fund shares are processed at
the NAV next calculated after your order is received by the
Distributor. In addition, orders received by the Distributor from
financial service firms after NAV is determined that day will be
processed at that day's NAV if the orders were received by the
firm from its customer prior to such determination and were
transmitted to and received by the Distributor prior to its close
of business that day (normally 7:00 p.m., Eastern time).
The Trust does not calculate NAVs or process orders on days when
the New York Stock Exchange is closed. If your purchase or
redemption order is received by the Distributor on a day when the
New York Stock Exchange is closed, it will be processed on the
next succeeding day when the New York Stock Exchange is open
(according to the succeeding day's NAV).
Buying Class D shares of each Fund are continuously offered through
Shares financial service firms, such as broker-dealers or registered
investment advisers, with which the Distributor has an agreement
for the use of the Funds in particular investment products,
programs or accounts for which a fee may be charged. See
"Financial Service Firms" above.
You may purchase Class D shares only through your financial
service firm. In connection with purchases, your financial service
firm is responsible for forwarding all necessary documentation to
the Distributor, and may charge you for such services. If you wish
to purchase shares of the Funds directly from the Trust or the
Distributor, you should inquire about the other classes of shares
offered by the Trust. Please call the Distributor at 1-888-87-
PIMCO for information about other investment options.
37 PIMCO Funds: Multi-Manager Series
<PAGE>
Class D shares of the Funds will be held in your account with
your financial service firm and, generally, your firm will hold
your Class D shares in nominee or street name as your agent. In
most cases, the Trust's transfer agent, PFPC, Inc., will have no
information with respect to or control over accounts of specific
Class D shareholders and you may obtain information about your
accounts only through your financial service firm. In certain
circumstances, your firm may arrange to have your shares held in
your own name or you may subsequently become a holder of record
for some other reason (for instance, if you terminate your
relationship with your firm). In such circumstances, please
contact the Distributor at 1-888-87-PIMCO for information about
your account. In the interest of economy and convenience,
certificates for Class D shares will not be issued.
The Distributor, in its sole discretion, may accept or reject any
order for purchase of Fund shares. The sale of shares will be
suspended during any period in which the New York Stock Exchange
is closed for other than weekends or holidays, or if permitted by
the rules of the Securities and Exchange Commission, when trading
on the New York Stock Exchange is restricted or during an
emergency which makes it impracticable for the Funds to dispose of
their securities or to determine fairly the value of their net
assets, or during any other period as permitted by the Securities
and Exchange Commission for the protection of investors.
Investment The following investment minimums apply for purchases of Class D
Minimums shares.
<TABLE>
<CAPTION>
Initial Investment Subsequent Investments
----------------------------------------------------------
<S> <C>
$2,500 per Fund $100 per Fund
</TABLE>
Your financial service firm may impose different investment
minimums than the Trust. For example, if your firm maintains an
omnibus account with a particular Fund, the firm may impose higher
or lower investment minimums than the Trust when you invest in
Class D shares of the Fund through your firm. Please contact your
firm for information.
Exchanging Except as provided below or in the applicable Fund's or series'
Shares prospectus(es), you may exchange your Class D shares of any Fund
for Class D shares of any other Fund or series of PIMCO Funds:
Pacific Investment Management Series that offers Class D shares.
Shares are exchanged on the basis of their respective NAVs next
calculated after your exchange order is received by the
Distributor. Currently, the Trust does not charge any exchange
fees or charges. Your financial service firm may impose various
fees and charges, investment minimums and other requirements with
respect to exchanges. In addition, an exchange is generally a
taxable event which will generate capital gains or losses, and
special rules may apply in computing tax basis when determining
gain or loss. Please contact your financial service firm to
exchange your shares and for additional information about the
exchange privilege.
The Trust reserves the right to refuse exchange purchases if, in
the judgment of PIMCO Advisors, the purchase would adversely
affect a Fund and its shareholders. In particular, a pattern of
exchanges characteristic of "market-timing" strategies may be
deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. Currently, the Trust limits the number of "round
trip" exchanges an investor may make. An investor makes a "round
trip" exchange when the investor purchases shares of a particular
Fund, subsequently exchanges those shares for shares of a
different PIMCO Fund and then exchanges back into the originally
purchased Fund. The Trust has the right to refuse any exchange for
any investor who completes (by making the exchange back into the
shares of the originally purchased Fund) more than six round trip
exchanges in any twelve-month period. Although the Trust has no
current intention of terminating or modifying the exchange
privilege other than as set forth in the preceding sentence, it
reserves the right to do so at any time. Except as otherwise
permitted by Securities and Exchange Commission regulations, the
Trust will give 60 days' advance notice to your financial service
firm of any termination or material modification of the exchange
privilege with respect to Class D shares.
Selling You can sell (redeem) Class D shares through your financial
Shares service firm on any day the New York Stock Exchange is open. You
do not pay any fees or other charges to the Trust or the
Distributor when you sell your shares, although your financial
service firm may charge you for its services in processing your
redemption request. Please contact your firm for details. If you
are the holder of record of your Class D shares, you may contact
the Distributor at 1-888-87-PIMCO for information regarding how to
sell your shares directly to the Trust.
Prospectus 38
<PAGE>
Your financial service firm is obligated to transmit your
redemption orders to the Distributor promptly and is responsible
for ensuring that your redemption request is in proper form. Your
financial service firm will be responsible for furnishing all
necessary documentation to the Distributor or the Trust's transfer
agent and may charge you for its services. Redemption proceeds
will be forwarded to your financial service firm as promptly as
possible and in any event within seven days after the redemption
request is received by the Distributor in good order.
Redemptions of Fund shares may be suspended when trading on the
Exchange is restricted or during an emergency which makes it
impracticable for the Funds to dispose of their securities or to
determine fairly the value of their net assets, or during any
other period as permitted by the Securities and Exchange
Commission for the protection of investors. Under these and other
unusual circumstances, the Trust may suspend redemptions or
postpone payment for more than seven days, as permitted by law.
Redemptions The Trust had agreed to redeem shares of each Fund solely in cash
In Kind up to the lesser of $250,000 or 1% of the Fund's net assets during
any 90-day period for any one shareholder. In consideration of the
best interests of the remaining shareholders, the Trust may pay
any redemption proceeds exceeding this amount in whole or in part
by a distribution in kind of securities held by a Fund in lieu of
cash. Except for Funds with a tax-efficient management strategy,
it is highly unlikely that your shares would ever be redeemed in
kind. If your shares are redeemed in kind, you should expect to
incur transaction costs upon the disposition of the securities
received in the distribution.
Fund Distributions
Each Fund distributes substantially all of its net investment
income to shareholders in the form of dividends. You begin earning
dividends on Fund shares the day after the Trust receives your
purchase payment. Dividends paid by each Fund with respect to its
Class D shares are calculated in the same manner and at the same
time. The following shows when each Fund intends to declare and
distribute income dividends to shareholders of record.
<TABLE>
<CAPTION>
Fund At Least Annually Quarterly
-------------------------------------------------------------
<S> <C> <C>
Equity Income, Renaissance and .
Value Funds
-------------------------------------------------------------
All other Funds .
-------------------------------------------------------------
</TABLE>
In addition, each Fund distributes any net capital gains it earns
from the sale of portfolio securities to shareholders no less
frequently than annually. Net short-term capital gains may be paid
more frequently.
You can choose from the following distribution options:
. Reinvest all distributions in additional Class D shares of your
Fund at NAV. This will be done unless you elect another option.
. Invest all distributions in Class D shares of any other Fund or
another series of the Trust or PIMCO Funds: Pacific Investment
Management Series which offers Class D shares at NAV. You must
have an account existing in the Fund or series selected for
investment with the identical registered name. This option must
be elected when your account is set up.
. Receive all distributions in cash (either paid directly to you
or credited to your account with your financial service firm).
This option must be elected when your account is set up.
Your financial service firm may offer additional distribution
reinvestment programs or options. Please contact your firm for
details.
You do not pay any sales charges on shares you receive through
the reinvestment of Fund distributions. If you elect to receive
Fund distributions in cash and the postal or other delivery
service is unable to deliver checks to your address of record, the
Trust's Transfer Agent will hold the returned checks for your
benefit in a non-interest bearing account.
For further information on distribution options, please contact
your financial service firm or call the Distributor at 1-888-87-
PIMCO.
39 PIMCO Funds: Multi-Manager Series
<PAGE>
Tax Consequences
. Taxes on Fund distributions. If you are subject to U.S.
federal income tax, you will be subject to tax on Fund
distributions whether you received them in cash or reinvested them
in additional shares of the Funds. For federal income tax
purposes, Fund distributions will be taxable to you as either
ordinary income or capital gains.
Fund dividends (i.e., distributions of investment income) are
taxable to you as ordinary income. Federal taxes on Fund
distributions of gains are determined by how long the Fund owned
the investments that generated the gains, rather than how long you
have owned your shares. Distributions of gains from investments
that a Fund owned for more than 12 months will generally be
taxable to you as capital gains. Distributions of gains from
investments that the Fund owned for 12 months or less will
generally be taxable to you as ordinary income.
Fund distributions are taxable to you even if they are paid from
income or gains earned by a Fund prior to your investment and thus
were included in the price you paid for your shares. For example,
if you purchase shares on or just before the record date of a Fund
distribution, you will pay full price for the shares and may
receive a portion of your investment back as a taxable
distribution.
. Taxes when you sell (redeem) or exchange your shares. Any gain
resulting from the sale of Fund shares will generally be subject
to federal income tax. When you exchange shares of a Fund for
shares of another series, the transaction will generally be
treated as a sale of the Fund shares for these purposes, and any
gain on those shares will generally be subject to federal income
tax.
. A Note on the Tax-Efficient Equity Fund. The Tax-Efficient
Equity Fund utilizes a number of tax-efficient management
techniques designed to minimize taxable distributions. For
instance, the Fund generally seeks to minimize realized gains and,
when realizing gains, attempts to realize gains that will be taxed
as capital gains (i.e., as gains on investments owned for more
than 12 months) when distributed to shareholders. Although the
Fund attempts to minimize taxable distributions, it may be
expected to earn and distribute taxable income and realize and
distribute capital gains from time to time.
. A Note on Foreign Investments. A Fund's investment in foreign
securities may be subject to foreign withholding taxes. In that
case, the Fund's yield on those securities would be decreased. In
addition, a Fund's investments in foreign securities or foreign
currencies may increase or accelerate the Fund's recognition of
ordinary income and may affect the timing or amount of the Fund's
distributions.
This section relates only to federal income tax consequences of
investing in the Funds; the consequences under other tax laws may
differ. You should consult your tax advisor as to the possible
application of foreign, state and local income tax laws to Fund
dividends and capital distributions. Please see the Statement of
Additional Information for additional information regarding the
tax aspects of investing in the Funds.
Characteristics and Risks of Securities
and Investment Techniques
This section provides additional information about some of the
principal investments and related risks of the Funds identified
under "Summary Information" above. It also describes
characteristics and risks of additional securities and investment
techniques that are not necessarily principal investment
strategies but may be used by the Funds from time to time. Most of
these securities and investment techniques are discretionary,
which means that the portfolio managers can decide whether to use
them or not. This Prospectus does not attempt to disclose all of
the various types of securities and investment techniques that may
be used by the Funds. As with any mutual fund, investors in the
Funds must rely on the professional investment judgment and skill
of PIMCO Advisors, the Sub-Advisers and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the
Statement of Additional Information for more detailed information
about the securities and investment techniques described in this
section and about other strategies and techniques that may be used
by the Funds.
Fixed
Income
Securities
and
Defensive
Strategies
Fixed income securities are obligations of the issuer to make
payments of principal and/or interest on future dates, and include
corporate and government bonds, notes, certificates of deposit,
commercial paper, convertible securities and mortgage-backed and
other asset-backed securities.
Prospectus 40
<PAGE>
The Capital Appreciation, Mid-Cap and Tax-Efficient Equity Funds
intend to be as fully invested in common stocks as practicable at
all times, although, for cash management purposes, each of these
Funds may maintain a portion of its assets (normally not more than
10%) in U.S. Government securities, high quality fixed income
securities, money market obligations and cash to pay certain Fund
expenses and to meet redemption requests. None of these Funds will
make defensive investments in response to unfavorable market and
other conditions and therefore may be particularly vulnerable to
general declines in stock prices and/or other categories of
securities in which they invest.
The Equity Income, Global Innovation, Growth, Innovation,
Renaissance, Select Growth, Target and Value Funds will each
invest primarily in common stocks, and may also invest in other
kinds of equity securities, including preferred stocks and
securities (including fixed income securities and warrants)
convertible into or exercisable for common stocks. Each of these
Funds may also invest a portion of its assets in fixed income
securities. These Funds may temporarily hold up to 100% of their
assets in short-term U.S. Government securities and other money
market instruments for defensive purposes in response to
unfavorable market and other conditions. The Growth & Income Fund
will invest primarily in common stocks, but may also invest
significant portions of its assets in preferred stocks, fixed
income securities, convertible securities and Real Estate
Investment Trusts, or "REITs." The Growth & Income Fund may
temporarily hold up to 100% of its assets in short-term U.S.
Government securities and other money market instruments for
defensive purposes in response to unfavorable market and other
conditions. The temporary defensive strategies described in this
paragraph would be inconsistent with the investment objective and
principal investment strategies of each of the noted Funds and may
adversely affect the Fund's ability to achieve its investment
objective.
Companies
With
Smaller
Market
Capitalizations
Each of the Funds may invest in securities of companies with
market capitalizations that are small compared to other publicly
traded companies. The Global Innovation and Innovation Funds may
invest significant portions of their assets in smaller companies
and therefore have substantial exposure to the risks described
below. The Growth & Income, Mid-Cap and Target Funds also have
significant exposure to the risks described below because they
invest primarily in companies with medium-sized market
capitalizations, which are smaller and generally less well-known
or seasoned than the largest companies.
Companies which are smaller and less well-known or seasoned than
larger, more widely held companies may offer greater opportunities
for capital appreciation, but may also involve risks different
from, or greater than, risks normally associated with larger
companies. Larger companies generally have greater financial
resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater
depth of management and technical personnel than smaller
companies. Smaller companies may have limited product lines,
markets or financial resources or may depend on a small,
inexperienced management group. Securities of smaller companies
may trade less frequently and in lesser volume than more widely
held securities and their values may fluctuate more abruptly or
erratically than securities of larger companies. They may also
trade in the over-the-counter market or on a regional exchange, or
may otherwise have limited liquidity. These securities may
therefore be more vulnerable to adverse market developments than
securities of larger companies. Also, there may be less publicly
available information about smaller companies or less market
interest in their securities as compared to larger companies, and
it may take longer for the prices of the securities to reflect the
full value of a company's earnings potential or assets.
Because securities of smaller companies may have limited
liquidity, a Fund may have difficulty establishing or closing out
its positions in smaller companies at prevailing market prices. As
a result of owning large positions in this type of security, a
Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if
redemptions require the Fund to liquidate its securities
positions. For these reasons, it may be prudent for a Fund with a
relatively large asset size to limit the number of relatively
small positions it holds in securities having limited liquidity in
order to minimize its exposure to such risks, to minimize
transaction costs, and to maximize the benefits of research. As a
consequence, as a Fund's asset size increases, the Fund may reduce
its exposure to illiquid smaller capitalization securities, which
could adversely affect performance.
The Funds may purchase securities in intial public offerings
(IPOs). These securities are subject to many of the same risks of
investing in companies with smaller market capitalizations.
Securities issued in IPOs have no trading history, and information
about the companies may be available for very limited periods. In
addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in
IPOs to the extent desired because, for example, only a small
portion of the securities being offered in an IPO may be made
available to the Fund or because under certain market conditions
few companies may issue securities in IPOs.
41 PIMCO Funds: Multi-Manager Series
<PAGE>
Foreign The Global Innovation Fund will invest in the securities of
(non- issuers located in at least three countries (one of which may be
U.S.) the United States). The Equity Income, Growth, Growth & Income,
Securities Innovation, Renaissance, Select Growth, Target and Value Funds may
invest up to 15% of their respective assets in securities of
foreign issuers, securities traded principally in securities
markets outside the United States and/or securities denominated in
foreign currencies (together, "foreign securities"), and may
invest without limit in ADRs (defined below).
All of the Funds may invest in American Depository Receipts
("ADRs"). In addition, the Equity Income, Global Innovation,
Growth, Growth & Income, Innovation, Renaissance, Select Growth,
Target and Value Funds may invest in European Depository Receipts
(EDRs) and Global Depository Receipts (GDRs). ADRs are dollar-
denominated receipts issued generally by domestic banks and
representing the deposit with the bank of a security of a foreign
issuer, and are publicly traded on exchanges or over-the-counter
in the United States. EDRs are receipts similar to ADRs and are
issued and traded in Europe. GDRs may be offered privately in the
United States and also traded in public or private markets in
other countries.
Investing in foreign securities involves special risks and
considerations not typically associated with investing in U.S.
securities and shareholders should consider carefully the
substantial risks involved for Funds that invest in these
securities. These risks include: differences in accounting,
auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the
possibility of nationalization, expropriation or confiscatory
taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign
economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rate
of inflation, capital reinvestment, resources, self-sufficiency
and balance of payments position. The securities markets, values
of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign
securities and dividends and interest payable on those securities
may be subject to foreign taxes, including taxes withheld from
payments on those securities. Foreign securities often trade with
less frequency and volume than domestic securities and therefore
may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic
investments and additional transaction costs with respect to
foreign currency conversions. Changes in foreign exchange rates
also will affect the value of securities denominated or quoted in
foreign currencies.
Emerging Each of the Funds that may invest in foreign securities may invest
Market in securities of issuers based in countries with developing (or
Securities "emerging market") economies. The Global Innovation Fund may
invest significant portions of its assets in emerging market
securities. Investing in emerging market securities imposes risks
different from, or greater than, risks of investing in domestic
securities or in foreign, developed countries. These risks
include: smaller market capitalization of securities markets,
which may suffer periods of relative illiquidity; significant
price volatility; restrictions on foreign investment; and possible
repatriation of investment income and capital. In addition,
foreign investors may be required to register the proceeds of
sales and future economic or political crises could lead to price
controls, forced mergers, expropriation or confiscatory taxation,
seizure, nationalization or the creation of government monopolies.
The currencies of emerging market countries may experience
significant declines against the U.S. dollar, and devaluation may
occur subsequent to investments in these currencies by a Fund.
Inflation and rapid fluctuations in inflation rates have had, and
may continue to have, negative effects on the economies and
securities markets of certain emerging market countries.
Additional risks of emerging market securities may include:
greater social, economic and political uncertainty and
instability; more substantial governmental involvement in the
economy; less governmental supervision and regulation;
unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial
reporting standards, which may result in unavailability of
material information about issuers; and less developed legal
systems. In addition, emerging securities markets may have
different clearance and settlement procedures, which may be unable
to keep pace with the volume of securities transactions or
otherwise make it difficult to engage in such transactions.
Settlement problems may cause a Fund to miss attractive investment
opportunities, hold a portion of its assets in cash pending
investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of
the security.
Special Risks of Investing in Russian and Other Eastern European
Securities. The Global Innovation Fund may invest a portion of its
assets in securities of issuers located in Russia and in other
Eastern European countries. While investments in securities of
such issuers are subject generally to the same
Prospectus 42
<PAGE>
risks associated with investments in other emerging market
countries described above, the political, legal and operational
risks of investing in Russian and other Eastern European issuers,
and of having assets custodied within these countries, may be
particularly acute. A risk of particular note with respect to
direct investment in Russian securities is the way in which
ownership of shares of companies is normally recorded. When a Fund
invests in a Russian issuer, it will normally receive a "share
extract," but that extract is not legally determinative of
ownership. The official record of ownership of a company's share
is maintained by the company's share registrar. Such share
registrars are completely under the control of the issuer, and
investors are provided with few legal rights against such
registrars.
Foreign A Fund that invests directly in foreign currencies or in
Currencies securities that trade in, and receive revenues in, foreign
currencies will be subject to currency risk. The Global Innovation
Fund is particularly sensitive to this risk.
Foreign currency exchange rates may fluctuate significantly over
short periods of time. They generally are determined by supply and
demand and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other
complex factors. Currency exchange rates also can be affected
unpredictably by intervention (or the failure to intervene) by
U.S. or foreign governments or central banks, or by currency
controls or political developments. For example, significant
uncertainty surrounds the recent introduction of the euro (a
common currency unit for the European Union) in January 1999 and
the effect it may have on the value of securities denominated in
local European currencies. These and other currencies in which the
Funds' assets are denominated may be devalued against the U.S.
dollar, resulting in a loss to the Funds.
Foreign Currency Transactions. The Equity Income, Global
Innovation, Growth, Growth & Income, Innovation, Renaissance,
Select Growth, Target and Value Funds may enter into forward
foreign currency exchange contracts to reduce the risks of adverse
changes in foreign exchange rates. In addition, the Global
Innovation Fund may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency
futures. A forward foreign currency exchange contract, which
involves an obligation to purchase or sell a specific currency at
a future date at a price set at the time of the contract, reduces
a Fund's exposure to changes in the value of the currency it will
deliver and increases its exposure to changes in the value of the
currency it will receive for the duration of the contract. The
effect on the value of a Fund is similar to selling securities
denominated in one currency and purchasing securities denominated
in another currency. Contracts to sell foreign currency would
limit any potential gain which might be realized by a Fund if the
value of the hedged currency increases. A Fund may enter into
these contracts to hedge against foreign exchange risk arising
from the Fund's investment or anticipated investment in securities
denominated in foreign currencies. Suitable hedging transactions
may not be available in all circumstances and there can be no
assurance that a Fund will engage in such transactions at any
given time or from time to time. Also, such transactions may not
be successful and may eliminate any chance for a Fund to benefit
from favorable fluctuations in relevant foreign currencies.
The Global Innovation Fund may also enter into these contracts
for purposes of increasing exposure to a foreign currency or to
shift exposure to foreign currency fluctuations from one currency
to another. To the extent that it does so, the Fund will be
subject to the additional risk that the relative value of
currencies will be different than anticipated by the Fund's
portfolio manager. The Global Innovation Fund may use one currency
(or a basket of currencies) to hedge against adverse changes in
the value of another currency (or a basket of currencies) when
exchange rates between the two currencies are positively
correlated. The Fund will segregate assets determined to be liquid
by PIMCO Advisors or its Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations
under forward foreign currency exchange contracts entered into for
non-hedging purposes.
Corporate Corporate debt securities are subject to the risk of the issuer's
Debt inability to meet principal and interest payments on the
Securities obligation and may also be subject to price volatility due to
factors such as interest rate sensitivity, market perception of
the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities
can be expected to decline. Debt securities with longer durations
tend to be more sensitive to interest rate movements than those
with shorter durations.
Convertible Each Fund may invest in convertible securities. The Growth &
Securities Income Fund may place particular emphasis on convertible
securities. Convertible securities are generally preferred stocks
and other securities, including fixed income securities and
warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a
convertible security will normally vary in some proportion to
changes in the price of the underlying common stock because of
this
43 PIMCO Funds: Multi-Manager Series
<PAGE>
conversion or exercise feature. However, the value of a
convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally
also provide income and is subject to interest rate risk. While
convertible securities generally offer lower interest or dividend
yields than non-convertible fixed income securities of similar
quality, their value tends to increase as the market value of the
underlying stock increases and to decrease when the value of the
underlying stock decreases. Also, a Fund may be forced to convert
a security before it would otherwise choose, which may have an
adverse effect on the Fund's ability to achieve its investment
objective.
Derivatives Each Fund (except the Capital Appreciation and Mid-Cap Funds) may,
but is not required to, use a number of derivative instruments for
risk management purposes or as part of its investment strategies.
Generally, derivatives are financial contracts whose value depends
upon, or is derived from, the value of an underlying asset,
reference rate or index, and may relate to stocks, bonds, interest
rates, currencies or currency exchange rates, commodities, and
related indexes. A portfolio manager may decide not to employ any
of these strategies and there is no assurance that any derivatives
strategy used by a Fund will succeed.
Examples of derivative instruments that the Funds may use include
options contracts, futures contracts, options on futures contracts
and swap agreements. The Equity Income, Global Innovation, Growth,
Growth & Income, Innovation, Renaissance, Select Growth, Target,
Tax-Efficient Equity and Value Funds may purchase and sell (write)
call and put options on securities, securities indexes and foreign
currencies. Each of these Funds may purchase and sell futures
contracts and options thereon with respect to securities,
securities indexes and foreign currencies. The Global Innovation
and Tax-Efficient Equity Funds may enter into swap agreements with
respect to securities indexes. A description of these and other
derivative instruments that the Funds may use are described under
"Investment Objectives and Policies" in the Statement of
Additional Information.
A Fund's use of derivative instruments involves risks different
from, or greater than, the risks associated with investing
directly in securities and other more traditional investments. A
description of various risks associated with particular derivative
instruments is included in "Investment Objectives and Policies" in
the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all
derivative instruments that may be used by the Funds.
Management Risk Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of
a derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit
of observing the performance of the derivative under all possible
market conditions.
Credit Risk The use of a derivative instrument involves the risk
that a loss may be sustained as a result of the failure of another
party to the contract (usually referred to as a "counterparty") to
make required payments or otherwise comply with the contract's
terms.
Liquidity Risk Liquidity risk exists when a particular derivative
instrument is difficult to purchase or sell. If a derivative
transaction is particularly large or if the relevant market is
illiquid (as is the case with many privately negotiated
derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage
component, adverse changes in the value or level of the underlying
asset, reference rate or index can result in a loss substantially
greater than the amount invested in the derivative itself. Certain
derivatives have the potential for unlimited loss, regardless of
the size of the initial investment. When a Fund uses derivatives
for leverage, investments in that Fund will tend to be more
volatile, resulting in larger gains or losses in response to
market changes. To limit leverage risk, each Fund will segregate
assets determined to be liquid by PIMCO Advisors or a Sub-Adviser
in accordance with procedures established by the Board of Trustees
(or, as permitted by applicable regulation, enter into certain
offsetting positions) to cover its obligations under derivative
instruments.
Lack of Availability Because the markets for certain derivative
instruments (including markets located in foreign countries) are
relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk
management or other purposes. There is no assurance that a Fund
will engage in derivatives transactions at any time or from time
to time. A Fund's ability to use derivatives may also be limited
by certain regulatory and tax considerations.
Prospectus 44
<PAGE>
Market and Other Risks Like most other investments, derivative
instruments are subject to the risk that the market value of the
instrument will change in a way detrimental to a Fund's interest.
If a portfolio manager incorrectly forecasts the values of
securities, currencies or interest rates or other economic factors
in using derivatives for a Fund, the Fund might have been in a
better position if it had not entered into the transaction at all.
While some strategies involving derivative instruments can reduce
the risk of loss, they can also reduce the opportunity for gain or
even result in losses by offsetting favorable price movements in
other Fund investments. A Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is
legally required to maintain offsetting positions or asset
coverage in connection with certain derivatives transactions.
Other risks in using derivatives include the risk of mispricing
or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates
and indexes. Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Fund. Also, the value of
derivatives may not correlate perfectly, or at all, with the value
of the assets, reference rates or indexes they are designed to
closely track. In addition, a Fund's use of derivatives may cause
the Fund to realize higher amounts of short-term capital gains
(taxed at ordinary income tax rates when distributed to
shareholders who are individuals) than if the Fund had not used
such instruments.
Credit The Funds may invest in securities based on their credit ratings
Ratings assigned by rating agencies such as Moody's Investors Service,
and Inc. ("Moody's") and Standard & Poor's Ratings Services ("S&P").
Unrated Moody's, S&P and other rating agencies are private services that
Securities provide ratings of the credit quality of fixed income securities,
including convertible securities. The Appendix to the Statement of
Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a
rating agency are not absolute standards of credit quality and do
not evaluate market risk. Rating agencies may fail to make timely
changes in credit ratings and an issuer's current financial
condition may be better or worse than a rating indicates. A Fund
will not necessarily sell a security when its rating is reduced
below its rating at the time of purchase. PIMCO Advisors and the
Sub-Advisers do not rely solely on credit ratings, and develop
their own analysis of issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a
rating agency) if its portfolio manager determines that the
security is of comparable quality to a rated security that the
Fund may purchase. Unrated securities may be less liquid than
comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security's
comparative credit rating.
High
Yield Securities rated lower than Baa by Moody's or lower than BBB by
Securities S&P are sometimes referred to as "high yield" securities or "junk
bonds." The Funds, particularly the Growth & Income Fund, may
invest in these securities. Investing in high yield securities
involves special risks in addition to the risks associated with
investments in higher-rated fixed income securities. While
offering a greater potential opportunity for capital appreciation
and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-
rated securities. High yield securities may be regarded as
predominantly speculative with respect to the issuer's continuing
ability to meet principal and interest payments. They may also be
more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities.
Loans of For the purpose of achieving income, each Fund may lend its
Portfolio portfolio securities to brokers, dealers, and other financial
Securities institutions provided a number of conditions are satisfied,
including that the loan is fully collateralized. Please see
"Investment Objectives and Policies" in the Statement of
Additional Information for details. When a Fund lends portfolio
securities, its investment performance will continue to reflect
changes in the value of the securities loaned, and the Fund will
also receive a fee or interest on the collateral. Securities
lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to
return the security loaned or becomes insolvent. A Fund may pay
lending fees to the party arranging the loan.
Short
Sales
Each Fund may make short sales as part of its overall portfolio
management strategies or to offset a potential decline in the
value of a security. A short sale involves the sale of a security
that is borrowed from a broker or other institution to complete
the sale. A Fund may only enter into short selling transactions if
the security sold short is held in the Fund's portfolio or if the
Fund has the right to acquire the security without the payment of
further consideration. For these purposes, a Fund may also hold or
have the right to acquire securities which, without the payment of
any further consideration, are convertible into or exchangeable
for the securities sold short. Short sales expose a Fund to the
risk that it will be required to acquire, convert or exchange
securities to replace the borrowed securities (also known as
"covering" the short position) at a time when the securities sold
short have appreciated in value, thus resulting in a loss to the
Fund.
45 PIMCO Funds: Multi-Manager Series
<PAGE>
When- Each Fund may purchase securities which it is eligible to purchase
Issued, on a when-issued basis, may purchase and sell such securities for
Delayed delayed delivery and may make contracts to purchase such
Delivery securities for a fixed price at a future date beyond normal
and settlement time (forward commitments). When-issued transactions,
Forward delayed delivery purchases and forward commitments involve a risk
Commitment of loss if the value of the securities declines prior to the
Transactionssettlement date. This risk is in addition to the risk that the
Fund's other assets will decline in value. Therefore, these
transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues
on securities a Fund has committed to purchase prior to the time
delivery of the securities is made, although a Fund may earn
income on securities it has segregated to cover these positions.
Repurchase Each Fund may enter into repurchase agreements, in which the Fund
Agreements purchases a security from a bank or broker-dealer that agrees to
repurchase the security at the Fund's cost plus interest within a
specified time. If the party agreeing to repurchase should
default, the Fund will seek to sell the securities which it holds.
This could involve procedural costs or delays in addition to a
loss on the securities if their value should fall below their
repurchase price. Those Funds whose investment objectives do not
include the earning of income will invest in repurchase agreements
only as a cash management technique with respect to that portion
of its portfolio maintained in cash. Repurchase agreements
maturing in more than seven days are considered illiquid
securities.
Reverse Each Fund may enter into reverse repurchase agreements, subject to
Repurchase the Fund's limitations on borrowings. A reverse repurchase
Agreements agreement involves the sale of a security by a Fund and its
And Other agreement to repurchase the instrument at a specified time and
Borrowings price, and may be considered a form of borrowing for some
purposes. A Fund will segregate assets determined to be liquid by
PIMCO Advisors or a Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations
under reverse repurchase agreements. A Fund also may borrow money
for investment purposes subject to any policies of the Fund
currently described in this Prospectus or in the Statement of
Additional Information. Reverse repurchase agreements and other
forms of borrowings may create leveraging risk for a Fund.
Illiquid Each Fund may invest in securities that are illiquid so long as
Securities not more than 15% of the value of the Fund's net assets (taken at
market value at the time of investment) would be invested in such
securities. Certain illiquid securities may require pricing at
fair value as determined in good faith under the supervision of
the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by a
Fund, and transactions in illiquid securities may entail
registration expenses and other transaction costs that are higher
than those for transactions in liquid securities. The term
"illiquid securities" for this purpose means securities that
cannot be disposed of within seven days in the ordinary course of
business at approximately the amount at which a Fund has valued
the securities. Please see "Investment Objectives and Policies" in
the Statement of Additional Information for a listing of various
securities that are generally considered to be illiquid for these
purposes. Restricted securities, i.e., securities subject to legal
or contractual restrictions on resale, may be illiquid. However,
some restricted securities (such as securities issued pursuant to
Rule 144A under the Securities Act of 1933 and certain commercial
paper) may be treated as liquid, although they may be less liquid
than registered securities traded on established secondary
markets.
Investment Each of the Funds may invest up to 5% of its assets in other
in Other investment companies. As a shareholder of an investment company, a
Investment Fund may indirectly bear service and other fees which are in
Companies addition to the fees the Fund pays its service providers.
Portfolio With the exception of the Tax-Efficient Equity Fund, the length of
Turnover time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities
held by a Fund is known as "portfolio turnover." Each Fund may
engage in active and frequent trading of portfolio securities to
achieve its investment objective and principal investment
strategies, particularly during periods of volatile market
movements, although the Tax-Efficient Equity Fund will generally
attempt to limit portfolio turnover as part of its tax-efficient
management strategies. High portfolio turnover (e.g., over 100%)
involves correspondingly greater expenses to a Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable
capital gains, including short-term capital gains (which are taxed
at ordinary income tax rates when distributed to shareholders who
are individuals). The trading costs and tax effects associated
with portfolio turnover may adversely affect a Fund's performance.
Prospectus 46
<PAGE>
Changes The investment objective of each of the Global Innovation, Growth,
in Growth & Income, Innovation, Renaissance, Select Growth, Target
Investment and Tax-Efficient Equity Funds described in this Prospectus may be
Objectives changed by the Board of Trustees without shareholder approval. The
and investment objective of each other Fund is fundamental and may not
Policies be changed without shareholder approval. Unless otherwise stated
in the Statement of Additional Information, all investment
policies of the Funds may be changed by the Board of Trustees
without shareholder approval. If there is a change in a Fund's
investment objective or policies, including a change approved by
shareholder vote, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current
financial position and needs.
New and In addition to the risks described under "Summary of Principal
Smaller- Risks" above and in this section, several of the Funds are newly
Sized formed and therefore have no performance history for investors to
Funds evaluate. Also, it is possible that newer Funds and smaller-sized
Funds may invest in securities offered in initial public offerings
and other types of transactions (such as private placements)
which, because of the Funds' size, have a disproportionate impact
on the Funds' performance results. The Funds would not necessarily
have achieved the same performance results if their aggregate net
assets had been greater.
Percentage Unless otherwise stated, all percentage limitations on Fund
Investment investments listed in this Prospectus will apply at the time of
Limitations investment. A Fund would not violate these limitations unless an
excess or deficiency occurs or exists immediately after and as a
result of an investment.
Other The Funds may invest in other types of securities and use a
Investments variety of investment techniques and strategies which are not
and described in this Prospectus. These securities and techniques may
Techniques subject the Funds to additional risks. Please see the Statement of
Additional Information for additional information about the
securities and investment techniques described in this Prospectus
and about additional securities and techniques that may be used by
the Funds.
47 PIMCO Funds: Multi-Manager Series
<PAGE>
(This page left blank intentionally)
Prospectus 48
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand
the financial performance of Class D shares of each Fund since the
class of shares was first offered. Certain information reflects
financial results for a single Fund share. The total returns in
the table represent the rate that an investor would have earned or
lost on an investment in Class D shares of a Fund, assuming
reinvestment of all dividends and distributions. This information
has been audited by PricewaterhouseCoopers LLP, whose report,
along with each Fund's financial statements, are included in the
Trust's annual report to shareholders. The annual report is
incorporated by reference in the Statement of Additional
Information and is available free of charge upon request from the
Distributor. The Growth & Income Fund did not offer Class D shares
during the periods shown.
[To be updated in a susequent post-effective amendment.]
<TABLE>
<CAPTION>
Net Realized/ Total Income Dividends Distributions
Year or Net Asset Value Net Unrealized (Loss) From Net From Net
Period Beginning Investment Gain (Loss) on From Investment Investment Realized Capital
Ended of Period Income (Loss) Investments Operations Income Gains
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund
06/30/99 $26.01 $0.06 (a) $2.34 (a) $2.40 $(0.13) $(1.65)
04/08/98-06/30/98 25.41 0.02 (a) 0.58 (a) 0.60 0.00 0.00
Equity Income Fund (i)
06/30/99 $16.04 $0.40 (a) $1.27 (a) $1.67 $(0.36) $(1.76)
04/08/98-06/30/98 16.71 0.09 (a) (0.66)(a) (0.57) (0.10) 0.00
Global Innovation Fund
[to be added]
Growth Fund [to be added]
Innovation Fund (i)
06/30/99 $24.28 $(0.29)(a) $14.79 (a) $14.50 $0.00 $(1.26)
04/08/98-06/30/98 21.50 (0.05)(a) 2.83 (a) 2.78 0.00 0.00
Mid-Cap Fund
06/30/99 $23.99 $0.03 (a) $(0.04)(a) $(0.01) $(0.01) $(1.07)
04/08/98-06/30/98 23.97 0.00 (a) 0.02 (a) 0.02 0.00 0.00
Renaissance Fund (i)
06/30/99 $19.10 $0.00 (a) $1.45 (a) $1.45 $0.00 $(2.33)
04/08/98-06/30/98 18.99 0.01 (a) 0.10 (a) 0.11 0.00 0.00
Select Growth Fund [to be
added]
Target Fund [to be added]
Tax-Efficient Equity Fund
07/10/98-06/30/99 $10.00 $0.03 (a) $1.56 (a) $1.59 $0.00 $0.00
Value Fund (i)
06/30/99 $15.64 $0.23 (a) $1.37 (a) $1.60 $(0.23) $(1.72)
04/08/98-06/30/98 15.99 0.04 (a) (0.34)(a) (0.30) (0.05) 0.00
</TABLE>
-------
* Annualized
(a)Per share amounts based upon average number of shares outstanding during the
period.
(i) The information provided for the Equity Income, Innovation, Renaissance and
Value Funds reflects results of operations under each Funds' former Sub-
Adviser through May 8, 2000, March 6, 1999, May 7, 1999 and May 8, 2000,
respectively; the Funds would not necessarily have achieved the performance
results shown above under their current investment management arrangements.
49 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ditributionss Ratio of Investment
i Excess ofn Net Asset Expenses to Income (Loss) to
Nt Realizede Total Value End of Net Assets End Average Net Average Net Portfolio
Caital Gainsp Distributions Period Total Return of Period (000s) Assets Assets Turnover Rate
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0.00 $(1.78) $26.63 10.17% $339 1.10% 0.24% 120%
0.00 0.00 26.01 2.36 118 1.10* 0.27* 75
$0.00 $(2.12) $15.59 12.21% $106 1.10% 2.73% 76%
0.00 (0.10) 16.04 (3.43) 104 1.10* 2.23* 45
$0.00 $(1.26) $37.52 61.62% $18,366 1.30% (0.89)% 119%
0.00 0.00 24.28 12.93 139 1.30* (0.99)* 100
$0.00 $(1.08) $22.90 0.25% $359 1.10% 0.16% 85%
0.00 0.00 23.99 0.08 142 1.10* 0.03* 66
$0.00 $(2.33) $18.22 10.01% $192 1.25% (0.02)% 221%
0.00 0.00 19.10 0.58 126 1.25* 0.21* 192
$0.00 $0.00 $11.59 15.90% $869 1.11%* 0.30%* 13%
$0.00 $(1.95) $15.29 12.00% $118 1.10% 1.61% 101%
0.00 (0.05) 15.64 (1.85) 98 1.10* 1.23* 77
</TABLE>
Prospectus 50
<PAGE>
PIMCO Funds: Multi-Manager Series
The Trust's Statement of Additional Information ("SAI") and annual
and semi-annual reports to shareholders include additional
information about the Funds. The SAI and the financial statements
included in the Funds' most recent annual report to shareholders
are incorporated by reference into this Prospectus, which means
they are part of this Prospectus for legal purposes. The Funds'
annual report discusses the market conditions and investment
strategies that significantly affected each Fund's performance
during its last fiscal year.
You may get free copies of any of these materials, request other
information about a Fund, or make shareholder inquiries by calling
1-888-87-PIMCO, or by writing to:
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, CT 06902
You may also contact your financial service firm for additional
information.
You may review and copy information about the Trust, including its
SAI, at the Securities and Exchange Commission's public reference
room in Washington, D.C. You may call the Commission at 1-202-942-
8090 for information about the operation of the public reference
room. You may also access reports and other information about the
Trust on the EDGAR database on the Commission's Web site at
www.sec.gov. You may get copies of this information, with payment
of a duplication fee, by electronic request at the following e-
mail address: [email protected], or by writing the Public
Reference Section of the Commission, Washington, D.C. 20549-6009.
You may need to refer to the Trust's file number under the
Investment Company Act, which is 811-6161.
You can also visit our Web site at www.pimcofunds.com for
additional information about the Funds.
[LOGO OF PIMCO FUNDS]
File No. 811-6161
51 PIMCO Funds: Multi-Manager Series
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated [ ], 2000
to the
Prospectus for Class D Shares
Dated [ ], 2000
Disclosure Relating to PIMCO Select International Fund
(formerly PIMCO International Growth Fund)
Effective November 1, 2000, PIMCO Funds: Multi-Manager Series
intends to offer Class A, B and C shares of PIMCO Select
International Fund (formerly known as "PIMCO International Growth
Fund"). In connection with this, the following Fund Summary is added
to the Prospectus.
1
<PAGE>
PIMCO Select International Fund
--------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Common stocks of non- Capitalization Range
and Seeks U.S. issuers More than $1 billion
Strategies
Fund Category Approximate Number of Dividend Frequency
International Holdings 50-60 At least annually
Stocks
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio
of common stocks and other equity securities of companies located
outside of the United States. Although the Fund normally invests
in issuers from at least five different countries, it may at times
invest in fewer than five countries, or even a single country. The
Fund typically invests in approximately 50 to 60 stocks, with each
stock usually constituting from 1.25% to 4.0% of the Fund's
portfolio. The Fund may invest in both developed and developing,
or "emerging," markets. The Fund has no other limits on geographic
asset distribution and may invest in any foreign securities market
in the world. The Fund may also invest in securities of foreign
issuers traded on U.S. securities markets, but will normally not
invest in U.S. issuers. The Fund invests most of its assets in
foreign securities which trade in currencies other than the U.S.
dollar and may invest directly in foreign currencies
The portfolio manager selects securities for the Fund using the
Sub-Adviser's "Best Research" investment style. The Best Research
style uses a research-driven "bottom-up" approach that seeks to
utilize the Sub-Adviser's global research capabilities to identify
companies with above-average long-term growth prospects and
attractive valuations and that possess a sustainable competitive
advantage, such as superior or innovative products, personnel and
distribution systems. The portfolio manager seeks to select those
stocks with the best long-term performance expectations, using a
broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures,
dividend and profit growth, balance sheet strength and return on
assets. The portfolio managers sell stocks in order to adjust or
rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts)
primarily for portfolio management and hedging purposes. The Fund
may also invest in equity securities other than common stocks
(such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and
other conditions, the Fund may make temporary investments of some
or all of its assets in foreign and domestic fixed income
securities and in equity securities of U.S. issuers. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could
adversely affect its net asset value, yield and total return, are:
. Foreign . Growth Securities . Focused
Investment Risk Risk Investment Risk
. Emerging Market . Value Securities . Leveraging Risk
Risk Risk . Credit Risk
. Currency Risk . Smaller Company . Management Risk
. Market Risk Risk
. Issuer Risk . Liquidity Risk
. Derivatives Risk
2
<PAGE>
PIMCO Select International Fund (continued)
Performance The following shows summary performance information for the Fund
Information in a bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Fund by showing changes in its performance from year to year
and by showing how the Fund's average annual returns compare with
the returns of a broad-based securities market index and an index
of similar funds. The bar chart, the information to its right and
the Average Annual Total Returns table show performance of the
Fund's Institutional Class shares, which are offered in a
different prospectus. This is because the Fund did not offer
Class D shares during the periods shown. Although Class D and
Institutional Class shares would have similar annual returns
(because all the Fund's shares represent interests in the same
portfolio of securities), Class D performance would be lower than
Institutional Class performance because of the higher expenses
paid by Class D shares.
The Average Annual Total Returns table also shows estimated
historical performance for Class D shares. The estimated Class D
performance is based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the actual
distribution and/or service (12b-1) fees and other expenses paid
by Class D shares.
The performance information on the next page reflects the Fund's
advisory fee rate in effect prior to May 8, 2000 (0.85% per
annum). Prior to November 1, 2000, the Fund had different sub-
advisers and would not necessarily have achieved the performance
results shown on the next page under its current investment
management arrangements. In addition, the Fund changed its
investment objective and policies on November 1, 2000; the
performance results shown on the next page would not necessarily
have been achieved had the Fund's current objective and policies
then been in effect. Past performance is no guarantee of future
results.
Calendar Year Total Returns -- Institutional Class
More Recent Return
Information
--------------------
1/1/00-
9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99) 47.11%
--------------------
Lowest (3rd Qtr.
'98) -17.79%
[GRAPH]
'98 39.40%
'99 109.71%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (12/31/97)(/3/)
---------------------------------------------------------------------
Institutional Class 109.71% 70.98%
---------------------------------------------------------------------
Class D % [ ]%
---------------------------------------------------------------------
MSCI EAFE Index(/1/) 27.30% 23.77%
---------------------------------------------------------------------
Lipper International Fund Average(/2/) 40.91% 25.73%
---------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) ("MSCI EAFE") Index is a widely
recognized, unmanaged index of issuers in countries of
Europe, Australia and the Far East. It is not possible to
invest directly in the index.
(2) The Lipper International Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest their assets in securities whose
primary trading markets are outside of the United States. It does
not take into account sales charges.
(3) The Fund began operations on 12/31/97. Index comparisons begin
on 12/31/97.
3
<PAGE>
PIMCO Select International Fund (continued)
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Class D shares of the Fund:
of the
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Fees (12b-1) Fees(/1/) Expenses(/2/) Expenses
--------------------------------------------------------------------
Class D 0.75 0.25% 0.70% 1.70%
--------------------------------------------------------------------
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement may
be Distribution and/or Service (12b-1) Fees. The Fund will pay
a total of 0.95% per year under the administration agreement
regardless of whether a portion or none of the 0.25%
authorized under the plan is paid under the plan. Please see
"Management of the Funds--Administrative Fees" for details.
The Fund intends to treat any fees paid under the plan as
"service fees" for purposes of applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD").
To the extent that such fees are deemed not to be "service
fees," Class D shareholders 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 NASD.
(2) Other Expenses reflects the portion of the Administrative Fee
paid by the class that is not reflected under Distribution
and/or Service (12b-1) Fees.
Examples. The Examples below are intended to help you compare
the cost of investing in Class D shares of the Fund with the
costs of investing in other mutual funds. The Examples assume
that you invest $10,000 in Class D shares for the time periods
indicated, and then redeem all your shares at the end of those
periods. The Examples also assume that your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions.
<CAPTION>
Year 1 Year 3 Year 5 Year 10
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D $[ ] $[ ] $[ ] $[ ]
--------------------------------------------------------------------
</TABLE>
4
<PAGE>
Changes to "Management of the Funds"; "How Fund Shares are Priced"; "How to Buy
and Sell Shares"; "Fund Distributions"; and "Tax Consequences"
Disclosure for PIMCO Select International Fund for the sections of
the Prospectus listed above is incorporated by reference from the
corresponding sections of the Prospectus. Except as expressly set
forth herein or therein or as the context otherwise requires,
references to a "Fund" or the "Funds" in these sections and the
sections captioned "Summary of Principal Risks" and "Characteristics
and Risks of Securities and Investment Techniques" are deemed to
refer to PIMCO Select International Fund.
PIMCO Advisors serves as Investment Adviser and Administrator for
the Fund. The Fund pays monthly advisory fees to PIMCO Advisors at
the annual rate of 0.75% of the average daily net assets of the
Fund. The Fund pays PIMCO Advisors monthly administrative fees at
the annual rate of 0.95% of the average daily net assets
attributable in the aggregate to the Fund's Class D shares. As
described in the Prospectus under "Management of the Funds--12b-1
Plan for Class D Shares," the administration agreement includes a
plan adopted in conformity with Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") which provides for the payment
of up to 0.25% of the 0.95% Administrative Fee as reimbursement for
expenses in respect of activities that may be deemed to be primarily
intended to result in the sale of Class D shares. The "Annual Fund
Operating Expenses" table on the prior page shows the 0.95%
Administrative Fee rate under two separate columns entitled
"Distribution and/or Service (12b-1) Fees" and "Other Expenses."
PIMCO/Allianz International Advisors LLC ("PAIA") serves as sub-
adviser to the Fund. PAIA is a wholly-owned subsidiary of PIMCO
Advisors. As sub-adviser, PAIA will have full investment discretion
and will make all determinations with respect to the investment of
the Fund's assets. Summary information about PAIA and the
individuals who will have primary investment management
responsibility for the Fund is provided below.
Name and Address
PIMCO/Allianz Investment Advisors LLC
1345 Avenue of the Americas
50th Floor
New York, NY 10105
Portfolio Managers
Udo Frank
Gerd Wolfgang Hintz
Recent Professional Experience
Mr. Frank. Managing Director and Chief Investment Officer of
Allianz Asset Advisory and Management GmbH ("Allianz AAM"),
responsible for the entire investment area (since 1997), and
Chief Executive Officer and Chief Investment Officer of Allianz
PIMCO Asset Management. Previously, Mr. Frank served as the
Chief Investment Officer of Allianz KAG (since 1994).
Mr. Hintz. Managing Director of the Equity Research Department
at Allianz AAM since 1998. In addition, Mr. Hintz has been
responsible for Allianz AAM's trading department since January
2000. Previously, he was the head of Research and Investor
Relations of Allianz AG.
The Fund intends to declare and distribute income dividends to
shareholders of record at least annually.
Changes to "Summary of Principal Risks"
The section of the Prospectus captioned "Summary of Principal Risks"
is amended as follows:
1. The subsections captioned "Growth Securities Risk" and "Value
Securities Risk" are revised to indicate that PIMCO Select
International Fund is particularly susceptible to these risks.
2. The subsection captioned "Smaller Company Risk" is revised to
indicate that PIMCO Select International Fund has significant
exposure to this risk because it may invest significantly in
companies with medium-sized market capitalizations, which are
smaller and generally less-seasoned than the largest companies.
3. The subsection "Foreign (non-U.S.) Investment Risk" is revised to
indicate that PIMCO Select International Fund is particularly
susceptible to the risks described in that subsection.
5
<PAGE>
4. The subsection "Currency Risk" is revised to indicate that PIMCO
Select International Fund is particularly susceptible to the risks
described in that subsection.
5. The subsection "Focused Investment Risk" is revised to indicate
that PIMCO Select International Fund may be subject to increased
risk to the extent that it focuses its investments in securities
denominated in a particular foreign currency or in a narrowly
defined geographic area outside the U.S.
6. The subsection "Emerging Markets Risk" is revised to indicate
that PIMCO Select International Fund may invest a significant
portion of its assets in emerging market securities.
Changes to "Characteristics and Risks of Securities and Investment
Techniques"
The section of the Prospectus captioned "Characteristics and Risks
of Securities and Investment Techniques" is amended as follows:
1. The subsection captioned "Fixed Income Securities and Defensive
Strategies" is amended by adding the following disclosure:
"The Select International Fund will invest primarily in
common stocks, and may also invest in other kinds of equity
securities, including preferred stocks and securities
(including fixed income securities and warrants) convertible
into or exercisable for common stocks. The Select
International Fund may invest a portion of its assets in
fixed income securities. The Fund may temporarily hold up to
100% of its assets in short-term U.S. Government securities
and other money market instruments for defensive purposes in
response to unfavorable market and other conditions, and may
also hold up to 100% of its assets in other domestic fixed
income, foreign fixed income and equity securities
principally traded in the U.S., including obligations issued
or guaranteed by a foreign government or its agencies,
authorities or instrumentalities, corporate bonds and
American Depository Receipts, for temporary defensive
purposes."
2. The subsection captioned "Foreign Securities" is amended to
indicate that PIMCO Select International Fund normally invests
principally in securities of foreign issuers, securities traded
principally in securities markets outside the United States and/or
securities denominated in foreign currencies, and may invest in
ADRs, EDRs and GDRs.
3. The subsection captioned "Emerging Market Securities" is revised
to indicate that PIMCO Select International Fund may invest
significant portions of its assets in emerging market securities,
including securities of issuers located in Russia and in other
Eastern European countries.
4. The subsection captioned "Foreign Currencies" is amended to
indicate that PIMCO Select International Fund may invest in foreign
currencies to the same extent as PIMCO International Fund, and is
particularly sensitive to foreign currency risk.
5. The subsection captioned "Derivatives" is amended to indicate
that PIMCO Select International Fund may purchase and sell (write)
call and put options on securities, securities indexes and foreign
currencies. PIMCO Select International Fund may also purchase and
sell futures contracts and options thereon with respect to
securities, securities indexes and foreign currencies, and may enter
into swap agreements with respect to securities indexes.
6. The subsection captioned "Companies with Smaller Market
Capitalizations" is revised to indicate that PIMCO Select
International Fund has significant exposure to the risks discussed
in this section because it may invest significantly in companies
with medium-sized market capitalizations, which are smaller and
generally less-seasoned than the largest companies.
7. The subsection captioned "Investment in Other Investment
Companies" is revised to indicate that PIMCO Select International
Fund may invest up to 10% of its assets in securities of other
investment companies, such as closed-end management investment
companies, or in pooled accounts or other investment vehicles which
invest in foreign markets.
6
<PAGE>
8. The subsection captioned "Changes in Investment Objectives and
Policies" is revised by adding the following disclosure:
The investment objective of the Select International Fund may
be changed by the Board of Trustees without shareholder
approval.
Financial Highlights
The Fund did not offer Class D shares during the periods
indicated, and therefore Financial Highlights for the Fund are
not included.
7
<PAGE>
PIMCO Funds Prospectus
This Prospectus describes three actively managed mutual fund
PIMCO Portfolios offered by PIMCO Funds: Multi-Manager Series (the
Funds: "Trust").
Multi-
Manager
Series
Asset Allocation Series -- 90/10 Portfolio
Asset Allocation Series -- 60/40 Portfolio
Asset Allocation Series -- 30/70 Portfolio
November
1, 2000
Each Portfolio invests in a diversified portfolio of other PIMCO
Funds. This Prospectus explains what you should know about the
Portfolios before you invest. Please read it carefully.
Share
Classes
Institutional and
Administrative
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
1 PIMCO Funds: Multi-Manager Series
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information.............................................. 3
Portfolio Summaries
90/10 Portfolio................................................ 5
60/40 Portfolio................................................ 8
30/70 Portfolio................................................ 11
Summary of Principal Risks....................................... 14
Investment Objectives and Principal Investment Strategies........ 20
Underlying Funds................................................. 23
Other Risk Information........................................... 26
Management of the Portfolios..................................... 26
Investment Options - Institutional Class and Administrative Class
Shares ......................................................... 29
Purchases, Redemptions and Exchanges............................. 30
How Portfolio Shares Are Priced.................................. 33
Portfolio Distributions.......................................... 34
Tax Consequences................................................. 34
Financial Highlights............................................. 37
</TABLE>
Prospectus 2
<PAGE>
Summary Information
The Portfolios are intended for investors who prefer to have their
asset allocation decisions made by professional money managers.
Each Portfolio has a distinct investment objective which it seeks
to achieve by investing within specified equity and fixed income
targets and ranges among certain Funds in the PIMCO Funds family.
The Portfolios invest only in Funds in the PIMCO Funds family. The
PIMCO Funds in which the Portfolios invest are called Underlying
Funds or Funds in this Prospectus.
Some of the Underlying Funds invest primarily in equity
securities and are called Underlying Stock Funds. Other Underlying
Funds invest primarily in fixed income securities, including money
market instruments, and are called Underlying Bond Funds. The
Portfolios are named according to their equity/fixed income
allocation targets. For instance, the 90/10 Portfolio will
normally invest approximately 90% of its assets in Underlying
Stock Funds and 10% of its assets in Underlying Bond Funds.
The table below lists the investment objectives and compares the
asset allocation strategies of the Portfolios. Other important
characteristics are described in the individual Portfolio
Summaries beginning on page 5, and are discussed in greater detail
under "Investment Objectives and Principal Investment Strategies."
A "Summary of Principal Risks" begins on page 11.
<TABLE>
<CAPTION>
PIMCO Funds
Asset Allocation Series Investment Objective Allocation Strategy
----------------------------------------------------------------------
<C> <C> <S>
90/10 Portfolio Long-term capital Under normal conditions,
appreciation approximately 90% (range
of 80%-100%) of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 10% (range of 0%-
20%) among Underlying
Bond Funds
----------------------------------------------------------------------
60/40 Portfolio Long-term capital Under normal conditions,
appreciation and approximately 60% (range
current income of 50%-70%) of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 40% (range of 30%-
50%) among Underlying
Bond Funds
----------------------------------------------------------------------
30/70 Portfolio Current income, with Under normal conditions,
long-term approximately 30% (range
capital appreciation as of 25%-35%) of the
a Portfolio's assets will
secondary objective be allocated among
Underlying Stock Funds
and 70% (range of 65%-
75%) among Underlying
Bond Funds
</TABLE>
Risk/Return An investor should choose among the Portfolios based on personal
Comparison investment objectives, investment time horizon, tolerance for risk
and personal financial circumstances. Generally speaking,
historical data suggests that the longer the time horizon, the
greater the likelihood that the total return of a portfolio that
invests primarily in equity securities will be higher than the
total return of a portfolio that invests primarily in fixed income
securities. However, an equity portfolio is generally subject to
higher levels of overall risk and price volatility than a fixed
income portfolio and is considered to be a more aggressive
investment. Based on these assumptions, the following chart gives
some indication of the comparative risk/return potential of the
Portfolios according to their equity/fixed income allocation
targets and ranges. Note that these assumptions may not be correct
in future market conditions and the chart may not accurately
predict the actual comparative risk/return of the Portfolios under
all market conditions.
90/10 Portfolio might be suitable for investors that have a
relatively long time horizon, seek long-term capital
appreciation potential and have a fairly high tolerance for
risk and volatility.
60/40 Portfolio might be suitable for investors that have a
medium-range time horizon, seek a balance of long-term
capital appreciation potential and income and have medium
tolerance for risk and volatility.
30/70 Portfolio might be suitable for investors that have a
shorter time horizon, seek a higher level of income combined
with some potential for long-term capital appreciation and
have a lower tolerance for risk and volatility.
It is possible to lose money on investments in the Portfolios.
While each Portfolio provides a relatively high level of
diversification in comparison to most mutual funds, a single
Portfolio may not be suitable as a complete investment program.
The fact that a Portfolio may have had good performance in the
past (for example, during the year ended 1999) is no assurance
that the value of the Fund's investments will not decline in the
future or will appreciate at a slower rate. An investment in a
Portfolio is not a deposit of a bank and is not guaranteed or
insured by the Federal Deposit Insurance Corporation or any other
government agency.
3 PIMCO Funds: Multi-Manager Series
<PAGE>
Summary Information (continued)
Asset
Allocation PIMCO Advisors L.P. serves as the investment adviser to the
Strategies Portfolios. PIMCO Advisors selects the Underlying Funds in which
the Portfolios may invest. PIMCO Advisors' Asset Allocation
Committee determines how each Portfolio allocates and reallocates
its assets among the Underlying Funds selected by PIMCO Advisors
according to the Portfolio's equity/fixed income allocation
targets and ranges. The Committee attempts to diversify each
Portfolio's assets broadly among the major asset classes and sub-
classes represented by the Underlying Funds.
The major equity asset classes and sub-classes held by the
Underlying Stock Funds include those categorized by investment
style/category (growth, blend, value, enhanced index, sector-
related), region (U.S. equities, international developed markets,
international emerging markets), and market capitalization (large-
cap, mid-cap and small-cap). The major fixed income asset classes
and sub-classes held by the Underlying Bond Funds include those
categorized by sector/investment specialty (government securities,
mortgage-related securities, corporate bonds and inflation-indexed
bonds), region (U.S. fixed income, developed foreign fixed income,
emerging markets fixed income), credit quality (investment
grade/money market, medium grade, high yield), and duration (long-
term, intermediate-term and short-term).
Please see "Underlying Funds" in this Prospectus for a
description of the Underlying Funds as categorized by their
investment styles and main investments.
The Portfolios may invest in any or all of the Underlying Funds,
but will not normally invest in every Underlying Fund at any
particular time. Each Portfolio may invest in shares of the same
Underlying Funds; however, the percentage of each Portfolio's
assets so invested will vary depending on the Portfolio's
investment objective. The Asset Allocation Committee does not
allocate a Portfolio's assets according to a predetermined blend
of particular Underlying Funds. Instead, the Committee meets
regularly to determine the mix of Underlying Funds appropriate for
each Portfolio by allocating among the asset classes and sub-
classes held by the Underlying Funds. When making these decisions,
the Committee considers various quantitative and qualitative data
relating to the U.S. and foreign economies and securities markets.
This data includes projected growth trends in the U.S. and foreign
economies, forecasts for interest rates and the relationship
between short- and long-term interest rates (yield curve), current
and projected trends in inflation, relative valuation levels in
the equity and fixed income markets and various segments within
those markets, the outlook and projected growth of various
industrial sectors, information relating to business cycles,
borrowing trends and the cost of capital, political trends, data
relating to trade balances and labor information. The Committee
may also consider proprietary research provided by the investment
advisers and sub-advisers of the Underlying Funds.
The Committee then selects representative Underlying Funds for
each Portfolio to fill out the asset class and sub-class
weightings it has identified according to the Portfolio's
equity/fixed income targets and ranges. The Committee has the
flexibility to reallocate each Portfolio's assets in varying
percentages among any or all of the Underlying Funds based on the
Committee's ongoing analyses of the equity and fixed income
markets, although these tactical shifts are not expected to be
large or frequent in nature.
"Fund of The term "fund of funds" is used to describe mutual funds, such as
Funds" the Portfolios, that pursue their investment objectives by
Structure investing in other mutual funds. The cost of investing in a
and Portfolio will generally be higher than the cost of investing in a
Expenses mutual fund that invests directly in individual stocks and bonds.
By investing in a Portfolio, an investor will indirectly bear fees
and expenses charged by the Underlying Funds in which the
Portfolio invests in addition to the Portfolio's direct fees and
expenses. In addition, the use of a fund of funds structure could
affect the timing, amount and character of distibutions to
shareholders and therefore may increase the amount of taxes
payable by shareholders.
Portfolio
Descriptions
and Fees
The following Portfolio Summaries identify each Portfolio's
investment objective, principal investments and strategies,
principal risks and fees and expenses. A more detailed "Summary of
Principal Risks" describing principal risks of investing in the
Portfolios begins after the Portfolio Summaries. Because the
Portfolios have not been in operation for a full calendar year, no
performance information (e.g., a bar chart or average annual total
returns table) is included for the Portfolios. A fuller discussion
of the Portfolios' investment strategies and related information
is included under "Investment Objectives and Principal Investment
Strategies" in this Prospectus.
Prospectus 4
<PAGE>
90/10 Portfolio
--------------------------------------------------------------------------------
Principal Investment Allocation
Investments Objective Strategy Target Range
and Seeks long-term Underlying Stock
Strategies capital Funds 90% 80%-100%
appreciation Underlying Bond
Funds 10% 0%-20%
Dividend
Frequency
At least
annually
The Portfolio seeks to achieve its investment objective by
normally investing approximately 90% (within a range of 80%--100%)
of its assets in Underlying Stock Funds and approximately 10%
(within a range of0%--20%) of its assets in Underlying Bond Funds.
The Portfolio invests all of its assets in shares of the
Underlying Funds and does not invest directly in stocks or bonds
of other issuers. Please see "Asset Allocation Strategies" on page
3 for a summary of how the Asset Allocation Committee allocates
and reallocates the Portfolio's assets among particular Underlying
Funds.
The Portfolio may concentrate investments in a particular
Underlying Fund by investing more than 25% of its assets in that
Fund.
Based on the Portfolio's equity/fixed income allocation
strategy, it might be suitable for an investor with a relatively
long time horizon who seeks long-term capital appreciation
potential and has a fairly high tolerance for risk and volatility.
--------------------------------------------------------------------------------
Principal Allocation Risk The Portfolio's investment performance depends
Risks upon how its assets are allocated and reallocated among particular
Underlying Funds. A principal risk of investing in the Portfolio
is that the Asset Allocation Committee's allocation techniques and
decisions will not produce the desired results, and the Portfolio
may not achieve its investment objective.
Underlying Fund Risks The value of your investment in the
Portfolio is directly related to the investment performance of the
Underlying Funds in which it invests. Therefore, the principal
risks of investing in the Portfolio are closely related to the
principal risks associated with the Underlying Funds and their
investments. Because the Portfolio's allocation among the
Underlying Funds will vary, an investment may be subject to any
and all of these risks at different times and to different
degrees.
Among the principal risks of the Underlying Funds, which could
adversely affect the net asset value, yield and total return of
the Portfolio, are:
.Market Risk .Derivatives Risk .Interest Rate Risk
.Issuer Risk .Foreign Investment .Credit Risk
.Value Securities Risk .High Yield Risk
Risk .Emerging Markets .Mortgage Risk
.Growth Securities Risk .Management Risk
Risk .Currency Risk
.Smaller Company .Focused Investment
Risk Risk
.Liquidity Risk .Leveraging Risk
Please see "Summary of Principal Risks" following the Portfolio
Summaries for a description of these and other risks associated
with the Underlying Funds and an investment in the Portfolio.
5 PIMCO Funds: Multi-Manager Series
<PAGE>
90/10 Portfolio (continued)
--------------------------------------------------------------------------------
Performance The following shows summary performance information for the
Information Portfolio in a bar chart and an Average Annual Total Returns
table. The information provides some indication of the risks of
investing in the Portfolio by showing changes in its performance
from year to year and by showing how the Portfolio's average
annual returns compare with the returns of broad-based securities
market indices and an index of mutual funds. The bar chart, the
information to its right and the Average Annual Total Returns
table show performance of the Portfolio's Class A shares, which
are offered in a different prospectus. This is because the
Portfolio has not offered Institutional Class or Administrative
Class shares for a full calendar year. Although Class A,
Institutional Class and Administrative Class shares would have
similar returns (because all the Portfolio's shares represent
interests in the same portfolio of securities), Class A
performance would be lower than Institutional Class or
Administrative Class performance because of the higher sales
charges and/or expenses paid by Class A shares. The returns in the
bar chart and the information to its right do not reflect the
impact of sales charges (loads). If they did, the returns would be
lower than those shown. Unlike the bar chart, performance figures
for Class A shares in the Average Annual Total Returns table
reflect the impact of sales charges. For periods prior to the
inception of Institutional Class and Administrative Class shares
(2/26/99), the Average Annual Total Returns table also shows
estimated historical performance for those classes based on the
performance of the Portfolio's Class A shares. The Class A
performance has been adjusted to reflect that there are no sales
charges and lower distribution and/or service (12b-1) fees (if
any), administrative fees and other expenses paid by Institutional
Class and Administrative Class shares. Past performance is no
guarantee of future results.
Calendar Year Total Returns -- Class A
<TABLE>
<S> <C>
More Recent Return
Information
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99)
14.32%
--------------------
Lowest (3rd Qtr.
'99)
-3.86%
</TABLE>
[GRAPH]
'99 19.00%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (9/30/98)(/4/)
---------------------------------------------------------------------
Class A 12.50% 22.17%
---------------------------------------------------------------------
Institutional Class 19.80% 28.62%
---------------------------------------------------------------------
Administrative Class 19.54% 28.33%
---------------------------------------------------------------------
Russell 3000 Index(/1/) 20.89% 35.92%
---------------------------------------------------------------------
Blended Index(/2/) 20.54% 33.44%
---------------------------------------------------------------------
Lipper Multi-Cap Core Funds Average(/3/) % %
---------------------------------------------------------------------
</TABLE>
(1) The Russell 3000 Index is an unmanaged index of the 3,000
largest U.S. companies based on total market capitalization.
It is not possible to invest directly in the index.
(2) The Blended Index represents the blended performance of a
hypothetical index made up of 72% Russell 3000 Index, 18%
MSCI All Country World ex-U.S. Index and 10% Lehman Brothers
Aggregate Bond Index. The Russell 3000 Index is described
above. The MSCI All Country World ex-U.S. Index is an
unmanaged index of stocks representing both developed and
emerging markets but excluding the United States. The Lehman
Brothers Aggregate Bond Index is an unmanaged index of
investment grade, U.S. dollar-denominated fixed income
securities of domestic issuers having a maturity greater than
one year. It is not possible to invest directly in these
indices.
(3) The Lipper Multi-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges, without concentrating in any one
market capitalization range over an extended period of time.
It does not take into account sales charges.
(4) The Fund began operations on 9/30/98. Index comparisons begin
on 9/30/98.
Prospectus 6
<PAGE>
90/10 Portfolio (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Portfolio:
Portfolio
Shareholder Fees (fees paid directly from your investment)
None
Annual Portfolio Operating Expenses (expenses that are deducted
from Portfolio assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Other Expenses
---------------------------------
Distribution Total Annual
Advisory and/or Service Administrative Underlying Portfolio Operating
Share Class Fees (12b-1) Fees Fees(/1/) Fund Expenses(/2/) Expenses(/1/)
------------------------------------------------------------------------------------------
Institutional None None 0.15% 0.76% 0.91%
------------------------------------------------------------------------------------------
Administrative None 0.25% 0.15 0.76 1.16
------------------------------------------------------------------------------------------
</TABLE>
(1) The Administrative Fees for the Portfolio do not reflect a
voluntary fee waiver of 0.05% currently in effect. While the
fee waiver is in effect, actual Administrative Fees will be
0.10%, and Total Annual Portfolio Operating Expenses are
estimated to be as follows: Institutional Class - 0.86%;
Administrative Class - 1.11%.
(2) Based on estimated expenses for the current fiscal year.
Underlying Fund Expenses for the Portfolio are estimated based
upon a recent allocation of the Portfolio's assets among
Underlying Funds and upon the total annual operating expenses
of Institutional Class shares of these Underlying Funds. For a
listing of the expenses associated with each Underlying Fund,
please see "Management of the Portfolios--Underlying Fund
Expenses." Total Annual Portfolio Operating Expenses and the
Examples set forth below are based on estimates of the
Underlying Fund Expenses the Portfolio will incur. Actual
Underlying Fund Expenses for the Portfolio are expected to
vary with changes in the allocation of the Portfolio's assets,
and may be higher or lower than those shown above.
Examples. The Examples are intended to help you compare the cost
of investing in Institutional Class or Administrative Class shares
of the Portfolio with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the
Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
<TABLE>
<S> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
Institutional $ 93 $290 $504 $1,120
-----------------------------------------------------------------------------------
Administrative 118 368 638 1,409
-----------------------------------------------------------------------------------
</TABLE>
Taking into account the Administrative Fees waiver described in
footnote (1) above, the Examples for Years 1, 3, 5 and 10,
respectively, are as follows: Institutional Class -- $88, $274,
$477 and $1,061; Administrative Class -- $113, $353, $612 and
$1,352.
7 PIMCO Funds: Multi-Manager Series
<PAGE>
60/40 Portfolio
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Principal Investments Investment Objective Allocation Strategy Target Range
and Strategies Seeks long-term capital appreciation Underlying Stock Funds 60% 50%-70%
and current income Underlying Bond Funds 40% 30%-50%
Dividend Frequency
Quarterly
</TABLE>
The Portfolio seeks to achieve its investment objective by
normally investing approximately 60% (within a range of 50%--70%)
of its assets in Underlying Stock Funds and approximately 40%
(within a range of 30%--50%) of its assets in Underlying Bond
Funds. The Portfolio invests all of its assets in shares of the
Underlying Funds and does not invest directly in stocks or bonds
of other issuers. Please see "Asset Allocation Strategies" on page
3 for a summary of how the Asset Allocation Committee allocates
and reallocates the Portfolio's assets among particular Underlying
Funds.
The Portfolio may concentrate investments in a particular
Underlying Fund by investing more than 25% of its assets in that
Fund.
Based on the Portfolio's equity/fixed income allocation
strategy, it might be suitable for an investor with a medium-range
time horizon who seeks a balance of long-term capital appreciation
potential and income and has a medium tolerance for risk and
volatility.
--------------------------------------------------------------------------------
Principal Allocation Risk The Portfolio's investment performance depends
Risks upon how its assets are allocated and reallocated among particular
Underlying Funds. A principal risk of investing in the Portfolio
is that the Asset Allocation Committee's allocation techniques and
decisions will not produce the desired results, and the Portfolio
may not achieve its investment objective.
Underlying Fund Risks The value of your investment in the
Portfolio is directly related to the investment performance of the
Underlying Funds in which it invests. Therefore, the principal
risks of investing in the Portfolio are closely related to the
principal risks associated with the Underlying Funds and their
investments. Because the Portfolio's allocation among the
Underlying Funds will vary, an investment may be subject to any
and all of these risks at different times and to different
degrees.
Among the principal risks of the Underlying Funds, which could
adversely affect the net asset value, yield and total return of
the Portfolio, are:
<TABLE>
<S> <C> <C>
. Market Risk . Credit Risk . Emerging Markets Risk
. Issuer Risk . High Yield Risk . Currency Risk
. Value Securities Risk . Mortgage Risk . Focused Investment Risk
. Growth Securities Risk . Liquidity Risk . Leveraging Risk
. Smaller Company Risk . Derivatives Risk . Management Risk
. Interest Rate Risk . Foreign Investment Risk
</TABLE>
Please see "Summary of Principal Risks" following the Portfolio
Summaries for a description of these and other risks associated
with the Underlying Funds and an investment in the Portfolio.
Prospectus 8
<PAGE>
60/40 Portfolio (continued)
--------------------------------------------------------------------------------
Performance The following shows summary performance information for the
Information Portfolio in a bar chart and an Average Annual Total Returns
table. The information provides some indication of the risks of
investing in the Portfolio by showing changes in its performance
from year to year and by showing how the Portfolio's average
annual returns compare with the returns of broad-based securities
market indices and an index of mutual funds. The bar chart, the
information to its right and the Average Annual Total Returns
table show performance of the Portfolio's Class A shares, which
are offered in a different prospectus. This is because the
Portfolio has not offered Institutional Class or Administrative
Class shares for a full calendar year. Although Class A,
Institutional Class and Administrative Class shares would have
similar returns (because all the Portfolio's shares represent
interests in the same portfolio of securities), Class A
performance would be lower than Institutional Class or
Administrative Class performance because of the higher sales
charges and/or expenses paid by Class A shares. The returns in the
bar chart and the information to its right do not reflect the
impact of sales charges (loads). If they did, the returns would be
lower than those shown. Unlike the bar chart, performance figures
for Class A shares in the Average Annual Total Returns table
reflect the impact of sales charges. For periods prior to the
inception of Institutional Class and Administrative Class shares
(2/26/99), the Average Annual Total Returns table also shows
estimated historical performance for those classes based on the
performance of the Portfolio's Class A shares. The Class A
performance has been adjusted to reflect that there are no sales
charges and lower distribution and/or service (12b-1) fees (if
any), administrative fees and other expenses paid by Institutional
Class and Administrative Class shares. Past performance is no
guarantee of future results.
Calendar Year Total Returns -- Class A
<TABLE>
<S> <C>
More Recent Return
Information
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99)
9.40%
--------------------
Lowest (3rd Qtr.
'99)
-2.40%
</TABLE>
[GRAPH]
'99 12.03%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (9/30/98)(/5/)
--------------------------------------------------------------------
Class A 5.87% 13.02%
--------------------------------------------------------------------
Institutional Class 12.71% 18.92%
--------------------------------------------------------------------
Administrative Class 12.43% 18.62%
--------------------------------------------------------------------
Russell 3000 Index(/1/) 20.89% 35.92%
--------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(/2/) -0.82% -0.39%
--------------------------------------------------------------------
Blended Index(/3/) 13.12% 21.30%
--------------------------------------------------------------------
Lipper Balanced Fund Average(/4/) 8.79% 16.57%
--------------------------------------------------------------------
</TABLE>
(1) The Russell 3000 Index is an unmanaged index of the 3,000
largest U.S. companies based on total market capitalization.
It is not possible to invest directly in the index.
(2) The Lehman Brothers Aggregate Bond Index is an unmanaged
index of investment grade, U.S. dollar-denominated fixed
income securities of domestic issuers having a maturity
greater than one year. It is not possible to invest directly
in the index.
(3) The Blended Index represents the blended performance of a
hypothetical index made up of 48% Russell 3000 Index, 12%
MSCI All Country World ex-U.S. Index and 40% Lehman Brothers
Aggregate Bond Index. The Russell 3000 Index and Lehman
Brothers Aggregate Bond Index are described above. The MSCI
All Country World ex-U.S. Index is an unmanaged index of
stocks representing both developed and emerging markets but
excluding the United States. It is not possible to invest
directly in these indices.
(4) The Lipper Balanced Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. whose primary objective is to conserve
principal by maintaining at all times a balanced portfolio of
both stocks and bonds. It does not take into account sales
charges.
(5) The Fund began operations on 9/30/98. Index comparisons begin
on 9/30/98.
9 PIMCO Funds: Multi-Manager Series
<PAGE>
60/40 Portfolio (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Portfolio:
Portfolio
Shareholder Fees (fees paid directly from your investment)
None
Annual Portfolio Operating Expenses (expenses that are deducted
from Portfolio assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Other Expenses
---------------------------------
Distribution Total Annual
Advisory and/or Service Administrative Underlying Portfolio Operating
Share Class Fees (12b-1) Fees Fees(/1/) Fund Expenses(/2/) Expenses(/1/)
------------------------------------------------------------------------------------------
Institutional None None 0.15% 0.65% 0.80%
------------------------------------------------------------------------------------------
Administrative None 0.25% 0.15 0.65 1.05
------------------------------------------------------------------------------------------
</TABLE>
(1) The Administrative Fees for the Portfolio do not reflect a
voluntary fee waiver of 0.05% currently in effect. While the
fee waiver is in effect, actual Administrative Fees will be
0.10%, and Total Annual Portfolio Operating Expenses are
estimated to be as follows: Institutional Class - 0.75%;
Administrative Class - 1.00%.
(2) Based on estimated expenses for the current fiscal year.
Underlying Fund Expenses for the Portfolio are estimated
based upon a recent allocation of the Portfolio's assets
among Underlying Funds and upon the total annual operating
expenses of Institutional Class shares of these Underlying
Funds. For a listing of the expenses associated with each
Underlying Fund, please see "Management of the Portfolios--
Underlying Fund Expenses." Total Annual Portfolio Operating
Expenses and the Examples set forth below are based on
estimates of the Underlying Fund Expenses the Portfolio will
incur. Actual Underlying Fund Expenses for the Portfolio are
expected to vary with changes in the allocation of the
Portfolio's assets, and may be higher or lower than those
shown above.
Examples. The Examples are intended to help you compare the cost
of investing in Institutional Class or Administrative Class shares
of the Portfolio with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the
Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
<TABLE>
<S> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
Institutional $ 82 $255 $444 $ 990
-----------------------------------------------------------------------------------
Administrative 107 334 579 1,283
-----------------------------------------------------------------------------------
</TABLE>
Taking into account the Administrative Fees waiver described in
footnote (1) above, the Examples for Years 1, 3, 5 and 10,
respectively, are as follows: Institutional Class -- $77, $240,
$417 and $930; Administrative Class -- $102, $318, $552 and
$1,225.
Prospectus 10
<PAGE>
30/70 Portfolio
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Principal Investment Allocation Target Range
Investments Objective Strategy 30% 25%--35%
and Seeks current Underlying 70% 65%--75%
Strategies income, with Stock Funds
long-term Underlying
capital Bond Funds
appreciation as
a secondary
objective
</TABLE>
Dividend
Frequency
Monthly
The Portfolio seeks to achieve its investment objective by
normally investing approximately 30% (within a range of 25%--35%)
of its assets in Underlying Stock Funds and approximately 70%
(within a range of 65%--75%) of its assets in Underlying Bond
Funds. The Portfolio invests all of its assets in shares of the
Underlying Funds and does not invest directly in stocks or bonds
of other issuers. Please see "Asset Allocation Strategies" on page
3 for a summary of how the Asset Allocation Committee allocates
and reallocates the Portfolio's assets among particular Underlying
Funds.
The Portfolio may concentrate investments in a particular
Underlying Fund by investing more than 25% of its assets in that
Fund.
Based on the Portfolio's equity/fixed income allocation
strategy, it might be suitable for an investor with a shorter time
horizon who seeks a higher level of income combined with some
potential for long-term capital appreciation and has a lower
tolerance for risk and volatility.
--------------------------------------------------------------------------------
Principal Allocation Risk The Portfolio's investment performance depends
Risks upon how its assets are allocated and reallocated among particular
Underlying Funds. A principal risk of investing in the Portfolio
is that the Asset Allocation Committee's allocation techniques and
decisions will not produce the desired results, and the Portfolio
may not achieve its investment objective.
Underlying Fund Risks The value of your investment in the
Portfolio is directly related to the investment performance of the
Underlying Funds in which it invests. Therefore, the principal
risks of investing in the Portfolio are closely related to the
principal risks associated with the Underlying Funds and their
investments. Because the Portfolio's allocation among the
Underlying Funds will vary, an investment may be subject to any
and all of these risks at different times and to different
degrees.
Among the principal risks of the Underlying Funds, which could
adversely affect the net asset value, yield and total return of
the Portfolio, are:
. Interest Rate . Value Securities . Emerging Markets
Risk Risk Risk
. Credit Risk . Growth Securities . Currency Risk
. High Yield Risk Risk . Focused
. Mortgage Risk . Smaller Company Investment Risk
. Market Risk Risk . Leveraging Risk
. Issuer Risk . Liquidity Risk . Management Risk
. Derivatives Risk
. Foreign
Investment Risk
Please see "Summary of Principal Risks" following the Portfolio
Summaries for a description of these and other risks associated
with the Underlying Funds and an investment in the Portfolio.
11 PIMCO Funds: Multi-Manager Series
<PAGE>
30/70 Portfolio (continued)
--------------------------------------------------------------------------------
Performance The following shows summary performance information for the
Information Portfolio in a bar chart and an Average Annual Total Returns
table. The information provides some indication of the risks of
investing in the Portfolio by showing changes in its performance
from year to year and by showing how the Portfolio's average
annual returns compare with the returns of broad-based securities
market indices and an index of mutual funds. The bar chart, the
information to its right and the Average Annual Total Returns
table show performance of the Portfolio's Class A shares, which
are offered in a different prospectus. This is because the
Portfolio has not offered Institutional Class or Administrative
Class shares for a full calendar year. Although Class A,
Institutional Class and Administrative Class shares would have
similar returns (because all the Portfolio's shares represent
interests in the same portfolio of securities), Class A
performance would be lower than Institutional Class or
Administrative Class performance because of the higher sales
charges and/or expenses paid by Class A shares. The returns in the
bar chart and the information to its right do not reflect the
impact of sales charges (loads). If they did, the returns would be
lower than those shown. Unlike the bar chart, performance figures
for Class A shares in the Average Annual Total Returns table
reflect the impact of sales charges. For periods prior to the
inception of Institutional Class and Administrative Class shares
(2/26/99), the Average Annual Total Returns table also shows
estimated historical performance for those classes based on the
performance of the Portfolio's Class A shares. The Class A
performance has been adjusted to reflect that there are no sales
charges and lower distribution and/or service (12b-1) fees (if
any), administrative fees and other expenses paid by Institutional
Class and Administrative Class shares. Past performance is no
guarantee of future results.
Calendar Year Total Returns -- Class A
<TABLE>
<S> <C>
More Recent Return
Information
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (4th Qtr.
'99)
4.74%
--------------------
Lowest (1st Qtr.
'99)
-1.43%
</TABLE>
[GRAPH]
'99 4.64%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Fund Inception
1 Year (9/30/98)(/4/)
-------------------------------------------------------------------
Class A -0.07% 4.73%
-------------------------------------------------------------------
Institutional Class 5.18% 9.22%
-------------------------------------------------------------------
Administrative Class 4.92% 8.94%
-------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(/1/) -0.82% -0.39%
-------------------------------------------------------------------
Blended Index(/2/) 6.00% 10.04%
-------------------------------------------------------------------
Lipper General Bond Fund Average(/3/) 1.17% 2.88%
-------------------------------------------------------------------
</TABLE>
(1) The Lehman Brothers Aggregate Bond Index is an unmanaged index
of investment grade, U.S. dollar-denominated fixed income
securities of domestic issuers having a maturity greater than
one year. It is not possible to invest directly in the index.
(2) The Blended Index represents the blended performance of a
hypothetical index made up of 24% Russell 3000 Index, 6% MSCI
All Country World ex-U.S. Index and 70% Lehman Brothers
Aggregate Bond Index. The Russell 3000 Index is an unmanaged
index of the 3,000 largest U.S. companies based on total
market capitalization. The MSCI All Country World ex-U.S.
Index is an unmanaged index of stocks representing both
developed and emerging markets but excluding the United
States. The Lehman Brothers Aggregate Bond Index is described
above. It is not possible to invest directly in these indices.
(3) The Lipper General Bond Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that intend to keep most of their assets in
corporate and government debt issues and do not have any
quality or maturity restrictions. It does not take into
account sales charges.
(4) The Fund began operations on 9/30/98. Index comparisons begin
on 9/30/98.
Prospectus 12
<PAGE>
30/70 Portfolio (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Portfolio:
Portfolio
Shareholder Fees (fees paid directly from your investment)
None
Annual Portfolio Operating Expenses (expenses that are deducted
from Portfolio assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Other Expenses
---------------------------------
Distribution Total Annual
Advisory and/or Service Administrative Underlying Portfolio Operating
Share Class Fees (12b-1) Fees Fees(/1/) Fund Expenses(/2/) Expenses(/1/)
------------------------------------------------------------------------------------------
Institutional None None 0.15% 0.55% 0.70%
------------------------------------------------------------------------------------------
Administrative None 0.25% 0.15 0.55 0.95
------------------------------------------------------------------------------------------
</TABLE>
(1) The Administrative Fees for the Portfolio do not reflect a
voluntary fee waiver of 0.05% currently in effect. While the
fee waiver is in effect, actual Administrative Fees will be
0.10%, and Total Annual Portfolio Operating Expenses are
estimated to be as follows: Institutional Class - 0.65%;
Administrative Class - 0.90%.
(2) Based on estimated expenses for the current fiscal year.
Underlying Fund Expenses for the Portfolio are estimated
based upon a recent allocation of the Portfolio's assets
among Underlying Funds and upon the total annual operating
expenses of Institutional Class shares of these Underlying
Funds. For a listing of the expenses associated with each
Underlying Fund, please see "Management of the Portfolios--
Underlying Fund Expenses." Total Annual Portfolio Operating
Expenses and the Examples set forth below are based on
estimates of the Underlying Fund Expenses the Portfolio will
incur. Actual Underlying Fund Expenses for the Portfolio are
expected to vary with changes in the allocation of the
Portfolio's assets, and may be higher or lower than those
shown above.
Examples. The Examples are intended to help you compare the cost
of investing in Institutional Class or Administrative Class shares
of the Portfolio with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the
Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
<TABLE>
<S> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------
Institutional $72 $224 $390 $ 871
-----------------------------------------------------------------------------------
Administrative 97 303 525 1,166
-----------------------------------------------------------------------------------
</TABLE>
Taking into account the Administrative Fees waiver described in
footnote (1) above, the Examples for Years 1, 3, 5 and 10,
respectively, are as follows: Institutional Class -- $66, $208,
$362 and $810; Administrative Class -- $92, $287, $498 and $1,108.
13 PIMCO Funds: Multi-Manager Series
<PAGE>
Summary of Principal Risks
The value of an investment in a Portfolio changes with the values
of that Portfolio's investments in the Underlying Funds. Many
factors can affect those values. The factors that are most likely
to have a material effect on a particular Portfolio's investments
as a whole are called "principal risks." The principal risks of
each Portfolio are identified in the Portfolio Summaries beginning
on page 5 and are summarized in this section. There is no
guarantee that a Portfolio will be able to achieve its investment
objective.
Allocation Risk
Each Portfolio's investment performance depends upon how its
assets are allocated and reallocated among particular Underlying
Funds according to the Portfolio's equity/fixed income allocation
targets and ranges. A principal risk of investing in each
Portfolio is that PIMCO Advisors' Asset Allocation Committee will
make less than optimal or poor asset allocation decisions. The
Committee attempts to identify asset classes and sub-classes
represented by the Underlying Funds that will provide consistent,
quality performance for the Portfolios, but there is no guarantee
that the Committee's allocation techniques will produce the
desired results. It is possible that the Committee will focus on
Underlying Funds that perform poorly or underperform other
available Funds under various market conditions. You could lose
money on your investment in a Portfolio as a result of these
allocation decisions.
Underlying Fund Risks
Because each Portfolio invests all of its assets in Underlying
Funds, the risks associated with investing in the Portfolios are
closely related to the risks associated with the securities and
other investments held by the Underlying Funds. The ability of a
Portfolio to achieve its investment objective will depend upon the
ability of the Underlying Funds to achieve their objectives. There
can be no assurance that the investment objective of any
Underlying Fund will be achieved.
Each Portfolio's net asset value will fluctuate in response to
changes in the net asset values of the Underlying Funds in which
it invests. The extent to which the investment performance and
risks associated with a particular Portfolio correlate to those of
a particular Underlying Fund will depend upon the extent to which
the Portfolio's assets are allocated from time to time for
investment in the Underlying Fund, which will vary. A Portfolio's
investment in a particular Underlying Fund may and in some cases
is expected to exceed 25% of its assets. To the extent that a
Portfolio invests a significant portion of its assets in an
Underlying Fund, it will be particularly sensitive to the risks
associated with that Fund.
The following summarizes principal risks associated with
investments in the Underlying Funds and, indirectly, with your
investment in a Portfolio. Each Underlying Fund may be subject to
additional principal risks other than those described below
because the types of investments made by an Underlying Fund can
change over time. The summary is not intended to be exhaustive.
For a more complete description of these risks and the securities
and investment techniques used by the Underlying Funds, please
refer to the Statement of Additional Information and the
Underlying Fund prospectuses, which are incorporated herein by
reference and are available free of charge by telephoning the
Trust at 1-800-927-4648.
Market The market price of securities owned by an Underlying Fund may go
Risk up or down, sometimes rapidly or unpredictably. Securities may
decline in value due to factors affecting securities markets
generally or particular industries represented in the securities
markets. The value of a security may decline due to general market
conditions which are not specifically related to a particular
company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in
interest or currency rates, or adverse investor sentiment
generally. They may also decline due to factors which affect a
particular industry or industries, such as labor shortages or
increased production costs and competitive conditions within an
industry. Equity securities generally have greater price
volatility than fixed income securities and the Underlying Stock
Funds are particularly sensitive to these market risks.
Issuer
Risk
The value of a security may also decline for a number of reasons
which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the
issuer's goods or services.
Prospectus 14
<PAGE>
Value
Securities Each Underlying Stock Fund may invest in companies that may not be
Risk expected to experience significant earnings growth, but whose
securities the Fund's portfolio manager believes are selling at a
price lower than their true value. PIMCO Equity Income,
Renaissance, Value, Small-Cap Value, Capital Appreciation, Mid-Cap
and Micro-Cap Funds and [PIMCO/Allianz] Select International Fund
place particular emphasis on value securities. Companies that
issue value securities may have experienced adverse business
developments or may be subject to special risks that have caused
their securities to be out of favor. If a portfolio manager's
assessment of a company's prospects is wrong, or if the market
does not recognize the value of the company, the price of its
securities may decline or may not approach the value that the
portfolio manager anticipates.
Growth
Securities Each Underlying Stock Fund may invest in equity securities of
Risk companies that its portfolio manager believes will experience
relatively rapid earnings growth. PIMCO Growth, Target,
Opportunity, Capital Appreciation, Mid-Cap, Micro-Cap, Select
International and Innovation Funds place particular emphasis on
growth securities. Growth securities typically trade at higher
multiples of current earnings than other securities. Therefore,
the values of growth securities may be more sensitive to changes
in current or expected earnings than the values of other
securities.
Smaller
Company The general risks associated with equity securities and liquidity
Risk risk are particularly pronounced for securities of companies with
market capitalizations that are small compared to other publicly
traded companies. These companies may have limited product lines,
markets or financial resources or they may depend on a few key
employees. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities
and their values may fluctuate more sharply than other securities.
They may also trade in the over-the-counter market or on a
regional exchange, or may otherwise have limited liquidity. PIMCO
Opportunity, Micro-Cap, Small-Cap Value and Innovation Funds
generally have substantial exposure to this risk. PIMCO Target,
Select International and Mid-Cap Funds also have significant
exposure to this risk because they invest substantial assets in
companies with medium-sized market capitalizations, which are
smaller and generally less-seasoned than the largest companies.
Smaller company risk also applies to fixed income securities
issued by smaller companies and may affect certain investments of
the Underlying Bond Funds.
Liquidity
Risk Many of the Underlying Funds are subject to liquidity risk.
Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing a Fund from selling out of
these illiquid securities at an advantageous time or price.
Underlying Funds with principal investment strategies that involve
securities of companies with smaller market capitalizations,
foreign securities, derivatives or securities with substantial
market and/or credit risk tend to have the greatest exposure to
liquidity risk.
Derivatives Many of the Underlying Funds may, but are not required to, use a
Risk number of derivative instruments for risk management purposes or
as part of their investment strategies. Generally, derivatives are
financial contracts whose value depends upon, or is derived from,
the value of an underlying asset, reference rate or index, and may
relate to stocks, bonds, interest rates, currencies or currency
exchange rates, commodities, and related indexes. Examples of
derivative instruments include options contracts, futures
contracts, options on futures contracts and swap agreements. An
Underlying Fund's use of derivative instruments involves risks
different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional
investments. Also, an Underlying Fund's portfolio manager may
decide not to employ any of these strategies and there is no
assurance that any derivatives strategy used by a Fund will
succeed.
A description of the various derivative instruments in which the
Underlying Funds may invest and the risks associated with each
instrument is included in the Underlying Fund prospectuses and in
the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all
derivative instruments that may be used by the Underlying Funds.
Management Risk Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of
a derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit
of observing the performance of the derivative under all possible
market conditions.
Credit Risk The use of a derivative instrument involves the risk
that a loss may be sustained as a result of the failure of another
party to the contract (usually referred to as a "counterparty") to
make required payments or otherwise comply with the contract's
terms.
15 PIMCO Funds: Multi-Manager Series
<PAGE>
Liquidity Risk Liquidity risk exists when a particular
derivative instrument is difficult to purchase or sell. If a
derivative transaction is particularly large or if the relevant
market is illiquid (as is the case with many privately negotiated
derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage
component, adverse changes in the value or level of the underlying
asset, reference rate or index can result in a loss substantially
greater than the amount invested in the derivative itself. Certain
derivatives have the potential for unlimited loss, regardless of
the size of the initial investment. When an Underlying Fund uses
derivatives for leverage, investments in that Fund will tend to be
more volatile, resulting in larger gains or losses in response to
market changes. To limit leveraging risk, the Underlying Funds
observe asset segregation requirements to cover their obligations
under derivative instruments.
Lack of Availability Because the markets for certain derivative
instruments (including markets located in foreign countries) are
relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk
management or other purposes. There is no assurance that an
Underlying Fund will engage in derivatives transactions at any
time or from time to time. A Fund's ability to use derivatives may
also be limited by certain regulatory considerations.
Market and Other Risks Like most other investments, derivative
instruments are subject to the general risk that the market value
of the instrument will change in a way detrimental to an
Underlying Fund's interest. If a portfolio manager incorrectly
forecasts the values of securities, currencies or interest rates
or other economic factors in using derivatives for an Underlying
Fund, the Fund might have been in a better position if it had not
entered into the transaction at all. While some strategies
involving derivative instruments can reduce the risk of loss, they
can also reduce the opportunity for gain or even result in losses
by offsetting favorable price movements in other investments of an
Underlying Fund. An Underlying Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is
legally required to maintain offsetting positions or asset
coverage in connection with certain derivatives transactions.
Other risks in using derivatives include the risk of mispricing
or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates
and indexes. Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to an Underlying Fund. Also, the
value of derivatives may not correlate perfectly, or at all, with
the value of the assets, reference rates or indexes they are
designed to closely track. In addition, an Underlying Fund's use
of derivatives may also cause the Fund to realize higher amounts
of short-term capital gains (taxed at ordinary income tax rates
when distributed to shareholders who are individuals) than if the
Fund had not used such instruments.
Foreign
(non- Many Underlying Funds (in particular, PIMCO International, Select
U.S.) International, Structured Emerging Markets, Tax-Efficient
Investment Structured Emerging Markets, Global Bond, Foreign Bond and
Risk Emerging Markets Bond Funds) invest in securities of foreign
issuers, securities traded principally in securities markets
outside the United States and/or securities denominated in foreign
currencies (together, "foreign securities"). These Funds may
experience more rapid and extreme changes in value than Funds that
invest exclusively in securities of U.S. issuers or securities
that trade exclusively in U.S. markets.
The securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small
number of industries. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may
exhibit greater price volatility. Additionally, issuers of foreign
securities are usually not subject to the same degree of
regulation as U.S. issuers. Reporting, accounting and auditing
standards of foreign countries differ, in some cases
significantly, from U.S. standards. Also, nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely
affect an Underlying Fund's investments in a foreign country. In
the event of nationalization, expropriation or other confiscation,
a Fund could lose its entire investment in foreign securities. To
the extent that an Underlying Fund invests a significant portion
of its assets in a narrowly defined geographic area such as
Eastern Europe, South Africa or Asia, the Fund will generally have
more exposure to regional economic risks associated with foreign
investments. Adverse conditions in certain regions (such as
Southeast Asia) can also adversely affect securities of other
countries whose economies appear to be unrelated. In addition,
special U.S. tax considerations may apply to an Underlying Fund's
investment in foreign securities.
Prospectus 16
<PAGE>
Certain Underlying Bond Funds may invest in sovereign debt
issued by governments, their agencies or instrumentalities, or
other government-related entities. Holders of sovereign debt may
be requested to participate in the rescheduling of such debt and
to extend further loans to governmental entities. In addition,
there is no bankruptcy proceeding by which defaulted sovereign
debt may be collected.
Emerging Certain Underlying Funds (in particular, PIMCO Structured Emerging
Markets Markets, Tax-Efficient Structured Emerging Markets and Emerging
Risk Markets Bond Funds) may invest in the securities of issuers based
in countries with developing or "emerging market" economies. These
securities may present market, credit, currency, liquidity, legal,
political and other risks different from, or greater than, the
risks of investing in developed foreign countries.
Currency
Risk Many Underlying Funds may invest directly in foreign currencies or
in securities that trade in, or receive revenues in, foreign
currencies. To the extent that they do so, these Funds are subject
to the risk that those currencies will decline in value relative
to the U.S. dollar, or, in the case of hedging positions, that the
U.S. Dollar will decline in value relative to the currency being
hedged. PIMCO Global Bond, Foreign Bond, Emerging Markets Bond,
International, Select International, Structured Emerging Markets
and Tax-Efficient Structured Emerging Markets Funds are
particularly sensitive to currency risk. Currency rates in foreign
countries may fluctuate significantly over short periods of time
for a number of reasons, including changes in interest rates,
intervention (or the failure to intervene) by U.S. or foreign
governments, central banks or supranational entities such as the
International Monetary Fund, or by the imposition of currency
controls or other political developments in the U.S. or abroad.
For example, significant uncertainty surrounds the introduction of
the euro (a common currency unit for the European Union) in
January 1999 and its effect on the value of securities denominated
in local European currencies. These and other currencies in which
Underlying Fund assets are denominated may be devalued against the
U.S. dollar, resulting in a loss to such Funds.
Focused
Investment Focusing Fund investments in a small number of issuers, industries
Risk or foreign currencies increases risk. PIMCO Global Bond, Foreign
Bond and Emerging Markets Bond Funds are "non-diversified," which
means that they invest in a smaller number of issuers than
diversified mutual funds. Other Underlying Funds also normally
invest in a relatively small number of issuers. In addition, many
Underlying Bond Funds may invest a substantial portion of their
assets in the bonds of similar projects or from issuers in the
same state. To the extent that they focus their investments, the
Underlying Funds may have more risk because changes in the value
of a single security or the impact of a single economic, political
or regulatory occurrence may have a greater adverse impact on the
Underlying Fund's net asset value. Some of those investments also
may present substantial credit or other risks. PIMCO
International, Select International, Structured Emerging Markets,
Tax-Efficient Structured Emerging Markets, Global Bond, Foreign
Bond and Emerging Markets Bond Funds may be subject to increased
risk to the extent they focus their assets in securities
denominated in a particular foreign currency or in a narrowly
defined geographic area outside the U.S., because companies in
these areas may share common characteristics and react similarly
to market developments. Similarly, PIMCO Innovation Fund is
vulnerable to events affecting companies which use innovative
technologies to gain a strategic, competitive advantage in their
industry and companies that provide and service those technologies
because it normally concentrates its investments in those
companies. Also, the Underlying Funds may from time to time have
greater risk to the extent they invest a substantial portion of
their assets in related industries such as "technology" or
"financial and business services," which may share common
characteristics and react similarly to market developments.
Although each Portfolio normally invests in a number of different
Underlying Funds, to the extent that a Portfolio concentrates a
significant portion of its assets in a single Underlying Fund, it
will be particularly sensitive to the risks associated with that
Fund and any investments in which that Fund concentrates.
Leveraging Certain Underlying Funds may engage in transactions or purchase
Risk instruments that give rise to forms of leverage. Such transactions
and instruments may include, among others, the use of reverse
repurchase agreements and other borrowings, the investment of
collateral from loans of portfolio securities, or the use of when-
issued, delayed-delivery or forward commitment transactions. An
Underlying Fund's use of derivatives may also involve leverage.
Leverage, including borrowing, will cause the value of an
Underlying Fund's shares to be more volatile that if the Fund did
not use leverage. This is because leverage tends to exaggerate the
effect of any increase or decrease in the value of a Fund's
portfolio securities. The use of leverage may also cause an
Underlying Fund to liquidate portfolio positions when it may not
be advantageous to do so in order to satisfy its obligations or to
meet segregation requirements.
17 PIMCO Funds: Multi-Manager Series
<PAGE>
Interest All of the Underlying Funds that invest in fixed income
Rate Risk securities, and particularly the Underlying Bond Funds, are
subject to interest rate risk. Changes in the market values of
fixed income securities are largely a function of changes in the
current level of interest rates. The value of an Underlying Fund's
investments in fixed income securities will typically change as
the level of interest rates fluctuate. During periods of declining
interest rates, the value of fixed income securities generally
rise. Conversely, during periods of rising interest rates, the
value of fixed income securities generally decline.
"Duration" is one measure of the expected life of a fixed income
security that is used to determine the sensitivity of a security's
price to changes in interest rates. Securities with longer
durations tend to be more sensitive to changes in interest rates,
usually making them more volatile than securities with shorter
durations. Accordingly, Underlying Bond Funds with longer average
portfolio durations (e.g., PIMCO Long-Term U.S. Government Fund)
will generally be more sensitive to changes in interest rates than
Funds with shorter average portfolio durations (e.g., PIMCO Money
Market, Short-Term and Low Duration Funds). Also, some portfolios
(e.g., those with mortgage-backed and other prepayable securities)
have changing durations and may have increasing durations
precisely when that is least advantageous (i.e., when interest
rates are rising).
Many Underlying Funds, including most of the Underlying Bond
Funds, may invest in securities that are particularly sensitive to
fluctuations in prevailing interest rates and have relatively high
levels of interest rate risk. These include various mortgage-
related securities (for instance, the interest-only or "IO" class
of a stripped mortgage-backed security) and "zero coupon"
securities (fixed income securities, including certain U.S.
Government securities, that do not make periodic interest payments
and are purchased at a discount from their value at maturity).
Credit All of the Underlying Funds are subject to credit risk. This is
Risk the risk that the issuer or the guarantor of a fixed income
security, or the counterparty to a derivatives contract,
repurchase agreement or a loan of portfolio securities, will be
unable or unwilling to make timely principal and/or interest
payments, or to otherwise honor its obligations. Securities are
subject to varying degrees of credit risk, which are often
reflecting in credit ratings provided by rating agencies such as
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Ratings Services ("S&P").
The Underlying Funds that invest in fixed income securities
(particularly the Underlying Bond Funds) are subject to varying
degrees of risk that the issuers of the securities will have their
credit ratings downgraded or will default, potentially reducing
the Underlying Fund's share price and income level. Nearly all
fixed income securities are subject to some credit risk, whether
the issuers of the securities are corporations, states and local
governments or foreign governments. Even certain U.S. Government
securities are subject to credit risk.
High High yield securities (commonly known as "junk bonds") are fixed
Yield income securities rated lower than Baa by Moody's or BBB by S&P,
Risk or unrated securities determined to be of comparable quality.
Underlying Bond Funds which invest in high yield securities (in
particular, PIMCO High Yield and Emerging Markets Bond Funds) may
be subject to greater volatility and higher levels of credit,
liquidity and other risks than Funds that invest exclusively in
higher quality fixed income securities (e.g., PIMCO Money Market
and Long-Term U.S. Government Funds). High yield securities are
considered predominately speculative with respect to the issuer's
continuing ability to make principal and interest payments (credit
risk). High yield securities may also be more susceptible to real
or perceived adverse economic and competitive industry conditions
than higher quality fixed income securities. An economic downturn
or period of rising interest rates could adversely affect the
market for high yield securities and reduce an Underlying Bond
Fund's ability to sell its high yield securities (liquidity risk).
Mortgage Most of the Underlying Bond Funds may invest in mortgage-related
Risk securities. Rising interest rates tend to extend the duration of
mortgage-related securities, making them more sensitive to changes
in interest rates. As a result, in a period of rising interest
rates, an Underlying Fund that holds mortgage-related securities
may exhibit additional volatility. This is sometimes referred to
as extension risk. In addition, mortgage-related securities may
involve special risks relating to unanticipated rates of
prepayment on the mortgages underlying the securities. This is
sometimes referred to as prepayment risk. Declining interest rates
may tend to increase prepayments, and these prepayments would have
to be reinvested at the then-prevailing lower interest rates.
Therefore, an Underlying Fund that holds mortgage-related
securities may have less potential for capital appreciation during
periods of declining interest rates than Funds that invest in
other types of fixed income securities of similar maturities.
Prospectus 18
<PAGE>
Management
Risk Each Underlying Fund is subject to management risk because it is
an actively managed investment portfolio. PIMCO Advisors, Pacific
Investment Management Company LLC, and the sub-advisers and
individual portfolio managers of the Underlying Funds will apply
investment techniques and risk analyses in making investment
decisions for the Funds, but there can be no guarantee that they
will produce the desired results.
A Note on Each Portfolio may invest in PIMCO StocksPLUS Fund. While the
PIMCO investment objective of that Fund is to achieve a total return
StocksPLUS which exceeds the total return performance of the S&P 500 Index,
Fund it does so by investing substantially all of its assets in a
combination of equity-based (S&P 500 Index) derivative
instruments, backed by a portfolio of fixed income securities.
Consequently, the risks of investing in the Fund include
derivatives risk and the risks generally associated with the
Underlying Bond Funds. To the extent that the Fund invests in S&P
500 Index derivatives backed by a portfolio of fixed income
securities, under certain conditions, generally in a market where
the value of both S&P 500 Index derivatives and fixed income
securities are declining, the Fund may experience greater losses
than would be the case if it were to invest directly in a
portfolio of S&P 500 Index stocks.
19 PIMCO Funds: Multi-Manager Series
<PAGE>
Investment Objectives and Principal Investment Strategies
The investment objective and principal investment strategies of
each Portfolio are described below. There can be no assurance that
the investment objective of any Portfolio will be achieved.
Because the market value of each Portfolio's investments will
change, the net asset value per share of each Portfolio will also
vary.
The Portfolios are intended for investors who prefer to have
their asset allocation decisions made by professional money
managers. Each Portfolio seeks to achieve its investment objective
by investing within specified equity and fixed income ranges among
the Underlying Funds. Each Underlying Fund is a series of the
Trust or PIMCO Funds: Pacific Investment Management Series and is
managed by PIMCO Advisors and/or its affiliates.
Portfolio 90/10 Portfolio seeks long-term capital appreciation. Under normal
Descriptionsconditions, approximately 90% of the Portfolio's assets will be
allocated among Underlying Stock Funds and 10% among Underlying
Bond Funds.
60/40 Portfolio seeks long-term capital appreciation and current
income. Under normal conditions, approximately 60% of the
Portfolio's assets will be allocated among Underlying Stock Funds
and 40% among Underlying Bond Funds.
30/70 Portfolio seeks current income. Long-term capital
appreciation is a secondary objective. Under normal conditions,
approximately 30% of the Portfolio's assets will be allocated
among Underlying Stock Funds and 70% among Underlying Bond Funds.
PIMCO Advisors serves as the investment adviser to the
Portfolios. PIMCO Advisors' Asset Allocation Committee determines
how each Portfolio allocates and reallocates its assets among the
Underlying Funds according to the Portfolio's equity/fixed income
allocation targets and ranges. Please see "Asset Allocation
Strategies" in the Summary Information section above for a
description of the allocation strategies and techniques used by
the Committee. The table below illustrates the equity and fixed
income allocation targets and typical ranges for each Portfolio
under normal market conditions.
Equity and Fixed Income Targets and Ranges
(as a percentage of each Portfolio's total investments)
<TABLE>
<CAPTION>
Typical
PIMCO Funds Target Allocation
Asset Allocation Series Allocation Range
--------------------------------------------------------
<S> <C> <C>
90/10 Portfolio
Equity--Underlying Stock Funds 90% 80% - 100%
Fixed Income--Underlying Bond Funds* 10% 0% - 20%
--------------------------------------------------------
60/40 Portfolio
Equity--Underlying Stock Funds 60% 50% - 70%
Fixed Income--Underlying Bond Funds* 40% 30% - 50%
--------------------------------------------------------
30/70 Portfolio
Equity--Underlying Stock Funds 30% 25% - 35%
Fixed Income--Underlying Bond Funds* 70% 65% - 75%
</TABLE>
* The Fixed Income portion may include a money market component
through investments in PIMCO Money Market Fund.
Each Portfolio invests all of its assets in Underlying Funds and
may invest in any or all of the Funds. However, it is expected
that a Portfolio will invest in only some of the Underlying Funds
at any particular time. A Portfolio's investment in a particular
Underlying Fund may exceed 25% of the Portfolio's total assets. To
the extent that a Portfolio invests a significant portion of its
assets in an Underlying Fund, it will be particularly sensitive to
the risks associated with that Fund. The particular Underlying
Funds in which each Portfolio may invest, the equity and fixed
income allocation targets and ranges specified above, and the
percentage of each Portfolio's assets invested from time to time
in any Underlying Fund or combination of Funds may be changed from
time to time without the approval of the Portfolio's shareholders.
Each Portfolio is also subject to certain investment restrictions
that are described under "Investment Restrictions" in the
Statement of Additional Information.
Prospectus 20
<PAGE>
Equity The equity portion of each Portfolio will be allocated among a
Portion number of Underlying Stock Funds which represent a broad range of
of the equity-based asset classes and sub-classes and a variety of
Portfolios investment objectives and strategies. By allocating assets among
these Funds, the equity portions of the Portfolios can be
diversified in multiple ways, including the following:
By Investment Style/Category
.Growth
.Blend (Broad Market)
.Value
.Enhanced Index
.Sector-Related
By Region
.U.S. Equities
.International Developed Markets Equities
.International Emerging Markets Equities
By Size
.Large-Cap
.Mid-Cap
.Small-Cap
For a description of the Underlying Stock Funds and their
investment objectives and strategies, please see "Underlying
Funds."
Fixed The fixed income portion of each Portfolio will be allocated among
Income a number of Underlying Bond Funds which represent a broad range of
Portion fixed income-based asset classes and sub-classes and a variety of
of the investment objectives and strategies. By allocating assets among
Portfolios these Funds, the fixed income portions of the Portfolios can be
diversified in multiple ways, including the following:
By Sector/Investment Specialty
.Governments
.Mortgages
.Corporate
.Inflation-Indexed
By Region
.U.S. Fixed Income
.Developed Foreign Fixed Income
.Emerging Markets Fixed Income
By Credit Quality
.Investment Grade/Money Market
.Medium Grade
.High Yield
By Duration
.Long-Term
.Intermediate-Term
.Short-Term
For a description of the Underlying Bond Funds and their
investment objectives and strategies, please see "Underlying
Funds."
Temporary In response to unfavorable market and other conditions, each
Defensive Portfolio may invest up to 100% of its assets in PIMCO Money
Strategies Market Fund (and may deviate from its asset allocation range) for
temporary defensive purposes. A Portfolio may also borrow money
for temporary or emergency purposes. These temporary strategies
would be inconsistent with the Portfolio's investment objective
and principal investment strategies and may adversely affect the
Portfolio's ability to achieve its investment objective.
21 PIMCO Funds: Multi-Manager Series
<PAGE>
Portfolio A change in the securities held by a Portfolio is known as
Turnover "portfolio turnover." Because PIMCO Advisors does not expect to
reallocate the Portfolios' assets among the Underlying Funds on a
frequent basis, the portfolio turnover rates for the Portfolios
are expected to be modest (i.e., less than 25%) in comparison to
most mutual funds. However, the Portfolios' indirectly bear the
expenses associated with portfolio turnover of the Underlying
Funds, a number of which have fairly high portfolio turnover rates
(i.e., in excess of 100%). High portfolio turnover involves
correspondingly greater expenses to an Underlying Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other
securities. Shareholders in the Portfolios may also bear expenses
directly or indirectly through sales of securities held by the
Portfolios and the Underlying Funds which result in realization of
taxable capital gains. To the extent such gains relate to
securities held for twelve months or less, such gains will be
short-term capital gains taxed at ordinary income tax rates when
distributed to shareholders who are individuals. The trading costs
and tax effects associated with portfolio turnover may adversely
affect a Portfolio's performance and the return to shareholders.
Changes The investment objective, the equity/fixed income allocation
in targets and ranges, and, unless otherwise noted, other investment
Investment policies of each Portfolio described in this Prospectus may be
Objectives changed by the Board of Trustees without shareholder approval. If
and there is a change in a Portfolio's investment objective,
Policies allocation target or range, or other investment policies,
shareholders should consider whether the Portfolio remains an
appropriate investment in light of their then current financial
positions and needs.
Prospectus 22
<PAGE>
Underlying Funds
Each Portfolio invests all of its assets in Underlying Funds.
Accordingly, each Portfolio's investment performance depends upon
a favorable allocation among the Underlying Funds as well as the
ability of the Underlying Funds to achieve their objectives. There
can be no assurance that the investment objective of any
Underlying Fund will be achieved. Shares of the Underlying Funds
are not offered in this Prospectus.
Advisory
ArrangementsPIMCO Advisors serves as investment adviser for each of the
for the Underlying Stock Funds, except that its affiliate, Pacific
Underlying Investment Management Company, is the sole investment adviser to
Funds PIMCO StocksPLUS Fund. The PIMCO Equity Advisors division of PIMCO
Advisors manages the investments of several of the Underlying
Stock Funds. PIMCO Advisors retains sub-advisory firms to manage
the portfolios of other Underlying Stock Funds. These firms
include PIMCO/Allianz International Advisors LLC, Cadence Capital
Management, NFJ Investment Group and Parametric Portfolio
Associates, each of which is an affiliate of PIMCO Advisors, and
Blairlogie Capital Management, which is not an affiliate. Pacific
Investment Management Company LLC is the sole investment adviser
to each of the Underlying Bond Funds. For a complete description
of the advisory and sub-advisory arrangements for the Underlying
Funds, please see the Statement of Additional Information and the
Underlying Fund prospectuses, which are incorporated herein by
reference and are available free of charge by telephoning the
Trust at 1-800-927-4648.
Underlying The following provides a concise description of the investment
Stock objective, main investments and other information about each
Funds Underlying Stock Fund. For a complete description of these Funds,
please see the Underlying Fund prospectuses, which are
incorporated herein by reference and are available free of charge
by telephoning the Trust at 1-800-927-4648.
<TABLE>
<CAPTION>
Approximate
PIMCO Investment Main Number of
Fund Objective Investments Holdings
---------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C>
Growth Stock Growth Long-term growth of Common stocks of 35-40
Funds capital; companies with market
income is an capitalizations of at
incidental least $5 billion
consideration
-------------------------------------------------------------------------------------
Target Capital appreciation; Common stocks of 40-60
no companies with market
consideration is capitalizations of
given to income between $1 billion and
$10 billion
-------------------------------------------------------------------------------------
Opportunity Capital appreciation; Common stocks of 60-100
no companies with market
consideration is capitalizations of
given to income between $100 million and
$2 billion
---------------------------------------------------------------------------------------------------
Blend Stock Capital Appreciation Growth of capital Common stocks of 60-100
Funds companies with market
capitalizations of at
least $1 billion that
have improving
fundamentals and whose
stock is reasonably
valued by the market
-------------------------------------------------------------------------------------
Mid-Cap Growth of capital Common stocks of 60-100
companies with market
capitalizations of more
than $500 million
(excluding the largest
200 companies) that have
improving fundamentals
and whose stock is
reasonably valued by the
market
-------------------------------------------------------------------------------------
Micro-Cap Long-term growth of Common stocks of 60-100
capital companies with market
capitalizations of less
than $250 million that
have improving
fundamentals and whose
stock is reasonably
valued by the market
</TABLE>
23 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Approximate
PIMCO Investment Main Number of
Fund Objective Investments Holdings
---------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C>
Value Stock Equity Income Current income as a Income-producing common 40-50
Funds primary objective; stocks of companies with
long-term growth of market capitalizations
capital as a of more than $2 billion
secondary objective
-----------------------------------------------------------------------------------------
Renaissance Long-term growth of Common stocks of 50-80
capital and income companies with below-
average valuations whose
business fundamentals
are expected to improve
-----------------------------------------------------------------------------------------
Value Long-term growth of Common stocks of 40
capital and income companies with market
capitalizations of more
than $5 billion that are
undervalued relative to
the market and their
industry groups
-----------------------------------------------------------------------------------------
Small-Cap Value Long-term growth of Common stocks of 100
capital and income companies with market
capitalizations of
between $100 million and
$1.5 billion and below-
average price-to-
earnings ratios relative
to the market and their
industry groups
---------------------------------------------------------------------------------------------------------
Enhanced Index Tax-Efficient Equity Maximum after-tax A broadly diversified More than
Stock Funds growth of capital portfolio of at least 200
200 common stocks of
companies represented in
the S&P 500 Index with
market capitalizations
of more than $5 billion
-----------------------------------------------------------------------------------------
Enhanced Equity A total return which Common stocks 100-200
equals or exceeds the represented in the S&P
total return 500 Index with market
performance of an capitalizations of more
index (currently the than $5 billion
S&P 500 Index) that
represents the
performance of a
reasonably broad
spectrum of common
stocks that are
publicly traded in
the U.S.
-----------------------------------------------------------------------------------------
StocksPLUS Total return that S&P 500 stock index N/A
exceeds that of the derivatives backed by a
S&P 500 Index portfolio of short-term
fixed income securities
---------------------------------------------------------------------------------------------------------
International International Capital appreciation Common stocks of foreign 200-250
Stock Funds through investment in (non-U.S.) issuers
an international (developed and emerging
portfolio; income is markets) with market
an incidental capitalizations of more
consideration than $500 million
-----------------------------------------------------------------------------------------
Select International Capital appreciation An international 50-100
portfolio of common
stocks
-----------------------------------------------------------------------------------------
Structured Emerging Long-term growth of Common stocks of More than
Markets capital companies located in, or 300
whose business relates
to, emerging markets
-----------------------------------------------------------------------------------------
Tax-Efficient Structured Long-term growth of Common stocks of More than
Emerging Markets capital. The Fund companies located in, or 300
also seeks to achieve whose business relates
superior after-tax to, emerging markets
returns for its
shareholders by using
a variety of tax-
efficient management
strategies
---------------------------------------------------------------------------------------------------------
Sector-Related Innovation Capital appreciation; Common stocks of 40
Stock Funds no consideration is technology-related
given to income companies with market
capitalizations of more
than $200 million
</TABLE>
Prospectus 24
<PAGE>
Underlying The investment objective of each Underlying Bond Fund (except as
Bond provided below) is to seek to realize maximum total return,
Funds consistent with preservation of capital and prudent investment
management. The "total return" sought by most of the Underlying
Bond Funds will consist of income earned on the Fund's
investments, plus capital appreciation, if any, which generally
arises from decreases in interest rates or improving credit
fundamentals for a particular sector or security. The investment
objective of PIMCO Real Return Bond Fund is to seek to realize
maximum real return, consistent with preservation of real capital
and prudent investment management. "Real return" is a measure of
the change in purchasing power of money invested in a particular
investment after adjusting for inflation. The investment objective
of each of PIMCO Money Market Fund and PIMCO Short-Term Fund is to
seek to obtain maximum current income, consistent with
preservation of capital and daily liquidity. PIMCO Money Market
Fund also attempts to maintain a stable net asset value of $1.00
per share, although there can be no assurance that it will be
successful in doing so.
The following provides a concise description of the main
investments of and other information relating to each Underlying
Bond Fund. For a complete description of these Funds, please see
the Underlying Fund prospectus for PIMCO Funds: Pacific Investment
Management Series, which is incorporated herein by reference and
is available free of charge by telephoning the Trust at 1-800-927-
4648.
<TABLE>
<CAPTION>
Non-U.S. Dollar
Denominated
PIMCO Fund Main Investments Duration Credit Quality(/1/) Securities(/2/)
--------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C>
Short Money Market Money market instruments (greater than Min 95% Aaa or
Duration Bond or equal to) Prime 1; 0%
Funds 90 days (greater than
dollar-weighted or equal to) 5%
average maturity Aa or Prime 2
-----------------------------------------------------------------------------------------------
Short-Term Money market instruments 0-1 yr B to Aaa; max 10% 0-5%
and below Baa
short maturity fixed
income
securities
-----------------------------------------------------------------------------------------------
Low Duration Short maturity fixed 1-3 yrs B to Aaa; max 10% 0-20%
income below Baa
securities
--------------------------------------------------------------------------------------------------------
Intermediate Moderate Duration Short and intermediate 2-5 yrs B to Aaa; max 10% 0-20%
Duration maturity below Baa
Bond Funds fixed income securities
-----------------------------------------------------------------------------------------------
Total Return Intermediate maturity 3-6 yrs B to Aaa; max 10% 0-20%
fixed income securities below Baa
-----------------------------------------------------------------------------------------------
Total Return II Intermediate maturity 3-6 yrs Baa to Aaa 0%
fixed
income securities with
quality
and foreign issuer
restrictions
--------------------------------------------------------------------------------------------------------
Long Duration Long-Term U.S. Long-term maturity fixed (greater than A to Aaa 0%
Bond Funds Government income or equal to)
securities 8 yrs
--------------------------------------------------------------------------------------------------------
International Global Bond U.S. and foreign 3-7 yrs B to Aaa; max 10% 25-75%
Bond Funds intermediate below Baa
maturity fixed income
securities
-----------------------------------------------------------------------------------------------
Foreign Bond Intermediate maturity 3-7 yrs B to Aaa; max 10% (less
hedged below Baa than or
foreign fixed income equal to)
securities 85%
-----------------------------------------------------------------------------------------------
Emerging Markets Emerging market fixed 0-8 yrs B to Aaa (less
Bond income than or
securities equal to)
80%
--------------------------------------------------------------------------------------------------------
High Yield High Yield Higher yielding fixed 2-6 yrs B to Aaa; min 65% 0%
Bond Funds income below Baa
securities
--------------------------------------------------------------------------------------------------------
Inflation Real Return Bond Inflation-indexed fixed N/A B to Aaa; max 10% 0-35%
Indexed Bond income below Baa
Funds securities
</TABLE>
1. As rated by Moody's Investors Service, Inc., or equivalently
rated by Standard & Poor's Ratings Services, or if unrated, de-
termined by Pacific Investment Management Company to be of compa-
rable quality.
2. Percentage limitations relate to non-U.S. dollar-denominated
securities for all Underlying Bond Funds except PIMCO Global
Bond, Foreign Bond and Emerging Markets Bond Funds. Percentage
limitations for these three Funds relate to securities of non-
U.S. issuers, denominated in any currency. Each Underlying Bond
Fund (except PIMCO Total Return II and Long-Term U.S. Government
Funds) may invest beyond these limits in U.S. dollar-denominated
securities of non-U.S. issuers.
Each Underlying Bond Fund invests at least 65% of its assets in
the following types of securities, which, unless provided above,
may be issued by domestic or foreign entities and denominated in
U.S. dollars or foreign currencies: securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities"); corporate debt
securities, including convertible securities and corporate
commercial paper; mortgage-backed and other asset-backed
securities; inflation-indexed bonds issued by both governments and
corporations; structured notes, including hybrid or "indexed"
securities, catastrophe bonds and loan participations; delayed
funding loans and revolving credit facilities; bank certificates
of deposit, fixed time deposits and bankers' acceptances;
repurchase agreements and reverse repurchase agreements; debt
securities issued by states or local governments and their
agencies, authorities and other instrumentalities; obligations of
foreign governments or their subdivisions, agencies and
instrumentalities; and obligations of international agencies or
supranational entities.
25 PIMCO Funds: Multi-Manager Series
<PAGE>
Other In addition to purchasing the securities listed above under "Main
Investment Investments," some or all of the Underlying Funds may to varying
Practices extents: lend portfolio securities; enter into repurchase
of the agreements and reverse repurchase agreements; purchase and sell
Underlying securities on a when-issued or delayed delivery basis; enter into
Funds forward commitments to purchase securities; purchase and write
call and put options on securities and securities indexes; enter
into futures contracts, options on futures contracts and swap
agreements; invest in foreign securities; and buy or sell foreign
currencies and enter into forward foreign currency contracts.
These and the other types of securities and investment techniques
used by the Underlying Funds all have attendant risks. The
Portfolios are indirectly subject to some or all of these risks to
varying degrees because they invest all of their assets in the
Underlying Funds. For further information concerning the
investment practices of and risks associated with the Underlying
Funds, please see "Investment Objectives and Policies" in the
Statement of Additional Information and the Underlying Fund
prospectuses, which are incorporated herein by reference and are
available free of charge by telephoning the Trust at 1-800-927-
4648.
Additional
Underlying Funds
In addition to the Funds listed above, a Portfolio may invest in
additional Underlying Funds, including those that may become
available for investment in the future, at the discretion of PIMCO
Advisors and without shareholder approval.
Other Risk Information
Potential PIMCO Advisors has broad discretion to allocate and reallocate the
Conflicts Portfolios' assets among the Underlying Funds consistent with the
of Portfolios' investment objectives and policies and asset
Interest allocation targets and ranges. Although PIMCO Advisors does not
charge an investment advisory fee for its asset allocation
services, PIMCO Advisors and its affiliates indirectly receive
fees (including investment advisory and administrative fees) from
the Underlying Funds in which the Portfolios invest. In this
regard, PIMCO Advisors has a financial incentive to invest a
Portfolio's assets in Underlying Funds with higher fees than other
Funds, even if it believes that alternate investments would better
serve the Portfolio's investment program. PIMCO Advisors is
legally obligated to disregard that incentive in making asset
allocation decisions for the Portfolios. The Trustees and officers
of the Trust may also have conflicting interests in fulfilling
their fiduciary duties to both the Portfolios and the Underlying
Funds of the Trust.
Management of the Portfolios
Investment
Adviser
and
Administrator
PIMCO Advisors serves as the investment adviser and the
administrator (serving in its capacity as administrator, the
"Administrator") for the Portfolios. Subject to the supervision of
the Board of Trustees, PIMCO Advisors is responsible for managing,
either directly or through others selected by it, the investment
activities of the Portfolios and the Portfolios' business affairs
and other administrative matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport
Beach, California 92660. Organized in 1987, PIMCO Advisors
provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual
funds. As of September 30, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $[ ] billion in assets under
management.
PIMCO Advisors has retained its affiliate, Pacific Investment
Management Company LLC, to provide various administrative and
other services required by the Portfolios in its capacity as sub-
administrator. PIMCO Advisors and the sub-administrator may retain
other affiliates to provide certain of these services.
Prospectus 26
<PAGE>
Asset
Allocation PIMCO Advisors selects the Underlying Funds in which the
Committee Portfolios may invest. PIMCO Advisors' Asset Allocation Committee
is responsible for determining how the Portfolios' assets are
allocated and reallocated from time-to-time among the Underlying
Funds selected by PIMCO Advisors. The following provides
information about the individuals who comprise the Asset
Allocation Committee and are primarily responsible for making
asset allocation and other investment decisions for the
Portfolios.
<TABLE>
<CAPTION>
Asset Allocation
Committee Member Since Recent Professional Experience
----------------------------------------------------------------------------------------------
<S> <C> <C>
Udo Frank May, 2000 Managing Director and Chief Investment Officer of Allianz Asset
Advisory and Management GmbH, responsible for the entire investment
area (since 1997), and Chief Executive Officer and Chief Investment
Officer of Allianz PIMCO Asset Management. Previously, he served as
the Chief Investment Officer of Allianz KAG since 1994.
Kenneth W. Corba May, 2000 Managing Director and Chief Investment Officer of the PIMCO Equity
Advisors division of PIMCO Advisors. Prior to joining PIMCO
Advisors, he was with Eagle Asset Management from 1995 to 1998,
serving in various capacities including as Chief Investment Officer
and Portfolio Manager. He was with Stein Roe & Farnham Inc. from
1984 to 1995.
Colin Glinsman May, 2000 Chief Investment Officer of Oppenheimer Capital since 1999.
Previously, he served as a portfolio manager and research analyst
at Oppenheimer Capital from 1989 to 1999.
John Hague May, 2000 Managing Director of Pacific Investment Management Company LLC,
where he is a member of the Executive Committee and a senior member
of the Portfolio Management and Investment Strategy Groups. He
joined Pacific Investment Management Company LLC in 1987.
John Loftus May, 2000 Managing Director of Pacific Investment Management Company LLC,
where he is a senior member of its Investment Strategy Group. He
also heads the firm's product management area. He joined Pacific
Investment Management Company LLC in 1986.
</TABLE>
Advisory
Fees The Portfolios do not pay any fees to PIMCO Advisors under the
Trust's investment advisory agreement in return for the advisory
and asset allocation services provided by PIMCO Advisors. The
Portfolios do, however, indirectly pay their proportionate share
of the advisory fees paid to PIMCO Advisors and Pacific Investment
Management Company LLC by the Underlying Funds in which the
Portfolios invest. See "Underlying Fund Expenses" below.
Administrative
Fees
Institutional Class and Administrative Class shareholders of each
Portfolio pay an administrative fee to PIMCO Advisors, computed as
a percentage of the Portfolio's assets attributable in the
aggregate to those classes of shares. PIMCO Advisors, in turn,
provides or procures administrative services for Institutional
Class and Administrative Class shareholders and also bears the
costs of various third-party services required by the Portfolios,
including audit, custodial, portfolio accounting, legal, transfer
agency and printing costs.
Each Portfolio pays monthly administrative fees to PIMCO
Advisors at an annual rate of 0.15% based on the average daily net
assets attributable in the aggregate to the Portfolio's
Institutional Class and Administrative Class shares. In order to
reduce expenses, PIMCO Advisors has voluntarily undertaken to
waive a portion of the administrative fees it is entitled to
receive for Institutional Class and Administrative Class shares of
each Portfolio until further notice. As a result, while the waiver
is in effect, each Portfolio will pay administrative fees to PIMCO
Advisors at the annual rate of 0.10%, calculated in the manner
specified above. The Portfolios also indirectly pay their
proportionate share of the administrative fees charged by PIMCO
Advisors and Pacific Investment Management Company LLC to the
Underlying Funds in which the Portfolios invest. See "Underlying
Fund Expenses" below.
Underlying
Fund The expenses associated with investing in a "fund of funds," such
Expenses as the Portfolios, are generally higher than those for mutual
funds that do not invest primarily in other mutual funds. This is
because shareholders in a "fund of funds" indirectly pay a portion
of the fees and expenses charged at the underlying fund level.
27 PIMCO Funds: Multi-Manager Series
<PAGE>
The Portfolios are structured in the following ways to lessen
the impact of expenses incurred at the Underlying Fund level:
. The Portfolios do not pay any fees for asset allocation or
advisory services under the Trust's investment advisory
agreement.
. The Underlying Funds invest in Institutional Class shares of
the Underlying Funds, which are not subject to any sales
charges or 12b-1 fees.
The following table summarizes the annual expenses borne by
Institutional Class shareholders of the Underlying Funds (based on
estimates for the current fiscal year). Because the Portfolios
invest in Institutional Class shares of the Underlying Funds,
shareholders of each Portfolio indirectly bear a proportionate
share of these expenses, depending upon how the Portfolio's assets
are allocated from time to time among the Underlying Funds. See
"Fees and Expenses of the Portfolio" in each Portfolio Summary
above.
<TABLE>
<CAPTION>
Annual Underlying Fund Expenses
(Based on the average daily net assets
attributable to a Fund's Institutional
Class shares):
Advisory Admini- Total Fund
Underlying Fund Fees strative Fees Operating Expenses
----------------------------------------------------------------
<S> <C> <C> <C>
PIMCO Growth 0.50% 0.25% 0.75%
----------------------------------------------------------------
PIMCO Target 0.55 0.25 0.80
----------------------------------------------------------------
PIMCO Opportunity 0.65 0.25 0.90
----------------------------------------------------------------
PIMCO Capital
Appreciation 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Mid-Cap 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Micro-Cap 1.25 0.25 1.50
----------------------------------------------------------------
PIMCO Equity Income 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Renaissance 0.60 0.25 0.85
----------------------------------------------------------------
PIMCO Value 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Small-Cap Value 0.60 0.25 0.85
----------------------------------------------------------------
PIMCO Tax-Efficient
Equity 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Enhanced Equity 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO StocksPLUS 0.40 0.25 0.65
----------------------------------------------------------------
PIMCO International 0.55 0.50 1.05
----------------------------------------------------------------
PIMCO/Allianz Select
International 0.75 0.50 1.25
----------------------------------------------------------------
PIMCO Structured Emerging
Markets 0.45 0.50 0.95
----------------------------------------------------------------
PIMCO Tax-Efficient
Structured Emerging
Markets 0.45 0.50 0.95
----------------------------------------------------------------
PIMCO Innovation 0.65 0.25 0.90
----------------------------------------------------------------
PIMCO Money Market 0.15 0.20 0.35
----------------------------------------------------------------
PIMCO Short-Term 0.25 0.20 0.45
----------------------------------------------------------------
PIMCO Low Duration 0.25 0.18 0.43
----------------------------------------------------------------
PIMCO Moderate Duration 0.25 0.20 0.45
----------------------------------------------------------------
PIMCO Total Return 0.25 0.18 0.43
----------------------------------------------------------------
PIMCO Total Return II 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Long-Term U.S.
Government 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Global Bond 0.25 0.30 0.55
----------------------------------------------------------------
PIMCO Foreign Bond 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Emerging Markets
Bond 0.45 0.40 0.85
----------------------------------------------------------------
PIMCO High Yield 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Real Return Bond 0.25 0.27 0.52
</TABLE>
Distributor
The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly
owned subsidiary of PIMCO Advisors. The Distributor, located at
2187 Atlantic Street, Stamford, CT 06902, is a broker-dealer
registered with the Securities and Exchange Commission.
Prospectus 28
<PAGE>
Investment Options --
Institutional Class and Administrative Class Shares
The Trust offers investors Institutional Class and Administrative
Class shares of the Portfolios in this Prospectus.
The Trust does not charge any sales charges (loads) or other fees
in connection with purchases, sales (redemptions) or exchanges of
Institutional Class or Administrative Class shares. Administrative
Class shares are generally subject to a higher level of operating
expenses than Institutional Class shares due to the additional
service and/or distribution fees paid by Administrative Class
shares as described below. Therefore, Institutional Class shares
will generally pay higher dividends and have a more favorable
investment return than Administrative Class shares.
. Service and Distribution (12b-1) Fees--Administrative Class
Shares. The Trust has adopted an Administrative Services Plan and
a Distribution Plan for the Administrative Class shares of each
Portfolio. Each Plan has been adopted in accordance with the
requirements of Rule 12b-1 under the Investment Company Act of
1940 and is administered in accordance with that rule. However,
shareholders do not have the voting rights set forth in Rule 12b-1
with respect to the Administrative Services Plan.
Each Plan allows the Portfolios to use their Administrative Class
assets to reimburse financial intermediaries that provide services
relating to Administrative Class shares. The Distribution Plan
permits reimbursement for expenses in connection with the
distribution and marketing of Administrative Class shares and/or
the provision of shareholder services to Administrative Class
shareholders. The Administrative Services Plan permits
reimbursement for services in connection with the administration
of plans or programs that use Administrative Class shares of the
Portfolios as their funding medium and for related expenses.
In combination, the Plans permit a Portfolio to make total
reimbursements at an annual rate of up to 0.25% of the Portfolio's
average daily net assets attributable to its Administrative Class
shares. The same entity may not receive both distribution and
administrative services fees with respect to the same
Administrative Class assets, but may receive fees under each Plan
with respect to separate assets. Because these fees are paid out
of a Portfolio's Administrative Class assets on an ongoing basis,
over time they will increase the cost of an investment in
Administrative Class shares and may cost an investor more than
other types of sales charges.
. Arrangements with Service Agents. Institutional Class and
Administrative Class shares of the Portfolios may be offered
through certain brokers and financial intermediaries ("service
agents") that have established a shareholder servicing
relationship with the Trust on behalf of their customers. The
Trust pays no compensation to such entities other than service
and/or distribution fees paid with respect to Administrative Class
shares. Service agents may impose additional or different
conditions than the Trust on purchases, redemptions or exchanges
of Portfolio shares by their customers. Service agents may also
independently establish and charge their customers transaction
fees, account fees and other amounts in connection with purchases,
sales and redemptions of Portfolio shares in addition to any fees
charged by the Trust. These additional fees may vary over time and
would increase the cost of the customer's investment and lower
investment returns. Each service agent is responsible for
transmitting to its customers a schedule of any such fees and
information regarding any additional or different conditions
regarding purchases, redemptions and exchanges. Shareholders who
are customers of service agents should consult their service
agents for information regarding these fees and conditions.
29 PIMCO Funds: Multi-Manager Series
<PAGE>
Purchases, Redemptions and Exchanges
Investors may purchase Institutional Class and Administrative
Purchasing Class shares of the Portfolios at the relevant net asset value
Shares ("NAV") of that class without a sales charge or other fee.
Institutional Class shares are offered primarily for direct
investment by investors such as pension and profit sharing plans,
employee benefit trusts, endowments, foundations, corporations and
high net worth individuals. Institutional Class shares may also be
offered through certain financial intermediaries that charge their
customers transaction or other fees with respect to their
customers' investments in the Portfolios.
Administrative Class shares are offered primarily through
employee benefit plan alliances, broker-dealers and other
intermediaries, and each Portfolio pays service and/or
distribution fees to these entities for services they provide to
Administrative Class shareholders.
Pension and profit-sharing plans, employee benefit trusts and
employee benefit plan alliances and "wrap account" programs
established with broker-dealers or financial intermediaries may
purchase shares of either class only if the plan or program for
which the shares are being acquired will maintain an omnibus or
pooled account for each Portfolio and will not require a Portfolio
to pay any type of administrative payment per participant account
to any third party.
. Investment Minimums. The minimum initial investment for shares
of either class is $5 million, except that the minimum initial
investment for a registered investment adviser purchasing
Institutional Class shares for its clients through omnibus
accounts is $250,000 per Portfolio. At the discretion of PIMCO
Advisors, the minimum initial investment may be waived for
Institutional or Administrative Class shares offered to clients of
PIMCO Equity Advisors, PIMCO/Allianz International Advisors,
Cadence, NFJ, Pacific Investment Management Company LLC,
Parametric and their affiliates, and to the benefit plans of PIMCO
Advisors and its affiliates. In addition, the minimum initial
investment does not apply to Institutional Class shares offered
through fee-based programs sponsored and maintained by a
registered broker-dealer and approved by the Distributor in which
each investor pays an asset based fee at an annual rate of at
least 0.50% of the assets in the account to a financial
intermediary for investment advisory and/or administrative
services.
The Trust and the Distributor may waive the minimum initial
investment for other categories of investors at their discretion.
The investment minimums discussed in this section do not apply to
participants in PIMCO Advisors Portfolio Strategies, a managed
product sponsored by PIMCO Advisors.
. Timing of Purchase Orders and Share Price Calculations. A
purchase order received by the Trust's transfer agent, National
Financial Data Services (the "Transfer Agent"), prior to the close
of regular trading (normally 4:00 p.m., Eastern time) on the New
York Stock Exchange, on a day the Trust is open for business,
together with payment made in one of the ways described below,
will be effected at that day's net asset value ("NAV"). An order
received after the close of regular trading on the New York Stock
Exchange will be effected at the NAV determined on the next
business day. However, orders received by certain retirement plans
and other financial intermediaries on a business day prior to the
close of regular trading on the New York Stock Exchange and
communicated to the Transfer Agent prior to 9:00 a.m., Eastern
time, on the following business day will be effected at the NAV
determined on the prior business day. The Trust is "open for
business" on each day the New York Stock Exchange is open for
trading, which excludes the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Purchase orders will be accepted only on days on
which the Trust is open for business.
. Initial Investment. Investors may open an account by
completing and signing a Client Registration Application and
mailing it to PIMCO Funds at 840 Newport Center Drive, Suite 300,
Newport Beach, California 92660. A Client Registration Application
may be obtained by calling 1-800-927-4648.
Except as described below, an investor may purchase Institutional
Class and Administrative Class shares only by wiring federal funds
to the Transfer Agent, National Financial Data Services, 330 West
9th Street, 4th Floor, Kansas City, Missouri 64105. Before wiring
federal funds, the investor must telephone the Trust at 1-800-927-
4648 to receive instructions for wire transfer and must provide
the following information: name of authorized person, shareholder
name, shareholder account number, name of Portfolio and share
class, amount being wired, and wiring bank name.
Prospectus 30
<PAGE>
An investor may purchase shares without first wiring federal
funds if the proceeds of the investment are derived from an
advisory account the investor maintains with PIMCO Advisors or one
of its affiliates, from surrender or other payment from an
annuity, insurance, or other contract held by Pacific Life
Insurance Company LLC, or from an investment by broker-dealers,
institutional clients or other financial intermediaries which have
established a shareholder servicing relationship with the Trust on
behalf of their customers.
. Additional Investments. An investor may purchase additional
Institutional Class and Administrative Class shares of the
Portfolios at any time by calling the Trust and wiring federal
funds to the Transfer Agent as outlined above.
. Other Purchase Information. Purchases of a Portfolio's
Institutional Class and Administrative Class shares will be made
in full and fractional shares. In the interest of economy and
convenience, certificates for shares will not be issued.
The Trust and the Distributor each reserves the right, in its
sole discretion, to suspend the offering of shares of the
Portfolios or to reject any purchase order, in whole or in part,
when, in the judgment of management, such suspension or rejection
is in the best interests of the Trust.
An investor should invest in the Portfolios for long-term
investment purposes only. The Trust and PIMCO Advisors each
reserves the right to restrict purchases of Portfolio shares
(including exchanges) when a pattern of frequent purchases and
sales made in response to short-term fluctuations in share price
appears evident. Notice of any such restrictions, if any, will
vary according to the particular circumstances.
Institutional Class and Administrative Class shares of the Trust
may not be qualified or registered for sale in all states.
Investors should inquire as to whether shares of a particular
Portfolio are available for offer and sale in the investor's state
of residence. Shares of the Trust may not be offered or sold in
any state unless registered or qualified in that jurisdiction or
unless an exemption from registration or qualification is
available.
. Retirement Plans. Shares of the Portfolios are available for
purchase by retirement and savings plans, including Keogh plans,
401(k) plans, 403(b) custodial accounts, and Individual Retirement
Accounts. The administrator of a plan or employee benefits office
can provide participants or employees with detailed information on
how to participate in the plan and how to elect a Portfolio as an
investment option. Participants in a retirement or savings plan
may be permitted to elect different investment options, alter the
amounts contributed to the plan, or change how contributions are
allocated among investment options in accordance with the plan's
specific provisions. The plan administrator or employee benefits
office should be consulted for details. For questions about
participant accounts, participants should contact their employee
benefits office, the plan administrator, or the organization that
provides recordkeeping services for the plan. Investors who
purchase shares through retirement plans should be aware that plan
administrators may aggregate purchase and redemption orders for
participants in the plan. Therefore, there may be a delay between
the time the investor places an order with the plan administrator
and the time the order is forwarded to the Transfer Agent for
execution.
Redeeming . Redemptions by Mail. An investor may redeem (sell)
Shares Institutional Class and Administrative Class shares by submitting
a written request to PIMCO Funds at 840 Newport Center Drive,
Suite 300, Newport Beach, California 92660. The redemption request
should state the Portfolio from which the shares are to be
redeemed, the class of shares, the number or dollar amount of the
shares to be redeemed and the account number. The request must be
signed exactly as the names of the registered owners appear on the
Trust's account records, and the request must be signed by the
minimum number of persons designated on the Client Registration
Application that are required to effect a redemption.
. Redemptions by Telephone or Other Wire Communication. An
investor that elects this option on the Client Registration
Application (or subsequently in writing) may request redemptions
of shares by calling the Trust at 1-800-927-4648, by sending a
facsimile to 1-949-725-6830, or by other means of wire
communication (excluding electronic mail). Investors should state
the Portfolio and class from which the shares are to be redeemed,
the number or dollar amount of the shares to be redeemed, the
account number and the signature of an authorized signatory.
Redemption requests of an amount of $10 million or more may be
initiated by telephone, but must be confirmed in writing by an
authorized party prior to processing.
In electing a telephone redemption, the investor authorizes
Pacific Investment Management Company LLC and the Transfer Agent
to act on telephone instructions from any person representing
himself to be the investor, and reasonably believed by Pacific
Investment Management Company LLC or the Transfer Agent to be
genuine. Neither the Trust nor the Transfer Agent may be liable
for any loss, cost or expense for acting on
31 PIMCO Funds: Multi-Manager Series
<PAGE>
instructions (whether in writing or by telephone) believed by the
party receiving such instructions to be genuine and in accordance
with the procedures described in this Prospectus. Shareholders
should realize that by electing the telephone or wire redemption
option, they may be giving up a measure of security that they
might have if they were to redeem their shares in writing.
Furthermore, interruptions in telephone service may mean that a
shareholder will be unable to effect a redemption by telephone
when desired. The Transfer Agent also provides written
confirmation of transactions initiated by telephone as a procedure
designed to confirm that telephone instructions are genuine
(written confirmation is also provided for redemption requests
received in writing). All telephone transactions are recorded, and
Pacific Investment Management Company LLC or the Transfer Agent
may request certain information in order to verify that the person
giving instructions is authorized to do so. The Trust or Transfer
Agent may be liable for any losses due to unauthorized or
fraudulent telephone transactions if it fails to employ reasonable
procedures to confirm that instructions communicated by telephone
are genuine. All redemptions, whether initiated by letter or
telephone, will be processed in a timely manner, and proceeds will
be forwarded by wire in accordance with the redemption policies of
the Trust detailed below. See "Other Redemption Information."
Shareholders may decline telephone exchange or redemption
privileges after an account is opened by instructing the Transfer
Agent in writing at least seven business days prior to the date
the instruction is to be effective. Shareholders may experience
delays in exercising telephone redemption privileges during
periods of abnormal market activity. During periods of volatile
economic or market conditions, shareholders may wish to consider
transmitting redemption orders by telegram, facsimile or overnight
courier.
Defined contribution plan participants may request redemptions by
contacting the employee benefits office, the plan administrator or
the organization that provides recordkeeping services for the
plan.
. Timing of Redemption Requests and Share Price Calculations. A
redemption request received by the Trust or its designee prior to
the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time), on a day the Trust is open for
business, is effective on that day. A redemption request received
after that time becomes effective on the next business day.
Redemption requests for Portfolio shares are effected at the NAV
per share next determined after receipt of a redemption request by
the Trust or its designee. The request must properly identify all
relevant information, such as account number, redemption amount
(in dollars or shares) and the Portfolio name, and must be
executed or initialed by the appropriate signatories.
. Other Redemption Information. Redemption proceeds will
ordinarily be wired to the investor's bank within three business
days after the redemption request, but may take up to seven
business days. Redemption proceeds will be sent by wire only to
the bank name designated on the Client Registration Application.
The Trust may suspend the right of redemption or postpone the
payment date at times when the New York Stock Exchange is closed,
or during certain other periods as permitted under the federal
securities laws.
For shareholder protection, a request to change information
contained in an account registration (for example, a request to
change the bank designated to receive wire redemption proceeds)
must be received in writing, signed by the minimum number of
persons designated on the Client Registration Application that are
required to effect a redemption, and accompanied by a signature
guarantee from any eligible guarantor institution, as determined
in accordance with the Trust's procedures. Shareholders should
inquire as to whether a particular institution is an eligible
guarantor institution. A signature guarantee cannot be provided by
a notary public. In addition, corporations, trusts, and other
institutional organizations are required to furnish evidence of
the authority of the persons designated on the Client Registration
Application to effect transactions for the organization.
Due to the relatively high cost of maintaining small accounts,
the Trust reserves the right to redeem Institutional Class and
Administrative Class shares in any account for their then-current
value (which will be promptly paid to the investor) if at any
time, due to redemption by the investor, the shares in the account
do not have a value of at least $100,000. A shareholder will
receive advance notice of a mandatory redemption and will be given
at least 30 days to bring the value of its account up to at least
$100,000. This mandatory redemption policy does not apply to
participants in PIMCO Advisors Portfolio Strategies, a managed
product sponsored by PIMCO Advisors.
The Trust agrees to redeem shares of each Portfolio solely in
cash up to the lesser of $250,000 or 1% of the Portfolio's net
assets during any 90-day period for any one shareholder. In
consideration of the best interests of the remaining shareholders,
the Trust reserves the right to pay any redemption proceeds
exceeding this amount in whole or in part by a distribution in
kind of securities held by a Portfolio in lieu of cash. When
shares are redeemed in kind, the redeeming shareholder may incur
transaction costs upon the disposition of the securities received
in the distribution.
Prospectus 32
<PAGE>
Redemption of Portfolio shares may be suspended when trading on
the New York Stock Exchange is restricted or during an emergency
which makes it impracticable for the Portfolios or the Underlying
Funds to dispose of their securities or to determine fairly the
value of their net assets, or duing any other period as permitted
by the Securities and Exchange Commission for the protection of
investors. Under these and other unusual circumstances, the Trust
may suspend redemptions or postpone payment for more than seven
days, as permitted by law.
Exchange
Privilege An investor may exchange Institutional Class or Administrative
Class shares of a Portfolio for shares of the same class of any
other Portfolio or other series of the Trust that offers that
class based on the respective NAVs of the shares involved, subject
to any restrictions on exchanges set forth in the applicable
Fund's or series' prospectus(es). An exchange may be made by
following the redemption procedure described above under
"Redemptions by Mail" or, if the investor has elected the
telephone redemption option, by calling the Trust at 1-800-927-
4648. An investor may also exchange shares of a Portfolio for
shares of the same class of a series of PIMCO Funds: Pacific
Investment Management Series, an affiliated mutual fund family
composed primarily of fixed income portfolios managed by Pacific
Investment Management Company LLC. Shareholders interested in such
an exchange may request a prospectus for these other series by
contacting PIMCO Funds: Pacific Investment Management Series at
the same address and telephone number as the Trust.
An investor may exchange shares only with respect to Portfolios
or other eligible series that are registered in the investor's
state of residence or where an exemption from registration is
available. In addition, an exchange is generally a taxable event
which will generate capital gains or losses, and special rules may
apply in computing tax basis when determining gain or loss. See
"Tax Consequences" in this Prospectus and "Taxation" in the
Statement of Additional Information.
The Trust reserves the right to refuse exchange purchases if, in
the judgment of PIMCO Advisors, the purchase would adversely
affect a Portfolio and its shareholders. In particular, a pattern
of exchanges characteristic of "market-timing" strategies may be
deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Portfolio. Currently, the Trust limits the number of
"round trip" exchanges investors may make. An investor makes a
"round trip" exchange when the investor purchases shares of a
particular Portfolio, subsequently exchanges those shares for
shares of a different Portfolio or other PIMCO Fund, and then
exchanges back into the originally purchased Portfolio. The Trust
has the right to refuse any exchange for any investor who
completes (by making the exchange back into the shares of the
originally purchased Portfolio) more than six round trip exchanges
in any twelve-month period. The Trust reserves the right to impose
additional restrictions on exchanges at any time, although it will
attempt to give shareholders 30 days' prior notice whenever it is
reasonably able to do so.
How Portfolio Shares Are Priced
The net asset value ("NAV") of a Portfolio's Institutional Class
and Administrative Class shares is determined by dividing the
total value of a Portfolio's portfolio investments and other
assets attributable to that class, less any liabilities, by the
total number of shares outstanding of that class.
The assets of each Portfolio consist of shares of the Underlying
Funds, which are valued at their respective NAVs at the time of
valuation of the Portfolios' shares. For purposes of calculating
the NAV of Underlying Fund shares, portfolio securities and other
assets of the Funds for which market quotes are available are
stated at market value. Market value is generally determined on
the basis of last reported sales prices, or if no sales are
reported, based on quotes obtained from a quotation reporting
system, established market makers, or pricing services. Certain
securities or investments for which daily market quotes are not
readily available may be valued, pursuant to procedures
established by the Board of Trustees of the Underlying Fund, with
reference to other securities or indices. Short-term investments
having a maturity of 60 days or less are generally valued at
amortized cost. Exchange traded options, futures and options on
futures are valued at the settlement price determined by the
exchange. Other securities for which market quotes are not readily
available are valued at fair value as determined in good faith by
the Fund's Board of Trustees or persons acting at the Board's
direction.
Underlying Fund investments initially valued in currencies other
than the U.S. dollar are converted to U.S. dollars using exchange
rates obtained from pricing services. As a result, the NAV of an
Underlying Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of
securities traded in markets outside the United States or
denominated in currencies other than the U.S. dollar
33 PIMCO Funds: Multi-Manager Series
<PAGE>
may be affected significantly on a day that the New York Stock
Exchange is closed. As a result, to the extent that a Portfolio
invests in Underlying Funds that hold foreign securities, the NAV
of the Portfolio's shares may change at times when you can not
purchase, redeem or exchange shares.
Portfolio and Underlying Fund shares are valued at the close of
regular trading (normally 4:00 p.m., Eastern time) (the "NYSE
Close") on each day that the New York Stock Exchange is open. For
purposes of calculating the NAV, the Underlying Funds normally use
pricing data for domestic equity securities received shortly after
the NYSE Close and do not normally take into account trading,
clearances or settlements that take place after the NYSE Close.
Domestic fixed income and foreign securities are normally priced
using data reflecting the earlier closing of the principal markets
for those securities. Information that becomes known to the
Underlying Funds or their agents after the NAV has been calculated
on a particular day will not generally be used to retroactively
adjust the price of a security or the NAV determined earlier that
day.
In unusual circumstances, instead of valuing securities in the
usual manner, the Underlying Funds may value securities at fair
value or estimate their value as determined in good faith by the
Fund's Board of Trustees or persons acting at their direction
pursuant to procedures approved by the Board of Trustees. Fair
valuation may also be used by the Underlying Fund's Board of
Trustees if extraordinary events occur after the close of the
relevant market but prior to the NYSE Close.
Portfolio Distributions
Each Portfolio distributes substantially all of its net investment
income to shareholders in the form of dividends. A shareholder
begins earning dividends on Portfolio shares the day after the
Trust receives the shareholder's purchase payment. Dividends paid
by each Portfolio with respect to each class of shares are
calculated in the same manner and at the same time, but dividends
on Administrative Class shares are expected to be lower than
dividends on Institutional Class shares as a result of the service
and/or distribution fees applicable to Administrative Class
shares. The following shows when each Portfolio intends to declare
and distribute income dividends to shareholders of record.
<TABLE>
<CAPTION>
Portfolio At Least Annually Quarterly Monthly
---------------------------------------------------------------------------
<S> <C> <C> <C>
90/10 Portfolio .
---------------------------------------------------------------------------
60/40 Portfolio .
---------------------------------------------------------------------------
30/70 Portfolio .
---------------------------------------------------------------------------
</TABLE>
In addition, each Portfolio distributes any net capital gains it
earns from the sale of portfolio securities to shareholders no
less frequently than annually. Net short-term capital gains may be
paid more frequently.
A Portfolio's dividend and capital gain distributions with
respect to a particular class of shares will automatically be
reinvested in additional shares of the same class of the Portfolio
at NAV unless the shareholder elects to have the distributions
paid in cash. A shareholder may elect to have distributions paid
in cash on the Client Registration Application or by submitting a
written request, signed by the appropriate signatories, indicating
the account number, Portfolio name(s) and wiring instructions.
Shareholders do not pay any sales charges or other fees on the
receipt of shares received through the reinvestment of Portfolio
distributions.
For further information on distribution options, please contact
the Trust at 1-800-927-4648.
Tax Consequences
. Taxes on Portfolio Distributions. A shareholder subject to U.S.
federal income tax will be subject to tax on Portfolio
distributions whether they are paid in cash or reinvested in
additional shares of the Portfolios. For federal income tax
purposes, Portfolio distributions will be taxable to the
shareholder as either ordinary income or capital gains.
Portfolio dividends (i.e., distributions of investment income)
are taxable to shareholders as ordinary income. Federal taxes on
Portfolio distributions of gains are determined by how long the
Portfolio owned the investments that generated the gains, rather
than how long the shareholder owned the shares. Distributions of
gains from investments that a Portfolio owned for more than 12
months will generally be taxable to shareholders as capital gains.
Distributions of gains from investments that the Portfolio owned
for 12 months or less will generally be taxable as ordinary
income.
Prospectus 34
<PAGE>
Portfolio distributions are taxable to shareholders even if they
are paid from income or gains earned by a Portfolio prior to the
shareholder's investment and thus were included in the price paid
for the shares. For example, a shareholder who purchases shares on
or just before the record date of a Portfolio distribution will
pay full price for the shares and may receive a portion of his or
her investment back as a taxable distribution.
The Portfolios' use of a fund of funds structure could affect the
amount, timing and character of distributions to shareholders. See
"Taxation--Distributions" in the Statement of Additional
Information.
. Taxes on Redemptions or Exchanges of Shares. Any gain resulting
from the sale of Portfolio shares will generally be subject to
federal income tax. When a shareholder exchanges shares of a
Portfolio for shares of another Portfolio or series of the Trust,
the transaction will be treated as a sale of the first Portfolio's
shares for these purposes, and any gain on those shares will
generally be subject to federal income tax.
This section relates only to federal income tax; the consequences
under other tax laws may differ. Shareholders should consult their
tax advisors as to the possible application of foreign, state and
local income tax laws to Portfolio dividends and capital
distributions. Please see the Statement of Additional Information
for additional information regarding the tax aspects of investing
in the Portfolios.
35 PIMCO Funds: Multi-Manager Series
<PAGE>
(This page left blank intentionally)
Prospectus 36
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand
the financial performance of Institutional Class and
Administrative Class shares of each Portfolio since the class of
shares was first offered. Certain information reflects financial
results for a single Portfolio share. The total returns in the
table represent the rate that an investor would have earned or
lost on an investment in a particular class of shares of a
Portfolio, assuming reinvestment of all dividends and
distributions. This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with each
Portfolio's financial statements, are included in the Trust's
annual report to shareholders. The annual report is incorporated
by reference in the Statement of Additional Information and is
available free of charge upon request from the Distributor.
[To be updated in a subsequent post-effective amendment.]
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends Distributions
Year or Value Net Unrealized Income from from Net from Net
Period Beginning Investment Gain (Loss) on Investment Investment Realized
Ended of Period Income Investments Operations Income Capital Gains
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
90/10 Portfolio
Institutional
Class
02/26/99-
06/30/99 $10.91 $0.05(a) $1.23(a) $1.28 $ 0.00 $0.00
Administrative
Class
02/26/99-
06/30/99 10.91 0.04(a) 1.23(a) 1.27 0.00 0.00
60/40 Portfolio
Institutional
Class
02/26/99-
06/30/99 $10.55 $0.09(a) $0.73(a) $0.82 $(0.10) $0.00
Administrative
Class
02/26/99-
06/30/99 10.55 0.09(a) 0.72(a) 0.81 (0.09) 0.00
30/70 Portfolio
Institutional
Class
02/26/99-
06/30/99 $10.09 $0.15(a) $0.23(a) $0.38 $(0.14) $0.00
Administrative
Class
02/26/99-
06/30/99 10.09 0.14(a) 0.23(a) 0.37 (0.13) 0.00
</TABLE>
-------
*Annualized
(a)Per share amounts based on average number of shares outstanding during the
period.
(b) The information provided under Ratio of Expenses to Average Net Assets
reflects a voluntary fee waiver of 0.05% currently in effect. If this
waiver was not reflected, Ratio of Expenses to Average Net Assets would be
0.15% for Institutional Class shares and 0.40% for Administrative Class
shares of each Portfolio.
37 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Tax Basis Net Asset Net Assets Expenses to Income (Loss)
Return of Total Value End End of Average Net to Average Portfolio
Capital Distributions of Period Total Return Period (000s) Assets Net Assets Turnover Rate
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$0.00 $ 0.00 $12.19 11.73% $11 0.10%*(b) 1.17%* 48%
0.00 0.00 12.18 11.64 11 0.35*(b) 0.95* 48
$0.00 $(0.10) $11.27 7.80% $11 0.10%*(b) 2.52%* 39%
0.00 (0.09) 11.27 7.71 11 0.35*(b) 2.44* 39
$0.00 $(0.14) $10.33 3.78% $10 0.10%*(b) 4.20%* 37%
0.00 (0.13) 10.33 3.70 10 0.35*(b) 4.03* 37
</TABLE>
Prospectus 38
<PAGE>
(This page left blank intentionally)
<PAGE>
(This page left blank intentionally)
<PAGE>
(This page left blank intentionally)
<PAGE>
-------------------------------------------------------------------
PIMCO INVESTMENT ADVISER AND ADMINISTRATOR
Funds: PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA
Multi- 92660
Manager
Series
-------------------------------------------------------------------
CUSTODIAN
State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO
64105
-------------------------------------------------------------------
TRANSFER AGENT
National Financial Data Services, 330 W. 9th Street, 4th Floor,
Kansas City, MO 64105
-------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
-------------------------------------------------------------------
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
-------------------------------------------------------------------
(Not part of the Prospectus)
<PAGE>
PIMCO Funds Prospectus
PIMCO This Prospectus describes three actively managed mutual fund
Funds: Portfolios offered by PIMCO Funds: Multi-Manager Series.
Multi-
Manager
Series
Asset Allocation Series -- 90/10 Portfolio
Asset Allocation Series -- 60/40 Portfolio
Asset Allocation Series -- 30/70 Portfolio
November
1, 2000
Each Portfolio invests in a diversified portfolio of other PIMCO
Funds. This Prospectus explains what you should know about the
Portfolios before you invest. Please read it carefully.
Share
Classes
A, B
and C
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
1 PIMCO Funds: Multi-Manager Series
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information................................................ 3
Portfolio Summaries
90/10 Portfolio.................................................. 5
60/40 Portfolio.................................................. 8
30/70 Portfolio.................................................. 11
Summary of Principal Risks......................................... 14
Investment Objectives and Principal Investment Strategies.......... 20
Underlying Funds................................................... 23
Other Risk Information............................................. 26
Management of the Portfolios....................................... 27
Investment Options - Class A, B and C Shares ...................... 29
How Portfolio Shares Are Priced.................................... 32
How to Buy and Sell Shares......................................... 32
Portfolio Distributions............................................ 36
Tax Consequences................................................... 37
Financial Highlights............................................... 39
</TABLE>
Prospectus 2
<PAGE>
Summary Information
The Portfolios are intended for investors who prefer to have their
asset allocation decisions made by professional money managers.
Each Portfolio has a distinct investment objective which it seeks
to achieve by investing within specified equity and fixed income
targets and ranges among certain Funds in the PIMCO Funds family.
The Portfolios invest only in Funds in the PIMCO Funds family. The
PIMCO Funds in which the Portfolios invest are called Underlying
Funds or Funds in this Prospectus.
Some of the Underlying Funds invest primarily in equity
securities and are called Underlying Stock Funds. Other Underlying
Funds invest primarily in fixed income securities, including money
market instruments, and are called Underlying Bond Funds. The
Portfolios are named according to their equity/fixed income
allocation targets. For instance, the 90/10 Portfolio will
normally invest approximately 90% of its assets in Underlying
Stock Funds and 10% of its assets in Underlying Bond Funds.
The table below lists the investment objectives and compares the
asset allocation strategies of the Portfolios. Other important
characteristics are described in the individual Portfolio
Summaries beginning on page 5, and are discussed in greater detail
under "Investment Objectives and Principal Investment Strategies."
A "Summary of Principal Risks" begins on page 11.
<TABLE>
<CAPTION>
PIMCO Funds
Asset Allocation Series Investment Objective Allocation Strategy
----------------------------------------------------------------------
<C> <C> <S>
90/10 Portfolio Long-term capital Under normal conditions,
appreciation approximately 90% (range
of 80%-100%) of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 10% (range of 0%-
20%) among Underlying
Bond Funds
----------------------------------------------------------------------
60/40 Portfolio Long-term capital Under normal conditions,
appreciation and approximately 60% (range
current income of 50%-70%) of the
Portfolio's assets will
be allocated among
Underlying Stock Funds
and 40% (range of 30%-
50%) among Underlying
Bond Funds
----------------------------------------------------------------------
30/70 Portfolio Current income, with Under normal conditions,
long-term approximately 30% (range
capital appreciation as of 25%-35%) of the
a Portfolio's assets will
secondary objective be allocated among
Underlying Stock Funds
and 70% (range of 65%-
75%) among Underlying
Bond Funds
</TABLE>
Risk/Return You should choose among the Portfolios based on personal
Comparison investment objectives, investment time horizon, tolerance for risk
and personal financial circumstances. Generally speaking,
historical data suggests that the longer the time horizon, the
greater the likelihood that the total return of a portfolio that
invests primarily in equity securities will be higher than the
total return of a portfolio that invests primarily in fixed income
securities. However, an equity portfolio is generally subject to
higher levels of overall risk and price volatility than a fixed
income portfolio and is considered to be a more aggressive
investment. Based on these assumptions, the following chart gives
some indication of the comparative risk/return potential of the
Portfolios according to their equity/fixed income allocation
targets and ranges. Note that these assumptions may not be correct
in future market conditions and the chart may not accurately
predict the actual comparative risk/return of the Portfolios under
all market conditions.
90/10 Portfolio might be suitable if you have a relatively
long time horizon, seek long-term capital appreciation
potential and have a fairly high tolerance for risk and
volatility.
60/40 Portfolio might be suitable if you have a medium-
range time horizon, seek a balance of long-term capital
appreciation potential and income and have medium tolerance
for risk and volatility.
30/70 Portfolio might be suitable if you have a shorter
time horizon, seek a higher level of income combined with
some potential for long-term capital appreciation and have
a lower tolerance for risk and volatility.
It is possible to lose money on investments in the Portfolios.
While each Portfolio provides a relatively high level of
diversification in comparison to most mutual funds, a single
Portfolio may not be suitable as a complete investment program.
The fact that a Portfolio may have had good performance in the
past (for example, during the year ended 1999) is no assurance
that the value of the Fund's investments will not decline in the
future or appreciate at a slower rate. An investment in a
Portfolio is not a deposit of a bank and is not guaranteed or
insured by the Federal Deposit Insurance Corporation or any other
government agency.
3 PIMCO Funds: Multi-Manager Series
<PAGE>
Summary Information (continued)
Asset PIMCO Advisors L.P. serves as the investment adviser to the
Allocation Portfolios. PIMCO Advisors selects the Underlying Funds in which
Strategies the Portfolios may invest. PIMCO Advisors' Asset Allocation
Committee determines how each Portfolio allocates and reallocates
its assets among the Underlying Funds selected by PIMCO Advisors
according to the Portfolio's equity/fixed income allocation
targets and ranges. The Committee attempts to diversify each
Portfolio's assets broadly among the major asset classes and sub-
classes represented by the Underlying Funds.
The major equity asset classes and sub-classes held by the
Underlying Stock Funds include those categorized by investment
style/category (growth, blend, value, enhanced index, sector-
related), region (U.S. equities, international developed markets,
international emerging markets), and market capitalization (large-
cap, mid-cap and small-cap). The major fixed income asset classes
and sub-classes held by the Underlying Bond Funds include those
categorized by sector/investment specialty (government securities,
mortgage-related securities, corporate bonds and inflation-indexed
bonds), region (U.S. fixed income, developed foreign fixed income,
emerging markets fixed income), credit quality (investment
grade/money market, medium grade, high yield), and duration (long-
term, intermediate-term and short-term).
Please see "Underlying Funds" in this Prospectus for a
description of the Underlying Funds as categorized by their
investment styles and main investments.
The Portfolios may invest in any or all of the Underlying Funds,
but will not normally invest in every Underlying Fund at any
particular time. Each Portfolio may invest in shares of the same
Underlying Funds; however, the percentage of each Portfolio's
assets so invested will vary depending on the Portfolio's
investment objective. The Asset Allocation Committee does not
allocate a Portfolio's assets according to a predetermined blend
of particular Underlying Funds. Instead, the Committee meets
regularly to determine the mix of Underlying Funds appropriate for
each Portfolio by allocating among the asset classes and sub-
classes held by the Underlying Funds. When making these decisions,
the Committee considers various quantitative and qualitative data
relating to the U.S. and foreign economies and securities markets.
This data includes projected growth trends in the U.S. and foreign
economies, forecasts for interest rates and the relationship
between short- and long-term interest rates (yield curve), current
and projected trends in inflation, relative valuation levels in
the equity and fixed income markets and various segments within
those markets, the outlook and projected growth of various
industrial sectors, information relating to business cycles,
borrowing trends and the cost of capital, political trends, data
relating to trade balances and labor information. The Committee
may also consider proprietary research provided by the investment
advisers and sub-advisers of the Underlying Funds.
The Committee then selects representative Underlying Funds for
each Portfolio to fill out the asset class and sub-class
weightings it has identified according to the Portfolio's
equity/fixed income targets and ranges. The Committee has the
flexibility to reallocate each Portfolio's assets in varying
percentages among any or all of the Underlying Funds based on the
Committee's ongoing analyses of the equity and fixed income
markets, although these tactical shifts are not expected to be
large or frequent in nature.
"Fund of The term "fund of funds" is used to describe mutual funds, such as
Funds" the Portfolios, that pursue their investment objectives by
Structure investing in other mutual funds. Your cost of investing in a
and Portfolio will generally be higher than the cost of investing in a
Expenses mutual fund that invests directly in individual stocks and bonds.
By investing in a Portfolio, you will indirectly bear fees and
expenses charged by the Underlying Funds in which the Portfolio
invests in addition to the Portfolio's direct fees and expenses.
In addition, the use of a fund of funds structure could affect the
timing, amount and character of distributions to you and therefore
may increase the amount of taxes payable by you.
Portfolio The following Portfolio Summaries identify each Portfolio's
Descriptionsinvestment objective, principal investments and strategies,
and Fees principal risks and fees and expenses. A more detailed "Summary of
Principal Risks" describing principal risks of investing in the
Portfolios begins after the Portfolio Summaries. Because the
Portfolios have not been in operation for a full calendar year, no
performance information (e.g., a bar chart or average annual total
returns table) is included for the Portfolios. A fuller discussion
of the Portfolios' investment strategies and related information
is included under "Investment Objectives and Principal Investment
Strategies" in this Prospectus.
Prospectus 4
<PAGE>
90/10 Portfolio
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Principal Investment Objective Allocation Strategy Target Range
Investments Seeks long-term capital appreciation Underlying Stock Funds 90% 80%-100%
and Strategies Underlying Bond Funds 10% 0% -20%
Dividend Frequency
At least annually
</TABLE>
The Portfolio seeks to achieve its investment objective by
normally investing approximately 90% (within a range of 80%-100%)
of its assets in Underlying Stock Funds and approximately 10%
(within a range of 0%-20%) of its assets in Underlying Bond Funds.
The Portfolio invests all of its assets in shares of the
Underlying Funds and does not invest directly in stocks or bonds
of other issuers.
Please see "Asset Allocation Strategies" on page 3 for a summary
of how the Asset Allocation Committee allocates and reallocates
the Portfolio's assets among particular Underlying Funds.
The Portfolio may concentrate investments in a particular
Underlying Fund by investing more than 25% of its assets in that
Fund.
Based on the Portfolio's equity/fixed income allocation
strategy, it might be suitable for an investor with a relatively
long time horizon who seeks long-term capital appreciation
potential and has a fairly high tolerance for risk and volatility.
--------------------------------------------------------------------------------
Principal Allocation Risk The Portfolio's investment performance depends
Risks upon how its assets are allocated and reallocated among particular
Underlying Funds. A principal risk of investing in the Portfolio
is that the Asset Allocation Committee's allocation techniques and
decisions will not produce the desired results, and the Portfolio
may not achieve its investment objective.
Underlying Fund Risks The value of your investment in the
Portfolio is directly related to the investment performance of the
Underlying Funds in which it invests. Therefore, the principal
risks of investing in the Portfolio are closely related to the
principal risks associated with the Underlying Funds and their
investments. Because the Portfolio's allocation among the
Underlying Funds will vary, your investment may be subject to any
and all of these risks at different times and to different
degrees.
Among the principal risks of the Underlying Funds, which could
adversely affect the net asset value, yield and total return of
the Portfolio, are:
<TABLE>
<S> <C> <C>
. Market Risk . Derivatives Risk . Interest Rate Risk
. Issuer Risk . Foreign Investment Risk . Credit Risk
. Value Securities Risk . Emerging Markets Risk . High Yield Risk
. Growth Securities Risk . Currency Risk . Mortgage Risk
. Smaller Company Risk . Focused Investment Risk . Management Risk
. Liquidity Risk . Leveraging Risk
</TABLE>
Please see "Summary of Principal Risks" following the Portfolio
Summaries for a description of these and other risks associated
with the Underlying Funds and an investment in the Portfolio.
5 PIMCO Funds: Multi-Manager Series
<PAGE>
90/10 Portfolio (continued)
--------------------------------------------------------------------------------
Performance Shown below is summary performance information for the Portfolio
Information in a bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Portfolio by showing changes in its performance from year to
year and by showing how the Portfolio's average annual returns
compare with the returns of broad-based securities market indices
and an index of mutual funds. The bar chart and the information to
its right show performance of the Portfolio's Class A shares, but
the returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
Past performance is no guarantee of future results.
Calendar Year Total Returns -- Class A
More Recent
Return
Information
1/1/00-9/30/00
[ ]%
Highest and
Lowest Quarter
Returns
(for periods
shown in the bar
chart)
------------------
Highest (10/1/99-
12/31/99)
14.32%
------------------
Lowest (7/1/99-
9/30/99)
-3.86%
[GRAPH]
'99 19.00%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Portfolio Inception
1 Year (9/30/98)(/4/)
-----------------------------------------------------------------
Class A 12.50% 22.17%
-----------------------------------------------------------------
Class B 13.13% 23.89%
-----------------------------------------------------------------
Class C 17.02% 26.82%
-----------------------------------------------------------------
Russell 3000 Index(/1/) 20.89% 35.92%
-----------------------------------------------------------------
Blended Index(/2/) 20.54% 33.44%
-----------------------------------------------------------------
Lipper Multi-Cap Core Funds Average(/3/) % %
-----------------------------------------------------------------
</TABLE>
(1) The Russell 3000 Index is an unmanaged index of the 3,000
largest U.S. companies based on total market capitalization.
It is not possible to invest directly in the index.
(2) The Blended Index represents the blended performance of a
hypothetical index made up of 72% Russell 3000 Index, 18% MSCI
All Country World ex-U.S. Index and 10% Lehman Brothers
Aggregate Bond Index. The Russell 3000 Index is described
above. The MSCI All Country World ex-U.S. Index is an
unmanaged index of stocks representing both developed and
emerging markets but excluding the United States. The Lehman
Brothers Aggregate Bond Index is an unmanaged index of
investment grade, U.S. dollar-denominated fixed income
securities of domestic issuers having a maturity greater than
one year. It is not possible to invest directly in these
indices.
(3) The Lipper Multi-Cap Core Funds Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that invest in companies with a variety of
capitalization ranges, without concentrating in any one market
capitalization range over an extended period of time. It does
not take into account sales charges.
(4) The Portfolio began operations on 9/30/98. Index comparisons
begin on 9/30/98.
Prospectus 6
<PAGE>
90/10 Portfolio (continued)
--------------------------------------------------------------------------------
These tables describe the fees and expenses you may pay if you buy
and hold Class A, B or C shares of the Portfolio:
Fees and Shareholder Fees (fees paid directly from your investment)
Expenses
of the
Portfolio
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares are
purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Portfolio Operating Expenses (expenses that are deducted
from Portfolio assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Other Expenses
---------------------------------
Distribution Total Annual
Advisory and/or Service Administrative Underlying Portfolio Operating
Share Class Fees (12b-1) Fees(/1/) Fees(/2/) Fund Expenses(/3/) Expenses
------------------------------------------------------------------------------------------
Class A None 0.25% 0.40% 0.76% 1.41%
------------------------------------------------------------------------------------------
Class B None 1.00 0.40 0.76 2.16
------------------------------------------------------------------------------------------
Class C None 1.00 0.40 0.76 2.16
------------------------------------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) The Administrative Fees are subject to a reduction of 0.05% on
average net assets attributable in the aggregate to the
Portfolio's Class A, B and C shares in excess of $2.5 billion.
(3) Based on estimated expenses for the current fiscal year.
Underlying Fund Expenses for the Portfolio are estimated based
upon a recent allocation of the Portfolio's assets among
Underlying Funds and upon the total annual operating expenses
of Institutional Class shares of these Underlying Funds. For a
listing of the expenses associated with each Underlying Fund,
please see "Management of the Portfolios--Underlying Fund
Expenses." Total Annual Portfolio Operating Expenses and the
Examples set forth below are based on estimates of the
Underlying Fund Expenses the Portfolio will incur. Actual
Underlying Fund Expenses for the Portfolio are expected to
vary with changes in the allocation of the Portfolio's assets,
and may be higher or lower than those shown above.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Portfolio with the
costs of investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the
Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $686 $972 $1,279 $2,148 $686 $972 $1,279 $2,148
-----------------------------------------------------------------------------------------------------------
Class B 719 976 1,359 2,207 219 676 1,159 2,207
-----------------------------------------------------------------------------------------------------------
Class C 319 676 1,159 2,493 219 676 1,159 2,493
-----------------------------------------------------------------------------------------------------------
</TABLE>
7 PIMCO Funds: Multi-Manager Series
<PAGE>
60/40 Portfolio
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Principal Investments Investment Objective
and Strategies Seeks long-term capital appreciation Allocation Strategy Target Range
and current income Underlying Stock Funds 60% 50%-70%
Underlying Bond Funds 40% 30%-50%
Dividend Frequency
Quarterly
</TABLE>
The Portfolio seeks to achieve its investment objective by
normally investing approximately 60% (within a range of 50%-70%)
of its assets in Underlying Stock Funds and approximately 40%
(within a range of 30%-50%) of its assets in Underlying Bond
Funds. The Portfolio invests all of its assets in shares of the
Underlying Funds and does not invest directly in stocks or bonds
of other issuers.
Please see "Asset Allocation Strategies" on page 3 for a summary
of how the Asset Allocation Committee allocates and reallocates
the Portfolio's assets among particular Underlying Funds.
The Portfolio may concentrate investments in a particular
Underlying Fund by investing more than 25% of its assets in that
Fund.
Based on the Portfolio's equity/fixed income allocation
strategy, it might be suitable for an investor with a medium-range
time horizon who seeks a balance of long-term capital appreciation
potential and income and has a medium tolerance for risk and
volatility.
--------------------------------------------------------------------------------
Principal Allocation Risk The Portfolio's investment performance depends
Risks upon how its assets are allocated and reallocated among particular
Underlying Funds. A principal risk of investing in the Portfolio
is that the Asset Allocation Committee's allocation techniques and
decisions will not produce the desired results, and the Portfolio
may not achieve its investment objective.
Underlying Fund Risks The value of your investment in the
Portfolio is directly related to the investment performance of the
Underlying Funds in which it invests. Therefore, the principal
risks of investing in the Portfolio are closely related to the
principal risks associated with the Underlying Funds and their
investments. Because the Portfolio's allocation among the
Underlying Funds will vary, your investment may be subject to any
and all of these risks at different times and to different
degrees.
Among the principal risks of the Underlying Funds, which could
adversely affect the net asset value, yield and total return of
the Portfolio, are:
<TABLE>
<S> <C> <C>
. Market Risk . Credit Risk . Emerging Markets Risk
. Issuer Risk . High Yield Risk . Currency Risk
. Value Securities Risk . Mortgage Risk . Focused Investment Risk
. Growth Securities Risk . Liquidity Risk . Leveraging Risk
. Smaller Company Risk . Derivatives Risk . Management Risk
. Interest Rate Risk . Foreign Investment Risk
</TABLE>
Please see "Summary of Principal Risks" following the Portfolio
Summaries for a description of these and other risks associated
with the Underlying Funds and an investment in the Portfolio.
Prospectus 8
<PAGE>
60/40 Portfolio (continued)
--------------------------------------------------------------------------------
Performance Shown below is summary performance information for the Portfolio
Information in a bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Portfolio by showing changes in its performance from year to
year and by showing how the Portfolio's average annual returns
compare with the returns of broad-based securities market indices
and an index of mutual funds. The bar chart and the information to
its right show performance of the Portfolio's Class A shares, but
the returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
Past performance is no guarantee of future results.
Calendar Year Total Returns -- Class A
More Recent Return
Information
1/1/00-9/30/00
[ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
-------------------
Highest (10/1/99-
12/31/99)
9.40%
-------------------
Lowest (7/1/99-
9/30/99)
-2.40%
[GRAPH]
'99 12.03%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Portfolio Inception
1 Year (9/30/98)(/5/)
------------------------------------------------------------------
Class A 5.87% 13.02%
------------------------------------------------------------------
Class B 6.10% 14.25%
------------------------------------------------------------------
Class C 10.13% 17.35%
------------------------------------------------------------------
Russell 3000 Index(/1/) 20.89% 35.92%
------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(/2/) -0.82% -0.39%
------------------------------------------------------------------
Blended Index(/3/) 13.12% 21.30%
------------------------------------------------------------------
Lipper Balanced Fund Average(/4/) 8.79% 16.57%
------------------------------------------------------------------
</TABLE>
(1) The Russell 3000 Index is an unmanaged index of the 3,000
largest U.S. companies based on total market capitalization.
It is not possible to invest directly in the index.
(2) The Lehman Brothers Aggregate Bond Index is an unmanaged
index of investment grade, U.S. dollar-denominated fixed
income securities of domestic issuers having a maturity
greater than one year. It is not possible to invest directly
in the index.
(3) The Blended Index represents the blended performance of a
hypothetical index made up of 48% Russell 3000 Index, 12%
MSCI All Country World ex-U.S. Index and 40% Lehman Brothers
Aggregate Bond Index. The Russell 3000 Index and Lehman
Brothers Aggregate Bond Index are described above. The MSCI
All Country World ex-U.S. Index is an unmanaged index of
stocks representing both developed and emerging markets but
excluding the United States. It is not possible to invest
directly in these indices.
(4) The Lipper Balanced Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. whose primary objective is to conserve
principal by maintaining at all times a balanced portfolio of
both stocks and bonds. It does not take into account sales
charges.
(5) The Portfolio began operations on 9/30/98. Index comparisons
begin on 9/30/98.
9 PIMCO Funds: Multi-Manager Series
<PAGE>
60/40 Portfolio (continued)
--------------------------------------------------------------------------------
These tables describe the fees and expenses you may pay if you buy
and hold Class A, B or C shares of the Portfolio:
Fees and Shareholder Fees (fees paid directly from your investment)
Expenses
of the
Portfolio
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 5.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
<TABLE>
<S> <C> <C> <C> <C> <C>
Other Expenses
---------------------------------
Distribution Total Annual
Advisory and/or Service Administrative Underlying Portfolio Operating
Share Class Fees (12b-1) Fees(/1/) Fees(/2/) Fund Expenses(/3/) Expenses
------------------------------------------------------------------------------------------
Class A None 0.25% 0.40% 0.65% 1.30%
------------------------------------------------------------------------------------------
Class B None 1.00 0.40 0.65 2.05
------------------------------------------------------------------------------------------
Class C None 1.00 0.40 0.65 2.05
------------------------------------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and Class
C shares, a Class B or Class C shareholders may, depending
upon 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.
(2) The Administrative Fees are subject to a reduction of 0.05% on
average net assets attributable in the aggregate to the
Portfolio's Class A, B and C shares in excess of $2.5 billion.
(3) Based on estimated expenses for the current fiscal year.
Underlying Fund Expenses for the Portfolio are estimated based
upon a recent allocation of the Portfolio's assets among
Underlying Funds and upon the total annual operating expenses
of Institutional Class shares of these Underlying Funds. For a
listing of the expenses associated with each Underlying Fund,
please see "Management of the Portfolios--Underlying Fund
Expenses." Total Annual Portfolio Operating Expenses and the
Examples set forth below are based on estimates of the
Underlying Fund Expenses the Portfolio will incur. Actual
Underlying Fund Expenses for the Portfolio are expected to
vary with changes in the allocation of the Portfolio's assets,
and may be higher or lower than those shown above.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Portfolio with the
costs of investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the
Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $675 $939 $1,224 $2,032 $675 $939 $1,224 $2,032
-----------------------------------------------------------------------------------------------------------
Class B 708 943 1,303 2,091 208 643 1,103 2,091
-----------------------------------------------------------------------------------------------------------
Class C 308 643 1,103 2,379 208 643 1,103 2,379
-----------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus 10
<PAGE>
30/70 Portfolio
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Investment
Investments Objective
and Seeks current Allocation
Strategies income, with Strategy Target Range
long-term capital
appreciation as a Underlying Stock
secondary Funds 30% 25%-35%
objective Underlying Bond
Funds 70% 65%-75%
Dividend
Frequency
Monthly
</TABLE>
The Portfolio seeks to achieve its investment objective by
normally investing approximately 30% (within a range of 25%-35%)
of its assets in Underlying Stock Funds and approximately 70%
(within a range of 65%-75%) of its assets in Underlying Bond
Funds. The Portfolio invests all of its assets in shares of the
Underlying Funds and does not invest directly in stocks or bonds
of other issuers.
Please see "Asset Allocation Strategies" on page 3 for a summary
of how the Asset Allocation Committee allocates and reallocates
the Portfolio's assets among particular Underlying Funds.
The Portfolio may concentrate investments in a particular
Underlying Fund by investing more than 25% of its assets in that
Fund.
Based on the Portfolio's equity/fixed income allocation
strategy, it might be suitable for an investor with a shorter time
horizon who seeks a higher level of income combined with some
potential for long-term capital appreciation and has a lower
tolerance for risk and volatility.
--------------------------------------------------------------------------------
Principal Allocation Risk The Portfolio's investment performance depends
Risks upon how its assets are allocated and reallocated among particular
Underlying Funds. A principal risk of investing in the Portfolio
is that the Asset Allocation Committee's allocation techniques and
decisions will not produce the desired results, and the Portfolio
may not achieve its investment objective.
Underlying Fund Risks The value of your investment in the
Portfolio is directly related to the investment performance of the
Underlying Funds in which it invests. Therefore, the principal
risks of investing in the Portfolio are closely related to the
principal risks associated with the Underlying Funds and their
investments. Because the Portfolio's allocation among the
Underlying Funds will vary, your investment may be subject to any
and all of these risks at different times and to different
degrees.
Among the principal risks of the Underlying Funds, which could
adversely affect the net asset value, yield and total return of
the Portfolio, are:
.Interest Rate Risk .Value Securities Risk .Emerging Markets
.Credit Risk .Growth Securities Risk Risk
.High Yield Risk .Smaller Company Risk .Currency Risk
.Mortgage Risk .Liquidity Risk .Focused Investment
.Market Risk .Derivatives Risk Risk
.Issuer Risk .Foreign Investment .Leveraging Risk
Risk .Management Risk
Please see "Summary of Principal Risks" following the Portfolio
Summaries for a description of these and other risks associated
with the Underlying Funds and an investment in the Portfolio.
11 PIMCO Funds: Multi-Manager Series
<PAGE>
30/70 Portfolio (continued)
--------------------------------------------------------------------------------
Performance Shown below is summary performance information for the Portfolio
Information in a bar chart and an Average Annual Total Returns table. The
information provides some indication of the risks of investing in
the Portfolio by showing changes in its performance from year to
year and by showing how the Portfolio's average annual returns
compare with the returns of broad-based securities market indices
and an index of mutual funds. The bar chart and the information to
its right show performance of the Portfolio's Class A shares, but
the returns do not reflect the impact of sales charges (loads). If
they did, the returns would be lower than those shown. Unlike the
bar chart, performance for Class A, B and C shares in the Average
Annual Total Returns table reflects the impact of sales charges.
Past performance is no guarantee of future results.
Calendar Year Total Returns -- Class A
<TABLE>
<S> <C>
More Recent Return
Information
1/1/00-9/30/00 [ ]%
Highest and Lowest
Quarter Returns
(for periods shown
in the bar chart)
--------------------
Highest (10/1/99-
12/31/99)
4.74%
--------------------
Lowest (1/1/99-
3/31/99)
-1.43%
</TABLE>
[GRAPH]
'99 4.64%
Calendar Year End (through 12/31)
Average Annual Total Returns (for periods ended 12/31/99)
<TABLE>
<S> <C> <C>
Portfolio Inception
1 Year (9/30/98)(/4/)
-------------------------------------------------------------------
Class A -0.07% 4.73%
-------------------------------------------------------------------
Class B -1.10% 4.66%
-------------------------------------------------------------------
Class C 2.91% 7.82%
-------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index(/1/) -0.82% -0.39%
-------------------------------------------------------------------
Blended Index(/2/) 6.00% 10.04%
-------------------------------------------------------------------
Lipper General Bond Fund Average(/3/) 1.17% 2.88%
-------------------------------------------------------------------
</TABLE>
(1) The Lehman Brothers Aggregate Bond Index is an unmanaged
index of investment grade, U.S. dollar-denominated fixed
income securities of domestic issuers having a maturity
greater than one year. It is not possible to invest directly
in the index.
(2) The Blended Index represents the blended performance of a
hypothetical index made up of 24% Russell 3000 Index, 6% MSCI
All Country World ex-U.S. Index and 70% Lehman Brothers
Aggregate Bond Index. The Russell 3000 Index is an unmanaged
index of the 3,000 largest U.S. companies based on total
market capitalization. The MSCI All Country World ex-U.S.
Index is an unmanaged index of stocks representing both
developed and emerging markets but excluding the United
States. The Lehman Brothers Aggregate Bond Index is described
above. It is not possible to invest directly in these
indices.
(3) The Lipper General Bond Fund Average is a total return
performance average of funds tracked by Lipper Analytical
Services, Inc. that intend to keep most of their assets in
corporate and government debt issues and do not have any
quality or maturity restrictions. It does not take into
account sales charges.
(4) The Portfolio began operations on 9/30/98. Index comparisons
begin on 9/30/98.
Prospectus 12
<PAGE>
30/70 Portfolio (continued)
--------------------------------------------------------------------------------
These tables describe the fees and expenses you may pay if you buy
and hold Class A, B or C shares of the Portfolio:
Fees and Shareholder Fees (fees paid directly from your investment)
Expenses
of the
Portfolio
<TABLE>
<S> <C> <C>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------
Class A 4.50% 1%(/1/)
------------------------------------------------------------------------------------------------------
Class B None 5%(/2/)
------------------------------------------------------------------------------------------------------
Class C None 1%(/3/)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time of
purchase.
(2) The maximum CDSC is imposed on shares redeemed in the first
year. For shares held longer than one year, the CDSC declines
according to the schedule set forth under "Investment
Options--Class A, B and C Shares--Contingent Deferred Sales
Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares redeemed
in the first year.
Annual Portfolio Operating Expenses (expenses that are deducted
from Portfolio assets)
<TABLE>
<S> <C> <C> <C> <C> <C>
Other Expenses
---------------------------------
Distribution Total Annual
Advisory and/or Service Administrative Underlying Portfolio Operating
Share Class Fees (12b-1) Fees(/1/) Fees(/2/) Fund Expenses(/3/) Expenses
------------------------------------------------------------------------------------------
Class A None 0.25% 0.40% 0.55% 1.20%
------------------------------------------------------------------------------------------
Class B None 1.00 0.40 0.55 1.95
------------------------------------------------------------------------------------------
Class C None 1.00 0.40 0.55 1.95
------------------------------------------------------------------------------------------
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon 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.
(2) The Administrative Fees are subject to a reduction of 0.05%
on average net assets attributable in the aggregate to the
Portfolio's Class A, B, and C shares in excess of $2.5
billion.
(3) Based on estimated expenses for the current fiscal year.
Underlying Fund Expenses for the Portfolio are estimated
based upon a recent allocation of the Portfolio's assets
among Underlying Funds and upon the total annual operating
expenses of Institutional Class shares of these Underlying
Funds. For a listing of the expenses associated with each
Underlying Fund, please see "Management of the Portfolios--
Underlying Fund Expenses." Total Annual Portfolio Operating
Expenses and the Examples set forth below are based on
estimates of the Underlying Fund Expenses the Portfolio will
incur. Actual Underlying Fund Expenses for the Portfolio are
expected to vary with changes in the allocation of the
Portfolio's assets, and may be higher or lower than those
shown above.
Examples. The Examples are intended to help you compare the cost
of investing in Class A, B or C shares of the Portfolio with the
costs of investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the
Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
<TABLE>
<CAPTION>
Example: Assuming you do not
Example: Assuming you redeem your shares at the end of each period redeem your shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share Class Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------
Class A $567 $814 $1,080 $1,839 $567 $814 $1,080 $1,839
-----------------------------------------------------------------------------------------------------------
Class B 698 912 1,252 1,984 198 612 1,052 1,984
-----------------------------------------------------------------------------------------------------------
Class C 298 612 1,052 2,275 198 612 1,052 2,275
-----------------------------------------------------------------------------------------------------------
</TABLE>
13 PIMCO Funds: Multi-Manager Series
<PAGE>
Summary of Principal Risks
The value of your investment in a Portfolio changes with the
values of that Portfolio's investments in the Underlying Funds.
Many factors can affect those values. The factors that are most
likely to have a material effect on a particular Portfolio's
investments as a whole are called "principal risks." The principal
risks of each Portfolio are identified in the Portfolio Summaries
beginning on page 5 and are summarized in this section. There is
no guarantee that a Portfolio will be able to achieve its
investment objective.
Allocation Risk
Each Portfolio's investment performance depends upon how its
assets are allocated and reallocated among particular Underlying
Funds according to the Portfolio's equity/fixed income allocation
targets and ranges. A principal risk of investing in each
Portfolio is that PIMCO Advisors' Asset Allocation Committee will
make less than optimal or poor asset allocation decisions. The
Committee attempts to identify asset classes and sub-classes
represented by the Underlying Funds that will provide consistent,
quality performance for the Portfolios, but there is no guarantee
that the Committee's allocation techniques will produce the
desired results. It is possible that the Committee will focus on
Underlying Funds that perform poorly or underperform other
available Funds under various market conditions. You could lose
money on your investment in a Portfolio as a result of these
allocation decisions.
Underlying Fund Risks
Because each Portfolio invests all of its assets in Underlying
Funds, the risks associated with investing in the Portfolios are
closely related to the risks associated with the securities and
other investments held by the Underlying Funds. The ability of a
Portfolio to achieve its investment objective will depend upon the
ability of the Underlying Funds to achieve their objectives. There
can be no assurance that the investment objective of any
Underlying Fund will be achieved.
Each Portfolio's net asset value will fluctuate in response to
changes in the net asset values of the Underlying Funds in which
it invests. The extent to which the investment performance and
risks associated with a particular Portfolio correlate to those of
a particular Underlying Fund will depend upon the extent to which
the Portfolio's assets are allocated from time to time for
investment in the Underlying Fund, which will vary. A Portfolio's
investment in a particular Underlying Fund may and in some cases
is expected to exceed 25% of its assets. To the extent that a
Portfolio invests a significant portion of its assets in an
Underlying Fund, it will be particularly sensitive to the risks
associated with that Fund.
The following summarizes principal risks associated with
investments in the Underlying Funds and, indirectly, with your
investment in a Portfolio. Each Underlying Fund may be subject to
additional principal risks other than those described below
because the types of investments made by an Underlying Fund can
change over time. The summary is not intended to be exhaustive.
For a more complete description of these risks and the securities
and investment techniques used by the Underlying Funds, please
refer to the Statement of Additional Information and the
Underlying Fund prospectuses, which are incorporated herein by
reference and are available free of charge by telephoning the
Distributor at 1-800-426-0107.
Market The market price of securities owned by an Underlying Fund may go
Risk up or down, sometimes rapidly or unpredictably. Securities may
decline in value due to factors affecting securities markets
generally or particular industries represented in the securities
markets. The value of a security may decline due to general market
conditions which are not specifically related to a particular
company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in
interest or currency rates, or adverse investor sentiment
generally. They may also decline due to factors which affect a
particular industry or industries, such as labor shortages or
increased production costs and competitive conditions within an
industry. Equity securities generally have greater price
volatility than fixed income securities and the Underlying Stock
Funds are particularly sensitive to these market risks.
Issuer
Risk
The value of a security may also decline for a number of reasons
which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the
issuer's goods or services.
Prospectus 14
<PAGE>
Value
Securities Each Underlying Stock Fund may invest in companies that may not be
Risk expected to experience significant earnings growth, but whose
securities the Fund's portfolio manager believes are selling at a
price lower than their true value. PIMCO Equity Income,
Renaissance, Value, Small-Cap Value, Capital Appreciation, Mid-Cap
and Micro-Cap Funds and [PIMCO/Allianz] Select International Fund
place particular emphasis on value securities. Companies that
issue value securities may have experienced adverse business
developments or may be subject to special risks that have caused
their securities to be out of favor. If a portfolio manager's
assessment of a company's prospects is wrong, or if the market
does not recognize the value of the company, the price of its
securities may decline or may not approach the value that the
portfolio manager anticipates.
Growth
Securities Each Underlying Stock Fund may invest in equity securities of
Risk companies that its portfolio manager believes will experience
relatively rapid earnings growth. PIMCO Growth, Target,
Opportunity, Capital Appreciation, Mid-Cap, Micro-Cap, Select
International and Innovation Funds place particular emphasis on
growth securities. Growth securities typically trade at higher
multiples of current earnings than other securities. Therefore,
the values of growth securities may be more sensitive to changes
in current or expected earnings than the values of other
securities.
Smaller
Company The general risks associated with equity securities and liquidity
Risk risk are particularly pronounced for securities of companies with
market capitalizations that are small compared to other publicly
traded companies. These companies may have limited product lines,
markets or financial resources or they may depend on a few key
employees. Securities of smaller companies may trade less
frequently and in lesser volume than more widely held securities
and their values may fluctuate more sharply than other securities.
They may also trade in the over-the-counter market or on a
regional exchange, or may otherwise have limited liquidity. PIMCO
Opportunity, Micro-Cap, Small-Cap Value and Innovation Funds
generally have substantial exposure to this risk. PIMCO Target,
Select International and Mid-Cap Funds also have significant
exposure to this risk because they invest substantial assets in
companies with medium-sized market capitalizations, which are
smaller and generally less-seasoned than the largest companies.
Smaller company risk also applies to fixed income securities
issued by smaller companies and may affect certain investments of
the Underlying Bond Funds.
Liquidity Many of the Underlying Funds are subject to liquidity risk.
Risk Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing a Fund from selling out of
these illiquid securities at an advantageous time or price.
Underlying Funds with principal investment strategies that involve
securities of companies with smaller market capitalizations,
foreign securities, derivatives or securities with substantial
market and/or credit risk tend to have the greatest exposure to
liquidity risk.
Derivatives
Risk Many of the Underlying Funds may, but are not required to, use a
number of derivative instruments for risk management purposes or
as part of their investment strategies. Generally, derivatives are
financial contracts whose value depends upon, or is derived from,
the value of an underlying asset, reference rate or index, and may
relate to stocks, bonds, interest rates, currencies or currency
exchange rates, commodities, and related indexes. Examples of
derivative instruments include options contracts, futures
contracts, options on futures contracts and swap agreements. An
Underlying Fund's use of derivative instruments involves risks
different from, or possibly greater than, the risks associated
with investing directly in securities and other traditional
investments. Also, an Underlying Fund's portfolio manager may
decide not to employ any of these strategies and there is no
assurance that any derivatives strategy used by a Fund will
succeed.
A description of the various derivative instruments in which the
Underlying Funds may invest and the risks associated with each
instrument is included in the Underlying Fund prospectuses and in
the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all
derivative instruments that may be used by the Underlying Funds.
Management Risk Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of
a derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit
of observing the performance of the derivative under all possible
market conditions.
Credit Risk The use of a derivative instrument involves the risk
that a loss may be sustained as a result of the failure of another
party to the contract (usually referred to as a "counterparty") to
make required payments or otherwise comply with the contract's
terms.
15 PIMCO Funds: Multi-Manager Series
<PAGE>
Liquidity Risk Liquidity risk exists when a particular
derivative instrument is difficult to purchase or sell. If a
derivative transaction is particularly large or if the relevant
market is illiquid (as is the case with many privately negotiated
derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage
component, adverse changes in the value or level of the underlying
asset, reference rate or index can result in a loss substantially
greater than the amount invested in the derivative itself. Certain
derivatives have the potential for unlimited loss, regardless of
the size of the initial investment. When an Underlying Fund uses
derivatives for leverage, investments in that Fund will tend to be
more volatile, resulting in larger gains or losses in response to
market changes. To limit leveraging risk, the Underlying Funds
observe asset segregation requirements to cover their obligations
under derivative instruments.
Lack of Availability Because the markets for certain derivative
instruments (including markets located in foreign countries) are
relatively new and still developing, suitable derivatives
transactions may not be available in all circumstances for risk
management or other purposes. There is no assurance that an
Underlying Fund will engage in derivatives transactions at any
time or from time to time. A Fund's ability to use derivatives may
also be limited by certain regulatory considerations.
Market and Other Risks Like most other investments, derivative
instruments are subject to the general risk that the market value
of the instrument will change in a way detrimental to an
Underlying Fund's interest. If a portfolio manager incorrectly
forecasts the values of securities, currencies or interest rates
or other economic factors in using derivatives for an Underlying
Fund, the Fund might have been in a better position if it had not
entered into the transaction at all. While some strategies
involving derivative instruments can reduce the risk of loss, they
can also reduce the opportunity for gain or even result in losses
by offsetting favorable price movements in other investments of an
Underlying Fund. An Underlying Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is
legally required to maintain offsetting positions or asset
coverage in connection with certain derivatives transactions.
Other risks in using derivatives include the risk of mispricing
or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates
and indexes. Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to an Underlying Fund. Also, the
value of derivatives may not correlate perfectly, or at all, with
the value of the assets, reference rates or indexes they are
designed to closely track. In addition, an Underlying Fund's use
of derivatives may also cause the Fund to realize higher amounts
of short-term capital gains (taxed at ordinary income tax rates
when distributed to shareholders who are individuals) than if the
Fund had not used such instruments.
Foreign
Investment Many Underlying Funds (in particular, PIMCO International, Select
Risk International, Structured Emerging Markets, Tax-Efficient
Structured Emerging Markets, Global Bond, Foreign Bond and
Emerging Markets Bond Funds) invest in securities of foreign
issuers, securities traded principally in securities markets
outside the United States and/or securities denominated in foreign
currencies (together, "foreign securities"). These Funds may
experience more rapid and extreme changes in value than Funds that
invest exclusively in securities of U.S. issuers or securities
that trade exclusively in U.S. markets.
The securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small
number of industries. Foreign securities often trade with less
frequency and volume than domestic securities and therefore may
exhibit greater price volatility. Additionally, issuers of foreign
securities are usually not subject to the same degree of
regulation as U.S. issuers. Reporting, accounting and auditing
standards of foreign countries differ, in some cases
significantly, from U.S. standards. Also, nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely
affect an Underlying Fund's investments in a foreign country. In
the event of nationalization, expropriation or other confiscation,
a Fund could lose its entire investment in foreign securities. To
the extent that an Underlying Fund invests a significant portion
of its assets in a narrowly defined geographic area such as
Eastern Europe, South Africa or Asia, the Fund will generally have
more exposure to regional economic risks associated with foreign
investments. Adverse conditions in certain regions (such as
Southeast Asia) can also adversely affect securities of other
countries whose economies appear to be unrelated. In addition,
special U.S. tax considerations may apply to an Underlying Fund's
investment in foreign securities.
Prospectus 16
<PAGE>
Certain Underlying Bond Funds may invest in sovereign debt
issued by governments, their agencies or instrumentalities, or
other government-related entities. Holders of sovereign debt may
be requested to participate in the rescheduling of such debt and
to extend further loans to governmental entities. In addition,
there is no bankruptcy proceeding by which defaulted sovereign
debt may be collected.
Emerging Certain Underlying Funds (in particular, PIMCO Structured Emerging
Markets Markets, Tax-Efficient Structured Emerging Markets and Emerging
Risk Markets Bond Funds) may invest in the securities of issuers based
in countries with developing or "emerging market" economies. These
securities may present market, credit, currency, liquidity, legal,
political and other risks different from, or greater than, the
risks of investing in developed foreign countries.
Currency
Risk Many Underlying Funds may invest directly in foreign currencies or
in securities that trade in, or receive revenues in, foreign
currencies. To the extent that they do so, these Funds are subject
to the risk that those currencies will decline in value relative
to the U.S. dollar, or, in the case of hedging positions, that the
U.S. Dollar will decline in value relative to the currency being
hedged. PIMCO Global Bond, Foreign Bond, Emerging Markets Bond,
International, Select International, Structured Emerging Markets
and Tax-Efficient Structured Emerging Markets Funds are
particularly sensitive to currency risk. Currency rates in foreign
countries may fluctuate significantly over short periods of time
for a number of reasons, including changes in interest rates,
intervention (or the failure to intervene) by U.S. or foreign
governments, central banks or supranational entities such as the
International Monetary Fund, or by the imposition of currency
controls or other political developments in the U.S. or abroad.
For example, significant uncertainty surrounds the introduction of
the euro (a common currency unit for the European Union) in
January 1999 and its effect on the value of securities denominated
in local European currencies. These and other currencies in which
Underlying Fund assets are denominated may be devalued against the
U.S. dollar, resulting in a loss to such Funds.
Focused Focusing Fund investments in a small number of issuers, industries
Investment or foreign currencies increases risk. PIMCO Global Bond, Foreign
Risk Bond and Emerging Markets Bond Funds are "non-diversified," which
means that they invest in a smaller number of issuers than
diversified mutual funds. Other Underlying Funds also normally
invest in a relatively small number of issuers. In addition, many
Underlying Bond Funds may invest a substantial portion of their
assets in the bonds of similar projects or from issuers in the
same state. To the extent that they focus their investments, the
Underlying Funds may have more risk because changes in the value
of a single security or the impact of a single economic, political
or regulatory occurrence may have a greater adverse impact on the
Underlying Fund's net asset value. Some of those investments also
may present substantial credit or other risks. PIMCO
International, Select International, Structured Emerging Markets,
Tax-Efficient Structured Emerging Markets, Global Bond, Foreign
Bond and Emerging Markets Bond Funds may be subject to increased
risk to the extent they focus their assets in securities
denominated in a particular foreign currency or in a narrowly
defined geographic area outside the U.S., because companies in
these areas may share common characteristics and react similarly
to market developments. Similarly, PIMCO Innovation Fund is
vulnerable to events affecting companies which use innovative
technologies to gain a strategic, competitive advantage in their
industry and companies that provide and service those technologies
because it normally concentrates its investments in those
companies. Also, the Underlying Funds may from time to time have
greater risk to the extent they invest a substantial portion of
their assets in related industries such as "technology" or
"financial and business services," which may share common
characteristics and react similarly to market developments.
Although each Portfolio normally invests in a number of different
Underlying Funds, to the extent that a Portfolio concentrates a
significant portion of its assets in a single Underlying Fund, it
will be particularly sensitive to the risks associated with that
Fund and any investments in which that Fund concentrates.
Leveraging Certain Underlying Funds may engage in transactions or purchase
Risk instruments that give rise to forms of leverage. Such transactions
and instruments may include, among others, the use of reverse
repurchase agreements and other borrowings, the investment of
collateral from loans of portfolio securities, or the use of when-
issued, delayed-delivery or forward commitment transactions. An
Underlying Fund's use of derivatives may also involve leverage.
Leverage, including borrowing, will cause the value of an
Underlying Fund's shares to be more volatile that if the Fund did
not use leverage. This is because leverage tends to exaggerate the
effect of any increase or decrease in the value of a Fund's
portfolio securities. The use of leverage may also cause an
Underlying Fund to liquidate portfolio positions when it may not
be advantageous to do so in order to satisfy its obligations or to
meet segregation requirements.
17 PIMCO Funds: Multi-Manager Series
<PAGE>
Interest All of the Underlying Funds that invest in fixed income
Rate Risk securities, and particularly the Underlying Bond Funds, are
subject to interest rate risk. Changes in the market values of
fixed income securities are largely a function of changes in the
current level of interest rates. The value of an Underlying Fund's
investments in fixed income securities will typically change as
the level of interest rates fluctuate. During periods of declining
interest rates, the value of fixed income securities generally
rise. Conversely, during periods of rising interest rates, the
value of fixed income securities generally decline.
"Duration" is one measure of the expected life of a fixed income
security that is used to determine the sensitivity of a security's
price to changes in interest rates. Securities with longer
durations tend to be more sensitive to changes in interest rates,
usually making them more volatile than securities with shorter
durations. Accordingly, Underlying Bond Funds with longer average
portfolio durations (e.g., PIMCO Long-Term U.S. Government Fund)
will generally be more sensitive to changes in interest rates than
Funds with shorter average portfolio durations (e.g., PIMCO Money
Market, Short-Term and Low Duration Funds). Also, some portfolios
(e.g., those with mortgage-backed and other prepayable securities)
have changing durations and may have increasing durations
precisely when that is least advantageous (i.e., when interest
rates are rising).
Many Underlying Funds, including most of the Underlying Bond
Funds, may invest in securities that are particularly sensitive to
fluctuations in prevailing interest rates and have relatively high
levels of interest rate risk. These include various mortgage-
related securities (for instance, the interest-only or "IO" class
of a stripped mortgage-backed security) and "zero coupon"
securities (fixed income securities, including certain U.S.
Government securities, that do not make periodic interest payments
and are purchased at a discount from their value at maturity).
Credit All of the Underlying Funds are subject to credit risk. This is
Risk the risk that the issuer or the guarantor of a fixed income
security, or the counterparty to a derivatives contract,
repurchase agreement or a loan of portfolio securities, will be
unable or unwilling to make timely principal and/or interest
payments, or to otherwise honor its obligations. Securities are
subject to varying degrees of credit risk, which are often
reflecting in credit ratings provided by rating agencies such as
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Ratings Services ("S&P").
The Underlying Funds that invest in fixed income securities
(particularly the Underlying Bond Funds) are subject to varying
degrees of risk that the issuers of the securities will have their
credit ratings downgraded or will default, potentially reducing
the Underlying Fund's share price and income level. Nearly all
fixed income securities are subject to some credit risk, whether
the issuers of the securities are corporations, states and local
governments or foreign governments. Even certain U.S. Government
securities are subject to credit risk.
High High yield securities (commonly known as "junk bonds") are fixed
Yield income securities rated lower than Baa by Moody's or BBB by S&P,
Risk or unrated securities determined to be of comparable quality.
Underlying Bond Funds which invest in high yield securities (in
particular, PIMCO High Yield and Emerging Markets Bond Funds) may
be subject to greater volatility and higher levels of credit,
liquidity and other risks than Funds that invest exclusively in
higher quality fixed income securities (e.g., PIMCO Money Market
and Long-Term U.S. Government Funds). High yield securities are
considered predominately speculative with respect to the issuer's
continuing ability to make principal and interest payments (credit
risk). High yield securities may also be more susceptible to real
or perceived adverse economic and competitive industry conditions
than higher quality fixed income securities. An economic downturn
or period of rising interest rates could adversely affect the
market for high yield securities and reduce an Underlying Bond
Fund's ability to sell its high yield securities (liquidity risk).
Mortgage Most of the Underlying Bond Funds may invest in mortgage-related
Risk securities. Rising interest rates tend to extend the duration of
mortgage-related securities, making them more sensitive to changes
in interest rates. As a result, in a period of rising interest
rates, an Underlying Fund that holds mortgage-related securities
may exhibit additional volatility. This is sometimes referred to
as extension risk. In addition, mortgage-related securities may
involve special risks relating to unanticipated rates of
prepayment on the mortgages underlying the securities. This is
sometimes referred to as prepayment risk. Declining interest rates
may tend to increase prepayments, and these prepayments would have
to be reinvested at the then-prevailing lower interest rates.
Therefore, an Underlying Fund that holds mortgage-related
securities may have less potential for capital appreciation during
periods of declining interest rates than Funds that invest in
other types of fixed income securities of similar maturities.
Prospectus 18
<PAGE>
Management
Risk Each Underlying Fund is subject to management risk because it is
an actively managed investment portfolio. PIMCO Advisors, Pacific
Investment Management Company LLC, and the sub-advisers and
individual portfolio managers of the Underlying Funds will apply
investment techniques and risk analyses in making investment
decisions for the Funds, but there can be no guarantee that they
will produce the desired results.
A Note on Each Portfolio may invest in PIMCO StocksPLUS Fund. While the
PIMCO investment objective of that Fund is to achieve a total return
StocksPLUS which exceeds the total return performance of the S&P 500 Index,
Fund it does so by investing substantially all of its assets in a
combination of equity-based (S&P 500 Index) derivative
instruments, backed by a portfolio of fixed income securities.
Consequently, the risks of investing in the Fund include
derivatives risk and the risks generally associated with the
Underlying Bond Funds. To the extent that the Fund invests in S&P
500 Index derivatives backed by a portfolio of fixed income
securities, under certain conditions, generally in a market where
the value of both S&P 500 Index derivatives and fixed income
securities are declining, the Fund may experience greater losses
than would be the case if it were to invest directly in a
portfolio of S&P 500 Index stocks.
19 PIMCO Funds: Multi-Manager Series
<PAGE>
Investment Objectives and Principal Investment Strategies
The investment objective and principal investment strategies of
each Portfolio are described below. There can be no assurance that
the investment objective of any Portfolio will be achieved.
Because the market value of each Portfolio's investments will
change, the net asset value per share of each Portfolio will also
vary.
The Portfolios are intended for investors who prefer to have
their asset allocation decisions made by professional money
managers. Each Portfolio seeks to achieve its investment objective
by investing within specified equity and fixed income ranges among
the Underlying Funds. Each Underlying Fund is a series of the
Trust or PIMCO Funds: Pacific Investment Management Series and is
managed by PIMCO Advisors and/or its affiliates.
Portfolio 90/10 Portfolio seeks long-term capital appreciation. Under normal
Descriptionsconditions, approximately 90% of the Portfolio's assets will be
allocated among Underlying Stock Funds and 10% among Underlying
Bond Funds.
60/40 Portfolio seeks long-term capital appreciation and current
income. Under normal conditions, approximately 60% of the
Portfolio's assets will be allocated among Underlying Stock Funds
and 40% among Underlying Bond Funds.
30/70 Portfolio seeks current income. Long-term capital
appreciation is a secondary objective. Under normal conditions,
approximately 30% of the Portfolio's assets will be allocated
among Underlying Stock Funds and 70% among Underlying Bond Funds.
PIMCO Advisors serves as the investment adviser to the
Portfolios. PIMCO Advisors' Asset Allocation Committee determines
how each Portfolio allocates and reallocates its assets among the
Underlying Funds according to the Portfolio's equity/fixed income
allocation targets and ranges. Please see "Asset Allocation
Strategies" in the Summary Information section above for a
description of the allocation strategies and techniques used by
the Committee. The table below illustrates the equity and fixed
income allocation targets and typical ranges for each Portfolio
under normal market conditions.
Equity and Fixed Income Targets and Ranges
(as a percentage of each Portfolio's total investments)
<TABLE>
<CAPTION>
Typical
PIMCO Funds Target Allocation
Asset Allocation Series Allocation Range
--------------------------------------------------------
<S> <C> <C>
90/10 Portfolio
Equity--Underlying Stock Funds 90% 80% - 100%
Fixed Income--Underlying Bond Funds* 10% 0% - 20%
--------------------------------------------------------
60/40 Portfolio
Equity--Underlying Stock Funds 60% 50% - 70%
Fixed Income--Underlying Bond Funds* 40% 30% - 50%
--------------------------------------------------------
30/70 Portfolio
Equity--Underlying Stock Funds 30% 25% - 35%
Fixed Income--Underlying Bond Funds* 70% 65% - 75%
</TABLE>
* The Fixed Income portion may include a money market component
through investments in PIMCO Money Market Fund.
Prospectus 20
<PAGE>
Each Portfolio invests all of its assets in Underlying Funds and
may invest in any or all of the Funds. However, it is expected
that a Portfolio will invest in only some of the Underlying Funds
at any particular time. A Portfolio's investment in a particular
Underlying Fund may exceed 25% of the Portfolio's total assets. To
the extent that a Portfolio invests a significant portion of its
assets in an Underlying Fund, it will be particularly sensitive to
the risks associated with that Fund. The particular Underlying
Funds in which each Portfolio may invest, the equity and fixed
income allocation targets and ranges specified above, and the
percentage of each Portfolio's assets invested from time to time
in any Underlying Fund or combination of Funds may be changed from
time to time without the approval of the Portfolio's shareholders.
Each Portfolio is also subject to certain investment restrictions
that are described under "Investment Restrictions" in the
Statement of Additional Information.
Equity The equity portion of each Portfolio will be allocated among a
Portion number of Underlying Stock Funds which represent a broad range of
of the equity-based asset classes and sub-classes and a variety of
Portfolios investment objectives and strategies. By allocating assets among
these Funds, the equity portions of the Portfolios can be
diversified in multiple ways, including the following:
By Investment Style/Category
.Growth
.Blend (Broad Market)
.Value
.Enhanced Index
.Sector-Related
By Region
.U.S. Equities
.International Developed Markets Equities
.International Emerging Markets Equities
By Size
.Large-Cap
.Mid-Cap
.Small-Cap
For a description of the Underlying Stock Funds and their
investment objectives and strategies, please see "Underlying
Funds."
Fixed The fixed income portion of each Portfolio will be allocated among
Income a number of Underlying Bond Funds which represent a broad range of
Portion fixed income-based asset classes and sub-classes and a variety of
of the investment objectives and strategies. By allocating assets among
Portfolios these Funds, the fixed income portions of the Portfolios can be
diversified in multiple ways, including the following:
By Sector/Investment Specialty
.Governments
.Mortgages
.Corporate
.Inflation-Indexed
By Region
.U.S. Fixed Income
.Developed Foreign Fixed Income
.Emerging Markets Fixed Income
By Credit Quality
.Investment Grade/Money Market
.Medium Grade
.High Yield
By Duration
.Long-Term
.Intermediate-Term
.Short-Term
21 PIMCO Funds: Multi-Manager Series
<PAGE>
For a description of the Underlying Bond Funds and their
investment objectives and strategies, please see "Underlying
Funds."
Temporary In response to unfavorable market and other conditions, each
Defensive Portfolio may invest up to 100% of its assets in PIMCO Money
Strategies Market Fund (and may deviate from its asset allocation range) for
temporary defensive purposes. A Portfolio may also borrow money
for temporary or emergency purposes. These temporary strategies
would be inconsistent with the Portfolio's investment objective
and principal investment strategies and may adversely affect the
Portfolio's ability to achieve its investment objective.
Portfolio A change in the securities held by a Portfolio is known as
Turnover "portfolio turnover." Because PIMCO Advisors does not expect to
reallocate the Portfolios' assets among the Underlying Funds on a
frequent basis, the portfolio turnover rates for the Portfolios
are expected to be modest (i.e., less than 25%) in comparison to
most mutual funds. However, the Portfolios' indirectly bear the
expenses associated with portfolio turnover of the Underlying
Funds, a number of which have fairly high portfolio turnover rates
(i.e., in excess of 100%). High portfolio turnover involves
correspondingly greater expenses to an Underlying Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other
securities. Shareholders in the Portfolios may also bear expenses
directly or indirectly through sales of securities held by the
Portfolios and the Underlying Funds which result in realization of
taxable capital gains. To the extent such gains relate to
securities held for twelve months or less, such gains will be
short-term capital gains taxed at ordinary income tax rates when
distributed to shareholders who are individuals. The trading costs
and tax effects associated with portfolio turnover may adversely
affect a Portfolio's performance and the return to shareholders.
Changes The investment objective, equity/fixed income allocation targets
in and ranges, and, unless otherwise noted, other investment policies
Investment of each Portfolio described in this Prospectus may be changed by
Objectives the Board of Trustees without shareholder approval. If there is a
and change in a Portfolio's investment objective, allocation target or
Policies range, or other investment policies, shareholders should consider
whether the Portfolio remains an appropriate investment in light
of their then current financial positions and needs.
Prospectus 22
<PAGE>
Underlying Funds
Each Portfolio invests all of its assets in Underlying Funds.
Accordingly, each Portfolio's investment performance depends upon
a favorable allocation among the Underlying Funds as well as the
ability of the Underlying Funds to achieve their objectives. There
can be no assurance that the investment objective of any
Underlying Fund will be achieved. Shares of the Underlying Funds
are not offered in this Prospectus.
Advisory
ArrangementsPIMCO Advisors serves as investment adviser for each of the
for the Underlying Stock Funds, except that its affiliate, Pacific
Underlying Investment Management Company, is the sole investment adviser to
Funds PIMCO StocksPLUS Fund. The PIMCO Equity Advisors division of PIMCO
Advisors manages the investments of several of the Underlying
Stock Funds. PIMCO Advisors retains sub-advisory firms to manage
the portfolios of other Underlying Stock Funds. These firms
include PIMCO/Allianz International Advisors LLC, Cadence Capital
Management, NFJ Investment Group and Parametric Portfolio
Associates, each of which is an affiliate of PIMCO Advisors, and
Blairlogie Capital Management, which is not an affiliate. Pacific
Investment Management Company LLC is the sole investment adviser
to each of the Underlying Bond Funds. For a complete description
of the advisory and sub-advisory arrangements for the Underlying
Funds, please see the Statement of Additional Information and the
Underlying Fund prospectuses, which are incorporated herein by
reference and are available free of charge by telephoning the
Distributor at 1-800-426-0107.
Underlying The following provides a concise description of the investment
Stock objective, main investments and other information about each
Funds Underlying Stock Fund. For a complete description of these Funds,
please see the Underlying Fund prospectuses, which are
incorporated herein by reference and are available free of charge
by telephoning the Distributor at 1-800-426-0107.
<TABLE>
<CAPTION>
Approximate Approximate
PIMCO Investment Main Number of Capitalization
Fund Objective Investments Holdings Range
----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C>
Growth Stock Growth Long-term growth of Common stocks of 35-40 At least $5 billion
Funds capital; companies with market
income is an capitalizations of at
incidental least $5 billion
consideration
--------------------------------------------------------------------------------------------------------
Target Capital appreciation; Common stocks of 40-60 Between $1 billion
no companies with market and $10 billion
consideration is capitalizations of
given to income between $1 billion and
$10 billion
--------------------------------------------------------------------------------------------------------
Opportunity Capital appreciation; Common stocks of 60-100 Between $100 million
no companies with market and $2 billion
consideration is capitalizations of
given to income between $100 million and
$2 billion
----------------------------------------------------------------------------------------------------------------------
Blend Stock Capital Appreciation Growth of capital Common stocks of 60-100 At least $1 billion
Funds companies with market
capitalizations of at
least $1 billion that
have improving
fundamentals and whose
stock is reasonably
valued by the market
--------------------------------------------------------------------------------------------------------
Mid-Cap Growth of capital Common stocks of 60-100 More than $500 million
companies with market (excluding the
capitalizations of more largest 200
than $500 million companies)
(excluding the largest
200 companies) that have
improving fundamentals
and whose stock is
reasonably valued by the
market
--------------------------------------------------------------------------------------------------------
Micro-Cap Long-term growth of Common stocks of 60-100 Less than
capital companies with market $250 million
capitalizations of less
than $250 million that
have improving
fundamentals and whose
stock is reasonably
valued by the market
</TABLE>
23 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Approximate Approximate
PIMCO Investment Main Number of Capitalization
Fund Objective Investments Holdings Range
---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C>
Value Stock Equity Income Current income as a Income-producing common 40-50 More than $2 billion
Funds primary objective; stocks of companies
long-term growth of with market
capital as a capitalizations of more
secondary objective than $2 billion
-----------------------------------------------------------------------------------------------------------
Renaissance Long-term growth of Common stocks of 50-80 All capitalizations
capital companies with below-
and income average valuations
whose business
fundamentals are
expected to improve
-----------------------------------------------------------------------------------------------------------
Value Long-term growth of Common stocks of 40 More than $5 billion
capital companies with market
and income capitalizations of more
than $5 billion that
are undervalued
relative to the market
and their industry
groups
-----------------------------------------------------------------------------------------------------------
Small-Cap Value Long-term growth of Common stocks of 100 Between $100 million
capital companies with market and $1.5 billion
and income capitalizations of
between $100 million
and $1.5 billion and
below-average price-to-
earnings ratios
relative to the market
and their industry
groups
---------------------------------------------------------------------------------------------------------------------------
Enhanced Index Tax-Efficient Equity Maximum after-tax A broadly diversified More than More than $5 billion
Stock Funds growth of capital portfolio of at least 200
200 common stocks of
companies represented
in the S&P 500 Index
with market
capitalizations of more
than $5 billion
-----------------------------------------------------------------------------------------------------------
Enhanced Equity A total return which Common stocks 100-200 At least $5 billion
equals or exceeds the represented in the S&P
total return 500 Index with market
performance of an capitalizations of more
index (currently the than $5 billion
S&P 500 Index) that
represents the
performance of a
reasonably broad
spectrum of common
stocks that are
publicly traded in
the U.S.
-----------------------------------------------------------------------------------------------------------
StocksPLUS Total return that S&P 500 stock index N/A N/A
exceeds that derivatives backed by a
of the S&P 500 Index portfolio of short-term
fixed income securities
---------------------------------------------------------------------------------------------------------------------------
International International Capital appreciation Common stocks of 200-250 More than $500 million
Stock Funds through investment in foreign (non-U.S.)
an international issuers (developed and
portfolio; income is emerging markets)
an incidental with market
consideration capitalizations of more
than $500 million
-----------------------------------------------------------------------------------------------------------
Select International Capital appreciation An international 50-100 At least $2 billion
portfolio of
common stocks
-----------------------------------------------------------------------------------------------------------
Structured Emerging Long-term growth of Common stocks of More than All
Markets capital companies located in, 300 capitalizations
or whose business
relates to, emerging
markets
-----------------------------------------------------------------------------------------------------------
Tax-Efficient Structured Long-term growth of Common stocks of More than All
Emerging Markets capital. The Fund companies located in, 300 capitalizations
also seeks to achieve or whose business
superior after-tax relates to, emerging
returns for its markets
shareholders by using
a variety of tax-
efficient management
strategies
---------------------------------------------------------------------------------------------------------------------------
Sector-Related Innovation Capital appreciation; Common stocks of 40 More than $200 million
Stock Funds no technology-related
consideration is companies with market
given to income capitalizations of more
than $200 million
</TABLE>
Prospectus 24
<PAGE>
Underlying The investment objective of each Underlying Bond Fund (except as
Bond provided below) is to seek to realize maximum total return,
Funds consistent with preservation of capital and prudent investment
management. The "total return" sought by most of the Underlying
Bond Funds will consist of income earned on the Fund's
investments, plus capital appreciation, if any, which generally
arises from decreases in interest rates or improving credit
fundamentals for a particular sector or security. The investment
objective of PIMCO Real Return Bond Fund is to seek to realize
maximum real return, consistent with preservation of real capital
and prudent investment management. "Real return" is a measure of
the change in purchasing power of money invested in a particular
investment after adjusting for inflation. The investment objective
of each of PIMCO Money Market Fund and PIMCO Short-Term Fund is to
seek to obtain maximum current income, consistent with
preservation of capital and daily liquidity. PIMCO Money Market
Fund also attempts to maintain a stable net asset value of $1.00
per share, although there can be no assurance that it will be
successful in doing so.
The following provides a concise description of the main
investments of and other information relating to each Underlying
Bond Fund. For a complete description of these Funds, please see
the Underlying Fund prospectus for PIMCO Funds: Pacific Investment
Management Series, which is incorporated herein by reference and
is available free of charge by telephoning the Distributor at
1-800-426-0107.
<TABLE>
<CAPTION>
Non-U.S. Dollar
Denominated
PIMCO Fund Main Investments Duration Credit Quality(/1/) Securities(/2/)
-----------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C>
Short Money Market Money market instruments 90 days dollar- Min 95% Aaa or Prime 1;
Duration Bond weighted 5% Aa or Prime 2
Funds average maturity (Greater than or
(Greater than Equal to)
or Equal to)
---------------------------------------------------------------------------------------------
Short-Term Money market instruments 0-1 yr B to Aaa; max 10% 0-5%
and below Baa
short maturity fixed
income
securities
---------------------------------------------------------------------------------------------
Low Duration Short maturity fixed 1-3 yrs B to Aaa; max 10% 0-20%
income below Baa
securities
-----------------------------------------------------------------------------------------------------------
Intermediate Moderate Duration Short and intermediate 2-5 yrs B to Aaa; max 10% 0-20%
Duration maturity below Baa
Bond Funds fixed income securities
---------------------------------------------------------------------------------------------
Total Return Intermediate maturity 3-6 yrs B to Aaa; max 10% 0-20%
fixed income securities below Baa
---------------------------------------------------------------------------------------------
Total Return II Intermediate maturity 3-6 yrs Baa to Aaa 0%
fixed
income securities with
quality
and foreign issuer
restrictions
-----------------------------------------------------------------------------------------------------------
Long Duration Long-Term U.S. Long-term maturity fixed 8 yrs A to Aaa 0%
Bond Funds Government income (Lesser than
securities or Equal to)
-----------------------------------------------------------------------------------------------------------
International Global Bond U.S. and foreign 3-7 yrs B to Aaa; max 10% 25-75%
Bond Funds intermediate below Baa
maturity fixed income
securities
---------------------------------------------------------------------------------------------
Foreign Bond Intermediate maturity 3-7 yrs B to Aaa; max 10% 85%
hedged below Baa (Lesser than
foreign fixed income or Equal to)
securities
---------------------------------------------------------------------------------------------
Emerging Markets Emerging market fixed 0-8 yrs B to Aaa 80%
Bond income (Lesser than
securities or Equal to)
-----------------------------------------------------------------------------------------------------------
High Yield High Yield Higher yielding fixed 2-6 yrs B to Aaa; min 65% 0%
Bond Funds income below Baa
securities
-----------------------------------------------------------------------------------------------------------
Inflation Real Return Bond Inflation-indexed fixed N/A B to Aaa; max 10% 0-35%
Indexed Bond income below Baa
Funds securities
</TABLE>
1. As rated by Moody's Investors Service, Inc., or equivalently
rated by Standard & Poor's Rating Services, or if unrated, de-
termined by Pacific Investment Management Company to be of com-
parable quality.
2. Percentage limitations relate to non-U.S. dollar-denominated
securities for all Underlying Bond Funds except PIMCO Global
Bond, Foreign Bond and Emerging Markets Bond Funds. Percentage
limitations for these three Funds relate to securities of non-
U.S. issuers, denominated in any currency. Each Underlying Bond
Fund (except PIMCO Total Return II and Long-Term U.S. Government
Funds) may invest beyond these limits in U.S. dollar-denominated
securities of non-U.S. issuers.
Each Underlying Bond Fund invests at least 65% of its assets in
the following types of securities, which, unless provided above,
may be issued by domestic or foreign entities and denominated in
U.S. dollars or foreign currencies: securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities"); corporate debt
securities, including convertible securities and corporate
commercial paper; mortgage-backed and other asset-backed
securities; inflation-indexed bonds issued by both governments and
corporations; structured notes, including hybrid or "indexed"
securities, catastrophe bonds and loan participations; delayed
funding loans and revolving
25 PIMCO Funds: Multi-Manager Series
<PAGE>
credit facilities; bank certificates of deposit, fixed time
deposits and bankers' acceptances; repurchase agreements and
reverse repurchase agreements; debt securities issued by states or
local governments and their agencies, authorities and other
instrumentalities; obligations of foreign governments or their
subdivisions, agencies and instrumentalities; and obligations of
international agencies or supranational entities.
Other In addition to purchasing the securities listed above under "Main
Investment Investments," some or all of the Underlying Funds may to varying
Practices extents: lend portfolio securities; enter into repurchase
of the agreements and reverse repurchase agreements; purchase and sell
Underlying securities on a when-issued or delayed delivery basis; enter into
Funds forward commitments to purchase securities; purchase and write
call and put options on securities and securities indexes; enter
into futures contracts, options on futures contracts and swap
agreements; invest in foreign securities; and buy or sell foreign
currencies and enter into forward foreign currency contracts.
These and the other types of securities and investment techniques
used by the Underlying Funds all have attendant risks. The
Portfolios are indirectly subject to some or all of these risks to
varying degrees because they invest all of their assets in the
Underlying Funds. For further information concerning the
investment practices of and risks associated with the Underlying
Funds, please see "Investment Objectives and Policies" in the
Statement of Additional Information and the Underlying Fund
prospectuses, which are incorporated herein by reference and are
available free of charge by telephoning the Distributor at 1-800-
426-0107.
Additional
Underlying Funds
In addition to the Funds listed above, a Portfolio may invest in
additional Underlying Funds, including those that may become
available for investment in the future, at the discretion of PIMCO
Advisors and without shareholder approval.
Other Risk Information
Potential PIMCO Advisors has broad discretion to allocate and reallocate the
Conflicts Portfolios' assets among the Underlying Funds consistent with the
of Portfolios' investment objectives and policies and asset
Interest allocation targets and ranges. Although PIMCO Advisors does not
charge an investment advisory fee for its asset allocation
services, PIMCO Advisors and its affiliates indirectly receive
fees (including investment advisory and administrative fees) from
the Underlying Funds in which the Portfolios invest. In this
regard, PIMCO Advisors has a financial incentive to invest a
Portfolio's assets in Underlying Funds with higher fees than other
Funds, even if it believes that alternate investments would better
serve the Portfolio's investment program. PIMCO Advisors is
legally obligated to disregard that incentive in making asset
allocation decisions for the Portfolios. The Trustees and officers
of the Trust may also have conflicting interests in fulfilling
their fiduciary duties to both the Portfolios and the Underlying
Funds of the Trust.
Prospectus 26
<PAGE>
Management of the Portfolios
Investment
Adviser
and
Administrator
PIMCO Advisors serves as the investment adviser and the
administrator (serving in its capacity as administrator, the
"Administrator") for the Portfolios. Subject to the supervision of
the Board of Trustees, PIMCO Advisors is responsible for managing,
either directly or through others selected by it, the investment
activities of the Portfolios and the Portfolios' business affairs
and other administrative matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport
Beach, California 92660. Organized in 1987, PIMCO Advisors
provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual
funds. As of September 30, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $[ ] billion in assets under
management.
PIMCO Advisors has retained its affiliate, Pacific Investment
Management Company LLC, to provide various administrative and
other services required by the Portfolios in its capacity as sub-
administrator. PIMCO Advisors and the sub-administrator may retain
other affiliates to provide certain of these services.
Asset
Allocation PIMCO Advisors selects the Underlying Funds in which the
Committee Portfolios may invest. PIMCO Advisors' Asset Allocation Committee
is responsible for determining how the Portfolios' assets are
allocated and reallocated from time-to-time among the Underlying
Funds selected by PIMCO Advisors. The following provides
information about the individuals who comprise the Asset
Allocation Committee and are primarily responsible for making
asset allocation and other investment decisions for the
Portfolios.
<TABLE>
<CAPTION>
Asset Allocation
Committee Member Since Recent Professional Experience
----------------------------------------------------------------------------------------------
<S> <C> <C>
Udo Frank May, 2000 Managing Director and Chief Investment Officer of Allianz Asset
Advisory and Management GmbH, responsible for the entire investment
area (since 1997), and Chief Executive Officer and Chief Investment
Officer of Allianz PIMCO Asset Management. Previously, he served as
the Chief Investment Officer of Allianz KAG since 1994.
Kenneth W. May, 2000 Managing Director and Chief Investment Officer of the PIMCO Equity
Corba Advisors Division of PIMCO Advisors. Prior to joining PIMCO
Advisors, he was with Eagle Asset Management from 1995 to 1998,
serving in various capacities including as Chief Investment Officer
and Portfolio Manager. He was with Stein Roe & Farnham Inc. from
1984 to 1995.
Colin Glinsman May, 2000 Chief Investment Officer of Oppenheimer Capital since 1999.
Previously, he served as a portfolio manager and research analyst
at Oppenheimer Capital from 1989 to 1999.
John Hague May, 2000 Managing Director of Pacific Investment Management Company LLC,
where he is a member of the Executive Committee and a senior member
of the Portfolio Management and Investment Strategy Groups. He
joined Pacific Investment Management Company LLC in 1987.
John Loftus May, 2000 Managing Director of Pacific Investment Management Company LLC,
where he is a senior member of its Investment Strategy Group. He
also heads the firm's product management area. He joined Pacific
Investment Management Company LLC in 1986.
</TABLE>
Advisory
Fees The Portfolios do not pay any fees to PIMCO Advisors under the
Trust's investment advisory agreement in return for the advisory
and asset allocation services provided by PIMCO Advisors. The
Portfolios do, however, indirectly pay their proportionate share
of the advisory fees paid to PIMCO Advisors and Pacific Investment
Management Company LLC by the Underlying Funds in which the
Portfolios invest. See "Underlying Fund Expenses" below.
Administrative
Fees
Each Portfolio pays for the administrative services it requires
under a fee structure which is essentially fixed. Class A, Class B
and Class C shareholders of each Portfolio pay an administrative
fee to PIMCO Advisors, computed as a percentage of the Portfolio's
assets attributable in the aggregate to those classes of shares.
PIMCO Advisors, in turn, provides or procures administrative
services for Class A, Class B and Class C shareholders and also
bears the costs of various third-party services required by the
Portfolios, including audit, custodial, portfolio accounting,
legal, transfer agency and printing costs.
Each Portfolio pays monthly administrative fees to PIMCO
Advisors at an annual rate of 0.40% based on the average daily net
assets attributable in the aggregate to the Portfolio's Class A,
Class B and Class C shares up to $2.5 billion, and 0.35% based on
such average daily net assets in excess of $2.5 billion. The
Portfolios also indirectly pay their proportionate share of the
administrative fees charged by PIMCO Advisors and Pacific
Investment Management Company LLC to the Underlying Funds in which
the Portfolios invest. See "Underlying Fund Expenses" below.
27 PIMCO Funds: Multi-Manager Series
<PAGE>
Underlying The expenses associated with investing in a "fund of funds," such
Fund as the Portfolios, are generally higher than those for mutual
Expenses funds that do not invest primarily in other mutual funds. This is
because shareholders in a "fund of funds" indirectly pay a portion
of the fees and expenses charged at the underlying fund level.
The Portfolios are structured in the following ways to lessen
the impact of expenses incurred at the Underlying Fund level:
. The Portfolios do not pay any fees for asset allocation or
advisory services under the Trust's investment advisory
agreement.
. The Underlying Funds invest in Institutional Class shares of the
Underlying Funds, which are not subject to any sales charges or
12b-1 fees.
The following table summarizes the annual expenses borne by
Institutional Class shareholders of the Underlying Funds (based on
estimates for the current fiscal year). Because the Portfolios
invest in Institutional Class shares of the Underlying Funds,
shareholders of each Portfolio indirectly bear a proportionate
share of these expenses, depending upon how the Portfolio's assets
are allocated from time to time among the Underlying Funds. See
"Fees and Expenses of the Portfolio" in each Portfolio Summary
above.
<TABLE>
<CAPTION>
Annual Underlying Fund Expenses
(Based on the average daily net assets
attributable to a Fund's Institutional
Class shares):
Advisory Admini- Total Fund
Underlying Fund Fees strative Fees Operating Expenses
----------------------------------------------------------------
<S> <C> <C> <C>
PIMCO Growth 0.50% 0.25% 0.75%
----------------------------------------------------------------
PIMCO Target 0.55 0.25 0.80
----------------------------------------------------------------
PIMCO Opportunity 0.65 0.25 0.90
----------------------------------------------------------------
PIMCO Capital
Appreciation 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Mid-Cap 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Micro-Cap 1.25 0.25 1.50
----------------------------------------------------------------
PIMCO Equity Income 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Renaissance 0.60 0.25 0.85
----------------------------------------------------------------
PIMCO Value 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Small-Cap Value 0.60 0.25 0.85
----------------------------------------------------------------
PIMCO Tax-Efficient
Equity 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO Enhanced Equity 0.45 0.25 0.70
----------------------------------------------------------------
PIMCO StocksPLUS 0.40 0.25 0.65
----------------------------------------------------------------
PIMCO International 0.55 0.50 1.05
----------------------------------------------------------------
PIMCO/Allianz Select
International 0.75 0.50 1.25
----------------------------------------------------------------
PIMCO Structured Emerging
Markets 0.45 0.50 0.95
----------------------------------------------------------------
PIMCO Tax-Efficient
Structured Emerging
Markets 0.45 0.50 0.95
----------------------------------------------------------------
PIMCO Innovation 0.65 0.25 0.90
----------------------------------------------------------------
PIMCO Money Market 0.15 0.20 0.35
----------------------------------------------------------------
PIMCO Short-Term 0.25 0.20 0.45
----------------------------------------------------------------
PIMCO Low Duration 0.25 0.18 0.43
----------------------------------------------------------------
PIMCO Moderate Duration 0.25 0.20 0.45
----------------------------------------------------------------
PIMCO Total Return 0.25 0.18 0.43
----------------------------------------------------------------
PIMCO Total Return II 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Long-Term U.S.
Government 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Global Bond 0.25 0.30 0.55
----------------------------------------------------------------
PIMCO Foreign Bond 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Emerging Markets
Bond 0.45 0.40 0.85
----------------------------------------------------------------
PIMCO High Yield 0.25 0.25 0.50
----------------------------------------------------------------
PIMCO Real Return Bond 0.25 0.27 0.52
</TABLE>
Prospectus 28
<PAGE>
Distributor The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly
owned subsidiary of PIMCO Advisors. The Distributor, located at
2187 Atlantic Street, Stamford, CT 06902, is a broker-dealer
registered with the Securities and Exchange Commission.
Investment Options -- Class A, B and C Shares
The Trust offers investors Class A, Class B and Class C shares of
each Portfolio in this Prospectus. Each class of shares is subject
to different types and levels of sales charges than the other
classes and bears a different level of expenses.
The class of shares that is best for you depends upon a number of
factors, including the amount and the intended length of your
investment. The following summarizes key information about each
class to help you make your investment decision, including the
various expenses associated with each class. More extensive
information about the Trust's multi-class arrangements is included
in the PIMCO Funds Shareholders' Guide for Class A, B and C Shares
(the "Guide"), which is included as part of the Statement of
Additional Information and can be obtained free of charge from the
Distributor. See "How to Buy and Sell Shares--PIMCO Funds
Shareholders' Guide" below.
Class A . You pay an initial sales charge of up to 5.50% when you buy
Shares Class A shares. The sales charge is deducted from your
investment so that not all of your purchase payment is
invested.
. You may be eligible for a reduction or a complete waiver of
the initial sales charge under a number of circumstances. For
example, you normally pay no sales charge if you purchase
$1,000,000 or more of Class A shares. Please see the Guide for
details.
. Class A shares are subject to lower 12b-1 fees than Class B or
Class C shares. Therefore, Class A shareholders generally pay
lower annual expenses and receive higher dividends than Class
B or Class C shareholders.
. You normally pay no contingent deferred sales charge ("CDSC")
when you redeem Class A shares, although you may pay a 1% CDSC
if you purchase $1,000,000 or more of Class A shares (and
therefore pay no initial sales charge) and then redeem the
shares during the first 18 months after your initial purchase.
The Class A CDSC is waived for certain categories of investors
and does not apply if you are otherwise eligible to purchase
Class A shares without a sales charge. Please see the Guide
for details.
Class B . You do not pay an initial sales charge when you buy Class B
Shares shares. The full amount of your purchase payment is invested
initially.
. You normally pay a CDSC of up to 5% if you redeem Class B
shares during the first six years after your initial purchase.
The amount of the CDSC declines the longer you hold your Class
B shares. You pay no CDSC if you redeem during the seventh year
and thereafter. The Class B CDSC is waived for certain
categories of investors. Please see the Guide for details.
. Class B shares are subject to higher 12b-1 fees than Class A
shares for the first seven years they are held. During this
time, Class B shareholders normally pay higher annual expenses
and receive lower dividends than Class A shareholders.
. Class B shares automatically convert into Class A shares after
they have been held for seven years. After the conversion takes
place, the shares are subject to the lower 12b-1 fees paid by
Class A shares.
Class C . You do not pay an initial sales charge when you buy Class C
Shares shares. The full amount of your purchase payment is invested
initially.
. You normally pay a CDSC of 1% if you redeem Class C shares
during the first year after your initial purchase. The Class C
CDSC is waived for certain categories of investors. Please see
the Guide for details.
. Class C shares are subject to higher 12b-1 fees than Class A
shares. Therefore, Class C shareholders normally pay higher
annual expenses and receive lower dividends than Class A
shareholders.
. Class C shares do not convert into any other class of shares.
Because Class B shares convert into Class A shares after seven
years, Class C shares will normally be subject to higher
expenses and will pay lower dividends than Class B shares if
the shares are held for more than seven years.
29 PIMCO Funds: Multi-Manager Series
<PAGE>
The following provides additional information about the sales
charges and other expenses associated with Class A, Class B and
Class C shares.
--------------------------------------------------------------------------------
Initial Unless you are eligible for a waiver, the public offering price
Sales you pay when you buy Class A shares of the Portfolios is the net
Charges-- asset value ("NAV") of the shares plus an initial sales charge.
Class A The initial sales charge varies depending upon the size of your
Shares purchase, as set forth below. No sales charge is imposed where
Class A shares are issued to you pursuant to the automatic
reinvestment of income dividends or capital gains distributions.
90/10 Portfolio and 60/40 Portfolio
<TABLE>
<S> <C> <C>
Initial Sales Charge Initial Sales Charge
Amount of as % of Net as % of Public
Purchase Amount Invested Offering Price
---------------------------------------------------------------------
$0-$49,999 5.82% 5.50%
---------------------------------------------------------------------
$50,000-$99,999 4.71% 4.50%
---------------------------------------------------------------------
$100,000-$249,999 3.63% 3.50%
---------------------------------------------------------------------
$250,000-$499,999 2.56% 2.50%
---------------------------------------------------------------------
$500,000-$999,999 2.04% 2.00%
---------------------------------------------------------------------
$1,000,000 + 0.00%* 0.00%*
---------------------------------------------------------------------
</TABLE>
30/70 Portfolio
<TABLE>
<S> <C> <C>
Initial Sales Charge Initial Sales Charge
Amount of as % of Net as % of Public
Purchase Amount Invested Offering Price
---------------------------------------------------------------------
$0-$49,999 4.71% 4.50%
---------------------------------------------------------------------
$50,000-$99,999 4.17% 4.00%
---------------------------------------------------------------------
$100,000-$249,999 3.63% 3.50%
---------------------------------------------------------------------
$250,000-$499,999 2.56% 2.50%
---------------------------------------------------------------------
$500,000-$999,999 2.04% 2.00%
---------------------------------------------------------------------
$1,000,000 + 0.00%* 0.00%*
---------------------------------------------------------------------
</TABLE>
*As shown, investors that purchase $1,000,000 or more of any
Portfolio's Class A shares will not pay any initial sales charge
on the purchase. However, purchasers of $1,000,000 or more of
Class A shares may be subject to a CDSC of 1% if the shares are
redeemed during the first 18 months after their purchase. See
"CDSCs on Class A Shares" below.
--------------------------------------------------------------------------------
Contingent Unless you are eligible for a waiver, if you sell (redeem) your
Deferred Class B or Class C shares within the time periods specified below,
Sales you will pay a CDSC according to the following schedules.
Charges
(CDSCs)
-- Class
B and
Class C
Shares
Class B <TABLE>
Shares
<S> <C> <C>
Years Since Purchase Percentage Contingent
Payment was Made Deferred Sales Charge
-----------------------------------------------------------------------------
First 5
-----------------------------------------------------------------------------
Second 4
-----------------------------------------------------------------------------
Third 3
-----------------------------------------------------------------------------
Fourth 3
-----------------------------------------------------------------------------
Fifth 2
-----------------------------------------------------------------------------
Sixth 1
-----------------------------------------------------------------------------
Seventh 0*
-----------------------------------------------------------------------------
*After the seventh year, Class B shares convert into Class A
shares.
Class C
Shares
Years Since Purchase Percentage Contingent
Payment was Made Deferred Sales Charge
-----------------------------------------------------------------------------
First 1
-----------------------------------------------------------------------------
Thereafter 0
-----------------------------------------------------------------------------
</TABLE>
Prospectus 30
<PAGE>
--------------------------------------------------------------------------------
CDSCs on Unless a waiver applies, investors who purchase $1,000,000 or more
Class A of Class A shares (and, thus, pay no initial sales charge) will be
Shares subject to a 1% CDSC if the shares are redeemed within 18 months
of their purchase. The Class A CDSC does not apply if you are
otherwise eligible to purchase Class A shares without an initial
sales charge or if you are eligible for a waiver of the CDSC. See
"Reductions and Waivers of Initial Sales Charges and CDSCs" below.
--------------------------------------------------------------------------------
How CDSCs A CDSC is imposed on redemptions of Class B and Class C shares
are (and where applicable, Class A shares) on the amount of the
Calculated redemption which causes the current value of your account for the
particular class of shares of a Portfolio to fall below the total
dollar amount of your purchase payments subject to the CDSC.
However, no CDSC is imposed if the shares redeemed have been
acquired through the reinvestment of dividends or capital gains
distributions or if the amount redeemed is derived from increases
in the value of your account above the amount of the purchase
payments subject to the CDSC. CDSCs are deducted from the proceeds
of your redemption, not from amounts remaining in your account. In
determining whether a CDSC is payable, it is assumed that the
purchase payment from which the redemption is made is the earliest
purchase payment for the particular class of shares in your
account (from which a redemption or exchange has not already been
effected).
For instance, the following example illustrates the operation of
the Class B CDSC:
. Assume that an individual opens an account and makes a
purchase payment of $10,000 for Class B shares of a Portfolio
and that six months later the value of the investor's account
for that Portfolio has grown through investment performance
and reinvestment of distributions to $11,000. The investor
then may redeem up to $1,000 from that Portfolio ($11,000
minus $10,000) without incurring a CDSC. If the investor
should redeem $3,000, a CDSC would be imposed on $2,000 of
the redemption (the amount by which the investor's account
for the Portfolio was reduced below the amount of the
purchase payment). At the rate of 5%, the Class B CDSC would
be $100.
In determining whether an amount is available for redemption
without incurring a CDSC, the purchase payments made for all
shares of a particular class of a Portfolio in the shareholder's
account are aggregated, and the current value of all such shares
is aggregated.
--------------------------------------------------------------------------------
Reductions The initial sales charges on Class A shares and the CDSCs on Class
and A, Class B and Class C shares may be reduced or waived under
Waivers certain purchase arrangements and for certain categories of
of investors. Please see the Guide for details. The Guide is
Initial available free of charge from the Distributor. See "How to Buy and
Sales Sell Shares--PIMCO Funds Shareholders' Guide" below.
Charges
and CDSCs
--------------------------------------------------------------------------------
DistributionThe Portfolios pay fees to the Distributor on an ongoing basis as
and compensation for the services the Distributor renders and the
Servicing expenses it bears in connection with the sale and distribution of
(12b-1) Portfolio shares ("distribution fees") and/or in connection with
Plans personal services rendered to Portfolio shareholders and the
maintenance of shareholder accounts ("servicing fees"). These
payments are made pursuant to Distribution and Servicing Plans
("12b-1 Plans") adopted by each Portfolio pursuant to Rule 12b-1
under the Investment Company Act of 1940.
There is a separate 12b-1 Plan for each class of shares offered
in this Prospectus. Class A shares pay only servicing fees. Class
B and Class C shares pay both distribution and servicing fees. The
following lists the maximum annual rates at which the distribution
and/or servicing fees may be paid under each 12b-1 Plan
(calculated as a percentage of each Portfolio's average daily net
assets attributable to the particular class of shares):
<TABLE>
<S> <C> <C>
Servicing Distribution
All Portfolios Fee Fee
--------------------------------------------------------------------------------
Class A 0.25% None
--------------------------------------------------------------------------------
Class B 0.25% 0.75%
--------------------------------------------------------------------------------
Class C 0.25% 0.75%
--------------------------------------------------------------------------------
</TABLE>
Because 12b-1 fees are paid out of a Portfolio's assets on an
ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than sales charges which are
deducted at the time of investment. Therefore, although Class B
and Class C shares do not pay initial sales charges, the
distribution fees payable on Class B and Class C shares may, over
time, cost you more than the initial sales charge imposed on Class
A shares. Also, because Class B shares convert into Class A shares
after they have been held for seven years and are not subject to
distribution fees after the conversion, an investment in Class C
shares may cost you more over time than an investment in Class B
shares.
31 PIMCO Funds: Multi-Manager Series
<PAGE>
How Portfolio Shares Are Priced
The net asset value ("NAV") of a Portfolio's Class A, Class B and
Class C shares is determined by dividing the total value of a
Portfolio's portfolio investments and other assets attributable to
that class, less any liabilities, by the total number of shares
outstanding of that class.
The assets of each Portfolio consist of shares of the Underlying
Funds, which are valued at their respective NAVs at the time of
valuation of the Portfolios' shares. For purposes of calculating
the NAV of Underlying Fund shares, portfolio securities and other
assets of the Funds for which market quotes are available are
stated at market value. Market value is generally determined on
the basis of last reported sales prices, or if no sales are
reported, based on quotes obtained from a quotation reporting
system, established market makers, or pricing services. Certain
securities or investments for which daily market quotes are not
readily available may be valued, pursuant to procedures
established by the Board of Trustees of the Underlying Fund, with
reference to other securities or indices. Short-term investments
having a maturity of 60 days or less are generally valued at
amortized cost. Exchange traded options, futures and options on
futures are valued at the settlement price determined by the
exchange. Other securities for which market quotes are not readily
available are valued at fair value as determined in good faith by
the Fund's Board of Trustees or persons acting at the Board's
direction.
Underlying Fund investments initially valued in currencies other
than the U.S. dollar are converted to U.S. dollars using exchange
rates obtained from pricing services. As a result, the NAV of an
Underlying Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of
securities traded in markets outside the United States or
denominated in currencies other than the U.S. dollar may be
affected significantly on a day that the New York Stock Exchange
is closed. As a result, to the extent that a Portfolio invests in
Underlying Funds that hold foreign securities, the NAV of the
Portfolio's shares may change at times when you can not purchase,
redeem or exchange shares.
Portfolio and Underlying Fund shares are valued at the close of
regular trading (normally 4:00 p.m., Eastern time) (the "NYSE
Close") on each day that the New York Stock Exchange is open. For
purposes of calculating the NAV, the Underlying Funds normally use
pricing data for domestic equity securities received shortly after
the NYSE Close and do not normally take into account trading,
clearances or settlements that take place after the NYSE Close.
Domestic fixed income and foreign securities are normally priced
using data reflecting the earlier closing of the principal markets
for those securities. Information that becomes known to the
Underlying Funds or their agents after the NAV has been calculated
on a particular day will not generally be used to retroactively
adjust the price of a security or the NAV determined earlier that
day.
In unusual circumstances, instead of valuing securities in the
usual manner, the Underlying Funds may value securities at fair
value or estimate their value as determined in good faith by the
Fund's Board of Trustees or persons acting at their direction
pursuant to procedures approved by the Board of Trustees. Fair
valuation may also be used by the Underlying Fund's Board of
Trustees if extraordinary events occur after the close of the
relevant market but prior to the NYSE Close.
How to Buy and Sell Shares
The following section provides basic information about how to buy,
sell (redeem) and exchange shares of the Portfolios.
PIMCO
Funds
Shareholders'
Guide
More detailed information about the Trust's purchase, sale and
exchange arrangements for Portfolio shares is provided in the
PIMCO Funds Shareholders' Guide, which is included in the
Statement of Additional Information and can be obtained free of
charge from the Distributor by written request or by calling 1-
800-426-0107. The Guide provides technical information about the
basic arrangements described below and also describes special
purchase, sale and exchange features and programs offered by the
Trust, including:
. Automated telephone and wire transfer procedures
. Automatic purchase, exchange and withdrawal programs
. Programs that establish a link from your Portfolio account to
your bank account
. Special arrangements for tax-qualified retirement plans
. Investment programs which allow you to reduce or eliminate the
initial sales charges on Class A shares
. Categories of investors that are eligible for waivers or
reductions of initial sales charges and CDSCs
Prospectus 32
<PAGE>
Calculation When you buy shares of the Portfolios, you pay a price equal to
of Share the NAV of the shares, plus any applicable sales charge. When you
Price and sell (redeem) shares, you receive an amount equal to the NAV of
Redemption the shares, minus any applicable CDSC. NAVs are determined at the
Payments close of regular trading (normally, 4:00 p.m., Eastern time) on
the New York Stock Exchange on each day the New York Stock
Exchange is open. See "How Portfolio Shares Are Priced" above for
details. Generally, purchase and redemption orders for Portfolio
shares are processed at the NAV next calculated after your order
is received by the Distributor. There are certain exceptions where
an order is received by a broker or dealer prior to the close of
regular trading on the New York Stock Exchange and then
transmitted to the Distributor after the NAV has been calculated
for that day (in which case the order may be processed at that
day's NAV). Please see the Guide for details.
The Trust does not calculate NAVs or process orders on days when
the New York Stock Exchange is closed. If your purchase or
redemption order is received by the Distributor on a day when the
New York Stock Exchange is closed, it will be processed on the
next succeeding day when the New York Stock Exchange is open (at
the succeeding day's NAV).
Buying You can buy Class A, Class B or Class C shares of the Portfolios
Shares in the following ways:
. Through your broker, dealer or other financial intermediary.
Your broker, dealer or other intermediary may establish higher
minimum investment requirements than the Trust and may also
independently charge you transaction fees and additional amounts
(which may vary) in return for its services, which will reduce
your return. Shares you purchase through your broker, dealer or
other intermediary will normally be held in your account with that
firm.
. Directly from the Trust. To make direct investments, you must
open an account with the Distributor and send payment for your
shares either by mail or through a variety of other purchase
options and plans offered by the Trust.
If you wish to invest directly by mail, please send a check
payable to PIMCO Funds Distributors LLC, along with a completed
application form to:
PIMCO Funds Distributors LLC
P.O. Box 9688
Providence, RI 02940-0926
The Trust accepts all purchases by mail subject to collection of
checks at full value and conversion into federal funds. You may
make subsequent purchases by mailing a check to the address above
with a letter describing the investment or with the additional
investment portion of a confirmation statement. Checks for
subsequent purchases should be payable to PIMCO Funds Distributors
LLC and should clearly indicate your account number. Please call
the Distributor at 1-800-426-0107 if you have any questions
regarding purchases by mail.
The Guide describes a number of additional ways you can make
direct investments, including through the PIMCO Funds Auto-Invest
and PIMCO Funds Fund Link programs. You can obtain a Guide free of
charge from the Distributor by written request or by calling 1-
800-426-0107. See "PIMCO Funds Shareholders' Guide" above.
The Distributor, in its sole discretion, may accept or reject any
order for purchase of Portfolio shares. No share certificates will
be issued unless specifically requested in writing.
Investment The following investment minimums apply for purchases of Class A,
Minimums Class B and Class C shares:
<TABLE>
<CAPTION>
Initial Investment Subsequent Investments
------------------ ----------------------
<S> <C>
$2,500 per Portfolio $100 per Portfolio
</TABLE>
Lower minimums may apply for certain categories of investors,
including certain tax-qualified retirement plans, and for special
investment programs and plans offered by the Trust, such as the
PIMCO Funds Auto-Invest and PIMCO Funds Fund Link programs. Please
see the Guide for details.
Small
Account
Fee
Because of the disproportionately high costs of servicing accounts
with low balances, if you have a direct account with the
Distributor, you will be charged a fee at the annual rate of $16
if your account balance for any Portfolio falls below a minimum
level of $2,500, except for Uniform Gift to Minors, IRA, Roth IRA
and Auto-Invest accounts for which the limit is $1,000. The fee
also applies to employer-sponsored retirement plan accounts, Money
Purchase and/or Profit Sharing plans, 401(k) plans, 403(b)(7)
custodial accounts, SIMPLE IRAs, SEPs and SAR/SEPs. (A separate
custodial fee may
33 PIMCO Funds: Multi-Manager Series
<PAGE>
apply to IRAs, Roth IRAs and other retirement accounts.) However,
you will not be charged this fee if the aggregate value of all of
your PIMCO Funds accounts is at least $50,000. Any applicable
small account fee will be deducted automatically from your below-
minimum Portfolio account in quarterly installments and paid to
the Administrator. Each Portfolio account will normally be valued,
and any deduction taken, during the last five business days of
each calendar quarter. Lower minimum balance requirements and
waivers of the small account fee apply for certain categories of
investors. Please see the Guide for details.
Minimum Due to the relatively high cost to the Portfolios of maintaining
Account small accounts, you are asked to maintain an account balance in
Size each Portfolio in which you invest of at least the minimum
investment necessary to open the particular type of account. If
your balance for any Portfolio remains below the minimum for three
months or longer, the Administrator has the right (except in the
case of employer-sponsored retirement accounts) to redeem your
remaining shares and close that Portfolio account after giving you
60 days to increase your balance. Your Portfolio account will not
be liquidated if the reduction in size is due solely to a decline
in market value of your Portfolio shares or if the aggregate value
of all your PIMCO Funds accounts exceeds $50,000.
Exchanging You may exchange your Class A, Class B or Class C shares of any
Shares Portfolio for the same Class of shares of any other Portfolio or
of another series of the Trust or PIMCO Funds: Pacific Investment
Management Series, subject to any restrictions on exchanges set
forth in the applicable fund's or series' prospectus(es). Shares
are exchanged on the basis of their respective NAVs next
calculated after your exchange order is received by the
Distributor. Currently, the Trust does not charge any exchange
fees or charges. Exchanges are subject to the $2,500 minimum
initial purchase requirements for each Portfolio, except with
respect to tax-qualified programs and exchanges effected through
the PIMCO Funds Auto-Exchange plan. In addition, an exchange is
generally a taxable event which will generate capital gains or
losses, and special rules may apply in computing tax basis when
determining gain or loss. If you maintain your account with the
Distributor, you may exchange shares by completing a written
exchange request and sending it to PIMCO Funds Distributors LLC,
P.O. Box 9688, Providence, RI 02940-0926. You can get an exchange
form by calling the Distributor at 1-800-426-0107.
The Trust reserves the right to refuse exchange purchases if, in
the judgment of PIMCO Advisors, the purchase would adversely
affect a Portfolio and its shareholders. In particular, a pattern
of exchanges characteristic of "market-timing" strategies may be
deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Portfolio. Currently, the Trust limits the number of
"round trip" exchanges an investor may make. An investor makes a
"round trip" exchange when the investor purchases shares of a
particular Portfolio, subsequently exchanges those shares for
shares of a different PIMCO Fund and then exchanges back into the
originally purchased Portfolio. The Trust has the right to refuse
any exchange for any investor who completes (by making the
exchange back into the shares of the originally purchased
Portfolio) more than six round trip exchanges in any twelve-month
period. Although the Trust has no current intention of terminating
or modifying the exchange privilege other than as set forth in the
preceeding sentence, it reserves the right to do so at any time.
Except as otherwise permitted by the Securities and Exchange
Commission, the Trust will give you 60 days' advance notice if it
exercises its right to terminate or materially modify the exchange
privilege with respect to Class A, B and C shares.
The Guide provides more detailed information about the exchange
privilege, including the procedures you must follow and additional
exchange options. You can obtain a Guide free of charge from the
Distributor by written request or by calling 1-800-426-0107. See
"PIMCO Funds Shareholders' Guide" above.
Selling You can sell (redeem) Class A, Class B or Class C shares of the
Shares Portfolios in the following ways:
. Through your broker, dealer or other financial intermediary.
Your broker, dealer or other intermediary may independently charge
you transaction fees and additional amounts (which may vary) in
return for its services, which will reduce your return.
. Directly from the Trust by Written Request. To redeem shares
directly from the Trust by written request (whether or not the
shares are represented by certificates), you must send the
following items to the Trust's Transfer Agent, PFPC, Inc., P.O.
Box 9688, Providence, RI 02940-0926:
(1) a written request for redemption signed by all registered
owners exactly as the account is registered on the Transfer
Agent's records, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of
shares to be redeemed;
Prospectus 34
<PAGE>
(2) for certain redemptions described below, a guarantee of all
signatures on the written request or on the share certificate or
accompanying stock power, if required, as described under
"Signature Guarantee" below;
(3) any share certificates issued for any of the shares to be
redeemed (see "Certificated Shares" below); and
(4) any additional documents which may be required by the
Transfer Agent for redemption by corporations, partnerships or
other organizations, executors, administrators, trustees,
custodians or guardians, or if the redemption is requested by
anyone other than the shareholder(s) of record. Transfers of
shares are subject to the same requirements.
A signature guarantee is not required for redemptions requested
by and payable to all shareholders of record for the account that
is to be sent to the address of record for that account. To avoid
delay in redemption or transfer, if you have any questions about
these requirements you should contact the Transfer Agent in
writing or call 1-800-426-0107 before submitting a request.
Written redemption or transfer requests will not be honored until
all required documents in the proper form have been received by
the Transfer Agent. You can not redeem your shares by written
request to the Trust if they are held in broker "street name"
accounts--you must redeem through your broker.
If the proceeds of your redemption (i) are to be paid to a person
other than the record owner, (ii) are to be sent to an address
other than the address of the account on the Transfer Agent's
records, or (iii) are to be paid to a corporation, partnership,
trust or fiduciary, the signature(s) on the redemption request and
on the certificates, if any, or stock power must be guaranteed as
described under "Signature Guarantee" below. The Distributor may,
however, waive the signature guarantee requirement for redemptions
up to $2,500 by a trustee of a qualified retirement plan, the
administrator for which has an agreement with the Distributor.
The Guide describes a number of additional ways you can redeem
your shares, including:
. Telephone requests to the Transfer Agent
. PIMCO Funds Automated Telephone System (ATS)
. Expedited wire transfers
. Automatic Withdrawal Plan
. PIMCO Funds Fund Link
Unless you specifically elect otherwise, your initial account
application permits you to redeem shares by telephone subject to
certain requirements. To be eligible for ATS, expedited wire
transfer, Automatic Withdrawal Plan, and Fund Link privileges, you
must specifically elect the particular option on your account
application and satisfy certain other requirements. The Guide
describes each of these options and provides additional
information about selling shares. You can obtain a Guide free of
charge from the Distributor by written request or by calling 1-
800-426-0107.
Other than an applicable CDSC, you will not pay any special fees
or charges to the Trust or the Distributor when you sell your
shares. However, if you sell your shares through your broker,
dealer or other financial intermediary, that firm may charge you a
commission or other fee for processing your redemption request.
Redemptions of Portfolio shares may be suspended when trading on
the New York Stock Exchange is restricted or during an emergency
which makes it impracticable for the Portfolios or the Underlying
Funds to dispose of their securities or to determine fairly the
value of their net assets, or during any other period as permitted
by the Securities and Exchange Commission for the protection of
investors. Under these and other unusual circumstances, the Trust
may suspend redemptions or postpone payments for more than seven
days, as permitted by law.
Timing of
Redemption
Payments
Redemption proceeds will normally be mailed to the redeeming
shareholder within seven calendar days or, in the case of wire
transfer or Fund Link redemptions, sent to the designated bank
account within one business day. Fund Link redemptions may be
received by the bank on the second or third business day. In cases
where shares have recently been purchased by personal check,
redemption proceeds may be withheld until the check has been
collected, which may take up to 15 days. To avoid such
withholding, investors should purchase shares by certified or bank
check or by wire transfer. Under unusual circumstances, the Trust
may delay your redemption payments for more than seven days, as
permitted by law.
35 PIMCO Funds: Multi-Manager Series
<PAGE>
Redemptions The Trust has agreed to redeem shares of each Portfolio solely in
In Kind cash up to the lesser of $250,000 or 1% of the Portfolio's net
assets during any 90-day period for any one shareholder. In
consideration of the best interests of the remaining shareholders,
the Trust may pay any redemption proceeds exceeding this amount in
whole or in part by a distribution in kind of securities held by a
Portfolio in lieu of cash. If your shares are redeemed in kind,
you may incur transaction costs upon the disposition of the
securities received in the distribution.
CertificatedIf you are redeeming shares for which certificates have been
Shares issued, the certificates must be mailed to or deposited with the
Trust, duly endorsed or accompanied by a duly endorsed stock power
or by a written request for redemption. Signatures must be
guaranteed as described under "Signature Guarantee" below. The
Trust may request further documentation from institutions or
fiduciary accounts, such as corporations, custodians (e.g., under
the Uniform Gifts to Minors Act), executors, administrators,
trustees or guardians. Your redemption request and stock power
must be signed exactly as the account is registered, including
indication of any special capacity of the registered owner.
Signature
Guarantee When a signature guarantee is called for, you should have
"Signature Guaranteed" stamped under your signature and guaranteed
by any of the following entities: U.S. banks, foreign banks having
a U.S. correspondent bank, credit unions, savings associations,
U.S. registered dealers and brokers, municipal securities dealers
and brokers, government securities dealers and brokers, national
securities exchanges, registered securities associations and
clearing agencies (each an "Eligible Guarantor Institution"). The
Distributor reserves the right to reject any signature guarantee
pursuant to its written signature guarantee standards or
procedures, which may permit it to reject signature guarantees
from Eligible Guarantor Institutions that do not, based on credit
guidelines, satisfy such written standards or procedures.
Beginning January 1, 2001, when a signature guarantee is called
for, a "medallion" signature guarantee will be required. A
medallion signature guarantee may be obtained from a domestic bank
or trust company, broker, dealer, clearing agency, savings
association or other financial institution which is participating
in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are the
Securities Transfer Agents Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP) and New York Stock Exchange,
Inc. Medallion Signature Program (NYSE MSP). Signature guarantees
from financial institutions which are not participating in a
recognized medallion program may still be ineligible to provide a
signature guarantee for transactions of greater than a specified
dollar amount. The Trust may change the signature guarantee
requirements from time to time upon notice to shareholders, which
may be given by means of a new or supplemented Prospectus or a new
or supplemented Guide. Shareholders should contact the Distributor
for additional details regarding the Portfolios' signature
guarantee requirements.
Portfolio Distributions
Each Portfolio distributes substantially all of its net investment
income to shareholders in the form of dividends. You begin earning
dividends on Portfolio shares the day after the Trust receives
your purchase payment. Dividends paid by each Portfolio with
respect to each class of shares are calculated in the same manner
and at the same time, but dividends on Class B and Class C shares
are expected to be lower than dividends on Class A shares as a
result of the distribution fees applicable to Class B and Class C
shares. The following shows when each Portfolio intends to declare
and distribute income dividends to shareholders of record.
<TABLE>
<CAPTION>
Portfolio At Least Annually Quarterly Monthly
---------------------------------------------------------------------------
<S> <C> <C> <C>
90/10 Portfolio .
---------------------------------------------------------------------------
60/40 Portfolio .
---------------------------------------------------------------------------
30/70 Portfolio .
---------------------------------------------------------------------------
</TABLE>
In addition, each Portfolio distributes any net capital gains it
earns from the sale of portfolio securities to shareholders no
less frequently than annually. Net short-term capital gains may be
paid more frequently.
Prospectus 36
<PAGE>
You can choose from the following distribution options:
. Reinvest all distributions in additional shares of the same
class of your Portfolio at NAV. This will be done unless you
elect another option.
. Invest all distributions in shares of the same class of any
other Portfolio or another series of the Trust or PIMCO Funds:
Pacific Investment Management Series which offers that class at
NAV. You must have an account existing in the Portfolio or
series selected for investment with the identical registered
name. You must elect this option on your account application or
by a telephone request to the Transfer Agent at 1-800-426-0107.
. Receive all distributions in cash (either paid directly to you
or credited to your account with your broker or other financial
intermediary). You must elect this option on your account
application or by a telephone request to the Transfer Agent at
1-800-426-0107.
You do not pay any sales charges on shares you receive through
the reinvestment of Portfolio distributions.
If you elect to receive Portfolio distributions in cash and the
postal or other delivery service is unable to deliver checks to
your address of record, the Trust's Transfer Agent will hold the
returned checks for your benefit in a non-interest bearing
account.
For further information on distribution options, please contact
your broker or call the Distributor at 1-800-426-0107.
Tax Consequences
. Taxes on Portfolio distributions. If you are subject to U.S.
federal income tax, you will be subject to tax on Portfolio
distributions whether you received them in cash or reinvested them
in additional shares. For federal income tax purposes, Portfolio
distributions will be taxable to you as either ordinary income or
capital gains.
Portfolio dividends (i.e., distributions of investment income)
are taxable to you as ordinary income. Federal taxes on Portfolio
distributions of gains are determined by how long the Portfolio
owned the investments that generated the gains, rather than how
long you have owned your shares. Distributions of gains from
investments that a Portfolio owned for more than 12 months will
generally be taxable to you as capital gains. Distributions of
gains from investments that the Portfolio owned for 12 months or
less will generally be taxable to you as ordinary income.
Portfolio distributions are taxable to you even if they are paid
from income or gains earned by a Portfolio prior to your
investment and thus were included in the price you paid for your
shares. For example, if you purchase shares on or just before the
record date of a Portfolio distribution, you will pay full price
for the shares and may receive a portion of your investment back
as a taxable distribution.
The Portfolios' use of a fund of funds structure could affect the
amount, timing and character of distributions to shareholders. See
"Taxation--Distributions" in the Statement of Additional
Information.
. Taxes when you sell (redeem) or exchange your shares. Any gain
resulting from the sale of Portfolio shares will generally be
subject to federal income tax. When you exchange shares of a
Portfolio for shares of another Portfolio or series of the Trust,
the transaction will be treated as a sale of the first Portfolio's
shares for these purposes, and any gain on those shares will
generally be subject to federal income tax.
This section relates only to federal income tax consequences of
investing in the Portfolios; the consequences under other tax laws
may differ. You should consult your tax advisor as to the possible
application of foreign, state and local income tax laws to
Portfolio dividends and capital distributions. Please see the
Statement of Additional Information for additional information
regarding the tax aspects of investing in the Portfolios.
37 PIMCO Funds: Multi-Manager Series
<PAGE>
(This page left blank intentionally)
Prospectus 38
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand
the financial performance of Class A, Class B and Class C shares
of each Portfolio since the class of shares was first offered.
Certain information reflects financial results for a single
Portfolio share. The total returns in the table represent the rate
that an investor would have earned or lost on an investment in a
particular class of shares of a Portfolio, assuming reinvestment
of all dividends and distributions. This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with
each Portfolio's financial statements, are included in the Trust's
annual report to shareholders. The annual report is incorporated
by reference in the Statement of Additional Information and is
available free of charge upon request from the Distributor.
[To be updated in a subsequent post-effective amendment.]
<TABLE>
<CAPTION>
Year or Net Realized/ Dividends Dividends in
Period Net Asset Value Net Unrealized Total Income From Net Excess of Net
Ended Beginning Investment Gain (Loss) on From Investment Investment Investment
of Period Income (Loss) Investments Operations Income Income
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
90/10 Portfolio
Class A
09/30/98-06/30/99 $10.00 $0.16(a) $2.19(a) $2.35 $(0.15) $(0.03)
Class B
09/30/98-06/30/99 10.00 0.16(a) 2.13(a) 2.29 (0.15) (0.03)
Class C
09/30/98-06/30/99 10.00 0.07(a) 2.22(a) 2.29 (0.15) (0.03)
60/40 Portfolio
Class A
09/30/98-06/30/99 $10.00 $0.31(a) $1.23(a) $1.54 $(0.27) $0.00
Class B
09/30/98-06/30/99 10.00 0.16(a) 1.31(a) 1.47 (0.22) 0.00
Class C
09/30/98-06/30/99 10.00 0.18(a) 1.29(a) 1.47 (0.23) 0.00
30/70 Portfolio
Class A
09/30/98-06/30/99 $10.00 $0.58(a) $0.11(a) $0.69 $(0.36) $0.00
Class B
09/30/98-06/30/99 10.00 0.32(a) 0.31(a) 0.63 (0.31) 0.00
Class C
09/30/98-06/30/99 10.00 0.26(a) 0.36(a) 0.62 (0.32) 0.00
</TABLE>
-------
* Annualized
(a) Per share amounts based upon average number of shares outstanding during
the period.
39 PIMCO Funds: Multi-Manager Series
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Net Asset Expenses to Income (Loss) to
Total Value End of Net Assets End Average Net Average Net Portfolio
Ditributionss Period Total Return of Period (000s) Assets Assets Turnover Rate
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(0.18) $12.17 23.69% $ 647 0.65%* 1.91%* 48%
(0.18) 12.11 23.03 1,920 1.40* 1.87* 48
(0.18) 12.11 23.03 7,969 1.40* 0.77* 48
$(0.27) $11.27 15.50% $2,196 0.65%* 3.76%* 39%
(0.22) 11.25 14.83 3,653 1.40* 1.92* 39
(0.23) 11.24 14.82 9,826 1.40* 2.14* 39
$(0.36) $10.33 6.91% $ 407 0.65%* 7.54%* 37%
(0.31) 10.32 6.29 1,738 1.40* 4.09* 37
(0.32) 10.30 6.27 4,969 1.40* 3.39* 37
</TABLE>
Prospectus
40
<PAGE>
PIMCO Funds Asset Allocation Series
Actively managed Portfolios of select PIMCO Funds
The Trust's Statement of Additional Information ("SAI") and
annual and semi-annual reports to shareholders include
additional information about the Portfolios. In addition, the
current Trust prospectus and the prospectus of PIMCO Funds:
Pacific Investment Management Series relating to Institutional
Class shares of the Underlying Funds contain additional
information about the Underlying Funds. The SAI, the financial
statements included in the Portfolios' most recent annual report
to shareholders, and the Underlying Fund prospectuses are
incorporated by reference into this Prospectus, which means they
are part of this Prospectus for legal purposes. The Portfolios'
annual report discusses the market conditions and investment
strategies that significantly affected each Portfolio's
performance during its last fiscal year.
The SAI includes the PIMCO Funds Shareholders' Guide for Class
A, B and C Shares, a separate booklet which contains more
detailed information about Portfolio purchase, redemption and
exchange options and procedures and other information about the
Portfolios. You can get a free copy of the Guide together with
or separately from the rest of the SAI.
You may get free copies of any of these materials, request other
information about a Portfolio or the Underlying Funds, or make
shareholder inquiries by calling 1-800-426-0107, or by writing
to:
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, Connecticut 06902
You may review and copy information about the Trust, the
Portfolios and the Underlying Funds, including the SAI and the
Underlying Fund prospectuses, at the Securities and Exchange
Commission's public reference room in Washington, D.C. You may
call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access
reports and other information about the Trust on the EDGAR
database on the Commission's Web site at www.sec.gov. You may
get copies of this information, with payment of a duplication
fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or by electronic request at the
following e-mail address: [email protected]. You may need to
refer to the Trust's file number under the Investment Company
Act, which is 811-6161.
You can also visit our Web site at www.pimcofunds.com for
additional information about the Portfolios and the Underlying
Funds.
[LOGO OF PIMCO FUNDS APPEARS HERE]
File No. 811-6161
<PAGE>
Prospectus
PIMCO This Prospectus describes three mutual funds offered by PIMCO
Funds: Funds: Multi-Manager Series. The Funds provide access to the
Multi- professional investment advisory services offered by PIMCO
Manager Advisors L.P. and its affiliate, NFJ Investment Group.
Series
This Prospectus explains what you should know about the Funds
before you invest. Please read it carefully.
November
1, 2000
The Securities and Exchange Commission has not approved or
disapproved these securities or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
Share
Classes
Institutional
and
Administrative
1 PIMCO Funds: Multi-Manager Series
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information.............................................. 3
Fund Summaries
NFJ Equity Income Fund......................................... 5
NFJ Value Fund................................................. 7
NFJ Value 25 Fund.............................................. 9
Summary of Principal Risks....................................... 11
Management of the Funds.......................................... 13
Investment Options -- Institutional Class and Administrative
Class Shares.................................................... 15
Purchases, Redemptions and Exchanges............................. 16
How Fund Shares Are Priced....................................... 20
Fund Distributions............................................... 21
Tax Consequences................................................. 21
Characteristics and Risks of Securities and Investment
Techniques...................................................... 22
Financial Highlights............................................. 26
</TABLE>
Prospectus 2
<PAGE>
Summary Information
The table below lists the investment objectives and certain investment
characteristics of the Funds. Other important characteristics are described
in the individual Fund Summaries beginning on page 5.
<TABLE>
<CAPTION>
Approximate
Number of
Sub-Adviser Fund Investment Objective Main Investments Holdings
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NFJ Investment NFJ Equity Current income as a Income producing common stocks of 40-50
Group Income primary objective; companies with market capitalizations
long-term growth of of more than $2 billion
capital as a secondary
objective
----------------------------------------------------------------------------------------------
NFJ Value Long-term growth of Common stocks of companies with market 40
capital and income capitalizations of more than $2
billion that are undervalued relative
to the market and their industry
groups
----------------------------------------------------------------------------------------------
NFJ Value 25 Long-term growth of Approximately 25 common stocks of 25
capital and income companies with market capitalizations
of between $1 billion and $5 billion
and below-average price-to-earnings
ratios relative to their industry
groups
----------------------------------------------------------------------------------------------------------
</TABLE>
The following Fund Summaries identify each Fund's investment
objective, principal investments and strategies, principal risks,
performance information and fees and expenses. A more detailed
"Summary of Principal Risks" describing principal risks of
investing in the Funds begins after the Fund Summaries.
Fund
Descriptions,
Performance
and Fees
It is possible to lose money on investments in the Funds. The
fact that a Fund may have had good performance in the past (for
example, during the year ended 1999) is no assurance that the
value of the Fund's investments will not decline in the future or
appreciate at a slower rate. An investment in a Fund is not a
deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
3 PIMCO Funds: Multi-Manager Series
<PAGE>
(This page intentionally left blank)
Prospectus 4
<PAGE>
NFJ Equity Income Fund
-------------------------------------------------------------------------------
Principal Investment Objective Fund Focus Approximate
Investments Seeks current Income producing Capitalization
and income as a common stocks Range
Strategies primary with potential More than $2
objective, and for capital billion
long-term growth appreciation
of capital as a
secondary
objective
Dividend
Frequency
Quarterly
Approximate
Number of
Holdings
40-50
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in income-producing (e.g.,
dividend-paying) common stocks of companies with market
capitalizations of more than $2 billion at the time of investment.
The Fund's initial selection universe consists of the 1,000
largest publicly traded companies (in terms of market
capitalization) in the U.S. The portfolio managers classify the
universe by industry. They then identify the most undervalued
stocks in each industry based mainly on relative P/E ratios,
calculated both with respect to trailing operating earnings and
forward earnings estimates. From this group of stocks, the Fund
buys approximately 25 stocks with the highest dividend yields. The
portfolio managers then screen the most undervalued companies in
each industry by dividend yield to identify the highest yielding
stocks in each industry. From this group, the Fund buys
approximately 25 additional stocks with the lowest P/E ratios.
In selecting stocks, the portfolio managers consider quantitative
factors such as price momentum (based on changes in stock price
relative to changes in overall market prices), earnings momentum
(based on analysts' earnings per share estimates and revisions to
those estimates), relative dividend yields, valuation relative to
the overall market and trading liquidity. The portfolio managers
may replace a stock when a stock within the same industry group
has a considerably higher dividend yield or lower valuation than
the Fund's current holding.
Under normal circumstances, the Fund intends to be fully invested
in common stocks (aside from certain cash management practices).
The Fund may temporarily hold up to 10% of its assets in cash and
cash equivalents for defensive purposes in response to unfavorable
market and other conditions. This would be inconsistent with the
Fund's investment objective and principal strategies.
-------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Value Securities Risk . Management Risk
. Issuer Risk . Credit Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
-------------------------------------------------------------------------------
Performance
Information The Fund does not yet have a full calendar year of performance.
Thus, no bar chart or average annual total returns table is
included for the Fund.
5 PIMCO Funds: Multi-Manager Series
<PAGE>
NFJ Equity Income Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses is based on estimated amounts for the current
fiscal year and reflects a 0.25% Administrative Fee paid by the
class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3
------------------------------------------------------------------
Institutional $72 $224
------------------------------------------------------------------
Administrative 97 303
------------------------------------------------------------------
</TABLE>
Prospectus 6
<PAGE>
NFJ Value Fund
-------------------------------------------------------------------------------
Principal Investment Fund Focus Approximate
Investments Objective Undervalued larger Capitalization Range
and Seeks long-term capitalization More than $2 billion
Strategies growth of capital common stocks
and income
Approximate Number Dividend Frequency
of Holdings Quarterly
40
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of more than $2 billion at the time of
investment and below average P/E ratios relative to the market and
their respective industry groups. To achieve income, the Fund
invests a portion of its assets in income-producing (e.g.,
dividend-paying) common stocks.
The Fund's initial selection universe consists of the 1,000
largest publicly traded companies (in terms of market
capitalization) in the U.S. The portfolio managers classify the
universe by industry. They then identify the most undervalued
stocks in each industry based mainly on relative P/E ratios,
calculated both with respect to trailing operating earnings and
forward earnings estimates. After narrowing this universe to
approximately 150 candidates, the portfolio managers select
approximately 40 stocks for the Fund, each representing a
different industry group. The portfolio managers select stocks
based on a quantitative analysis of factors including price
momentum (based on changes in stock price relative to changes in
overall market prices), earnings momentum (based on analysts'
earnings per share estimates and revisions to those estimates),
relative dividend yields, valuation relative to the overall market
and trading liquidity. The Fund's portfolio is generally
rebalanced quarterly. The portfolio managers may also replace a
stock when a stock within the same industry group has a
considerably lower valuation than the Fund's current holding.
Under normal circumstances, the Fund intends to be fully invested
in common stocks (aside from certain cash management practices).
The Fund may temporarily hold up to 10% of its assets in cash and
cash equivalents for defensive purposes in response to unfavorable
market and other conditions. This would be inconsistent with the
Fund's investment objective and principal strategies.
-------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
. Market Risk . Value Securities . Management Risk
. Issuer Risk Risk
. Credit Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
-------------------------------------------------------------------------------
Performance
Information The Fund does not yet have a full calendar year of performance.
Thus, no bar chart or average annual total returns table is
included for the Fund.
7 PIMCO Funds: Multi-Manager Series
<PAGE>
NFJ Value Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.45% None 0.25% 0.70%
------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
------------------------------------------------------------------
(1) Other Expenses is based on estimated amounts for the current
fiscal year and reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
<CAPTION>
Share Class Year 1 Year 3
------------------------------------------------------------------
Institutional $72 $224
------------------------------------------------------------------
Administrative 97 303
------------------------------------------------------------------
</TABLE>
Prospectus 8
<PAGE>
NFJ Value 25 Fund
<TABLE>
------------------------------------------------------------------------------
<S> <C>
Principal Investment Fund Focus Approximate
Investments Objective Undervalued medium Capitalization Range
and Seeks long-term capitalization Between $1 billion
Strategies growth of capital common stocks and $5 billion
and income
Approximate Number Dividend Frequency
of Holdings At least annually
25
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with market capitalizations of between $1 billion and $5 billion
at the time of investment and below average P/E ratios relative to
their respective industry groups. The Fund normally invests in
approximately 25 common stocks. To achieve income, the Fund
invests a portion of its assets in income-producing (e.g.,
dividend-paying) common stocks.
The Fund's initial selection universe consists of approximately
600 stocks of companies within the Fund's capitalization range.
The portfolio managers classify the universe by industry. They
then identify the most undervalued stocks in each industry based
mainly on relative P/E ratios, calculated both with respect to
trailing operating earnings and forward earnings estimates. The
portfolio managers then select approximately 25 stocks, each
representing a different industry group. Each stock has close to
equal weighting in the portfolio. The portfolio managers select
stocks based on an analysis of factors including price momentum
(based on changes in stock price relative to changes in overall
market prices), earnings momentum (based on analysts' earnings per
share estimates and revisions to those estimates), relative
dividend yields and trading liquidity. The Fund's portfolio is
generally rebalanced quarterly. The portfolio managers may also
replace a stock when a stock within the same industry group has a
considerably lower valuation than the Fund's current holding.
Under normal circumstances, the Fund intends to be fully
invested in common stocks (aside from certain cash management
practices). The Fund may temporarily hold up to 25% of its assets
in cash and cash equivalents for defensive purposes in response to
unfavorable market and other conditions. This would be
inconsistent with the Fund's investment objective and principal
strategies.
--------------------------------------------------------------------------------
Principal Among the principal risks of investing in the Fund, which could
Risks adversely affect its net asset value, yield and total return, are:
<TABLE>
<S> <C> <C>
. Market Risk . Smaller Company Risk . Credit Risk
. Issuer Risk . Liquidity Risk . Management Risk
. Value Securities . Focused Investment
Risk Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of investing
in the Fund.
--------------------------------------------------------------------------------
Performance
Information
The Fund does not yet have a full calendar year of performance.
Thus, no bar chart or average annual total returns table is
included for the Fund.
9 PIMCO Funds: Multi-Manager Series
<PAGE>
NFJ Value 25 Fund (continued)
--------------------------------------------------------------------------------
Fees and These tables describe the fees and expenses you may pay if you buy
Expenses and hold Institutional Class or Administrative Class shares of the
of the Fund:
Fund
Shareholder Fees (fees paid directly from your investment)None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets):
<TABLE>
<S> <C> <C> <C> <C>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(/1/) Expenses
------------------------------------------------------------------
Institutional 0.50% None 0.25% 0.75%
------------------------------------------------------------------
Administrative 0.50 0.25% 0.25 1.00
------------------------------------------------------------------
(1) Other Expenses reflects a 0.25% Administrative Fee paid by
the class.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, the Examples show what your costs would be
based on these assumptions.
Share Class Year 1 Year 3
------------------------------------------------------------------
Institutional $ 77 $240
------------------------------------------------------------------
Administrative 102 318
------------------------------------------------------------------
</TABLE>
Prospectus 10
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of
that Fund's investments. Many factors can affect those values. The
factors that are most likely to have a material effect on a
particular Fund's portfolio as a whole are called "principal
risks." The principal risks of each Fund are identified in the
Fund Summaries and are summarized in this section. Each Fund may
be subject to additional principal risks and risks other than
those described below because the types of investments made by
each Fund can change over time. Securities and investment
techniques mentioned in this summary and described in greater
detail under "Characteristics and Risks of Securities and
Investment Techniques" appear in bold type. That section and
"Investment Objectives and Policies" in the Statement of
Additional Information also include more information about the
Funds, their investments and the related risks. There is no
guarantee that a Fund will be able to achieve its investment
objective.
Market The market price of securities owned by a Fund may go up or down,
Risk sometimes rapidly or unpredictably. Each of the Funds normally
invests most of its assets in common stocks and/or other equity
securities. A principal risk of investing in each Fund is that the
equity securities in its portfolio will decline in value due to
factors affecting equity securities markets generally or
particular industries represented in those markets. The values of
equity securities may decline due to general market conditions
which are not specifically related to a particular company, such
as real or perceived adverse economic conditions, changes in the
general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may
also decline due to factors which affect a particular industry or
industries, such as labor shortages or increased production costs
and competitive conditions within an industry. Equity securities
generally have greater price volatility than fixed income
securities.
Issuer The value of a security may also decline for a number of reasons
Risk which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the
issuer's goods or services.
Value The Funds place particular emphasis on investing in securities of
Securities companies that may not be expected to experience significant
Risk earnings growth, but whose securities its portfolio manager
believes are selling at a price lower than their true value (value
securities). Companies that issue value securities may have
experienced adverse business developments or may be subject to
special risks that have caused their securities to be out of
favor. If a portfolio manager's assessment of a company's
prospects is wrong, or if the market does not recognize the value
of the company, the price of its securities may decline or may not
approach the value that the portfolio manager anticipates.
Smaller The general risks associated with equity securities and liquidity
Company risk are particularly pronounced for securities of companies with
Risk smaller market capitalizations. These companies may have limited
product lines, markets or financial resources or they may depend
on a few key employees. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held
securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or
on a regional exchange, or may otherwise have limited liquidity.
The NFJ Value 25 Fund may have significant exposure to this risk
because it invests substantial assets in companies with medium-
sized market capitalizations, which are smaller and generally
less-seasoned than the largest companies.
11 PIMCO Funds: Multi-Manager Series
<PAGE>
Liquidity All of the Funds are subject to liquidity risk. Liquidity risk
Risk exists when particular investments are difficult to purchase or
sell, possibly preventing a Fund from selling such illiquid
securities at an advantageous time or price. Funds with principal
investment strategies that involve securities of companies with
smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have
the greatest exposure to liquidity risk.
Focused Focusing Fund investments in a small number of issuers, industries
Investment or foreign currencies increases risk. Funds, such as the NFJ Value
Risk 25 Fund, that invest in a relatively small number of issuers may
have more risk because changes in the value of a single security
or the impact of a single economic, political or regulatory
occurrence may have a greater adverse impact on the Fund's net
asset value. Some of those issuers also may present substantial
credit or other risks. Also, the Funds may from time to time have
greater risk to the extent they invest a substantial portion of
their assets in related industries such as "technology" or
"financial and business services," which may share common
characteristics and react similarly to market developments.
Credit All of the Funds are subject to credit risk. This is the risk that
Risk the issuer or the guarantor of a fixed income security, or the
counterparty to a repurchase agreement or a loan of portfolio
securities, is unable or unwilling to make timely principal and/or
interest payments, or to otherwise honor its obligations.
Securities are subject to varying degrees of credit risk, which
are often reflected in their credit ratings.
Management Each Fund is subject to management risk because it is an actively
Risk managed investment portfolio. PIMCO Advisors, NFJ and each
individual portfolio manager will apply investment techniques and
risk analyses in making investment decisions for the Funds, but
there can be no guarantee that these will produce the desired
results.
Prospectus 12
<PAGE>
Management of the Funds
Investment
Adviser
and
Administrator
PIMCO Advisors serves as the investment adviser and the
administrator (serving in its capacity as administrator, the
"Administrator") for the Funds. Subject to the supervision of the
Board of Trustees, PIMCO Advisors is responsible for managing,
either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other
administrative matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport
Beach, California 92660. Organized in 1987, PIMCO Advisors
provides investment management and advisory services to private
accounts of institutional and individual clients and to mutual
funds. As of September 30, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $[ ] billion in assets under
management.
PIMCO Advisors has retained an affiliated investment management
firm, NFJ Investment Group ("NFJ" or the "Sub-Adviser") to manage
each Fund's investments. See "Sub-Adviser" below. PIMCO Advisors
has retained its affiliate, Pacific Investment Management Company
LLC, to provide various administrative and other services required
by the Funds in its capacity as sub-administrator. PIMCO Advisors
and the sub-administrator may retain other affiliates to provide
certain of these services.
Advisory Each Fund pays PIMCO Advisors fees in return for providing or
Fees arranging for the provision of investment advisory services. PIMCO
Advisors (and not the Funds) pays a portion of the advisory fees
it receives to NFJ in return for NFJ's services as Sub-Adviser.
The Funds pay monthly advisory fees to PIMCO Advisors at the
following annual rates (stated as a percentage of the average
daily net assets of each Fund taken separately):
<TABLE>
<CAPTION>
Fund Advisory Fees
-------------------------------------------------
<S> <C>
NFJ Equity Income and NFJ Value Funds 0.45%
NFJ Value 25 Fund 0.50%
</TABLE>
Administrative
Fees
Each Fund pays for the administrative services it requires under a
fee structure which is essentially fixed. Institutional and
Administrative Class shareholders of each Fund pay an
administrative fee to PIMCO Advisors, computed as a percentage of
the Fund's assets attributable in the aggregate to those classes
of shares. PIMCO Advisors, in turn, provides or procures
administrative services for Institutional and Administrative Class
shareholders and also bears the costs of various third-party
services required by the Funds, including audit, custodial,
portfolio accounting, legal, transfer agency and printing costs.
The result of this fee structure is an expense level for
Institutional and Administrative Class shareholders of each Fund
that, with limited exceptions, is precise and predictable under
ordinary circumstances.
Institutional and Administrative Class shareholders of the Funds
pay PIMCO Advisors monthly administrative fees at the annual rate
of 0.25% (stated as a percentage of the average daily net assets
attributable in the aggregate to the Fund's Institutional and
Administrative Class shares):
Sub- The Sub-Adviser has full investment discretion and makes all
Adviser determinations with respect to the investment of a Fund's assets.
The following provides summary information about the Sub-Adviser,
including its investment specialty.
<TABLE>
<CAPTION>
Sub-Adviser Investment Specialty
--------------------------------------------------------------------
<S> <C>
NFJ Investment Group Value stocks that NFJ believes are undervalued
2121 San Jacinto, Suite and/or offer above-average dividend yields
1840
Dallas, TX 75201
</TABLE>
13 PIMCO Funds: Multi-Manager Series
<PAGE>
The following provides additional information about the Sub-
Adviser and the individual Portfolio Manager(s) who have or share
primary responsibility for managing the Funds' investments.
An affiliated sub-partnership of PIMCO Advisors, NFJ provides
advisory services to mutual funds and institutional accounts. NFJ
Investment Group, Inc., the predecessor investment adviser to NFJ,
commenced operations in 1989. Accounts managed by NFJ had combined
assets as of September 30, 2000 of approximately $[ ] billion.
The following individuals at NFJ share primary responsibility for
the noted Funds.
<TABLE>
<CAPTION>
Fund Portfolio Managers Since Recent Professional Experience
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
NFJ Equity Income Chris Najork 2000* Managing Director and founding
partner of NFJ. He has 30 years'
experience encompassing equity
research and portfolio management.
Prior to the formation of NFJ in
1989, he was a senior vice
president, senior portfolio manager
and analyst at NationsBank, which he
joined in 1974.
Benno J. Fischer 2000* Managing Director and founding
partner of NFJ. He has 32 years'
experience in portfolio management,
investment analysis and research.
Prior to the formation of NFJ in
1989, he was chief investment
officer (institutional and fixed
income), senior vice president and
senior portfolio manager at
NationsBank, which he joined in
1971. Prior to joining NationsBank,
Mr. Fischer was a securities analyst
at Chase Manhattan Bank and Clark,
Dodge.
NFJ Value Messrs. Najork and 2000* See above.
Fischer
Paul A. Magnuson 2000* Principal at NFJ. He is a Portfolio
Manager and Senior Research Analyst
with 14 years' experience in equity
analysis and portfolio management.
Prior to joining NFJ in 1992, he was
an assistant vice president at
NationsBank, which he joined in
1985. Within the Trust Investment
Qualitative Services Division of
NationsBank, he was responsible for
equity analytics and structured fund
management.
NFJ Value 25 Messrs. Najork and 2000* See above.
Fischer
E. Clifton Hoover, 2000* Principal at NFJ. He is a Portfolio
Jr. Manager with 13 years' experience in
financial analysis and portfolio
management. Prior to joining NFJ in
1997, he was associated with Credit
Lyonnais from 1991 to 1997, where he
served as a vice president and was
responsible for the financial
analysis and portfolio management of
a diversified portfolio. He began
his career as a financial analyst
with NationsBank in 1985.
-------
*Since inception of the Fund
</TABLE>
Distributor The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly
owned subsidiary of PIMCO Advisors. The Distributor, located at
2187 Atlantic Street, Stamford, Connecticut 06902, is a broker-
dealer registered with the Securities and Exchange Commission.
Adviser/ Shareholders of each Fund have approved a proposal permitting
Sub- PIMCO Advisors to enter into new or amended sub-advisory
Adviser agreements with one or more sub-advisers with respect to each Fund
Relationship without obtaining shareholder approval of such agreements, subject
to the conditions of an exemptive order that has been granted by
the Securities Exchange Commission. One of the conditions requires
the Board of Trustees to approve any such agreement. In addition,
the exemptive order prohibits PIMCO Advisors from entering into
sub-advisory agreements with affiliates of PIMCO Advisors without
shareholder approval, unless those affiliates are substantially
wholly-owned by PIMCO Advisors.
Prospectus 14
<PAGE>
Investment Options --
Institutional Class and Administrative Class Shares
The Trust offers investors Institutional Class and Administrative
Class shares of the Funds in this Prospectus.
The Trust does not charge any sales charges (loads) or other fees
in connection with purchases, sales (redemptions) or exchanges of
Institutional Class or Administrative Class shares. See
"Purchases, Redemptions and Exchanges" below.
Administrative Class shares are generally subject to a higher
level of operating expenses than Institutional Class shares due to
the additional service and/or distribution fees paid by
Administrative Class shares as described below. Therefore,
Institutional Class shares will generally pay higher dividends and
have a more favorable investment return than Administrative Class
shares.
. Service and Distribution (12b-1) Fees--Administrative Class
Shares. The Trust has adopted both an Administrative Services Plan
and a Distribution Plan for the Administrative Class shares of
each Fund. Each Plan has been adopted in accordance with the
requirements of Rule 12b-1 under the Investment Company Act of
1940 and is administered in accordance with that rule. However,
shareholders do not have the voting rights set forth in Rule 12b-1
with respect to the Administrative Services Plan.
Each Plan allows the Funds to use its Administrative Class assets
to reimburse financial intermediaries that provide services
relating to Administrative Class shares. The Distribution Plan
permits reimbursement for expenses in connection with the
distribution and marketing of Administrative Class shares and/or
the provision of shareholder services to Administrative Class
shareholders. The Administrative Services Plan permits
reimbursement for services in connection with the administration
of plans or programs that use Administrative Class shares of the
Funds as their funding medium and for related expenses.
In combination, the Plans permit a Fund to make total
reimbursements at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to its Administrative Class
shares. The same entity may not receive both distribution and
administrative services fees with respect to the same
Administrative Class assets, but may receive fees under each Plan
with respect to separate assets. Because these fees are paid out
of a Fund's Administrative Class assets on an ongoing basis, over
time they will increase the cost of an investment in
Administrative Class shares and may cost an investor more than
other types of sales charges.
. Arrangements with Service Agents. Institutional Class and
Administrative Class shares of the Funds may be offered through
certain brokers and financial intermediaries ("service agents")
that have established a shareholder servicing relationship with
the Trust on behalf of their customers. The Trust pays no
compensation to such entities other than service and/or
distribution fees paid with respect to Administrative Class
shares. Service agents may impose additional or different
conditions than the Trust on purchases, redemptions or exchanges
of Fund shares by their customers. Service agents may also
independently establish and charge their customers transaction
fees, account fees and other amounts in connection with purchases,
sales and redemptions of Fund shares in addition to any fees
charged by the Trust. These additional fees may vary over time and
would increase the cost of the customer's investment and lower
investment returns. Each service agent is responsible for
transmitting to its customers a schedule of any such fees and
information regarding any additional or different conditions
regarding purchases, redemptions and exchanges. Shareholders who
are customers of service agents should consult their service
agents for information regarding these fees and conditions.
15 PIMCO Funds: Multi-Manager Series
<PAGE>
Purchases, Redemptions and Exchanges
Purchasing Investors may purchase Institutional Class and Administrative
Shares Class shares of the Funds at the relevant net asset value ("NAV")
of that class without a sales charge or other fee.
Institutional Class shares are offered primarily for direct
investment by investors such as pension and profit sharing plans,
employee benefit trusts, endowments, foundations, corporations and
high net worth individuals. Institutional Class shares may also be
offered through certain financial intermediaries that charge their
customers transaction or other fees with respect to their
customers' investments in the Funds.
Administrative Class shares are offered primarily through
employee benefit plan alliances, broker-dealers and other
intermediaries, and each Fund pays service and/or distribution
fees to these entities for services they provide to Administrative
Class shareholders.
Pension and profit-sharing plans, employee benefit trusts and
employee benefit plan alliances and "wrap account" programs
established with broker-dealers or financial intermediaries may
purchase shares of either class only if the plan or program for
which the shares are being acquired will maintain an omnibus or
pooled account for each Fund and will not require a Fund to pay
any type of administrative payment per participant account to any
third party.
. Investment Minimums. The minimum initial investment for shares
of either class is $5 million, except that the minimum initial
investment for a registered investment adviser purchasing
Institutional Class shares for its clients through omnibus
accounts is $250,000 per Fund. At the discretion of PIMCO
Advisors, the minimum initial investment may be waived for
Institutional or Administrative Class shares offered to clients of
PIMCO Advisors, NFJ and their affiliates. In addition, the minimum
initial investment does not apply to Institutional Class shares
offered through fee-based programs sponsored and maintained by a
registered broker-dealer and approved by the Distributor in which
each investor pays an asset based fee at an annual rate of at
least 0.50% of the assets in the account to a financial
intermediary for investment advisory and/or administrative
services.
The Trust and the Distributor may waive the minimum initial
investment for other categories of investors at their discretion.
. Timing of Purchase Orders and Share Price Calculations. A
purchase order received by the Trust's transfer agent, National
Financial Data Services (the "Transfer Agent"), prior to the close
of regular trading (normally 4:00 p.m., Eastern time) on the New
York Stock Exchange, on a day the Trust is open for business,
together with payment made in one of the ways described below,
will be effected at that day's net asset value ("NAV"). An order
received after the close of regular trading on the New York Stock
Exchange will be effected at the NAV determined on the next
business day. However, orders received by certain retirement plans
and other financial intermediaries on a business day prior to the
close of regular trading on the New York Stock Exchange and
communicated to the Transfer Agent prior to 9:00 a.m., Eastern
time, on the following business day will be effected at the NAV
determined on the prior business day. The Trust is "open for
business" on each day the New York Stock Exchange is open for
trading, which excludes the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Purchase orders will be accepted only on days on
which the Trust is open for business.
. Initial Investment. Investors may open an account by
completing and signing a Client Registration Application and
mailing it to PIMCO Funds at 840 Newport Center Drive, Suite 300,
Newport Beach, California 92660. A Client Registration Application
may be obtained by calling 1-800-927-4648.
Prospectus 16
<PAGE>
Except as described below, an investor may purchase Institutional
Class and Administrative Class shares only by wiring federal funds
to the Transfer Agent, National Financial Data Services, 330 West
9th Street, 4th Floor, Kansas City, Missouri 64105. Before wiring
federal funds, the investor must telephone the Trust at 1-800-927-
4648 to receive instructions for wire transfer and must provide
the following information: name of authorized person, shareholder
name, shareholder account number, name of Fund and share class,
amount being wired, and wiring bank name.
An investor may purchase shares without first wiring federal
funds if the proceeds of the investment are derived from an
advisory account the investor maintains with PIMCO Advisors or one
of its affiliates or from an investment by broker-dealers,
institutional clients or other financial intermediaries which have
established a shareholder servicing relationship with the Trust on
behalf of their customers.
. Additional Investments. An investor may purchase additional
Institutional Class and Administrative Class shares of the Funds
at any time by calling the Trust and wiring federal funds to the
Transfer Agent as outlined above.
. Other Purchase Information. Purchases of a Fund's
Institutional Class and Administrative Class shares will be made
in full and fractional shares. In the interest of economy and
convenience, certificates for shares will not be issued.
The Trust and the Distributor each reserves the right, in its
sole discretion, to suspend the offering of shares of the Funds or
to reject any purchase order, in whole or in part, when, in the
judgment of management, such suspension or rejection is in the
best interests of the Trust.
An investor should invest in the Funds for long-term investment
purposes only. The Trust, PIMCO Advisors and NFJ each reserve the
right to restrict purchases of Fund shares (including exchanges)
when a pattern of frequent purchases and sales made in response to
short-term fluctuations in share price appears evident. Notice of
any such restrictions, if any, will vary according to the
particular circumstances.
Institutional Class and Administrative Class shares of the Trust
may not be qualified or registered for sale in all states.
Investors should inquire as to whether shares of a particular Fund
are available for offer and sale in the investor's state of
residence. Shares of the Trust may not be offered or sold in any
state unless registered or qualified in that jurisdiction or
unless an exemption from registration or qualification is
available.
Subject to the approval of the Trust, an investor may purchase
shares of a Fund with liquid securities that are eligible for
purchase by the Fund (consistent with the Fund's investment
policies and restrictions) and that have a value that is readily
ascertainable in accordance with the Trust's valuation policies.
These transactions will be effected only if PIMCO Advisors or NFJ
intends to retain the security in the Fund as an investment.
Assets purchased by a Fund in such a transaction will be valued in
generally the same manner as they would be valued for purposes of
pricing the Fund's shares, if such assets were included in the
Fund's assets at the time of purchase. The Trust reserves the
right to amend or terminate this practice at any time.
. Retirement Plans. Shares of the Funds are available for
purchase by retirement and savings plans, including Keogh plans,
401(k) plans, 403(b) custodial accounts, and Individual Retirement
Accounts. The administrator of a plan or employee benefits office
can provide participants or employees with detailed information on
how to participate in the plan and how to elect a Fund as an
investment option. Participants in a retirement or savings plan
may be permitted to elect different investment options, alter the
amounts contributed to the plan, or change how contributions are
allocated among investment options in accordance
17 PIMCO Funds: Multi-Manager Series
<PAGE>
with the plan's specific provisions. The plan administrator or
employee benefits office should be consulted for details. For
questions about participant accounts, participants should contact
their employee benefits office, the plan administrator, or the
organization that provides recordkeeping services for the plan.
Investors who purchase shares through retirement plans should be
aware that plan administrators may aggregate purchase and
redemption orders for participants in the plan. Therefore, there
may be a delay between the time the investor places an order with
the plan administrator and the time the order is forwarded to the
Transfer Agent for execution.
Redeeming . Redemptions by Mail. An investor may redeem (sell)
Shares Institutional Class and Administrative Class shares by submitting
a written request to PIMCO Funds at 840 Newport Center Drive,
Suite 300, Newport Beach, California 92660. The redemption request
should state the Fund from which the shares are to be redeemed,
the class of shares, the number or dollar amount of the shares to
be redeemed and the account number. The request must be signed
exactly as the names of the registered owners appear on the
Trust's account records, and the request must be signed by the
minimum number of persons designated on the Client Registration
Application that are required to effect a redemption.
. Redemptions by Telephone or Other Wire Communication. An
investor that elects this option on the Client Registration
Application (or subsequently in writing) may request redemptions
of shares by calling the Trust at 1-800-927-4648, by sending a
facsimile to 1-949-725-6830, or by other means of wire
communication (excluding electronic mail). Investors should state
the Fund and class from which the shares are to be redeemed, the
number or dollar amount of the shares to be redeemed, the account
number and the signature of an authorized signatory. Redemption
requests of an amount of $10 million or more may be initiated by
telephone, but must be confirmed in writing by an authorized party
prior to processing.
In electing a telephone redemption, the investor authorizes
Pacific Investment Management Company LLC and the Transfer Agent
to act on telephone instructions from any person representing
himself to be the investor, and reasonably believed by Pacific
Investment Management Company LLC or the Transfer Agent to be
genuine. Neither the Trust nor the Transfer Agent may be liable
for any loss, cost or expense for acting on instructions (whether
in writing or by telephone) believed by the party receiving such
instructions to be genuine and in accordance with the procedures
described in this Prospectus. Shareholders should realize that by
electing the telephone or wire redemption option, they may be
giving up a measure of security that they might have if they were
to redeem their shares in writing. Furthermore, interruptions in
telephone service may mean that a shareholder will be unable to
effect a redemption by telephone when desired. The Transfer Agent
also provides written confirmation of transactions initiated by
telephone as a procedure designed to confirm that telephone
instructions are genuine (written confirmation is also provided
for redemption requests received in writing). All telephone
transactions are recorded, and Pacific Investment Management
Company LLC or the Transfer Agent may request certain information
in order to verify that the person giving instructions is
authorized to do so. The Trust or Transfer Agent may be liable for
any losses due to unauthorized or fraudulent telephone
transactions if it fails to employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
All redemptions, whether initiated by letter or telephone, will be
processed in a timely manner, and proceeds will be forwarded by
wire in accordance with the redemption policies of the Trust
detailed below. See "Other Redemption Information."
Shareholders may decline telephone exchange or redemption
privileges after an account is opened by instructing the Transfer
Agent in writing at least seven business days prior to the date
the instruction is to be effective. Shareholders may experience
delays in exercising telephone redemption privileges during
periods of abnormal market activity. During periods of volatile
economic or market conditions, shareholders may wish to consider
transmitting redemption orders by telegram, facsimile or overnight
courier.
Prospectus 18
<PAGE>
Defined contribution plan participants may request redemptions by
contacting the employee benefits office, the plan administrator or
the organization that provides recordkeeping services for the
plan.
. Other Redemption Information. Redemption requests for Fund
shares are effected at the NAV per share next determined after
receipt of a redemption request by the Trust or its designee. The
request must properly identify all relevant information, such as
account number, redemption amount (in dollars or shares) and the
Fund name, and must be executed or initialed by the appropriate
signatories. A redemption request received by the Trust or its
designee prior to the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern time), on a day the
Trust is open for business, is effective on that day. A redemption
request received after that time becomes effective on the next
business day.
Redemption proceeds will ordinarily be wired to the investor's
bank within three business days after the redemption request, but
may take up to seven business days. Redemption proceeds will be
sent by wire only to the bank name designated on the Client
Registration Application. The Trust may suspend the right of
redemption or postpone the payment date at times when the New York
Stock Exchange is closed, or during certain other periods as
permitted under the federal securities laws.
For shareholder protection, a request to change information
contained in an account registration (for example, a request to
change the bank designated to receive wire redemption proceeds)
must be received in writing, signed by the minimum number of
persons designated on the Client Registration Application that are
required to effect a redemption, and accompanied by a signature
guarantee from any eligible guarantor institution, as determined
in accordance with the Trust's procedures. Shareholders should
inquire as to whether a particular institution is an eligible
guarantor institution. A signature guarantee cannot be provided by
a notary public. In addition, corporations, trusts, and other
institutional organizations are required to furnish evidence of
the authority of the persons designated on the Client Registration
Application to effect transactions for the organization.
Due to the relatively high cost of maintaining small accounts,
the Trust reserves the right to redeem Institutional Class and
Administrative Class shares in any account for their then-current
value (which will be promptly paid to the investor) if at any
time, due to redemption by the investor, the shares in the account
do not have a value of at least $100,000. A shareholder will
receive advance notice of a mandatory redemption and will be given
at least 30 days to bring the value of its account up to at least
$100,000.
The Trust agrees to redeem shares of each Fund solely in cash up
to the lesser of $250,000 or 1% of the Fund's net assets during
any 90-day period for any one shareholder. In consideration of the
best interests of the remaining shareholders, the Trust reserves
the right to pay any redemption proceeds exceeding this amount in
whole or in part by a distribution in kind of securities held by a
Fund in lieu of cash. Except for Funds with a tax-efficient
management strategy, it is highly unlikely that shares would ever
be redeemed in kind. When shares are redeemed in kind, the
redeeming shareholder should expect to incur transaction costs
upon the disposition of the securities received in the
distribution.
Redemptions of Fund shares may be suspended when trading on the
New York Stock Exchange is restricted or during an emergency which
makes it impracticable for the Funds to dispose of their
securities or to determine fairly the value of their net assets,
or during any other period as permitted by the Securities and
Exchange Commission for the protection of investors. Under these
and other unusual circumstances, the Trust may suspend redemptions
or postpone payment for more than seven days, as permitted by law.
Exchange
Privilege
An investor may exchange Institutional Class or Administrative
Class shares of a Fund described in this prospectus for shares of
the same class of any other Fund described in this prospectus
based on the respective NAVs of the shares involved. An exchange
may be made by following the redemption procedure described
19 PIMCO Funds: Multi-Manager Series
<PAGE>
above under "Redemptions by Mail" or, if the investor has elected
the telephone redemption option, by calling the Trust at 1-800-
927-4648.
An investor may exchange shares only with respect to Funds or
other eligible series that are registered in the investor's state
of residence or where an exemption from registration is available.
In addition, an exchange is generally a taxable event which will
generate capital gains or losses, and special rules may apply in
computing tax basis when determining gain or loss. See "Tax
Consequences" in this Prospectus and "Taxation" in the Statement
of Additional Information.
The Trust reserves the right to refuse exchange purchases if, in
the judgment of PIMCO Advisors, the purchase would adversely
affect a Fund and its shareholders. In particular, a pattern of
exchanges characteristic of "market-timing" strategies may be
deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. The Trust reserves the right to impose additional
restrictions on exchanges at any time, although it will attempt to
give shareholders 30 days' prior notice whenever it is reasonably
able to do so.
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Institutional and
Administrative Class shares is determined by dividing the total
value of a Fund's portfolio investments and other assets
attributable to that class, less any liabilities, by the total
number of shares outstanding of that class.
For purposes of calculating the NAV, portfolio securities and
other assets for which market quotes are available are stated at
market value. Market value is generally determined on the basis of
last reported sales prices, or if no sales are reported, based on
quotes obtained from a quotation reporting system, established
market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily
available may be valued, pursuant to procedures established by the
Board of Trustees, with reference to other securities or indices.
Short-term investments having a maturity of 60 days or less are
generally valued at amortized cost. Exchange traded options,
futures and options on futures are valued at the settlement price
determined by the exchange. Other securities for which market
quotes are not readily available are valued at fair value as
determined in good faith by the Board of Trustees or persons
acting at their direction.
Investments initially valued in currencies other than the U.S.
dollar are converted to U.S. dollars using exchange rates obtained
from pricing services. As a result, the NAV of a Fund's shares may
be affected by changes in the value of currencies in relation to
the U.S. dollar. The value of securities traded in markets outside
the United States or denominated in currencies other than the U.S.
dollar may be affected significantly on a day that the New York
Stock Exchange is closed and an investor is not able to purchase,
redeem or exchange shares.
Fund shares are valued at the close of regular trading (normally
4:00 p.m., Eastern time) (the "NYSE Close") on each day that the
New York Stock Exchange is open. For purposes of calculating the
NAV, the Funds normally use pricing data for domestic equity
securities received shortly after the NYSE Close and do not
normally take into account trading, clearances or settlements that
take place after the NYSE Close. Domestic fixed income and foreign
securities are normally priced using data reflecting the earlier
closing of the principal markets for those securities. Information
that becomes known to the Funds or their agents after the NAV has
been calculated on a particular day will not generally be used to
retroactively adjust the price of a security or the NAV determined
earlier that day.
In unusual circumstances, instead of valuing securities in the
usual manner, the Funds may value securities at fair value or
estimate their value as determined in good faith by the Board of
Trustees or persons acting at their direction pursuant to
procedures approved by the Board of Trustees. Fair valuation may
also be used by the Board of Trustees if extraordinary events
occur after the close of the relevant market but prior to the NYSE
Close.
Prospectus 20
<PAGE>
Under certain circumstances, the per share NAV of the
Administrative Class shares of the Funds may be lower than the per
share NAV of the Institutional Class shares as a result of the
daily expense accruals of the service and/or distribution fees
paid by Administrative Class shares. Generally, for Funds that pay
income dividends, those dividends are expected to differ over time
by approximately the amount of the expense accrual differential
between the two classes.
Fund Distributions
Each Fund distributes substantially all of its net investment
income to shareholders in the form of dividends. A shareholder
begins earning dividends on Fund shares the day after the Trust
receives the shareholder's purchase payment. Dividends paid by
each Fund with respect to each class of shares are calculated in
the same manner and at the same time, but dividends on
Administrative Class shares are expected to be lower than
dividends on Institutional Class shares as a result of the service
and/or distribution fees applicable to Administrative Class
shares.
The NFJ Equity Income and NFJ Value Funds each intend to declare
and distribute income dividends to shareholders of record at least
quarterly. The NFJ Value 25 Fund intends to declare and distribute
income dividends to shareholders of record at least annually. In
addition, each Fund distributes any net capital gains it earns
from the sale of portfolio securities to shareholders no less
frequently than annually. Net short-term capital gains may be paid
more frequently.
A Fund's dividend and capital gain distributions with respect to
a particular class of shares will automatically be reinvested in
additional shares of the same class of the Fund at NAV unless the
shareholder elects to have the distributions paid in cash. A
shareholder may elect to have distributions paid in cash on the
Client Registration Application or by submitting a written
request, signed by the appropriate signatories, indicating the
account number, Fund name(s) and wiring instructions. Shareholders
do not pay any sales charges or other fees on the receipt of
shares received through the reinvestment of Fund distributions.
For further information on distribution options, please contact
the Trust at 1-800-927-4648.
Tax Consequences
. Taxes on Fund Distributions. A shareholder subject to U.S.
federal income tax will be subject to tax on Fund distributions
whether they are paid in cash or reinvested in additional shares
of the Funds. For federal income tax purposes, Fund distributions
will be taxable to the shareholder as either ordinary income or
capital gains.
Fund dividends (i.e., distributions of investment income) are
taxable to shareholders as ordinary income. Federal taxes on Fund
distributions of gains are determined by how long the Fund owned
the investments that generated the gains, rather than how long the
shareholder owned the shares. Distributions of gains from
investments that a Fund owned for more than 12 months will
generally be taxable to shareholders as capital gains.
Distributions of gains from investments that the Fund owned for 12
months or less will generally be taxable as ordinary income.
Fund distributions are taxable to shareholders even if they are
paid from income or gains earned by a Fund prior to the
shareholder's investment and thus were included in the price paid
for the shares. For example, a shareholder who purchases shares on
or just before the record date of a Fund distribution will pay
full price for the shares and may receive a portion of his or her
investment back as a taxable distribution.
21 PIMCO Funds: Multi-Manager Series
<PAGE>
. Taxes on Redemptions or Exchanges of Shares. Any gain
resulting from the sale of Fund shares will generally be subject
to federal income tax. When a shareholder exchanges shares of a
Fund for shares of another series, the transaction generally will
be treated as a sale of the Fund shares for these purposes, and
any gain on those shares will generally be subject to federal
income tax.
. A Note on Foreign Investments. A Fund's investments in foreign
securities, if any, may be subject to foreign withholding taxes.
In that case, the Fund's yield on those securities would be
decreased. In addition, a Fund's investments in foreign securities
or foreign currencies may increase or accelerate the Fund's
recognition of ordinary income and may affect the timing or amount
of the Fund's distributions.
This section relates only to federal income tax; the consequences
under other tax laws may differ. Shareholders should consult their
tax advisors as to the possible application of foreign, state and
local income tax laws to Fund dividends and capital distributions.
Please see the Statement of Additional Information for additional
information regarding the tax aspects of investing in the Funds.
Characteristics and Risks of
Securities and Investment Techniques
This section provides additional information about some of the
principal investments and related risks of the Funds identified
under "Summary Information" above. It also describes
characteristics and risks of additional securities and investment
techniques that are not necessarily principal investments or
strategies but may be used by the Funds from time to time. Most of
these securities and investment techniques are discretionary,
which means that the portfolio managers can decide whether to use
them or not. This Prospectus does not attempt to disclose all of
the various types of securities and investment techniques that may
be used by the Funds. As with any mutual fund, investors in the
Funds must rely on the professional investment judgment and skill
of the Funds' Adviser and Sub-Adviser and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the
Statement of Additional Information for more detailed information
about the securities and investment techniques described in this
section and about other strategies and techniques that may be used
by the Funds.
Fixed Fixed income securities are obligations of the issuer to make
Income payments of principal and/or interest on future dates, and include
Securities corporate and government bonds, notes, certificates of deposit,
and commercial paper, convertible securities and mortgage-backed and
Defensive other asset-backed securities.
Strategies
Under normal circumstances, the Funds intend to be fully invested
in common stocks (aside from cash management practices), except
that each of the Funds may temporarily hold up to 10% of its
assets in cash and cash equivalents for defensive purposes in
response to unfavorable market and other conditions. These
temporary defensive strategies would be inconsistent with the
investment objective and principal investment strategies of each
of the Funds and may adversely affect a Fund's ability to achieve
its investment objective.
Companies
With
Smaller
Market
Capitalizations
Each of the Funds may invest in securities of companies with
market capitalizations that are small compared to other publicly
traded companies. The NFJ Value 25 Fund has significant exposure
to the risks described below because it invests primarily in
companies with medium-sized market capitalization, which are
smaller and generally less well-known or seasoned than the largest
companies. Companies which are smaller and less well-known or
seasoned than larger, more widely held companies may offer greater
opportunities for capital appreciation, but may also involve risks
different from, or greater than, risks normally associated with
larger companies. Larger companies generally have greater
financial resources, more extensive research and development,
manufacturing, marketing and service capabilities, and more
stability and greater depth of management and technical personnel
than smaller companies. Smaller
Prospectus 22
<PAGE>
companies may have limited product lines, markets or financial
resources or may depend on a small, inexperienced management
group. Securities of smaller companies may trade less frequently
and in lesser volume than more widely held securities and their
values may fluctuate more abruptly or erratically than securities
of larger companies. They may also trade in the over-the-counter
market or on a regional exchange, or may otherwise have limited
liquidity. These securities may therefore be more vulnerable to
adverse market developments than securities of larger companies.
Also, there may be less publicly available information about
smaller companies or less market interest in their securities as
compared to larger companies, and it may take longer for the
prices of the securities to reflect the full value of a company's
earnings potential or assets.
Because securities of smaller companies may have limited
liquidity, a Fund may have difficulty establishing or closing out
its positions in smaller companies at prevailing market prices. As
a result of owning large positions in this type of security, a
Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if
redemptions require the Fund to liquidate its securities
positions. For these reasons, it may be prudent for a Fund with a
relatively large asset size to limit the number of relatively
small positions it holds in securities having limited liquidity in
order to minimize its exposure to such risks, to minimize
transaction costs, and to maximize the benefits of research. As a
consequence, as a Fund's asset size increases, the Fund may reduce
its exposure to illiquid smaller capitalization securities, which
could adversely affect performance.
The Funds may purchase securities in initial public offerings
(IPOs). These securities are subject to many of the same risks of
investing in companies with smaller market capitalizations.
Securities issued in IPOs have no trading history, and information
about the companies may be available for very limited periods. In
addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in
IPOs to the extent desired because, for example, only a small
portion of the securities being offered in an IPO may be made
available to the Fund or because under certain market conditions
few companies may issue securities in IPOs.
Each of the Funds may invest in foreign securities, including
Foreign American Depository Receipts ("ADRs"). ADRs are dollar-denominated
(non- receipts issued generally by domestic banks and representing the
U.S.) deposit with the bank of a security of a foreign issuer, and are
Securities publicly traded on exchanges or over-the-counter in the United
States.
Investing in foreign securities involves special risks and
considerations not typically associated with investing in U.S.
securities and shareholders should consider carefully the
substantial risks involved for Funds that invest in these
securities. These risks include: differences in accounting,
auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the
possibility of nationalization, expropriation or confiscatory
taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign
economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rate
of inflation, capital reinvestment, resources, self-sufficiency
and balance of payments position. The securities markets, values
of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign
securities and dividends and interest payable on those securities
may be subject to foreign taxes, including taxes withheld from
payments on those securities. Foreign securities often trade with
less frequency and volume than domestic securities and therefore
may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic
investments and additional transaction costs with respect to
foreign currency conversions. Changes in foreign exchange rates
also will affect the value of securities denominated or quoted in
foreign currencies.
23 PIMCO Funds: Multi-Manager Series
<PAGE>
Foreign A Fund that invests directly in foreign currencies or in
Currencies securities that trade in, and receive revenues in, foreign
currencies will be subject to currency risk. Foreign currency
exchange rates may fluctuate significantly over short periods of
time. They generally are determined by supply and demand and the
relative merits of investments in different countries, actual or
perceived changes in interest rates and other complex factors.
Currency exchange rates also can be affected unpredictably by
intervention (or the failure to intervene) by U.S. or foreign
governments or central banks, or by currency controls or political
developments. For example, significant uncertainty surrounds the
recent introduction of the euro (a common currency unit for the
European Union) in January 1999 and the effect it may have on the
value of securities denominated in local European currencies.
These and other currencies in which the Funds' assets are
denominated may be devalued against the U.S. dollar, resulting in
a loss to the Funds.
Convertible Each Fund may invest in convertible securities. Convertible
Securities securities are generally preferred stocks and other securities,
including fixed income securities and warrants, that are
convertible into or exercisable for common stock at either a
stated price or a stated rate. The price of a convertible security
will normally vary in some proportion to changes in the price of
the underlying common stock because of this conversion or exercise
feature. However, the value of a convertible security may not
increase or decrease as rapidly as the underlying common stock. A
convertible security will normally also provide income and is
subject to interest rate risk. While convertible securities
generally offer lower interest or dividend yields than non-
convertible fixed income securities of similar quality, their
value tends to increase as the market value of the underlying
stock increases and to decrease when the value of the underlying
stock decreases. Also, a Fund may be forced to convert a security
before it would otherwise choose, which may have an adverse effect
on the Fund's ability to achieve its investment objective.
Credit The Funds may invest in securities based on their credit ratings
Ratings assigned by rating agencies such as Moody's Investors Service,
and Inc. ("Moody's") and Standard & Poor's Ratings Services ("S&P").
Unrated Moody's, S&P and other rating agencies are private services that
Securities provide ratings of the credit quality of fixed income securities,
including convertible securities. The Appendix to the Statement of
Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a
rating agency are not absolute standards of credit quality and do
not evaluate market risk. Rating agencies may fail to make timely
changes in credit ratings and an issuer's current financial
condition may be better or worse than a rating indicates. A Fund
will not necessarily sell a security when its rating is reduced
below its rating at the time of purchase. PIMCO Advisors and NFJ
do not rely solely on credit ratings, and develop their own
analysis of issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a
rating agency) if its portfolio manager determines that the
security is of comparable quality to a rated security that the
Fund may purchase. Unrated securities may be less liquid than
comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security's
comparative credit rating.
Loans of For the purpose of achieving income, each Fund may lend its
Portfolio portfolio securities to brokers, dealers, and other financial
Securities institutions provided a number of conditions are satisfied,
including that the loan is fully collateralized. Please see
"Investment Objectives and Policies" in the Statement of
Additional Information for details. When a Fund lends portfolio
securities, its investment performance will continue to reflect
changes in the value of the securities loaned, and the Fund will
also receive a fee or interest on the collateral. Securities
lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to
return the security loaned or becomes insolvent. A Fund may pay
lending fees to the party arranging the loan.
Prospectus 24
<PAGE>
Short Each Fund may make short sales as part of its overall portfolio
Sales management strategies or to offset a potential decline in the
value of a security. A short sale involves the sale of a security
that is borrowed from a broker or other institution to complete
the sale. A Fund may only enter into short selling transactions if
the security sold short is held in the Fund's portfolio or if the
Fund has the right to acquire the security without the payment of
further consideration. For these purposes, a Fund may also hold or
have the right to acquire securities which, without the payment of
any further consideration, are convertible into or exchangeable
for the securities sold short. Short sales expose a Fund to the
risk that it will be required to acquire, convert or exchange
securities to replace the borrowed securities (also known as
"covering" the short position) at a time when the securities sold
short have appreciated in value, thus resulting in a loss to the
Fund.
When- Each Fund may purchase securities which it is eligible to purchase
Issued, on a when-issued basis, may purchase and sell such securities for
Delayed delayed delivery and may make contracts to purchase such
Delivery securities for a fixed price at a future date beyond normal
and settlement time (forward commitments). When-issued transactions,
Forward delayed delivery purchases and forward commitments involve a risk
Commitment of loss if the value of the securities declines prior to the
Transactionssettlement date. This risk is in addition to the risk that the
Fund's other assets will decline in value. Therefore, these
transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues
on securities a Fund has committed to purchase prior to the time
delivery of the securities is made, although a Fund may earn
income on securities it has segregated to cover these positions.
Repurchase Each Fund may enter into repurchase agreements, in which the Fund
Agreements purchases a security from a bank or broker-dealer that agrees to
repurchase the security at the Fund's cost plus interest within a
specified time. If the party agreeing to repurchase should
default, the Fund will seek to sell the securities which it holds.
This could involve procedural costs or delays in addition to a
loss on the securities if their value should fall below their
repurchase price. Repurchase agreements maturing in more than
seven days are considered illiquid securities.
Reverse Each Fund may enter into reverse repurchase agreements, subject to
Repurchase the Fund's limitations on borrowings. A reverse repurchase
Agreements agreement involves the sale of a security by a Fund and its
and Other agreement to repurchase the instrument at a specified time and
Borrowings price, and may be considered a form of borrowing for some
purposes. A Fund will segregate assets determined to be liquid by
PIMCO Advisors or NFJ in accordance with procedures established by
the Board of Trustees to cover its obligations under reverse
repurchase agreements. A Fund also may borrow money for investment
purposes subject to any policies of the Fund currently described
in this Prospectus or in the Statement of Additional Information.
Reverse repurchase agreements and other forms of borrowings may
create leveraging risk for a Fund.
Illiquid Each Fund may invest in securities that are illiquid so long as
Securities not more than 15% of the value of the Fund's net assets (taken at
market value at the time of investment) would be invested in such
securities. Certain illiquid securities may require pricing at
fair value as determined in good faith under the supervision of
the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by the
Fund, and transactions in illiquid securities may entail
registration expenses and other transaction costs that are higher
than those for transactions in liquid securities. The term
"illiquid securities" for this purpose means securities that
cannot be disposed of within seven days in the ordinary course of
business at approximately the amount at which a Fund has valued
the securities. Please see "Investment Objectives and Policies" in
the Statement of Additional Information for a listing of various
securities that are generally considered to be illiquid for these
purposes. Restricted securities, i.e., securities subject to legal
or contractual restrictions on resale, may be illiquid. However,
some restricted securities (such as securities issued pursuant to
Rule 144A under the Securities Act of 1933 and certain commercial
paper) may be treated as liquid, although they may be less liquid
than registered securities traded on established secondary
markets.
25 PIMCO Funds: Multi-Manager Series
<PAGE>
Investment Each of the Funds may invest up to 5% of its assets in securities
in Other of other investment companies, such as closed-end management
Investment investment companies, or in other pooled investment vehicles. As a
Companies shareholder of an investment company, a Fund may indirectly bear
service and other fees which are in addition to the fees the Fund
pays its service providers.
Portfolio The length of time a Fund has held a particular security is not
Turnover generally a consideration in investment decisions. A change in the
securities held by a Fund is known as "portfolio turnover." Each
Fund may engage in active and frequent trading of portfolio
securities to achieve its investment objective and principal
investment strategies, particularly during periods of volatile
market movements. High portfolio turnover (e.g., over 100%)
involves correspondingly greater expenses to a Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable
capital gains, including short-term capital gains (which are taxed
at ordinary income tax rates when distributed to shareholders who
are individuals). The trading costs and tax effects associated
with portfolio turnover may adversely affect a Fund's performance.
Changes The investment objective of each Fund may be changed by the Board
in of Trustees without shareholder approval. Unless otherwise stated
Investment in the Statement of Additional Information, all investment
Objectives policies of the Funds may be changed by the Board of Trustees
and without shareholder approval. If there is a change in a Fund's
Policies investment objective or policies, including a change approved by
shareholder vote, shareholders should consider whether the Fund
remains an appropriate investment in light of their then current
financial position and needs.
In addition to the risks described under "Summary of Principal
New and Risks" above and in this section, the Funds are newly formed and
Smaller- therefore have limited performance histories for investors to
Sized evaluate. Also, it is possible that the Funds may invest in
Funds securities offered in initial public offerings and other types of
transactions (such as private placements) which, because of the
Funds' size, may have a disproportionate impact on the Funds'
performance results. The Funds would not necessarily have achieved
the same performance results if their aggregate net assets had
been greater.
Percentage Unless otherwise stated, all percentage limitations on Fund
Investment investments listed in this Prospectus will apply at the time of
Limitations investment. A Fund would not violate these limitations unless an
excess or deficiency occurs or exists immediately after and as a
result of an investment.
Other The Funds may invest in other types of securities and use a
Investments variety of investment techniques and strategies which are not
and described in this Prospectus. These securities and techniques may
Techniques subject the Funds to additional risks. Please see the Statement of
Additional Information for additional information about the
securities and investment techniques described in this Prospectus
and about additional securities and techniques that may be used by
the Funds.
Financial Highlights
The Funds did not offer Institutional or Administrative Class
shares during the periods ended June 30, 2000. Therefore,
financial highlights are not provided for the Funds.
[To be updated in a subsequent post-effective amendment.]
Prospectus 26
<PAGE>
(This page intentionally left blank)
<PAGE>
(This page intentionally left blank)
<PAGE>
-------------------------------------------------------------------
PIMCO INVESTMENT ADVISER AND ADMINISTRATOR
Funds: PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA
Multi- 92660
Manager
Series
-------------------------------------------------------------------
SUB-ADVISER
NFJ Investment Group, 2121 San Jacinto, Suite 1840, Dallas, TX
75201
-------------------------------------------------------------------
CUSTODIAN
State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO
64105
-------------------------------------------------------------------
TRANSFER AGENT
National Financial Data Services, 330 W. 9th Street, 4th Floor,
Kansas City, MO 64105
-------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
-------------------------------------------------------------------
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
-------------------------------------------------------------------
Not part of the Prospectus
<PAGE>
The Trust's Statement of Additional Information ("SAI") and annual and
semi-annual reports to shareholders include additional information about the
Funds. The SAI and the financial statements included in the Funds' most recent
annual report to shareholders are incorporated by reference into this
Prospectus, which means they are part of this Prospectus for legal purposes. The
Funds' annual report discusses the market conditions and investment strategies
that significantly affected each Fund's performance during its last fiscal
year.
You may get free copies of any of these materials, request other information
about a Fund, or make shareholder inquiries by calling the Trust at 1-800-927-
4648 or PIMCO Infolink Audio Response Network at 1-800-987-4626, or by writing
to:
PIMCO Funds:
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust on the EDGAR database on the Commission's Web site
at www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or by electronic request at the following e-mail
address: [email protected]. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-6161.
File No. 811-6161
[PIMCO Logo appears here]
PIMCO Funds
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
<PAGE>
SUBJECT TO COMPLETION DATED JANUARY 14, 2000
PIMCO Funds Prospectus
PIMCO Funds: This Prospectus describes 2 mutual funds offered by
Multi-Manager Series PIMCO Funds: Multi-Manager Series. The Funds provide
access to the professional investment advisory
services offered by PIMCO Advisors L.P. and its
affiliate, Cadence Capital Management.
November 1, 2000
This Prospectus explains what you should know about
Share Classes the Funds before you invest. Please read it
Institutional and carefully.
Administrative
The Securities and Exchange Commission has not
approved or disapproved these securities or
determined if this Prospectus is truthful or
complete. Any representation to the contrary is a
criminal offense.
<PAGE>
INTENTIONALLY LEFT BLANK
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information............................................................................... 3
Fund Summaries
Cadence Capital Appreciation Fund.............................................................. 4
Cadence Mid-Cap Growth Fund.................................................................... 6
Summary of Principal Risks........................................................................ 8
Management of the Funds........................................................................... 10
Investment Options -- Institutional Class and Administrative Class Shares......................... 13
Purchases, Redemptions and Exchanges.............................................................. 14
How Fund Shares Are Priced........................................................................ 18
Fund Distributions................................................................................ 20
Tax Consequences.................................................................................. 20
Characteristics and Risks of Securities and Investment Techniques................................. 20
</TABLE>
<PAGE>
Summary Information
The table below lists the investment objectives and certain investment
characteristics of the Funds. Other important characteristics are described in
the individual Fund Summaries beginning on page __.
<TABLE>
<CAPTION>
Approximate
Number of
Sub-Adviser Fund Investment Objective Main Investments Holdings
====================================================================================================================================
<S> <C> <C> <C> <C>
Cadence Cadence Growth of capital Common stocks of companies with market capitalizations of at
Capital Capital least $1 billion that have improving fundamentals and whose 60-100
Management Appreciation stock is reasonably valued by the market.
_______________________________________________________________________________________________________
Cadence Growth of capital Growth of capital Common stocks of companies with market 60-100
Mid-Cap capitalizations of more than $500 million (excluding the
Growth largest 200 companies) Growth that have improving
fundamentals and whose stock is reasonably valued by the
market.
====================================================================================================================================
</TABLE>
<PAGE>
Cadence Capital Appreciation Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments and Seeks growth of capital Larger capitalization At least $1 billion
Strategies common stocks
Approximate Number Dividend Frequency
of Holdings At least annually
60-100
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with larger market capitalizations that have improving fundamentals
(based on growth criteria) and whose stock is reasonably valued by the
market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers the 1,000 largest publicly traded companies
(in terms of market capitalization) in the U.S. The team screens the
stocks in this universe for a series of growth criteria, such as
dividend growth, earnings growth, relative growth of earnings over
time (earnings momentum) and the company's history of meeting earnings
targets (earnings surprise), and also value criteria, such as price-
to-earnings, price-to-book and price-to-cash flow ratios. The team
then selects individual stocks by subjecting the top 10% of the stocks
in the screened universe to a rigorous analysis of company factors,
such as strength of management, competitive industry position, and
business prospects, and financial statement data, such as earnings,
cash flows and profitability. The team may interview company
management in making investment decisions. The Fund's capitalization
criteria applies at the time of investment.
The portfolio management team rescreens the universe frequently and
seeks to consistently achieve a favorable balance of growth and value
characteristics for the Fund. The team sells a stock when it falls
below the median ranking, has negative earnings surprises, or shows
poor performance relative to all stocks in the Fund's capitalization
range or to companies in the same business sector. A stock may also
be sold if its weighting in the portfolio becomes excessive (normally
above 2% of the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other conditions.
________________________________________________________________________________
Principal Risks
Among the principal risks of investing in the Fund, which could adversely affect
its net asset value, yield and total return, are:
. Market Risk . Value Securities Risk . Credit Risk
. Issuer Risk . Growth Securities Risk . Management Risk
Please see "Summary of Principal Risks" following the Fund Summaries for a
description of these and other risks of investing in the Fund.
<PAGE>
________________________________________________________________________________
Performance Information
The Fund commenced operations in __________, 2000 and does not yet have a full
calendar year of performance. Thus, no bar chart or Average Annual Total
Returns table is included for the Fund.
<PAGE>
Cadence Capital Appreciation Fund (continued)
--------------------------------------------------------------------------------
Fees and Expenses of the Fund
These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets):
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees Expenses(1) Expenses
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional 0.45% None 0.25% 0.70%
----------------------------------------------------------------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Other Expenses is based on estimated amounts for the current fiscal year and
reflects a 0.25% Administrative Fee paid by the class.
Examples. The Examples below are intended to help you compare the cost of
investing in Institutional Class or Administrative Class shares of the Fund with
the costs of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods indicated, and
then redeem all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the reinvestment of all
dividends and distributions, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
Share Class Year 1 Year 3
--------------------------------------------------------------
Institutional $ 72 $ 224
--------------------------------------------------------------
Administrative 97 303
--------------------------------------------------------------
<PAGE>
Cadence Mid-Cap Growth Fund
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Principal Investment Objective Fund Focus Approximate Capitalization Range
Investments and Seeks growth of capital Medium More than $500 million
Strategies capitalization (excluding the largest 200
common stocks companies)
Approximate Number Dividend Frequency
of Holdings At lease annually
60-100
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in common stocks of companies
with medium market capitalizations that have improving fundamentals
(based on growth criteria) and whose stock is reasonably valued by the
market (based on value criteria).
In making investment decisions for the Fund, the portfolio
management team considers companies in the U.S. with market
capitalizations of more than $500 million, but excluding the 200
largest capitalization companies. The team screens the stocks in this
universe for a series of growth criteria, such as dividend growth,
earnings growth, relative growth of earnings over time (earnings
momentum) and the company's history of meeting earnings targets
(earnings surprise), and also value criteria, such as price-to-
earnings, price-to-book and price-to-cash flow ratios. The team then
selects individual stocks by subjecting the top 10% of the stocks in
the screened universe to a rigorous analysis of company factors, such
as strength of management, competitive industry position, and business
prospects, and financial statement data, such as earnings, cash flows
and profitability. The team may interview company management in making
investment decisions. The Fund's capitalization criteria applies at
the time of investment.
The portfolio management team rescreens the universe frequently and
seeks to consistently achieve a favorable balance of growth and value
characteristics for the Fund. The team sells a stock when it falls
below the median ranking, has negative earnings surprises, or shows
poor price performance relative to all stocks in the Fund's
capitalization range or to companies in the same business sector. A
stock may also be sold if its weighting in the portfolio becomes
excessive (normally above 2% of the Fund's investments).
The Fund intends to be fully invested in common stock (aside from
certain cash management practices) and will not make defensive
investments in response to unfavorable market and other conditions.
--------------------------------------------------------------------------------
Principal Risks
Among the principal risks of investing in the Fund, which could adversely affect
its net asset value, yield and total return, are:
. Market Risk . Growth Securities Risk . Credit Risk
. Issuer Risk . Smaller Company Risk . Management Risk
. Value Securities Risk . Liquidity Risk
Please see "Summary of Principal Risks" following the Fund Summaries for a
description of these and other risks of investing in the Fund.
<PAGE>
--------------------------------------------------------------------------------
Performance Information
The Fund commenced operations in __________, 2000 and does not yet have a full
calendar year of performance. Thus, no bar chart or Average Annual Total
Returns table is included for the Fund.
<PAGE>
Cadence Mid-Cap Growth Fund (continued)
--------------------------------------------------------------------------------
Fees and Expenses of the Fund
These tables describe the fees and expenses you may pay if you buy and hold
Institutional Class or Administrative Class shares of the Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets):
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Servic Other Fund Operating Expenses
Share Class Fees (12b-1) Fees Expenses(1)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional 0.45% None 0.25% 0.70%
-----------------------------------------------------------------------------------------------------------------------
Administrative 0.45 0.25% 0.25 0.95
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Other Expenses is based on estimated amounts for the current fiscal year and
reflects a 0.25% Administrative Fee paid by the class.
Examples. The Examples below are intended to help you compare the cost of
investing in Institutional Class or Administrative Class shares of the Fund with
the costs of investing in other mutual funds. The Examples assume that you
invest $10,000 in the noted class of shares for the time periods indicated, and
then redeem all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the reinvestment of all
dividends and distributions, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the Examples show what your
costs would be based on these assumptions.
Share Class Year 1 Year 3
-----------------------------------------------
Institutional $ 72 $ 224
Administrative 97 303
-----------------------------------------------
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of that Fund's
investments. Many factors can affect those values. The factors that are most
likely to have a material effect on a particular Fund's portfolio as a whole are
called "principal risks." The principal risks of each Fund are identified in the
Fund Summaries and are summarized in this section. Each Fund may be subject to
additional principal risks and risks other than those described below because
the types of investments made by each Fund can change over time. Securities and
investment techniques mentioned in this summary and described in greater detail
under "Characteristics and Risks of Securities and Investment Techniques" appear
in bold type. That section and "Investment Objectives and Policies" in the
Statement of Additional Information also include more information about the
Funds, their investments and the related risks. There is no guarantee that a
Fund will be able to achieve its investment objective.
Market Risk
The market price of securities owned by a Fund may go up or down, sometimes
rapidly or unpredictably. Each of the Funds normally invests most of its assets
in common stocks and/or other equity securities. A principal risk of investing
in each Fund is that the equity securities in its portfolio will decline in
value due to factors affecting equity securities markets generally or particular
industries represented in those markets. The values of equity securities may
decline due to general market conditions which are not specifically related to a
particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may also decline
due to factors which affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. Equity securities generally have greater price volatility than fixed
income securities.
Issuer Risk
The value of a security may also decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer's goods or services.
Value Securities Risk
The Funds place particular emphasis on investing in securities of companies that
may not be expected to experience significant earnings growth, but whose
securities its portfolio manager believes are selling at a price lower than
their true value (value securities). Companies that issue value securities may
have experienced adverse business developments or may be subject to special
risks that have caused their securities to be out of favor. If a portfolio
manager's assessment of a company's prospects is wrong, or if the market does
not recognize the value of the company, the price of its securities may decline
or may not approach the value that the portfolio manager anticipates.
Growth Securities Risk
The Funds place particular emphasis on investing in equity securities of
companies that its portfolio manager believes will experience relatively rapid
earnings growth (growth securities). Growth securities typically trade at
higher multiples of current earnings than other securities. Therefore, the
values of growth securities may be more sensitive to changes in current or
expected earnings than the values of other securities.
<PAGE>
Smaller Company Risk
The general risks associated with equity securities and liquidity risk are
particularly pronounced for securities of companies with smaller market
capitalizations. These companies may have limited product lines, markets or
financial resources or they may depend on a few key employees. Securities of
smaller companies may trade less frequently and in lesser volume than more
widely held securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. The Cadence Mid-Cap Growth
Fund has significant exposure to this risk because it invests substantial assets
in companies with medium-sized market capitalizations, which are smaller and
generally less well-known or seasoned than the largest companies.
Liquidity Risk
Each of the Funds are subject to liquidity risk. Liquidity risk exists when
particular investments are difficult to purchase or sell, possibly preventing a
Fund from selling such illiquid securities at an advantageous time or price.
Funds with principal investment strategies that involve securities of companies
with smaller market capitalizations or securities with substantial market and/or
credit risk tend to have the greatest exposure to liquidity risk.
Credit Risk
Each of the Funds are subject to credit risk. This is the risk that the issuer
or the guarantor of a fixed income security, or the counterparty to a repurchase
agreement or a loan of portfolio securities, is unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor its
obligations. Securities are subject to varying degrees of credit risk, which are
often reflected in their credit ratings.
Management Risk
Each Fund is subject to management risk because it is an actively managed
investment portfolio. PIMCO Advisors, Cadence and each individual portfolio
manager will apply investment techniques and risk analyses in making investment
decisions for the Funds, but there can be no guarantee that these will produce
the desired results.
Management of the Funds
Investment Adviser and Administrator
PIMCO Advisors serves as the investment adviser and the administrator (serving
in its capacity as administrator, the "Administrator") for the Funds. Subject to
the supervision of the Board of Trustees, PIMCO Advisors is responsible for
managing, either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other administrative
matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport Beach,
California 92660. Organized in 1987, PIMCO Advisors provides investment
management and advisory services to private accounts of institutional and
individual clients and to mutual funds. As of September 30, 2000, PIMCO Advisors
and its subsidiary partnerships had more than $[_] billion in assets under
management.
PIMCO Advisors has retained an affiliated investment management firm, Cadence
Capital Management ("Cadence " or the "Sub-Adviser") to manage each Fund's
investments. See "Sub-Adviser" below. PIMCO Advisors has retained its affiliate,
Pacific Investment Management Company LLC, to provide various administrative
and other services required by the Funds in its capacity as sub-administrator.
PIMCO Advisors and the sub-administrator may retain other affiliates to provide
certain of these services.
Advisory Fees
<PAGE>
Each Fund pays PIMCO Advisors fees in return for providing or arranging for
the provision of investment advisory services. PIMCO Advisors (and not the
Funds) pays a portion of the advisory fees it receives to Cadence in return for
Cadence's services as Sub-Advisor.
The Funds pay monthly advisory fees to PIMCO Advisors at the following annual
rates (stated as a percentage of the average daily net assets of each Fund taken
separately):
<TABLE>
<CAPTION>
Fund Advisory Fees
<S> <C>
Cadence Capital Appreciation and Cadence Mid-Cap Growth Funds 0.45%
</TABLE>
Administrative Fees
Each Fund pays for the administrative services it requires under a fee structure
which is essentially fixed. Institutional and Administrative Class shareholders
of each Fund pay an administrative fee to PIMCO Advisors, computed as a
percentage of the Fund's assets attributable in the aggregate to those classes
of shares. PIMCO Advisors, in turn, provides or procures administrative services
for Institutional and Administrative Class shareholders and also bears the costs
of various third-party services required by the Funds, including audit,
custodial, portfolio accounting, legal, transfer agency and printing costs. The
result of this fee structure is an expense level for Institutional and
Administrative Class shareholders of each Fund that, with limited exceptions, is
precise and predictable under ordinary circumstances.
Institutional and Administrative Class shareholders of the Funds pay PIMCO
Advisors monthly administrative fees at the annual rate of 0.25% (stated as a
percentage of the average daily net assets attributable in the aggregate to the
Fund's Institutional and Administrative Class shares).
<PAGE>
Sub-Adviser
The Sub-Adviser has full investment discretion and makes all determinations with
respect to the investment of a Fund's assets. The following provides summary
information about the Sub-Adviser, including its investment specialty.
Sub-Adviser Investment Specialty
Cadence Capital Management A blend of growth companies whose stock is
Exchange Place, 53 State Street reasonably valued by the market.
Boston, MA 02109
The following provides additional information about the Sub-Adviser and the
individual Portfolio Manager(s) who have or share primary responsibility for
managing the Funds' investments.
An affiliated sub-partnership of PIMCO Advisors, Cadence provides advisory
services to mutual funds and institutional accounts. Cadence Capital Management
Corporation, the predecessor investment adviser to Cadence, commenced operations
in 1988. Accounts managed by Cadence had combined assets as of September 30,
2000 of approximately $[_] billion.
<PAGE>
The following individuals at Cadence share primary responsibility for the noted
Funds.
<TABLE>
<CAPTION>
Fund Portfolio Manager(s) Since Recent Professional Experience
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cadence Capital Appreciation David B. Breed [ ]* Managing Director, Chief Executive Officer, Chief Investment
Officer and founding partner of Cadence. Member of the
Management Board of PIMCO Advisors. He is a research
generalist and has lead the team of portfolio managers and
analysts since 1988. Mr. Breed has managed separate equity
accounts for many institutional clients and has led the team
that managers the PIMCO Funds sub-advised by Cadence since
those Funds' inception dates.
William B. Bannick [_]* Managing Director and Executive Vice President at Cadence. Mr.
Bannick is a research generalist and Senior Portfolio Manager
for the Cadence team. He has managed separately managed equity
accounts for various Cadence institutional clients and has
been a member of the team that manages the PIMCO Funds sub-
advised by Cadence since joining Cadence in 1992.
Katherine A. Burdon [_]* Managing Director and Senior Portfolio Manager at Cadence. Ms.
Burdon is a research generalist and has managed separately
managed equity accounts for various Cadence institutional
clients and has been a member of the team that manages the
PIMCO Funds sub-advised by Cadence since joining Cadence in
1993.
Peter B. McManus [_]* Director, Account Management at Cadence. He has been a member
of the investment team at Cadence and handles client
relationships of separately managed accounts, and has been a
member of the team that manages the PIMCO Funds sub-advised by
Cadence since joining Cadence in 1994. Previously, he served
as a Vice President of Bank of Boston from 1991 to 1994.
Cadence Mid-Cap Growth Mr. Breed [_]* See above.
Messrs.Bannick Same as Cadence See above
and McManus Capital Appreciation
and Ms. Burdon Fund
_____________
*Since inception of the Fund
</TABLE>
Adviser/Sub-Adviser Relationship
Shareholders of each Fund have approved a proposal permitting PIMCO Advisors to
enter into new or amended sub-advisory agreements with one or more sub-advisers
with respect to each Fund without obtaining shareholder approval of such
agreements, subject to the conditions of an exemptive order that has been
granted by the Securities Exchange Commission. One of the conditions requires
the Board of Trustees to approve any such agreement. In addition, the exemptive
order prohibits PIMCO Advisors from entering into sub-advisory agreements with
affiliates of PIMCO Advisors without shareholder approval, unless those
affiliates are substantially wholly-owned by PIMCO Advisors.
Distributor
The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly owned
subsidiary of PIMCO Advisors. The Distributor, located at 2187 Atlantic Street,
Stamford, Connecticut 06902, is a broker-dealer registered with the Securities
and Exchange Commission.
<PAGE>
Investment Options --
Institutional Class and Administrative Class Shares
The Trust offers investors Institutional Class and Administrative Class shares
of the Funds in this Prospectus.
The Trust does not charge any sales charges (loads) or other fees in
connection with purchases, sales (redemptions) or exchanges of Institutional
Class or Administrative Class shares. See "Purchases, Redemptions and Exchanges"
below.
Administrative Class shares are generally subject to a higher level of
operating expenses than Institutional Class shares due to the additional service
and/or distribution fees paid by Administrative Class shares as described below.
Therefore, Institutional Class shares will generally pay higher dividends and
have a more favorable investment return than Administrative Class shares.
. Service and Distribution (12b-1) Fees--Administrative Class Shares. The Trust
has adopted both an Administrative Services Plan and a Distribution Plan for the
Administrative Class shares of each Fund. Each Plan has been adopted in
accordance with the requirements of Rule 12b-1 under the Investment Company Act
of 1940 and is administered in accordance with that rule. However, shareholders
do not have the voting rights set forth in Rule 12b-1 with respect to the
Administrative Services Plan.
Each Plan allows the Funds to use its Administrative Class assets to
reimburse financial intermediaries that provide services relating to
Administrative Class shares. The Distribution Plan permits reimbursement for
expenses in connection with the distribution and marketing of Administrative
Class shares and/or the provision of shareholder services to Administrative
Class shareholders. The Administrative Services Plan permits reimbursement for
services in connection with the administration of plans or programs that use
Administrative Class shares of the Funds as their funding medium and for related
expenses.
In combination, the Plans permit a Fund to make total reimbursements at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to its Administrative Class shares. The same entity may not receive both
distribution and administrative services fees with respect to the same
Administrative Class assets, but may receive fees under each Plan with respect
to separate assets. Because these fees are paid out of a Fund's Administrative
Class assets on an ongoing basis, over time they will increase the cost of an
investment in Administrative Class shares and may cost an investor more than
other types of sales charges.
. Arrangements with Service Agents. Institutional Class and Administrative
Class shares of the Funds may be offered through certain brokers and financial
intermediaries ("service agents") that have established a shareholder servicing
relationship with the Trust on behalf of their customers. The Trust pays no
compensation to such entities other than service and/or distribution fees paid
with respect to Administrative Class shares. Service agents may impose
additional or different conditions than the Trust on purchases, redemptions or
exchanges of Fund shares by their customers. Service agents may also
independently establish and charge their customers transaction fees, account
fees and other amounts in connection with purchases, sales and redemptions of
Fund shares in addition to any fees charged by the Trust. These additional fees
may vary over time and would increase the cost of the customer's investment and
lower investment returns. Each service agent is responsible for transmitting to
its customers a schedule of any such fees and information regarding any
additional or different conditions regarding purchases, redemptions and
exchanges. Shareholders who are customers of service agents should consult their
service agents for information regarding these fees and conditions.
Purchases, Redemptions and Exchanges
<PAGE>
. Purchasing Shares. Investors may purchase Institutional Class and
Administrative Class shares of the Funds at the relevant net asset value
("NAV") of that class without a sales charge or other fee.
Institutional Class shares are offered primarily for direct investment by
investors such as pension and profit sharing plans, employee benefit trusts,
endowments, foundations, corporations and high net worth individuals.
Institutional Class shares may also be offered through certain financial
intermediaries that charge their customers transaction or other fees with
respect to their customers' investments in the Funds.
Administrative Class shares are offered primarily through employee benefit
plan alliances, broker-dealers and other intermediaries, and each Fund pays
service and/or distribution fees to these entities for services they provide to
Administrative Class shareholders.
Pension and profit-sharing plans, employee benefit trusts and employee
benefit plan alliances and "wrap account" programs established with broker-
dealers or financial intermediaries may purchase shares of either class only if
the plan or program for which the shares are being acquired will maintain an
omnibus or pooled account for each Fund and will not require a Fund to pay any
type of administrative payment per participant account to any third party.
. Investment Minimums. The minimum initial investment for shares of either
class is $5 million, except that the minimum initial investment for a registered
investment adviser purchasing Institutional Class shares for its clients through
omnibus accounts is $250,000 per Fund. The minimum initial investment may be
waived for Institutional or Administrative Class shares offered to clients of
Cadence and its affiliates. In addition, the minimum initial investment does not
apply to Institutional Class shares offered through fee-based programs sponsored
and maintained by a registered broker-dealer and approved by the Distributor in
which each investor pays an asset based fee at an annual rate of at least 0.50%
of the assets in the account to a financial intermediary for investment advisory
and/or administrative services.
The Trust and the Distributor may waive the minimum initial investment for
other categories of investors at their discretion.
. Timing of Purchase Orders and Share Price Calculations. A purchase order
received by the Trust's transfer agent, National Financial Data Services (the
"Transfer Agent") prior to the close of regular trading (normally 4:00 p.m.,
Eastern time) on the New York Stock Exchange, on a day the Trust is open for
business, together with payment made in one of the ways described below, will be
effected at that day's net asset value ("NAV"). An order received after the
close of regular trading on the New York Stock Exchange will be effected at the
NAV determined on the next business day. However, orders received by certain
retirement plans and other financial intermediaries on a business day prior to
the close of regular trading on the New York Stock Exchange and communicated to
the Transfer Agent prior to 9:00 a.m., Eastern time, on the following business
day will be effected at the NAV determined on the prior business day. The Trust
is "open for business" on each day the New York Stock Exchange is open for
trading, which excludes the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. Purchase orders will be accepted
only on days on which the Trust is open for business.
. Initial Investment. Investors may open an account by completing and signing a
Client Registration Application and mailing it to PIMCO Funds at 840 Newport
Center Drive, Suite 300, Newport Beach, California 92660. A Client Registration
Application may be obtained by calling 1-800-927-4648.
Except as described below, an investor may purchase Institutional Class and
Administrative Class shares only by wiring federal funds to the Transfer Agent,
National Financial Data Services, 330 West 9th Street, 4th Floor, Kansas City,
Missouri 64105. Before wiring federal funds, the investor must telephone the
Trust at 1-800-927-4648 to receive instructions for wire transfer and must
provide the following information: name of authorized person, shareholder name,
shareholder account number, name of Fund and share class, amount being wired,
and wiring bank name.
<PAGE>
An investor may purchase shares without first wiring federal funds if the
proceeds of the investment are derived from an advisory account the investor
maintains with PIMCO Advisors or one of its affiliates, from surrender or other
payment from an annuity, insurance, or other contract held by Pacific Life
Insurance Company LLC, or from an investment by broker-dealers, institutional
clients or other financial intermediaries which have established a shareholder
servicing relationship with the Trust on behalf of their customers.
. Additional Investments. An investor may purchase additional Institutional
Class and Administrative Class shares of the Funds at any time by calling the
Trust and wiring federal funds to the Transfer Agent as outlined above.
. Other Purchase Information. Purchases of a Fund's Institutional Class and
Administrative Class shares will be made in full and fractional shares. In the
interest of economy and convenience, certificates for shares will not be issued.
The Trust and the Distributor each reserves the right, in its sole
discretion, to suspend the offering of shares of the Funds or to reject any
purchase order, in whole or in part, when, in the judgment of management, such
suspension or rejection is in the best interests of the Trust.
An investor should invest in the Funds for long-term investment purposes
only. The Trust, PIMCO Advisors and Cadence each reserve the right to restrict
purchases of Fund shares (including exchanges) when a pattern of frequent
purchases and sales made in response to short-term fluctuations in share price
appears evident. Notice of any such restrictions, if any, will vary according to
the particular circumstances.
Institutional Class and Administrative Class shares of the Trust are not
qualified or registered for sale in all states. Investors should inquire as to
whether shares of a particular Fund are available for offer and sale in the
investor's state of residence. Shares of the Trust may not be offered or sold in
any state unless registered or qualified in that jurisdiction or unless an
exemption from registration or qualification is available.
Subject to the approval of the Trust, an investor may purchase shares of a
Fund with liquid securities that are eligible for purchase by the Fund
(consistent with the Fund's investment policies and restrictions) and that have
a value that is readily ascertainable in accordance with the Trust's valuation
policies. These transactions will be effected only if PIMCO Advisors or Cadence
intends to retain the security in the Fund as an investment. Assets purchased by
a Fund in such a transaction will be valued in generally the same manner as they
would be valued for purposes of pricing the Fund's shares, if such assets were
included in the Fund's assets at the time of purchase. The Trust reserves the
right to amend or terminate this practice at any time.
. Retirement Plans. Shares of the Funds are available for purchase by
retirement and savings plans, including Keogh plans, 401(k) plans, 403(b)
custodial accounts, and Individual Retirement Accounts. The administrator of a
plan or employee benefits office can provide participants or employees with
detailed information on how to participate in the plan and how to elect a Fund
as an investment option. Participants in a retirement or savings plan may be
permitted to elect different investment options, alter the amounts contributed
to the plan, or change how contributions are allocated among investment options
in accordance with the plan's specific provisions. The plan administrator or
employee benefits office should be consulted for details. For questions about
participant accounts, participants should contact their employee benefits
office, the plan administrator, or the organization that provides recordkeeping
services for the plan. Investors who purchase shares through retirement plans
should be aware that plan administrators may aggregate purchase and redemption
orders for participants in the plan. Therefore, there may be a delay between the
time the investor places an order with the plan administrator and the time the
order is forwarded to the Transfer Agent for execution.
Redeeming Shares
. Redemptions by Mail. An investor may redeem (sell) Institutional Class and
Administrative Class shares by submitting a written request to PIMCO Funds at
840 Newport Center Drive, Suite 300, Newport Beach, California 92660. The
redemption request should state the Fund from which the shares are to be
redeemed, the class
<PAGE>
of shares, the number or dollar amount of the shares to be redeemed and the
account number. The request must be signed exactly as the names of the
registered owners appear on the Trust's account records, and the request must be
signed by the minimum number of persons designated on the Client Registration
Application that are required to effect a redemption.
. Redemptions by Telephone or Other Wire Communication. An investor that
elects this option on the Client Registration Application (or subsequently in
writing) may request redemptions of shares by calling the Trust at 1-800-927-
4648, by sending a facsimile to 1-949-725-6830, or by other means of wire
communication (excluding electronic mail). Investors should state the Fund and
class from which the shares are to be redeemed, the number or dollar amount of
the shares to be redeemed, the account number and the signature of an authorized
signatory. Redemption requests of an amount of $10 million or more may be
initiated by telephone, but must be confirmed in writing by an authorized party
prior to processing.
In electing a telephone redemption, the investor authorizes Pacific
Investment Management Company LLC and the Transfer Agent to act on telephone
instructions from any person representing himself to be the investor, and
reasonably believed by Pacific Investment Management Company LLC or the Transfer
Agent to be genuine. Neither the Trust nor the Transfer Agent may be liable for
any loss, cost or expense for acting on instructions (whether in writing or by
telephone) believed by the party receiving such instructions to be genuine and
in accordance with the procedures described in this Prospectus. Shareholders
should realize that by electing the telephone or wire redemption option, they
may be giving up a measure of security that they might have if they were to
redeem their shares in writing. Furthermore, interruptions in telephone service
may mean that a shareholder will be unable to effect a redemption by telephone
when desired. The Transfer Agent also provides written confirmation of
transactions initiated by telephone as a procedure designed to confirm that
telephone instructions are genuine (written confirmation is also provided for
redemption requests received in writing). All telephone transactions are
recorded, and Pacific Investment Management Company LLC or the Transfer Agent
may request certain information in order to verify that the person giving
instructions is authorized to do so. The Trust or Transfer Agent may be liable
for any losses due to unauthorized or fraudulent telephone transactions if it
fails to employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. All redemptions, whether initiated by letter or
telephone, will be processed in a timely manner, and proceeds will be forwarded
by wire in accordance with the redemption policies of the Trust detailed below.
See "Other Redemption Information."
Shareholders may decline telephone exchange or redemption privileges after
an account is opened by instructing the Transfer Agent in writing at least seven
business days prior to the date the instruction is to be effective. Shareholders
may experience delays in exercising telephone redemption privileges during
periods of abnormal market activity. During periods of volatile economic or
market conditions, shareholders may wish to consider transmitting redemption
orders by telegram, facsimile or overnight courier.
Defined contribution plan participants may request redemptions by
contacting the employee benefits office, the plan administrator or the
organization that provides recordkeeping services for the plan.
. Other Redemption Information. Redemption requests for Fund shares are
effected at the NAV per share next determined after receipt of a redemption
request by the Trust or its designee. The request must properly identify all
relevant information, such as account number, redemption amount (in dollars or
shares) and the Fund name, and must be executed or initialed by the appropriate
signatories. A redemption request received by the Trust or its designee prior to
the close of regular trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time), on a day the Trust is open for business, is effective on that
day. A redemption request received after that time becomes effective on the next
business day.
Redemption proceeds will ordinarily be wired to the investor's bank within
three business days after the redemption request, but may take up to seven
business days. Redemption proceeds will be sent by wire only to the bank name
designated on the Client Registration Application. The Trust may suspend the
right of redemption or postpone the payment date at times when the New York
Stock Exchange is closed, or during certain other periods as permitted under the
federal securities laws.
<PAGE>
For shareholder protection, a request to change information contained in an
account registration (for example, a request to change the bank designated to
receive wire redemption proceeds) must be received in writing, signed by the
minimum number of persons designated on the Client Registration Application that
are required to effect a redemption, and accompanied by a signature guarantee
from any eligible guarantor institution, as determined in accordance with the
Trust's procedures. Shareholders should inquire as to whether a particular
institution is an eligible guarantor institution. A signature guarantee cannot
be provided by a notary public. In addition, corporations, trusts, and other
institutional organizations are required to furnish evidence of the authority of
the persons designated on the Client Registration Application to effect
transactions for the organization.
Due to the relatively high cost of maintaining small accounts, the Trust
reserves the right to redeem Institutional Class and Administrative Class shares
in any account for their then-current value (which will be promptly paid to the
investor) if at any time, due to redemption by the investor, the shares in the
account do not have a value of at least $100,000. A shareholder will receive
advance notice of a mandatory redemption and will be given at least 30 days to
bring the value of its account up to at least $100,000.
The Trust agrees to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for
any one shareholder. In consideration of the best interests of the remaining
shareholders, the Trust reserves the right to pay any redemption proceeds
exceeding this amount in whole or in part by a distribution in kind of
securities held by a Fund in lieu of cash. Except for Funds with a tax-efficient
management strategy, it is highly unlikely that shares would ever be redeemed in
kind. When shares are redeemed in kind, the redeeming shareholder should expect
to incur transaction costs upon the disposition of the securities received in
the distribution.
Exchange Privilege
An investor may exchange Institutional Class or Administrative Class shares of a
Fund for shares of the same class of any other Fund or other series of the Trust
that offers that class based on the respective NAVs of the shares involved. An
exchange may be made by following the redemption procedure described above under
"Redemptions by Mail" or, if the investor has elected the telephone redemption
option, by calling the Trust at 1-800-927-4648. An investor may also exchange
shares of a Fund for shares of the same class of a series of PIMCO Funds:
Pacific Investment Management Series, an affiliated mutual fund family composed
primarily of fixed income portfolios managed by Pacific Investment Management
Company [LLC]. Shareholders interested in such an exchange may request a
prospectus for these other series by contacting PIMCO Funds: Pacific Investment
Management Series at the same address and telephone number as the Trust.
An investor may exchange shares only with respect to Funds or other
eligible series that are registered in the investor's state of residence or
where an exemption from registration is available. In addition, an exchange is
generally a taxable event which will generate capital gains or losses, and
special rules may apply in computing tax basis when determining gain or loss.
See "Tax Consequences" in this Prospectus and "Taxation" in the Statement of
Additional Information.
The Trust reserves the right to refuse exchange purchases if, in the
judgment of PIMCO Advisors, the purchase would adversely affect a Fund and its
shareholders. In particular, a pattern of exchanges characteristic of "market-
timing" strategies may be deemed by PIMCO Advisors to be detrimental to the
Trust or a particular Fund. Currently, the Trust limits the number of "round
trip" exchanges investors may make. An investor makes a "round trip" exchange
when the investor purchases shares of a particular Fund, subsequently exchanges
those shares for shares of a different PIMCO Fund, and then exchanges back into
the originally purchased Fund. The Trust has the right to refuse any exchange
for any investor who completes (by making the exchange back into the shares of
the originally purchased Fund) more than six round trip exchanges in any twelve-
month period. The Trust reserves the right to impose additional restrictions on
exchanges at any time, although it will attempt to give shareholders 30 days'
prior notice whenever it is reasonably able to do so.
<PAGE>
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Institutional and Administrative
Class shares is determined by dividing the total value of a Fund's portfolio
investments and other assets attributable to that class, less any liabilities,
by the total number of shares outstanding of that class.
For purposes of calculating the NAV, portfolio securities and other assets
for which market quotes are available are stated at market value. Market value
is generally determined on the basis of last reported sales prices, or if no
sales are reported, based on quotes obtained from a quotation reporting system,
established market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily available may be
valued, pursuant to procedures established by the Board of Trustees, with
reference to other securities or indices. Short-term investments having a
maturity of 60 days or less are generally valued at amortized cost. Exchange
traded options, futures and options on futures are valued at the settlement
price determined by the exchange. Other securities for which market quotes are
not readily available are valued at fair value as determined in good faith by
the Board of Trustees or persons acting at their direction.
Investments initially valued in currencies other than the U.S. dollar are
converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of a Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of securities traded in
markets outside the United States or denominated in currencies other than the
U.S. dollar may be affected significantly on a day that the New York Stock
Exchange is closed and an investor is not able to purchase, redeem or exchange
shares.
Fund shares are valued at the close of regular trading (normally 4:00 p.m.,
Eastern time) (the "NYSE Close") on each day that the New York Stock Exchange is
open. For purposes of calculating the NAV, the Funds normally use pricing data
for domestic equity securities received shortly after the NYSE Close and do not
normally take into account trading, clearances or settlements that take place
after the NYSE Close. Domestic fixed income and foreign securities are normally
priced using data reflecting the earlier closing of the principal markets for
those securities. Information that becomes known to the Funds or their agents
after the NAV has been calculated on a particular day will not generally be used
to retroactively adjust the price of a security or the NAV determined earlier
that day.
In unusual circumstances, instead of valuing securities in the usual
manner, the Funds may value securities at fair value or estimate their value as
determined in good faith by the Board of Trustees or persons acting at their
direction, generally based upon recommendations provided by PIMCO Advisors
and/or Cadence. Fair valuation may also be used by the Board of Trustees if
extraordinary events occur after the close of the relevant market but prior to
the NYSE Close.
Under certain circumstances, the per share NAV of the Administrative Class
shares of the Funds may be lower than the per share NAV of the Institutional
Class shares as a result of the daily expense accruals of the service and/or
distribution fees paid by Administrative Class shares. Generally, for Funds that
pay income dividends, those dividends are expected to differ over time by
approximately the amount of the expense accrual differential between the two
classes.
Fund Distributions
Each Fund distributes substantially all of its net investment income to
shareholders in the form of dividends. A shareholder begins earning dividends on
Fund shares the day after the Trust receives the shareholder's purchase payment.
Dividends paid by each Fund with respect to each class of shares are calculated
in the same manner and at the same time, but dividends on Administrative Class
shares are expected to be lower than dividends on Institutional Class shares as
a result of the service and/or distribution fees applicable to Administrative
Class shares.
<PAGE>
Each Fund intends to declare and distribute income dividends to
shareholders of record at least annually. In addition, each Fund distributes any
net capital gains it earns from the sale of portfolio securities to shareholders
no less frequently than annually. Net short-term capital gains may be pa id more
frequently.
A Fund's dividend and capital gain distributions with respect to a
particular class of shares will automatically be reinvested in additional shares
of the same class of the Fund at NAV unless the shareholder elects to have the
distributions paid in cash. A shareholder may elect to have distributions paid
in cash by calling the Trust at 1-800-927-4648.
Shareholders do not pay any sales charges or other fees on shares received
through the reinvestment of Fund distributions.
For further information on distribution options, please contact the Trust
at 1-800-927-4648.
Tax Consequences
. Taxes on Fund Distributions. A shareholder subject to U.S. federal income tax
will be subject to tax on Fund distributions whether they are paid in cash or
reinvested in additional shares of the Funds. For federal income tax purposes,
Fund distributions will be taxable to the shareholder as either ordinary income
or capital gains.
Fund dividends (i.e., distributions of investment income) are taxable to
shareholders as ordinary income. Federal taxes on Fund distributions of gains
are determined by how long the Fund owned the investments that generated the
gains, rather than how long the shareholder owned the shares. Distributions of
gains from investments that a Fund owned for more than 12 months will generally
be taxable to shareholders as capital gains. Distributions of gains from
investments that the Fund owned for 12 months or less will generally be taxable
as ordinary income.
Fund distributions are taxable to shareholders even if they are paid from
income or gains earned by a Fund prior to the shareholder's investment and thus
were included in the price paid for the shares. For example, a shareholder who
purchases shares on or just before the record date of a Fund distribution will
pay full price for the shares and may receive a portion of his or her investment
back as a taxable distribution.
. Taxes on Redemptions or Exchanges of Shares. Any gain resulting from the sale
of Fund shares will generally be subject to federal income tax. When a
shareholder exchanges shares of a Fund for shares of another series, the
transaction generally will be treated as a sale of the Fund shares for these
purposes, and any gain on those shares will generally be subject to federal
income tax.
. A Note on Foreign Investments. A Fund's investment in foreign securities may
be subject to foreign withholding taxes. In that case, the Fund's yield on those
securities would be decreased. In addition, a Fund's investments in foreign
securities or foreign currencies may increase or accelerate the Fund's
recognition of ordinary income and may affect the timing or amount of the Fund's
distributions.
. This section relates only to federal income tax; the consequences under
other tax laws may differ. Shareholders should consult their tax advisors as to
the possible application of foreign, state and local income tax laws to Fund
dividends and capital distributions. Please see the Statement of Additional
Information for additional information regarding the tax aspects of investing in
the Funds.
<PAGE>
Characteristics and Risks of Securities and Investment Techniques
This section provides additional information about some of the principal
investments and related risks of the Funds identified under "Summary
Information" above. It also describes characteristics and risks of additional
securities and investment techniques that are not necessarily principal
investments or strategies but may be used by the Funds from time to time. Most
of these securities and investment techniques are discretionary, which means
that the portfolio managers can decide whether to use them or not. This
Prospectus does not attempt to disclose all of the various types of securities
and investment techniques that may be used by the Funds. As with any mutual
fund, investors in the Funds must rely on the professional investment judgment
and skill of the Funds' Adviser and Sub-Adviser and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the Statement of
Additional Information for more detailed information about the securities and
investment techniques described in this section and about other strategies and
techniques that may be used by the Funds.
Fixed Income Securities and Defensive Strategies
Fixed income securities are obligations of the issuer to make payments of
principal and/or interest on future dates, and include corporate and government
bonds, notes, certificates of deposit, commercial paper, convertible securities
and mortgage-backed and other asset-backed securities.
Aside from the cash management practices described below, the Funds intend
to be as fully invested in common stocks as practicable at all times. For cash
management purposes, each of the Funds may maintain a portion of its assets
(normally not more than 10%) in U.S. Government securities, high quality fixed
income securities, money market obligations and cash to pay certain Fund
expenses and to meet redemption requests. Neither of the Funds will make
defensive investments in response to unfavorable market and other conditions and
therefore may be particularly vulnerable to general declines in stock prices
and/or other categories of securities in which they invest.
<PAGE>
Companies With Smaller Market Capitalizations
Each of the Funds may invest in securities of companies with market
capitalizations that are small compared to other publicly traded companies. The
Cadence Mid-Cap Growth Fund has significant exposure to these risks because it
invests primarily in companies with medium-sized market capitalizations, which
are smaller and generally less well-known or seasoned than the largest
companies.
Companies which are smaller and less well-known or seasoned than larger,
more widely held companies may offer greater opportunities for capital
appreciation, but may also involve risks different from, or greater than, risks
normally associated with larger companies. Larger companies generally have
greater financial resources, more extensive research and development,
manufacturing, marketing and service capabilities, and more stability and
greater depth of management and technical personnel than smaller companies.
Smaller companies may have limited product lines, markets or financial resources
or may depend on a small, inexperienced management group. Securities of smaller
companies may trade less frequently and in lesser volume than more widely held
securities and their values may fluctuate more abruptly or erratically than
securities of larger companies. They may also trade in the over-the-counter
market or on a regional exchange, or may otherwise have limited liquidity. These
securities may therefore be more vulnerable to adverse market developments than
securities of larger companies. Also, there may be less publicly available
information about smaller companies or less market interest in their securities
as compared to larger companies, and it may take longer for the prices of the
securities to reflect the full value of a company's earnings potential or
assets.
Because securities of smaller companies may have limited liquidity, a Fund
may have difficulty establishing or closing out its positions in smaller
companies at prevailing market prices. As a result of owning large positions in
this type of security, a Fund is subject to the additional risk of possibly
having to sell portfolio securities at disadvantageous times and prices if
redemptions require the Fund to liquidate its securities positions. For these
reasons, it may be prudent for a Fund with a relatively large asset size to
limit the number of relatively small positions it holds in securities having
limited liquidity in order to minimize its exposure to such risks, to minimize
transaction costs, and to maximize the benefits of research. As a consequence,
as a Fund's asset size increases, the Fund may reduce its exposure to illiquid
smaller capitalization securities, which could adversely affect performance.
Foreign (non-U.S.) Securities
All of the Funds may invest in foreign securities, including American Depository
Receipts ("ADRs"). ADRs are dollar-denominated receipts issued generally by
domestic banks and representing the deposit with the bank of a security of a
foreign issuer, and are publicly traded on exchanges or over-the-counter in the
United States.
Investing in foreign securities involves special risks and considerations
not typically associated with investing in U.S. securities and shareholders
should consider carefully the substantial risks involved for Funds that invest
in these securities. These risks include: differences in accounting, auditing
and financial reporting standards; generally higher commission rates on foreign
portfolio transactions; the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position. The securities markets,
values of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign securities and
dividends and interest payable on those securities may be subject to foreign
taxes, including taxes withheld from payments on those securities. Foreign
securities often trade with less frequency and volume than domestic securities
and therefore may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic investments
and additional transaction costs with respect to foreign currency conversions.
Changes in foreign exchange rates also will affect the value of securities
denominated or quoted in foreign currencies.
Emerging Market Securities
<PAGE>
Each of the Funds that may invest in foreign securities may invest in securities
of issuers based in or that trade principally in countries with developing (or
"emerging market") economies. Investing in emerging market securities imposes
risks different from, or greater than, risks of investing in domestic securities
or in foreign, developed countries. These risks include: smaller market
capitalization of securities markets, which may suffer periods of relative
illiquidity; significant price volatility; restrictions on foreign investment;
and possible repatriation of investment income and capital. In addition, foreign
investors may be required to register the proceeds of sales, and future economic
or political crises could lead to price controls, forced mergers, expropriation
or confiscatory taxation, seizure, nationalization or the creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. dollar, and devaluation may occur
subsequent to investments in these currencies by a Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.
Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause a
Fund to miss attractive investment opportunities, hold a portion of its assets
in cash pending investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of the security.
Foreign Currencies
A Fund that invests directly in foreign currencies or in securities that trade
in, and receive revenues in, foreign currencies will be subject to currency
risk. Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by supply and demand and the
relative merits of investments in different countries, actual or perceived
changes in interest rates and other complex factors. Currency exchange rates
also can be affected unpredictably by intervention (or the failure to intervene)
by U.S. or foreign governments or central banks, or by currency controls or
political developments. For example, significant uncertainty surrounds the
recent introduction of the euro (a common currency unit for the European Union)
in January 1999 and the effect it may have on the value of securities
denominated in local European currencies. These and other currencies in which
the Funds' assets are denominated may be devalued against the U.S. dollar,
resulting in a loss to the Funds.
Convertible Securities
Each Fund may invest in convertible securities. Convertible securities are
generally preferred stocks and other securities, including fixed income
securities and warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a convertible
security will normally vary in some proportion to changes in the price of the
underlying common stock because of this conversion or exercise feature. However,
the value of a convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally also provide
income and is subject to interest rate risk. While convertible securities
generally offer lower interest or dividend yields than non-convertible fixed
income securities of similar quality, their value tends to increase as the
market value of the underlying stock increases and to decrease when the value of
the underlying stock decreases. Also, a Fund may be forced to convert a security
before it would otherwise choose, which may have an adverse effect on the Fund's
ability to achieve its investment objective.
<PAGE>
Credit Ratings and Unrated Securities
The Funds may invest in securities based on their credit ratings assigned by
rating agencies such as Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Ratings Services ("S&P"). Moody's, S&P and other rating agencies are
private services that provide ratings of the credit quality of fixed income
securities, including convertible securities. The Appendix to the Statement of
Additional Information describes the various ratings assigned to fixed income
securities by Moody's and S&P. Ratings assigned by a rating agency are not
absolute standards of credit quality and do not evaluate market risk. Rating
agencies may fail to make timely changes in credit ratings and an issuer's
current financial condition may be better or worse than a rating indicates. A
Fund will not necessarily sell a security when its rating is reduced below its
rating at the time of purchase. PIMCO Advisors and Cadence do not rely solely on
credit ratings, and develop their own analysis of issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a rating
agency) if its portfolio manager determines that the security is of comparable
quality to a rated security that the Fund may purchase. Unrated securities may
be less liquid than comparable rated securities and involve the risk that the
portfolio manager may not accurately evaluate the security's comparative credit
rating.
Loans of Portfolio Securities
For the purpose of achieving income, each Fund may lend its portfolio securities
to brokers, dealers, and other financial institutions provided a number of
conditions are satisfied, including that the loan is fully collateralized.
Please see "Investment Objectives and Policies" in the Statement of Additional
Information for details. When a Fund lends portfolio securities, its investment
performance will continue to reflect changes in the value of the securities
loaned, and the Fund will also receive a fee or interest on the collateral.
Securities lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to return the security
loaned or becomes insolvent. A Fund may pay lending fees to the party arranging
the loan.
Short Sales
Each Fund may make short sales as part of its overall portfolio management
strategies or to offset a potential decline in the value of a security. A short
sale involves the sale of a security that is borrowed from a broker or other
institution to complete the sale. A Fund may only enter into short selling
transactions if the security sold short is held in the Fund's portfolio or if
the Fund has the right to acquire the security without the payment of further
consideration. For these purposes, a Fund may also hold or have the right to
acquire securities which, without the payment of any further consideration, are
convertible into or exchangeable for the securities sold short. Short sales
expose a Fund to the risk that it will be required to acquire, convert or
exchange securities to replace the borrowed securities (also known as "covering"
the short position) at a time when the securities sold short have appreciated in
value, thus resulting in a loss to the Fund.
When-Issued, Delayed Delivery and Forward Commitment Transactions
Each Fund may purchase securities which it is eligible to purchase on a when-
issued basis, may purchase and sell such securities for delayed delivery and may
make contracts to purchase such securities for a fixed price at a future date
beyond normal settlement time (forward commitments). When-issued transactions,
delayed delivery purchases and forward commitments involve a risk of loss if the
value of the securities declines prior to the settlement date. This risk is in
addition to the risk that the Fund's other assets will decline in the value.
Therefore, these transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues on securities a
Fund has committed to purchase prior to the time delivery of the securities is
made, although a Fund may earn income on securities it has segregated to cover
these positions.
<PAGE>
Repurchase Agreements
Each Fund may enter into repurchase agreements, in which the Fund purchases a
security from a bank or broker-dealer that agrees to repurchase the security at
the Fund's cost plus interest within a specified time. If the party agreeing to
repurchase should default, the Fund will seek to sell the securities which it
holds. This could involve procedural costs or delays in addition to a loss on
the securities if their value should fall below their repurchase price. The
Funds will invest in repurchase agreements only as a cash management technique
with respect to that portion of its portfolio maintained in cash. Repurchase
agreements maturing in more than seven days are considered illiquid securities.
Reverse Repurchase Agreements and Other Borrowings
Each Fund may enter into reverse repurchase agreements, subject to the Fund's
limitations on borrowings. A reverse repurchase agreement involves the sale of a
security by a Fund and its agreement to repurchase the instrument at a specified
time and price, and may be considered a form of borrowing for some purposes. A
Fund will segregate assets determined to be liquid by PIMCO Advisors or Cadence
in accordance with procedures established by the Board of Trustees to cover its
obligations under reverse repurchase agreements. A Fund also may borrow money
for investment purposes subject to any policies of the Fund currently described
in this Prospectus or in the Statement of Additional Information. Reverse
repurchase agreements and other forms of borrowings may create leveraging risk
for a Fund.
Portfolio Turnover
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities held by a Fund
is known as "portfolio turnover." Each Fund may engage in active and frequent
trading of portfolio securities to achieve its investment objective and
principal investment strategies, particularly during periods of volatile market
movements. High portfolio turnover (e.g., over 100%) involves correspondingly
greater expenses to a Fund, including brokerage commissions or dealer mark-ups
and other transaction costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable capital gains,
including short-term capital gains (which are taxed at ordinary income tax rates
when distributed to shareholders who are individuals). The trading costs and tax
effects associated with portfolio turnover may adversely affect a Fund's
performance.
Illiquid Securities
Each Fund may invest in securities that are illiquid so long as not more than
15% of the value of the Fund's net assets (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by the Fund, and
transactions in illiquid securities may entail registration expenses and other
transaction costs that are higher than those for transactions in liquid
securities. The term "illiquid securities" for this purpose means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which a Fund has valued the securities. Please
see "Investment Objectives and Policies" in the Statement of Additional
Information for a listing of various securities that are generally considered to
be illiquid for these purposes. Restricted securities, i.e., securities subject
to legal or contractual restrictions on resale, may be illiquid. However, some
restricted securities (such as securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper) may be treated as liquid,
although they may be less liquid than registered securities traded on
established secondary markets.
<PAGE>
Investment in Other Investment Companies
Each of the Funds may invest up to 5% of its assets in securities of other
investment companies, such as closed-end management investment companies, or in
other pooled investment vehicles. As a shareholder of an investment company, a
Fund may indirectly bear service and other fees which are in addition to the
fees the Fund pays its service providers.
Changes in Investment Objectives and Policies
The investment objective of each Fund may be changed by the Board of Trustees
without shareholder approval. Unless otherwise stated, all other investment
policies of the Funds may be changed by the Board of Trustees without
shareholder approval. If there is a change in a Fund's investment objective or
policies, including a change approved by shareholder vote, shareholders should
consider whether the Fund remains an appropriate investment in light of their
then current financial position and needs.
Percentage Investment Limitations
Unless otherwise stated, all percentage limitations on Fund investments listed
in this Prospectus will apply at the time of investment. A Fund would not
violate these limitations unless an excess or deficiency occurs or exists
immediately after and as a result of an investment.
Other Investments and Techniques
The Funds may invest in other types of securities and use a variety of
investment techniques and strategies which are not described in this Prospectus.
These securities and techniques may subject the Funds to additional risks.
Please see the Statement of Additional Information for additional information
about the securities and investment techniques described in this Prospectus and
about additional securities and techniques that may be used by the Funds.
<PAGE>
PIMCO Funds: Multi-Manager Series
INVESTMENT ADVISER AND ADMINISTRATOR
PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA 92660
SUB-ADVISER
Cadence Capital Management, Exchange Place, 53 State Street, Boston, MA 02109
CUSTODIAN
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, MO 64105
TRANSFER AGENT
National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO
64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
(Not part of the Prospectus)
<PAGE>
The Trust's Statement of Additional Information ("SAI") and annual and semi-
annual reports to shareholders include additional information about the Funds.
The SAI and the financial statements included in the Funds' most recent annual
report to shareholders are incorporated by reference into this Prospectus, which
means they are part of this Prospectus for legal purposes. The Funds' annual
report discusses the market conditions and investment strategies that
significantly affected each Fund's performance during its last fiscal year.
You may get free copies of any of these materials, request other information
about a Fund, or make shareholder inquiries by calling the Trust at 1-800-927-
4648 or PIMCOInfolink Audio Response Network at 1-800-987-4626, or by writing
to:
PIMCO Funds:
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust on the Commission's Web site at www.sec.gov. You may
get copies of this information, with payment of a duplication fee, by writing
the Public Reference Section of the Commission, Washington, D.C. 20549-6009, or
by electronic request at the following e-mail address: [email protected]. You
may need to refer to the Trust's file number under the Investment Company Act,
which is 811-6161File No. 811-6161PIMCO Funds
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
STATEMENT OF ADDITIONAL INFORMATION
[To be updated in a subsequent Post-Effective Amendment.]
This Statement of Additional Information is not a prospectus, and should be
read in conjunction with the prospectuses of PIMCO Funds: Multi-Manager Series
(the "Trust"), as supplemented from time to time. Through six Prospectuses, the
Trust offers up to six classes of shares of each of its "Funds" and five classes
of shares of each of its "Portfolios" (each as defined herein). Class A, Class B
and Class C shares of certain Funds are offered through the "Class A, B and C
Prospectus," dated November 1, 2000. Class D shares of certain Funds are offered
through the "Class D Prospectus," dated November 1, 2000. Institutional and
Administrative Class shares of certain Funds are offered through two separate
prospectuses, the "Trust Institutional Prospectus," dated November 1, 2000, and
the "NFJ Institutional Prospectus," dated November 1, 2000 (together, the
"Institutional Prospectus"). Class A, Class B and Class C shares of the
Portfolios are offered through the "Retail Portfolio Prospectus," dated November
1, 2000, and Institutional and Administrative Class Shares of the Portfolios are
offered through the "Institutional Portfolio Prospectus," dated November 1,
2000. The Class A, B and C Prospectus, the Class D Prospectus, the Institutional
Prospectus, the Retail Portfolio Prospectus and the Institutional Portfolio
Prospectus are collectively referred to herein as the "Prospectuses."
Audited financial statements for the Trust, as of June 30, 2000, including
notes thereto, and the reports of [ ] thereon, are incorporated herein by
reference from the Trust's five June 30, 2000 Annual Reports. Because the
Portfolios invest a portion of their assets in series of PIMCO Funds: Pacific
Investment Management Series ("PIMS"), the PIMS Prospectus for Institutional
Class shares, dated August 1, 2000 and as from time to time amended or
supplemented (the "PIMS Prospectus"), and the PIMS Statement of Additional
Information, dated August 1, 2000 and as from time to time amended or
supplemented, are also incorporated herein by reference. See "Investment
Objectives and Policies--Investment Strategies of the Portfolios--Incorporation
by Reference" in this Statement of Additional Information. A copy of the
applicable Prospectus and the Annual Report (if any) corresponding to such
Prospectus, and the PIMCO Funds Shareholders' Guide for Class A, B and C Shares
(the "Guide"), which is a part of this Statement of Additional Information, may
be obtained free of charge at the addresses and telephone number(s) listed
below.
<TABLE>
<CAPTION>
Institutional and Institutional Class A, B and C, Class D,
------------------------------------- --------------------------------------------
<S> <C>
Portfolio Prospectuses, and Retail Portfolio Prospectuses,
------------------------------------- --------------------------------------------
Annual Reports, Semi-Annual Annual Reports,
------------------------------------- --------------------------------------------
and the PIMS the Guide and Reports
------------------------------------- --------------------------------------------
Prospectus and Statement of Statement of Additional
------------------------------------- --------------------------------------------
Additional Information Information
------------------------------------- --------------------------------------------
PIMCO Funds PIMCO Funds Distributors LLC
840 Newport Center Drive 2187 Atlantic Street
Suite 300 Stamford, Connecticut 06902
Newport Beach, California 92660
Telephone: 1-800-927-4648 Telephone: Class A, B and C - 1-800-426-0107
1-800-987-4626 (PIMCO Class D - 1-888-87-PIMCO
Infolink Audio Response Retail Portfolio - 1-800-426-0107
Network)
</TABLE>
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE TRUST............................................................................ 1
INVESTMENT OBJECTIVES AND POLICIES................................................... 1
U.S. Government Securities...................................................... 2
Borrowing....................................................................... 2
Preferred Stock................................................................. 3
Corporate Debt Securities....................................................... 3
High Yield Securities ("Junk Bonds")............................................ 4
Loan Participations and Assignments............................................. 5
Participation on Creditors Committees........................................... 6
Variable and Floating Rate Securities........................................... 6
Mortgage-Related and Asset-Backed Securities.................................... 6
Convertible Securities.......................................................... 11
Equity-Linked Securities........................................................ 11
Foreign Securities.............................................................. 11
Foreign Currencies.............................................................. 14
Bank Obligations................................................................ 15
Commercial Paper................................................................ 16
Money Market Instruments........................................................ 16
Derivative Instruments.......................................................... 16
When-Issued, Delayed Delivery and Forward Commitment Transactions............... 24
Warrants to Purchase Securities................................................. 24
Repurchase Agreements........................................................... 25
Securities Loans................................................................ 25
Stocks of Small and Medium Capitalization Companies............................. 25
Illiquid Securities............................................................. 26
Inflation-Indexed Bonds......................................................... 26
Delayed Funding Loans and Revolving Credit Facilities........................... 27
Catastrophe Bonds............................................................... 28
Hybrid Instruments.............................................................. 28
Investment Strategies of the Portfolios - Incorporation by Reference............ 29
INVESTMENT RESTRICTIONS.............................................................. 29
Fundamental Investment Restrictions............................................. 29
Non-Fundamental Investment Restrictions......................................... 33
MANAGEMENT OF THE TRUST.............................................................. 34
Trustees and Officers........................................................... 34
Trustees' Compensation.......................................................... 37
Investment Adviser.............................................................. 38
Portfolio Management Agreements................................................. 42
Fund Administrator.............................................................. 45
DISTRIBUTION OF TRUST SHARES......................................................... 49
Distributor and Multi-Class Plan................................................ 49
Distribution and Servicing Plans for Class A, Class B and Class C Shares........ 51
Payments Pursuant to Class A Plans.............................................. 54
Payments Pursuant to Class B Plans.............................................. 56
Payments Pursuant to Class C Plans.............................................. 59
Distribution and Administrative Services Plans for Administrative Class Shares.. 62
Payments Pursuant to the Administrative Plans................................... 64
Plan for Class D Shares......................................................... 65
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Purchases, Exchanges and Redemptions............................................ 66
PORTFOLIO TRANSACTIONS AND BROKERAGE................................................. 69
Investment Decisions and Portfolio Transactions................................. 69
Brokerage and Research Services................................................. 70
Portfolio Turnover.............................................................. 72
NET ASSET VALUE...................................................................... 73
TAXATION............................................................................. 74
Distributions................................................................... 75
Sales of Shares................................................................. 76
Backup Withholding.............................................................. 77
Options, Futures, Forward Contracts and Swap Agreements......................... 77
Foreign Currency Transactions................................................... 77
Foreign Taxation................................................................ 77
Original Issue Discount and Pay-In-Kind Securities.............................. 78
Other Taxation.................................................................. 79
OTHER INFORMATION.................................................................... 79
Capitalization.................................................................. 79
Performance Information......................................................... 80
Calculation of Yield............................................................ 81
Calculation of Total Return..................................................... 82
Compliance Efforts Related to the Euro.......................................... 98
Voting Rights................................................................... 98
Certain Ownership of Trust Shares............................................... 98
Custodian....................................................................... 98
Codes of Ethics................................................................. 99
Independent Accountants......................................................... 99
Transfer and Shareholder Servicing Agents....................................... 99
Legal Counsel................................................................... 99
Registration Statement.......................................................... 99
Financial Statements............................................................ 99
APPENDIX A DESCRIPTION OF SECURITIES RATINGS......................................... A-1
APPENDIX B CERTAIN OWNERSHIP OF TRUST SHARES......................................... B-1
PIMCO FUNDS SHAREHOLDERS' GUIDE FOR CLASS A, B AND C SHARES.......................... SG-1
</TABLE>
-ii-
<PAGE>
THE TRUST
PIMCO Funds: Multi-Manager Series (the "Trust"), is an open-end management
investment company ("mutual fund") that currently consists of twenty-seven
separate diversified investment series that are operational and/or offer their
shares to the public. The following twenty-four series (the "Funds") invest
directly in common stocks and other securities and instruments: the Equity
Income Fund, the Value Fund, the Renaissance Fund, the Tax-Efficient Equity
Fund, the Enhanced Equity Fund, the Growth Fund, the Mega-Cap Fund, the Capital
Appreciation Fund, the Mid-Cap Fund (f/k/a the "Mid-Cap Growth Fund"), the
Select Growth Fund (f/k/a the "Core Equity Fund"), the Growth & Income Fund
(f/k/a the "Mid-Cap Equity Fund"), the Target Fund, the Small-Cap Value Fund,
the Opportunity Fund, the Micro-Cap Fund (f/k/a the "Micro-Cap Growth Fund"),
the Innovation Fund, the Global Innovation Fund, the International Fund, the
International Growth Fund, the Tax-Efficient Structured Emerging Markets Fund,
the Structured Emerging Markets Fund, the NFJ Equity Income Fund, the NFJ Value
Fund and the NFJ Value 25 Fund. Three additional series, PIMCO Funds Asset
Allocation Series - 90/10 Portfolio (the "90/10 Portfolio"), PIMCO Funds Asset
Allocation Series - 60/40 Portfolio (the "60/40 Portfolio"), and PIMCO Funds
Asset Allocation Series - 30/70 Portfolio (the "30/70 Portfolio," and together
with the 90/10 Portfolio and the 60/40 Portfolio, the "Portfolios"), are so-
called "funds-of-funds" which invest all of their assets in certain of the Funds
and other series in the PIMCO Funds family.
The PIMCO Tax Exempt, International Developed, Emerging Markets, Balanced,
Precious Metals and Small-Cap Funds, which are referred to elsewhere in this
Statement of Additional Information, were formerly series of the Trust. The Tax
Exempt Fund reorganized with and into the Municipal Bond Fund of PIMCO Funds:
Pacific Investment Management Series ("PIMS"), an open-end series management
investment company advised by Pacific Investment Management Company LLC
("Pacific Investment Management"), in a transaction which took place on June 26,
1998. The Tax Exempt Fund was liquidated in connection with the transaction and
is no longer a series of the Trust. The International Developed and Emerging
Markets Funds reorganized with and into newly-formed series of Alleghany Funds
in a transaction which took place on April 30, 1999. The International
Developed and Emerging Markets Funds were liquidated in connection with the
transaction and are no longer series of the Trust. The Balanced Fund
reorganized with and into the Strategic Balanced Fund of PIMS in a transaction
which took place on September 17, 1999. The Balanced Fund was liquidated in
connection with the transaction and is no longer a series of the Trust. The
Precious Metals Fund was liquidated on March 3, 2000 and is no longer a series
of the Trust. The Small-Cap Fund (f/k/a the "Small-Cap Growth Fund") was
liquidated on July 28, 2000 is no longer a series of the Trust. The PIMCO Value
25 Fund is also referred to in this Statement of Additional Information. The
Value 25 Fund transferred substantially all of its assets to the Value Fund in a
transaction which took place on March 3, 2000. As part of the transaction, the
Value 25 Fund exchanged substantially all of its assets for shares of the Value
Fund, which were then distributed to shareholders of the Value 25 Fund in
complete redemption of their interests and liquidation of the Value 25 Fund.
The Value 25 Fund was not dissolved in the transaction; instead, on or about
April 3, 2000, the series constituting the Value 25 Fund was renamed the NFJ
Value 25 Fund.
Prior to April, 2000, the Growth & Income, Select Growth, Mid-Cap and
Micro-Cap Funds were named the Mid-Cap Equity, Core Equity, Mid-Cap Growth and
Micro-Cap Growth Funds, respectively.
The Trust was organized as a Massachusetts business trust on August 24,
1990. On January 17, 1997, the Trust and PIMCO Advisors Funds, a separate
trust, were involved in a transaction in which certain series of PIMCO Advisors
Funds reorganized into series of the Trust. In connection with this
transaction, the Trust changed its name from PIMCO Funds: Equity Advisors
Series to its current name. Prior to being known as PIMCO Funds: Equity
Advisors Series, the Trust was named PIMCO Advisors Institutional Funds, PFAMCO
Funds and PFAMCO Fund.
INVESTMENT OBJECTIVES AND POLICIES
In addition to the principal investment strategies and the principal risks
of the Funds and Portfolios described in the Prospectuses, each Fund may employ
other investment practices and may be subject to additional risks which are
described below. Because the following is a combined description of investment
strategies and
-1-
<PAGE>
risks for all the Funds and Portfolios, certain strategies and/or risks
described below may not apply to particular Funds and/or Portfolios. Unless a
strategy or policy described below is specifically prohibited by the investment
restrictions listed in the Prospectuses, under "Investment Restrictions" in this
Statement of Additional Information, or by applicable law, a Fund or Portfolio
may engage in each of the practices described below.
The 90/10 Portfolio, 60/40 Portfolio and 30/70 Portfolio invest all of
their assets in certain Funds and series of PIMS. PIMS is sometimes referred to
in the Prospectuses as PIMCO Funds: Pacific Investment Management Series.
These Funds and other series in which the Portfolios invest are referred to in
this Statement as "Underlying PIMCO Funds." By investing in Underlying PIMCO
Funds, the Portfolios may have an indirect investment interest in some or all of
the securities and instruments described below depending upon how their assets
are allocated among the Underlying PIMCO Funds. The Portfolios may also have an
indirect investment interest in other securities and instruments utilized by the
Underlying PIMCO Funds which are series of PIMS. These securities and
instruments are described in the current PIMS prospectus for Institutional Class
and Administrative Class shares and in the PIMS statement of additional
information. The PIMS prospectus and statement of additional information are
incorporated in this document by reference. See "Investment Strategies of the
Portfolios--Incorporation by Reference" below.
The Funds' sub-advisers, which are responsible for making investment
decisions for the Funds, are referred to in this section and the remainder of
this Statement of Additional Information as "Sub-Advisers." As discussed below
under "Management of the Trust--Investment Adviser," the PIMCO Equity Advisors
division of PIMCO Advisors is also referred to as a "Sub-Adviser."
U.S. GOVERNMENT SECURITIES
U.S. Government securities are obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities. The U.S. Government does not
guarantee the net asset value of the Funds' shares. Some U.S. Government
securities, such as Treasury bills, notes and bonds, and securities guaranteed
by the Government National Mortgage Association ("GNMA"), are supported by the
full faith and credit of the United States; others, such as those of the Federal
Home Loan Banks, are supported by the right of the issuer to borrow from the
U.S. Treasury; others, such as those of the Federal National Mortgage
Association ("FNMA"), are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; and still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the instrumentality. U.S. Government securities include securities that have no
coupons, or have been stripped of their unmatured interest coupons, individual
interest coupons from such securities that trade separately, and evidences of
receipt of such securities. Such securities may pay no cash income, and are
purchased at a deep discount from their value at maturity. Because interest on
zero coupon securities is not distributed on a current basis but is, in effect,
compounded, zero coupon securities tend to be subject to greater market risk
than interest-paying securities of similar maturities. Custodial receipts
issued in connection with so-called trademark zero coupon securities, such as
CATs and TIGRs, are not issued by the U.S. Treasury, and are therefore not U.S.
Government securities, although the underlying bond represented by such receipt
is a debt obligation of the U.S. Treasury. Other zero coupon Treasury
securities (e.g., STRIPs and CUBEs) are direct obligations of the U.S.
Government.
BORROWING
Subject to the limitations described under "Investment Restrictions" below,
a Fund may be permitted to borrow for temporary purposes and/or for investment
purposes. Such a practice will result in leveraging of a Fund's assets and may
cause a Fund to liquidate portfolio positions when it would not be advantageous
to do so. This borrowing may be unsecured. Provisions of the Investment Company
Act of 1940, as amended ("1940 Act"), require a Fund to maintain continuous
asset coverage (that is, total assets including borrowings, less liabilities
exclusive of borrowings) of 300% of the amount borrowed, with an exception for
borrowings not in excess of 5% of the Fund's total assets made for temporary
administrative purposes. Any borrowings for temporary administrative purposes
in excess of 5% of the Fund's total assets must maintain continuous asset
coverage. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, a Fund
-2-
<PAGE>
may be required to sell some of its portfolio holdings within three days to
reduce the debt and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that time.
Borrowing will tend to exaggerate the effect on net asset value of any increase
or decrease in the market value of a Fund's portfolio. Money borrowed will be
subject to interest costs which may or may not be recovered by appreciation of
the securities purchased. A Fund also may be required to maintain minimum
average balances in connection with such borrowing or to pay a commitment or
other fee to maintain a line of credit; either of these requirements would
increase the cost of borrowing over the stated interest rate.
From time to time, the Trust may enter into, and make borrowings for
temporary purposes related to the redemption of shares under, a credit agreement
with third-party lenders. Borrowings made under such a credit agreement will be
allocated among the Funds and Portfolios pursuant to guidelines approved by the
Board of Trustees.
In addition to borrowing for temporary purposes, a Fund may enter into
reverse repurchase agreements if permitted to do so under its investment
restrictions. A reverse repurchase agreement involves the sale of a portfolio-
eligible security by a Fund, coupled with its agreement to repurchase the
instrument at a specified time and price. The Fund will segregate assets
determined to be liquid by the Adviser or the Fund's Sub-Adviser in accordance
with procedures established by the Board of Trustees and equal (on a daily mark-
to-market basis) to its obligations under reverse repurchase agreements with
broker-dealers (but not banks). However, reverse repurchase agreements involve
the risk that the market value of securities retained by the Fund may decline
below the repurchase price of the securities sold by the Fund which it is
obligated to repurchase. Reverse repurchase agreements will be subject to the
Funds' limitations on borrowings as specified under "Investment Restrictions"
below.
PREFERRED STOCK
All Funds may invest in preferred stock. Preferred stock is a form of
equity ownership in a corporation. The dividend on a preferred stock is a fixed
payment which the corporation is not legally bound to pay. Certain classes of
preferred stock are convertible, meaning the preferred stock is convertible into
shares of common stock of the issuer. By holding convertible preferred stock, a
Fund can receive a steady stream of dividends and still have the option to
convert the preferred stock to common stock.
CORPORATE DEBT SECURITIES
All Funds may invest in corporate debt securities and/or hold their assets
in these securities for cash management purposes. The investment return of
corporate debt securities reflects interest earnings and changes in the market
value of the security. The market value of a corporate debt obligation may be
expected to rise and fall inversely with interest rates generally. There also
exists the risk that the issuers of the securities may not be able to meet their
obligations on interest or principal payments at the time called for by an
instrument.
A Fund's investments in U.S. dollar or foreign currency-denominated
corporate debt securities of domestic or foreign issuers are limited to
corporate debt securities (corporate bonds, debentures, notes and other similar
corporate debt instruments, including convertible securities) which meet the
minimum ratings criteria set forth for the Fund, or, if unrated, are deemed to
be comparable in quality to corporate debt securities in which the Fund may
invest. The rate of return or return of principal on some debt obligations may
be linked or indexed to the level of exchange rates between the U.S. dollar and
a foreign currency or currencies.
Among the corporate debt securities in which the Funds may invest are
convertible securities. A convertible debt security is a bond, debenture, note,
or other security that entitles the holder to acquire common stock or other
equity securities of the same or a different issuer. A convertible security
generally entitles the holder to receive interest paid or accrued until the
convertible security matures or is redeemed, converted or exchanged. Before
conversion, convertible securities have characteristics similar to non-
convertible debt
-3-
<PAGE>
securities. Convertible securities rank senior to common stock in a
corporation's capital structure and, therefore, generally entail less risk than
the corporation's common stock.
A convertible security may be subject to redemption at the option of the
issuer at a predetermined price. If a convertible security held by a Fund is
called for redemption, the Fund would be required to permit the issuer to redeem
the security and convert it to underlying common stock, or would sell the
convertible security to a third party.
HIGH YIELD SECURITIES ("JUNK BONDS")
Certain of the Funds may invest in debt/fixed income securities of domestic
or foreign issuers that meet minimum ratings criteria set forth for a Fund, or,
if unrated, are of comparable quality in the opinion of the Fund's Sub-Adviser.
A description of the ratings categories used is set forth in the Appendix to
this Statement of Additional Information.
A security is considered to be below "investment grade" quality if it is
either (1) not rated in one of the four highest rating categories by one of the
Nationally Recognized Statistical Rating Organizations ("NRSROs") (i.e., rated
Ba or below by Moody's Investors Service, Inc. ("Moody's") or BB or below by
Standard & Poor's Ratings Services ("S&P")) or (2) if unrated, determined by the
relevant Sub-Adviser to be of comparable quality to obligations so rated.
Certain Funds, particularly the Growth & Income Fund, may invest a portion
of their assets in fixed income securities rated lower than Baa by Moody's or
lower than BBB by S&P but rated at least B by Moody's or S&P or, if not rated,
determined by the Sub-Adviser to be of comparable quality. In addition, certain
of these Funds may invest in convertible securities rated below B by Moody's or
S&P (or, if unrated, considered by the Sub-Adviser to be of comparable quality).
Securities rated lower than Baa by Moody's or lower than BBB by S&P are
sometimes referred to as "high yield" or "junk" bonds. Investors should
consider the risks associated with high yield securities before investing in
these Funds. Although each of the Funds that invests in high yield securities
reserves the right to do so at any time, as of the date of this Statement of
Additional Information, none of these Funds invest or has the present intention
to invest more than 5% of its assets in high yield securities or junk bonds.
Investment in high yield securities generally provides greater income and
increased opportunity for capital appreciation than investments in higher
quality securities, but it also typically entails greater price volatility as
well as principal and income risk. High yield securities are regarded as
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments. The market for these securities is
relatively new, and many of the outstanding high yield securities have not
endured a major business recession. A long-term track record on default rates,
such as that for investment grade corporate bonds, does not exist for this
market. Analysis of the creditworthiness of issuers of high yield securities
may be more complex than for issuers of higher quality debt/fixed income
securities. Each Fund of the Trust that may purchase high yield securities may
continue to hold such securities following a decline in their rating if in the
opinion of the Adviser or the Sub-Adviser, as the case may be, it would be
advantageous to do so. Investments in high yield securities that are eligible
for purchase by certain of the Funds are described as "speculative" by both
Moody's and S&P.
Investing in high yield securities involves special risks in addition to
the risks associated with investments in higher rated fixed income securities.
While offering a greater potential opportunity for capital appreciation and
higher yields than investments in higher rated debt securities, high yield
securities typically entail greater potential price volatility and may be less
liquid than investment grade debt. High yield securities may be regarded as
predominately speculative with respect to the issuer's continuing ability to
meet principal and interest payments. Analysis of the creditworthiness of
issuers of high yield securities may be more complex than for issuers of higher
quality debt securities, and achievement of a Fund's investment objective may,
to the extent of its investments in high yield securities, depend more heavily
on the Sub-Adviser's creditworthiness analysis than would be the case if the
Fund were investing in higher quality securities.
-4-
<PAGE>
High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of high yield securities are likely to be sensitive to adverse
economic downturns or individual corporate developments. A projection of an
economic downturn or of a period of rising interest rates, for example, could
cause a decline in high yield security prices because the advent of a recession
could lessen the ability of a highly leveraged company to make principal and
interest payments on its debt/fixed income securities. If an issuer of high
yield securities defaults, in addition to risking payment of all or a portion of
interest and principal, the Funds investing in such securities may incur
additional expenses to seek recovery. In the case of high yield securities
structured as zero-coupon or pay-in-kind securities, their market prices are
affected to a greater extent by interest rate changes, and therefore tend to be
more volatile than securities which pay interest periodically and in cash. Even
though such securities do not pay current interest in cash, a Fund nonetheless
is required to accrue interest income on these investments and to distribute the
interest income on a current basis. Thus, a Fund could be required at times to
liquidate other investments in order to satisfy its distribution requirements.
Prices of high yield/high risk securities have been found to be less
sensitive to interest rate changes than more highly rated investments, but more
sensitive to economic downturns or individual corporate developments. The
secondary market on which high yield securities are traded may be less liquid
than the market for higher grade securities. Less liquidity in the secondary
trading market could adversely affect the price at which the Funds could sell a
high yield security, and could adversely affect the daily net asset value of the
shares. Lower liquidity in secondary markets could adversely affect the value
of high yield/high risk securities held by the Funds. While lower rated
securities typically are less sensitive to interest rate changes than higher
rated securities, the market prices of high yield/high risk securities
structured as "zero coupon" or "pay-in-kind" securities may be affected to a
greater extent by interest rate changes. See Appendix A to this Statement of
Additional Information for further information regarding high yield/high risk
securities. For instance, adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and liquidity of
high yield securities, especially in a thinly traded market. When secondary
markets for high yield securities are less liquid than the market for higher
grade securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater
role in the valuation because there is less reliable, objective data available.
Debt securities are purchased and sold principally in response to current
assessments of future changes in business conditions and the levels of interest
rates on debt/fixed income securities of varying maturities, the availability of
new investment opportunities at higher relative yields, and current evaluations
of an issuer's continuing ability to meet its obligations in the future. The
average maturity or duration of the debt/fixed income securities in a Fund's
portfolio may vary in response to anticipated changes in interest rates and to
other economic factors. Securities may be bought and sold in anticipation of a
decline or a rise in market interest rates. In addition, a Fund may sell a
security and purchase another of comparable quality and maturity (usually, but
not always, of a different issuer) at approximately the same time to take
advantage of what are believed to be short-term differentials in values or
yields.
LOAN PARTICIPATIONS AND ASSIGNMENTS
Certain Funds may invest in fixed- and floating-rate loans arranged through
private negotiations between an issuer of debt instruments and one or more
financial institutions ("lenders"). Generally, a Fund's investments in loans
are expected to take the form of loan participations and assignments of portions
of loans from third parties.
Large loans to corporations or governments may be shared or syndicated
among several lenders, usually banks. A Fund may participate in such
syndicates, or can buy part of a loan, becoming a direct lender. Participations
and assignments involve special types of risk, including liquidity risk and the
risks of being a lender. If a Fund purchases a participation, it may only be
able to enforce its rights through the lender, and may assume the credit risk of
the lender in addition to the borrower. In assignments, a Fund's rights against
the borrower may be more limited than those held by the original lender.
-5-
<PAGE>
PARTICIPATION ON CREDITORS COMMITTEES
A Fund may from time to time participate on committees formed by creditors
to negotiate with the management of financially troubled issuers of securities
held by the Fund. Such participation may subject a Fund to expenses such as
legal fees and may make the Fund an "insider" of the issuer for purposes of the
federal securities laws, and therefore may restrict the Fund's ability to trade
in or acquire additional positions in a particular security when it might
otherwise desire to do so. Participation by a Fund on such committees also may
expose the Fund to potential liabilities under the federal bankruptcy laws or
other laws governing the rights of creditors and debtors. A Fund would
participate on such committees only when the Adviser and the relevant Sub-
Adviser believe that such participation is necessary or desirable to enforce the
Fund's rights as a creditor or to protect the value of securities held by the
Fund.
VARIABLE AND FLOATING RATE SECURITIES
Variable and floating rate securities provide for a periodic adjustment in
the interest rate paid on the obligations. The terms of such obligations must
provide that interest rates are adjusted periodically based upon an interest
rate adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be event
based, such as based on a change in the prime rate.
Certain of the Funds may invest in floating rate debt instruments
("floaters"). The interest rate on a floater is a variable rate which is tied
to another interest rate, such as a money-market index or U.S. Treasury bill
rate. The interest rate on a floater resets periodically, typically every six
months. Because of the interest rate reset feature, floaters provide a Fund
with a certain degree of protection against rises in interest rates, but
generally do not allow the Fund to participate fully in appreciation resulting
from any general decline in interest rates.
Certain Funds may also invest in inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction from the market rate of interest to which the inverse floater
is indexed. An inverse floating rate security generally will exhibit greater
price volatility than a fixed rate obligation of similar credit quality. See
"Mortgage-Related and Asset-Backed Securities" below.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
All Funds that may purchase debt securities for investment purposes may
invest in mortgage-related securities, and in other asset-backed securities
(unrelated to mortgage loans) that are offered to investors currently or in the
future. Mortgage-related securities are interests in pools of residential or
commercial mortgage loans, including mortgage loans made by savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled as securities for sale to investors by various governmental,
government-related and private organizations. The value of some mortgage-
related or asset-backed securities in which the Funds invest may be particularly
sensitive to changes in prevailing interest rates, and, like other fixed income
investments, the ability of a Fund to successfully utilize these instruments may
depending part upon the ability of the Sub-Adviser to forecast interest rates
and other economic factors correctly. See "Mortgage Pass-Through Securities"
below. Certain debt securities are also secured with collateral consisting of
mortgage-related securities. See "Collateralized Mortgage Obligations" below.
MORTGAGE PASS-THROUGH SECURITIES. Mortgage Pass-Through Securities are
securities representing interests in "pools" of mortgage loans secured by
residential or commercial real property. Interests in pools of mortgage-related
securities differ from other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential or commercial mortgage loans, net of
any fees paid to the issuer or guarantor of such securities. Additional payments
are caused by repayments of principal resulting from the sale of the underlying
property, refinancing or
-6-
<PAGE>
foreclosure, net of fees or costs which may be incurred. Some mortgage-related
securities (such as securities issued by the Government National Mortgage
Association ("GNMA")) are described as "modified pass-through." These securities
entitle the holder to receive all interest and principal payments owed on the
mortgage pool, net of certain fees, at the scheduled payment dates regardless of
whether or not the mortgagor actually makes the payment.
The rate of prepayments on underlying mortgages will affect the price and
volatility of a mortgage-related security, and may have the effect of shortening
or extending the effective maturity of the security beyond what was anticipated
at the time of purchase. Early repayment of principal on some mortgage-related
securities (arising from prepayments of principal due to sale of the underlying
property, refinancing, or foreclosure, net of fees and costs which may be
incurred) may expose a Fund to a lower rate of return upon reinvestment of
principal. Also, if a security subject to prepayment has been purchased at a
premium, the value of the premium would be lost in the event of prepayment. Like
other fixed income securities, when interest rates rise, the value of a
mortgage-related security generally will decline; however, when interest rates
are declining, the value of mortgage-related securities with prepayment features
may not increase as much as other fixed income securities. To the extent that
unanticipated rates of prepayment on underlying mortgages increase the effective
maturity of a mortgage-related security, the volatility of such security can be
expected to increase.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. Government (in the case of securities
guaranteed by the GNMA) or guaranteed by agencies or instrumentalities of the
U.S. Government (in the case of securities guaranteed by the Federal National
Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC"). The principal governmental guarantor of mortgage-related
securities is the GNMA. GNMA is a wholly-owned U.S. Government corporation
within the Department of Housing and Urban Development. GNMA is authorized to
guarantee, with the full faith and credit of the U.S. Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of mortgages insured by the Federal Housing
Administration (the "FHA"), or guaranteed by the Department of Veterans Affairs
(the "VA").
Government-related guarantors (i.e., not backed by the full faith and
credit of the U.S. Government) include the FNMA and the FHLMC. FNMA is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases conventional (i.e., not insured or guaranteed by any government
agency) residential mortgages from a list of approved seller/services which
include state and federally chartered savings and loan associations, mutual
savings banks, commercial banks, and credit unions and mortgage bankers. Pass-
through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the U.S. Government. Instead, they are supported only by the discretionary
authority of the U.S. Government to purchase the agency's obligations.
FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a government-
sponsored corporation formerly owned by the twelve Federal Home Loan Banks and
now owned entirely by private stockholders. FHLMC issues Participation
Certificates ("PCs") which represent interests in conventional mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but PCs are not backed by the full faith and
credit of the U.S. Government. Instead, they are supported only by the
discretionary authority of the U.S. Government to purchase the agency's
obligations.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create pass-
through pools of conventional residential mortgage loans. Such issuers may, in
addition, be the originators and/or services of the underlying mortgage loans as
well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments in the former pools. However, timely
payment of interest
-7-
<PAGE>
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and
guarantees, and the creditworthiness of the issuers thereof, will be considered
in determining whether a mortgage-related security meets the Trust's investment
quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. A Fund may buy mortgage-related securities without insurance or
guarantees if, through an examination of the loan experience and practices of
the originator/servicers and poolers, the Sub-Adviser determines that the
securities meet the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable. A Fund will not purchase mortgage-
related securities or any other assets which in the Sub-Adviser's opinion are
illiquid if, as a result, more than 15% of the value of the Fund's net assets
(taken at market value at the time of investment) will be invested in illiquid
securities.
Mortgage-related securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to a Fund's
industry concentration restrictions, see "Investment Restrictions," by virtue of
the exclusion from that test available to all U.S. Government securities. In
the case of privately issued mortgage-related securities, the Funds take the
position that mortgage-related securities do not represent interests in any
particular "industry" or group of industries. The assets underlying such
securities may be represented by a portfolio of first lien residential mortgages
(including both whole mortgage loans and mortgage participation interests) or
portfolios of mortgage pass-through securities issued or guaranteed by GNMA,
FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn
be insured or guaranteed by the FHA or the VA. In the case of private issue
mortgage-related securities whose underlying assets are neither U.S. Government
securities nor U.S. Government-insured mortgages, to the extent that real
properties securing such assets may be located in the same geographical region,
the security may be subject to a greater risk of default than other comparable
securities in the event of adverse economic, political or business developments
that may affect such region and, ultimately, the ability of residential
homeowners to make payments of principal and interest on the underlying
mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). A CMO is a hybrid between a
mortgage-backed bond and a mortgage pass-through security. Similar to a bond,
interest and prepaid principal is paid, in most cases, semi-annually. CMOs may
be collateralized by whole mortgage loans, but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding
the longer maturity classes receive principal only after the first class has
been retired. An investor is partially guarded against a sooner than desired
return of principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering
are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C
Bonds all bear current interest. Interest on the Series Z Bond is accrued and
added to principal and a like amount is paid as principal on the Series A, B, or
C Bond currently being paid off. When the Series A, B, and C Bonds are paid in
full, interest and principal on the Series Z Bond begin to be paid currently.
With some CMOs, the issuer serves as a conduit to allow loan originators
(primarily builders or savings and loan associations) to borrow against their
loan portfolios.
-8-
<PAGE>
CMOs that are issued or guaranteed by the U.S. Government or by any of its
agencies or instrumentalities will be considered U.S. Government securities by a
Fund, while other CMOs, even if collateralized by U.S. Government securities,
will have the same status as other privately issued securities for purposes of
applying a Fund's diversification tests.
FHLMC COLLATERALIZED MORTGAGE OBLIGATIONS. FHLMC CMOs are debt obligations
of FHLMC issued in multiple classes having different maturity dates which are
secured by the pledge of a pool of conventional mortgage loans purchased by
FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are
made semi-annually, as opposed to monthly. The amount of principal payable on
each semi-annual payment date is determined in accordance with FHLMC's mandatory
sinking fund schedule, which in turn, is equal to approximately 100% of FHA
prepayment experience applied to the mortgage collateral pool. All sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payment of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum
sinking fund obligation for any payment date are paid to the holders of the CMOs
as additional sinking fund payments. Because of the "pass-through" nature of
all principal payments received on the collateral pool in excess of FHLMC's
minimum sinking fund requirement, the rate at which principal of the CMOs is
actually repaid is likely to be such that each class of bonds will be retired in
advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans
during any semi-annual payment period is not sufficient to meet FHLMC's minimum
sinking fund obligation on the next sinking fund payment date, FHLMC agrees to
make up the deficiency from its general funds.
Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC PCS. FHLMC has the right to substitute collateral
in the event of delinquencies and/or defaults.
COMMERCIAL MORTGAGE-BACKED SECURITIES. Commercial Mortgage-Backed
Securities include securities that reflect an interest in, and are secured by,
mortgage loans on commercial real property. The market for commercial mortgage-
backed securities developed more recently and in terms of total outstanding
principal amount of issues is relatively small compared to the market for
residential single-family mortgage-backed securities. Many of the risks of
investing in commercial mortgage-backed securities reflect the risks of
investing in the real estate securing the underlying mortgage loans. These
risks reflect the effects of local and other economic conditions on real estate
markets, the ability of tenants to make loan payments, and the ability of a
property to attract and retain tenants. Commercial mortgage-backed securities
may be less liquid and exhibit greater price volatility than other types of
mortgage- or asset-backed securities.
OTHER MORTGAGE-RELATED SECURITIES. Other mortgage-related securities
include securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including CMO residuals or stripped mortgage-backed
securities. Other mortgage-related securities may be equity or debt securities
issued by agencies or instrumentalities of the U.S. Government or by private
originators of, or investors in, mortgage loans, including savings and loan
associations, homebuilders, mortgage banks, commercial banks, investment banks,
partnerships, trusts and special purpose entities of the foregoing.
CMO RESIDUALS. CMO residuals are mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.
The cash flow generated by the mortgage assets underlying a series of CMOs
is applied first to make required payments of principal and interest on the CMOs
and second to pay the related administrative expenses of the issuer. The
residual in a CMO structure generally represents the interest in any excess cash
flow remaining after making the foregoing payments. Each payment of such excess
cash flow to a holder of the related CMO
-9-
<PAGE>
residual represents income and/or a return of capital. The amount of residual
cash flow resulting from a CMO will depend on, among other things, the
characteristics of the mortgage assets, the coupon rate of each class of CMO,
prevailing interest rates, the amount of administrative expenses and the
prepayment experience on the mortgage assets. In particular, the yield to
maturity on CMO residuals is extremely sensitive to prepayments on the related
underlying mortgage assets, in the same manner as an IO class of stripped
mortgage-backed securities. See "Other Mortgage-Related Securities--Stripped
Mortgage-Backed Securities." In addition, if a series of a CMO includes a class
that bears interest at an adjustable rate, the yield to maturity on the related
CMO residual will also be extremely sensitive to changes in the level of the
index upon which interest rate adjustments are based. As described below with
respect to stripped mortgage-backed securities, in certain circumstances a Fund
may fail to recoup some or all of its initial investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has developed fairly recently and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not,
have been registered under the Securities Act of 1933, as amended (the "1933
Act"). CMO residuals, whether or not registered under the 1933 Act, may be
subject to certain restrictions on transferability, and may be deemed
"illiquid" and subject to a Fund's limitations on investment in illiquid
securities.
STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities
("SMBS") are derivative multi-class mortgage securities. SMBS may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose entities
of the foregoing.
SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of SMBS will have one class receiving some of the
interest and most of the principal from the mortgage assets, while the other
class will receive most of the interest and the remainder of the principal. In
the most extreme case, one class will receive all of the interest (the "IO"
class), while the other class will receive all of the principal (the "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on a Fund's yield to maturity from these securities. If the underlying
mortgage assets experience greater than anticipated prepayments of principal,
the Fund may fail to recoup some or all of its initial investment in these
securities even if the security is in one of the highest rating categories.
Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were developed fairly recently. As a result, established trading markets have
not yet developed and, accordingly, these securities may be deemed "illiquid"
and subject to a Fund's limitations on investment in illiquid securities.
OTHER ASSET-BACKED SECURITIES. Similarly, the Adviser and Sub-Advisers
expect that other asset-backed securities (unrelated to mortgage loans) will be
offered to investors in the future and may be purchased by the Funds that may
invest in mortgage-related securities. Several types of asset-backed securities
have already been offered to investors, including Certificates for Automobile
ReceivablesSM ("CARSSM"). CARSSM represent undivided fractional interests in a
trust whose assets consist of a pool of motor vehicle retail installment sales
contracts and security interests in the vehicles securing the contracts.
Payments of principal and interest on CARSSM are passed through monthly to
certificate holders, and are guaranteed up to certain amounts and for a certain
time period by a letter of credit issued by a financial institution unaffiliated
with the trustee or originator of the trust. An investor's return on CARSSM may
be affected by early prepayment of principal on the underlying vehicle sales
contracts. If the letter of credit is exhausted, the trust may be prevented
from realizing the full amount due on a sales contract because of state law
requirements and restrictions relating to foreclosure sales of vehicles and the
obtaining of deficiency judgments following such sales or because of
depreciation, damage or loss
-10-
<PAGE>
of a vehicle, the application of federal and state bankruptcy and insolvency
laws, or other factors. As a result, certificate holders may experience delays
in payments or losses if the letter of credit is exhausted.
Consistent with a Fund's investment objectives and policies, the Adviser
and Sub-Adviser also may invest in other types of asset-backed securities.
CONVERTIBLE SECURITIES
Many of the Funds may invest in convertible securities. A Fund's Sub-
Adviser will select convertible securities to be purchased by the Fund based
primarily upon its evaluation of the fundamental investment characteristics and
growth prospects of the issuer of the security. As a fixed income security, a
convertible security tends to increase in market value when interest rates
decline and to decrease in value when interest rates rise. While convertible
securities generally offer lower interest or dividend yields than non-
convertible fixed income securities of similar quality, their value tends to
increase as the market value of the underlying stock increases and to decrease
when the value of the underlying stock decreases.
Certain Funds, including the Renaissance Fund, may invest in so-called
"synthetic convertible securities," which are composed of two or more
different securities whose investment characteristics, taken together, resemble
those of convertible securities. For example, the Renaissance Fund may purchase
a non-convertible debt security and a warrant or option. The synthetic
convertible differs from the true convertible security in several respects.
Unlike a true convertible security, which is a single security having a unitary
market value, a synthetic convertible comprises two or more separate securities,
each with its own market value. Therefore, the "market value" of a synthetic
convertible is the sum of the values of its fixed income component and its
convertible component. For this reason, the values of a synthetic convertible
and a true convertible security may respond differently to market fluctuations.
EQUITY-LINKED SECURITIES
Each of the Structured Emerging Markets and Tax-Efficient Structured
Emerging Markets Funds may invest up to 15% of its net assets in equity-linked
securities. The International Fund may invest up to 5% of its assets in equity-
linked securities. Equity-linked securities are privately issued securities
whose investment results are designed to correspond generally to the performance
of a specified stock index or "basket" of stocks, or sometimes a single stock.
To the extent that a Fund invests in an equity-linked security whose return
corresponds to the performance of a foreign securities index or one or more
foreign stocks, investing in equity-linked securities will involve risks similar
to the risks of investing in foreign equity securities. See "Foreign
Securities" in this Statement of Additional Information. In addition, the Funds
bear the risk that the issuer of an equity-linked security may default on its
obligations under the security. Equity-linked securities may be considered
illiquid and thus subject to the Funds' restrictions on investments in illiquid
securities.
FOREIGN SECURITIES
The Structured Emerging Markets, Tax-Efficient Structured Emerging Markets,
International Growth, International and Global Innovation Funds may invest in
U.S. dollar or foreign currency-denominated corporate debt securities of foreign
issuers; foreign equity securities, including preferred securities of foreign
issuers; certain foreign bank obligations; and U.S. dollar- or foreign currency-
denominated obligations of foreign governments or their subdivisions, agencies
and instrumentalities, international agencies and supranational entities. The
Structured Emerging Markets, Tax-Efficient Structured Emerging Markets,
International Growth, International and Global Innovation Funds may also invest
in common stocks issued by foreign companies. The Equity Income, Value,
Renaissance, Select Growth, Growth & Income, Growth, Target, Opportunity and
Innovation Funds each may invest up to 15% of their respective net assets in
securities which are traded principally in securities markets outside the United
States (Eurodollar certificates of deposit are excluded for purposes of these
limitations), and may invest without limit in securities of foreign issuers that
are traded in U.S.
-11-
<PAGE>
securities markets. The Enhanced Equity Fund may invest in common stock of
foreign issuers if it is included in the index from which stocks are selected.
Each of the Funds may invest in American Depository Receipts ("ADRs"). The
Equity Income, Value, Renaissance, Growth, Target, Select Growth, Growth &
Income, Opportunity, Innovation, Structured Emerging Markets, Tax-Efficient
Structured Emerging Markets, International Growth, International and Global
Innovation Funds may invest in European Depository Receipts ("EDRs") or Global
Depository Receipts ("GDRs"). ADRs are dollar-denominated receipts issued
generally by domestic banks and represent the deposit with the bank of a
security of a foreign issuer. EDRs are foreign currency-denominated receipts
similar to ADRs and are issued and traded in Europe, and are publicly traded on
exchanges or over-the-counter in the United States. GDRs may be offered
privately in the United States and also trade in public or private markets in
other countries. ADRs, EDRs and GDRs may be issued as sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements to have its
securities trade in the form of ADRs, EDRs or GDRs. In unsponsored programs,
the issuer may not be directly involved in the creation of the program.
Although regulatory requirements with respect to sponsored and unsponsored
programs are generally similar, in some cases it may be easier to obtain
financial information from an issuer that has participated in the creation of a
sponsored program.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
include: differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country), political instability which can
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. In addition, foreign securities and dividends
and interest payable on those securities may be subject to foreign taxes,
including taxes withheld from payments on those securities. Foreign securities
often trade with less frequency and volume than domestic securities and
therefore may exhibit greater price volatility. Changes in foreign exchange
rates will affect the value of those securities which are denominated or quoted
in currencies other than the U.S. dollar.
The risks of investing in foreign securities are particularly high when
securities of issuers based in developing (or "emerging market") countries are
involved. Investing in emerging market countries involves certain risks not
typically associated with investing in U.S. securities, and imposes risks
greater than, or in addition to, risks of investing in foreign, developed
countries. These risks include: greater risks of nationalization or
expropriation of assets or confiscatory taxation; currency devaluations and
other currency exchange rate fluctuations; greater social, economic and
political uncertainty and instability (including the risk of war); more
substantial government involvement in the economy; less government supervision
and regulation of the securities markets and participants in those markets;
controls on foreign investment and limitations on repatriation of invested
capital and on the Fund=s ability to exchange local currencies for U.S. dollars;
unavailability of currency hedging techniques in certain emerging market
countries; the fact that companies in emerging market countries may be smaller,
less seasoned and newly organized companies; the difference in, or lack of,
auditing and financial reporting standards, which may result in unavailability
of material information about issuers; the risk that it may be more difficult to
obtain and/or enforce a judgment in a court outside the United States; and
greater price volatility, substantially less liquidity and significantly smaller
market capitalization of securities markets. In addition, a number of emerging
market countries restrict, to various degrees, foreign investment in securities,
and high rates of inflation and rapid fluctuations in inflation rates have had,
and may continue to have, negative effects on the economies and securities
markets of certain emerging market countries. Also, any change in the
leadership or politics of emerging market countries, or the countries that
exercise a significant influence over those countries, may halt the expansion of
or reverse the liberalization of foreign investment policies now occurring and
adversely affect existing investment opportunities.
A Fund's investments in foreign currency denominated debt obligations and
hedging activities will likely produce a difference between its book income and
its taxable income. This difference may cause a portion of the Fund's income
distributions to constitute returns of capital for tax purposes or require the
Fund to make distributions exceeding book income to qualify as a regulated
investment company for federal tax purposes.
-12-
<PAGE>
SPECIAL RISKS OF INVESTING IN RUSSIAN AND OTHER EASTERN EUROPEAN
SECURITIES. The International, Global Innovation, International Growth, Tax-
Efficient Structured Emerging Markets and Structured Emerging Markets Funds may
invest a portion of their assets in securities of issuers located in Russia and
in other Eastern European countries. The political, legal and operational risks
of investing in the securities of Russian and other Eastern European issuers,
and of having assets custodied within these countries, may be particularly
acute. Investments in Eastern European countries may involve acute risks of
nationalization, expropriation and confiscatory taxation. The communist
governments of a number of Eastern European countries expropriated large amounts
of private property in the past, in many cases without adequate compensation,
and there can be no assurance that such expropriation will not occur in the
future. Also, certain Eastern European countries, which do not have market
economies, are characterized by an absence of developed legal structures
governing private and foreign investments and private property.
In addition, governments in certain Eastern European countries may require
that a governmental or quasi-governmental authority act as custodian of a Fund's
assets invested in such country. To the extent such governmental or quasi-
governmental authorities do not satisfy the requirements of the 1940 Act to act
as foreign custodians of the Fund's cash and securities, the Fund's investment
in such countries may be limited or may be required to be effected through
intermediaries. The risk of loss through governmental confiscation may be
increased in such circumstances.
Investments in securities of Russian issuers may involve a particularly
high degree of risk and special considerations not typically associated with
investing in U.S. and other more developed markets, many of which stem from
Russia's continuing political and economic instability and the slow-paced
development of its market economy. Investments in Russian securities should be
considered highly speculative. Such risks and special considerations include:
(a) delays in settling portfolio transactions and the risk of loss arising out
of Russia's system of share registration and custody (see below); (b)
pervasiveness of corruption, insider trading, and crime in the Russian economic
system; (c) difficulties associated in obtaining accurate market valuations of
many Russian securities, based partly on the limited amount of publicly
available information; (d) the general financial condition of Russian companies,
which may involve particularly large amounts of inter-company debt; and (e) the
risk that the Russian tax system will not be reformed to prevent inconsistent,
retroactive and/or exorbitant taxation or, in the alternative, the risk that a
reformed tax system may result in the inconsistent and unpredictable enforcement
of the new tax laws. Also, there is the risk that the government of Russia or
other executive or legislative bodies may decide not to continue to support the
economic reform programs implemented since the dissolution of the Soviet Union
and could follow radically different political and/or economic policies to the
detriment of investors, including non-market-oriented policies such as the
support of certain industries at the expense of other sectors or investors, a
return to the centrally planned economy that existed prior to the dissolution of
the Soviet Union, or the nationalization of privatized enterprises.
A risk of particular note with respect to direct investment in Russian
securities is the way in which ownership of shares of companies is normally
recorded. Ownership of shares (except where shares are held through
depositories that meet the requirements of the 1940 Act) is defined according to
entries in the company's share register and normally evidenced by "share
extracts" from the register or, in certain limited circumstances, by formal
share certificates. However, there is no central registration system for
shareholders and these services are carried out by the companies themselves or
by registrars located throughout Russia. The share registrars are controlled by
the issuer of the securities, and investors are provided with few legal rights
against such registrars. These registrars are not necessarily subject to
effective state supervision nor are they licensed with any governmental entity.
It is possible for a Fund to lose its registration through fraud, negligence or
even mere oversight. While a Fund will endeavor to ensure that its interest
continues to be appropriately recorded, which may involve a custodian or other
agent inspecting the share register and obtaining extracts of share registers
through regular confirmations, these extracts have no legal enforceability and
it is possible that subsequent illegal amendment or other fraudulent act may
deprive the Fund of its ownership rights or improperly dilute its interests. In
addition, while applicable Russian regulations impose liability on registrars
for losses resulting from their errors, it may be difficult for a Fund to
enforce any rights it may have against the registrar or issuer of the securities
in the event of loss of share registration.
-13-
<PAGE>
Also, although a Russian public enterprise with more than 500 shareholders
is required by law to contract out the maintenance of its shareholder register
to an independent entity that meets certain criteria, this regulation has not
always been strictly enforced in practice. Because of this lack of
independence, management of a company may be able to exert considerable
influence over who can purchase and sell the company's shares by illegally
instructing the registrar to refuse to record transactions in the share
register. In addition, so-called "financial-industrial groups" have emerged in
recent years that seek to deter outside investors from interfering in the
management of companies they control. These practices may prevent a Fund from
investing in the securities of certain Russian companies deemed suitable by the
Fund's Sub-Adviser. Further, this also could cause a delay in the sale of
Russian securities held by a Fund if a potential purchaser is deemed unsuitable,
which may expose the Fund to potential loss on the investment.
FOREIGN CURRENCIES
The Equity Income, Value, Renaissance, Select Growth, Growth & Income,
Growth, Target, Opportunity, Innovation, International, International Growth,
Structured Emerging Markets, Tax-Efficient Structured Emerging Markets and
Global Innovation Funds invest directly in foreign currencies and may enter into
forward foreign currency exchange contracts to reduce the risks of adverse
changes in foreign exchange rates. In addition, the Structured Emerging
Markets, Tax-Efficient Structured Emerging Markets, International, International
Growth and Global Innovation Funds may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency futures.
A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. By entering into a forward foreign
currency exchange contract, the fund "locks in" the exchange rate between the
currency it will deliver and the currency it will receive for the duration of
the contract. As a result, a Fund reduces its exposure to changes in the value
of the currency it will deliver and increases its exposure to changes in the
value of the currency it will exchange into. Contracts to sell foreign
currencies would limit any potential gain which might be realized by a Fund if
the value of the hedged currency increases. A Fund may enter into these
contracts for the purpose of hedging against foreign exchange risks arising from
the Funds' investment or anticipated investment in securities denominated in
foreign currencies. Suitable hedging transactions may not be available in all
circumstances. Also, such hedging transactions may not be successful and may
eliminate any chance for a Fund to benefit from favorable fluctuations in
relevant foreign currencies.
The International, Global Innovation, International Growth, Structured
Emerging Markets and Tax-Efficient Structured Emerging Markets Funds may also
enter into forward foreign currency exchange contracts for purposes of
increasing exposure to a foreign currency or to shift exposure to foreign
currency fluctuations from one currency to another. To the extent that they do
so, the International, Global Innovation, International Growth, Structured
Emerging Markets and Tax-Efficient Structured Emerging Markets Funds will be
subject to the additional risk that the relative value of currencies will be
different than anticipated by the particular Fund's Sub-Adviser. A Fund may use
one currency (or a basket of currencies) to hedge against adverse changes in the
value of another currency (or a basket of currencies) when exchange rates
between the two currencies are positively correlated. A Fund will segregate
assets determined to be liquid by the Adviser or a Sub-Adviser in accordance
with procedures established by the Board of Trustees to cover forward currency
contracts entered into for non-hedging purposes. The Funds may also use foreign
currency futures contracts and related options on currencies for the same
reasons for which forward foreign currency exchange contracts are used.
SPECIAL RISKS ASSOCIATED WITH THE INTRODUCTION OF THE EURO. The
introduction of a single currency, the euro, on January 1, 1999 for
participating European nations in the European Economic and Monetary Union
presents unique uncertainties for European securities in the markets in which
they trade and with respect to the operation of the Funds that invest in
securities denominated in European currencies and other European securities.
The introduction of the euro will result in the redenomination of European debt
and equity securities over a period of time. Uncertainties raised by the
introduction of the euro include whether the payment and operational systems
-14-
<PAGE>
of banks and other financial institutions will function correctly, whether
clearing and settlement payment systems developed for the new currency will be
suitable, the valuation and legal treatment of outstanding financial contracts
after January 1, 1999 that refer to existing currencies rather than the euro,
and possible adverse accounting or tax consequences that may arise from the
transition to the euro. These or other factors could cause market disruptions
and could adversely affect the value of securities and foreign currencies held
by the Funds.
BANK OBLIGATIONS
Bank obligations in which the Funds may invest include certificates of
deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit
are negotiable certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified return. Bankers'
acceptances are negotiable drafts or bills of exchange, normally drawn by an
importer or exporter to pay for specific merchandise, which are Aaccepted@ by a
bank, meaning, in effect, that the bank unconditionally agrees to pay the face
value of the instrument on maturity. Fixed time deposits are bank obligations
payable at a stated maturity date and bearing interest at a fixed rate. Fixed
time deposits may be withdrawn on demand by the investor, but may be subject to
early withdrawal penalties which vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits. A Fund will not invest in
fixed time deposits which (1) are not subject to prepayment or (2) provide for
withdrawal penalties upon prepayment (other than overnight deposits) if, in the
aggregate, more than 15% of its net assets (taken at market value at the time of
investment) would be invested in such deposits, repurchase agreements maturing
in more than seven days and other illiquid assets. Each Fund may also hold
funds on deposit with its sub-custodian bank in an interest-bearing account for
temporary purposes.
Each Fund limits its investments in United States bank obligations to
obligations of United States banks (including foreign branches) which have more
than $1 billion in total assets at the time of investment and are members of the
Federal Reserve System or are examined by the Comptroller of the Currency or
whose deposits are insured by the Federal Deposit Insurance Corporation. A Fund
also may invest in certificates of deposit of savings and loan associations
(federally or state chartered and federally insured) having total assets in
excess of $1 billion.
The Equity Income, Value, Renaissance, Growth, Target, Select Growth,
Growth & Income, Opportunity, Innovation, International, Structured Emerging
Markets, Tax-Efficient Structured Emerging Markets, International Growth and
Global Innovation Funds limit their investments in foreign bank obligations to
obligations of foreign banks (including United States branches of foreign banks)
which at the time of investment (i) have more than $10 billion, or the
equivalent in other currencies, in total assets; (ii) are among the 75 largest
foreign banks in the world in terms of total assets; (iii) have branches or
agencies (limited purpose offices which do not offer all banking services) in
the United States; and (iv) in the opinion of the relevant Sub-Adviser, are of
an investment quality comparable to obligations of United States banks in which
the Funds may invest. Subject to each Fund's limitation on concentration of no
more than 25% of its assets in the securities of issuers in a particular
industry, there is no limitation on the amount of a Fund's assets which may be
invested in obligations of foreign banks which meet the conditions set forth
above.
Obligations of foreign banks involve certain risks associated with
investing in foreign securities described under "Foreign Securities" above,
including the possibilities that their liquidity could be impaired because of
future political and economic developments, that their obligations may be less
marketable than comparable obligations of United States banks, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized, that foreign
governmental restrictions such as exchange controls may be adopted which might
adversely affect the payment of principal and interest on those obligations and
that the selection of those obligations may be more difficult because there may
be less publicly available information concerning foreign banks or the
accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign banks may differ from those applicable to
United
-15-
<PAGE>
States banks. Foreign banks are not generally subject to examination by any U.S.
Government agency or instrumentality.
COMMERCIAL PAPER
All Funds may invest in commercial paper. Commercial paper represents
short-term unsecured promissory notes issued in bearer form by banks or bank
holding companies, corporations and finance companies. The commercial paper
purchased by the Funds consists of U.S. dollar-denominated obligations of
domestic issuers, or, additionally for the Equity Income, Value, Renaissance,
Growth, Target, Select Growth, Growth & Income, Opportunity, Innovation,
Structured Emerging Markets, Tax-Efficient Structured Emerging Markets,
International, International Growth and Global Innovation Funds, foreign
currency-denominated obligations of domestic or foreign issuers which, at the
time of investment, are (i) rated "P-1" or "P-2" by Moody's or "A-1" or "A-2" or
better by S&P, (ii) issued or guaranteed as to principal and interest by issuers
or guarantors having an existing debt security rating of "A" or better by
Moody's or "A" or better by S&P, or (iii) securities which, if not rated, are,
in the opinion of the Sub-Adviser, of an investment quality comparable to rated
commercial paper in which the Fund may invest. The rate of return on commercial
paper may be linked or indexed to the level of exchange rates between the U.S.
dollar and a foreign currency or currencies.
MONEY MARKET INSTRUMENTS
Each of the Funds may invest at least a portion of its assets in the
following kinds of money market instruments: (1) short-term U.S. Government
securities; (2) certificates of deposit, bankers' acceptances and other bank
obligations rated in the two highest rating categories by at least two NRSROs,
or, if rated by only one NRSRO, in such agency's two highest grades, or, if
unrated, determined to be of comparable quality by the Adviser or a Sub-Adviser.
Bank obligations must be those of a bank that has deposits in excess of $2
billion or that is a member of the Federal Deposit Insurance Corporation. A Fund
may invest in obligations of U.S. branches or subsidiaries of foreign banks
("Yankee dollar obligations") or foreign branches of U.S. banks ("Eurodollar
obligations"); (3) commercial paper rated in the two highest rating categories
by at least two NRSROs, or, if rated by only one NRSRO, in such agency's two
highest grades, or, if unrated, determined to be of comparable quality by the
Adviser or a Sub-Adviser; (4) corporate obligations with a remaining maturity of
397 days or less whose issuers have outstanding short-term debt obligations
rated in the highest rating category by at least two NRSROs, or, if rated by
only one NRSRO, in such agency's highest grade, or, if unrated, determined to be
of comparable quality by the Adviser or a Sub-Adviser; and (5) repurchase
agreements with domestic commercial banks or registered broker-dealers.
DERIVATIVE INSTRUMENTS
The following describes certain derivative instruments and products in
which certain Funds may invest and risks associated therewith.
The Funds might not employ any of the strategies described below, and no
assurance can be given that any strategy used will succeed. Also, suitable
derivative and/or hedging transactions may not be available in all circumstances
and there can be no assurance that a Fund will be able to identify or employ a
desirable derivative and/or hedging transaction at any time or from time to
time.
OPTIONS ON SECURITIES AND INDEXES. As described under "Characteristics and
Risks of Securities and Investment Techniques--Derivatives" in the Prospectuses,
certain Funds may purchase and sell both put and call options on equity, fixed
income or other securities or indexes in standardized contracts traded on
foreign or domestic securities exchanges, boards of trade, or similar entities,
or quoted on National Association of Securities Dealers Automated Quotations
("NASDAQ") or on a regulated foreign over-the-counter market, and agreements,
sometimes called cash puts, which may accompany the purchase of a new issue of
bonds from a dealer. Among other reasons, a Fund may purchase put options to
protect holdings in an underlying or related security against a
-16-
<PAGE>
decline in market value, and may purchase call options to protect against
increases in the prices of securities it intends to purchase pending its ability
to invest in such securities in an orderly manner.
An option on a security (or index) is a contract that gives the holder of
the option, in return for a premium, the right to buy from (in the case of a
call) or sell to (in the case of a put) the writer of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an index is obligated to pay the difference between the cash value of
the index and the exercise price multiplied by the specified multiplier for the
index option. (An index is designed to reflect features of a particular
financial or securities market, a specific group of financial instruments or
securities, or certain economic indicators.)
A Fund will write call options and put options only if they are "covered."
In the case of a call option on a security, the option is "covered" if the Fund
owns the security underlying the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or, if additional
cash consideration is required, cash or other assets determined to be liquid by
the Sub-Adviser in accordance with procedures established by the Board of
Trustees in such amount are segregated) upon conversion or exchange of other
securities held by the Fund. For a call option on an index, the option is
covered if the Fund segregates assets determined to be liquid by the Adviser or
a Sub-Adviser in accordance with procedures established by the Board of Trustees
in an amount equal to the contract value of the index. A call option is also
covered if the Fund holds a call on the same security or index as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written, or (ii) greater than the exercise price
of the call written, provided the difference is segregated by the Fund in assets
determined to be liquid by the Adviser or a Sub-Adviser in accordance with
procedures established by the Board of Trustees. A put option on a security or
an index is "covered" if the Fund segregates assets determined to be liquid by
the Sub-Adviser in accordance with procedures established by the Board of
Trustees equal to the exercise price. A put option is also covered if the Fund
holds a put on the same security or index as the put written where the exercise
price of the put held is (i) equal to or greater than the exercise price of the
put written, or (ii) less than the exercise price of the put written, provided
the difference is segregated by the Fund in assets determined to be liquid by
the Adviser or a Sub-Adviser in accordance with procedures established by the
Board of Trustees.
If an option written by a Fund expires unexercised, the Fund realizes a
capital gain equal to the premium received at the time the option was written.
If an option purchased by a Fund expires unexercised, the Fund realizes a
capital loss equal to the premium paid. Prior to the earlier of exercise or
expiration, an exchange-traded option may be closed out by an offsetting
purchase or sale of an option of the same series (type, exchange, underlying
security or index, exercise price, and expiration). In addition, a Fund may
sell put or call options it has previously purchased, which could result in a
net gain or loss depending on whether the amount realized on the sale is more or
less than the premium and other transaction costs paid on the put or call option
which is sold. There can be no assurance, however, that a closing purchase or
sale transaction can be effected when the Fund desires.
A Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price of the underlying security or index in relation
to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
The premium paid for a put or call option purchased by a Fund is an asset
of the Fund. The premium received for an option written by a Fund is recorded
as a deferred credit. The value of an option purchased or
-17-
<PAGE>
written is marked to market daily and is valued at the closing price on the
exchange on which it is traded or, if not traded on an exchange or no closing
price is available, at the mean between the last bid and asked prices.
OTC OPTIONS. The Equity Income, Value, Renaissance, Growth, Select Growth,
Growth & Income, Target, Opportunity, Innovation, International, International
Growth and Global Innovation Funds may enter into over-the-counter ("OTC")
options transactions only with primary dealers in U.S. Government securities and
only pursuant to agreements that will assure that the relevant Fund will at all
times have the right to repurchase the option written by it from the dealer at a
specified formula price. Over-the-counter options in which certain Funds may
invest differ from traded options in that they are two-party contracts, with
price and other terms negotiated between buyer and seller, and generally do not
have as much market liquidity as exchange-traded options. The Funds may be
required to treat as illiquid over-the-counter options purchased and securities
being used to cover certain written over-the-counter options, and they will
treat the amount by which such formula price exceeds the intrinsic value of the
option (i.e., the amount, if any, by which the market price of the underlying
security exceeds the exercise price of the option) as an illiquid investment.
RISKS ASSOCIATED WITH OPTIONS ON SECURITIES AND INDEXES. There are several
risks associated with transactions in options on securities and on indexes. For
example, there are significant differences between the securities and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when a Fund seeks
to close out an option position. If a Fund were unable to close out an option
that it had purchased on a security, it would have to exercise the option in
order to realize any profit or the option may expire worthless. If a Fund were
unable to close out a covered call option that it had written on a security, it
would not be able to sell the underlying security unless the option expired
without exercise. As the writer of a covered call option, a Fund forgoes,
during the option's life, the opportunity to profit from increases in the market
value of the security covering the call option above the sum of the premium and
the exercise price of the call but, as long as its obligation as a writer
continues, has retained the risk of loss should the price of the underlying
security decline. The writer of an option has no control over the time when it
may be required to fulfill its obligation as a writer of the option. Once an
option writer has received an exercise notice, it cannot effect a closing
purchase transaction in order to terminate its obligation under the option and
must deliver the underlying security at the exercise price. If a put or call
option purchased by the Fund is not sold when it has remaining value, and if the
market price of the underlying security remains equal to or greater than the
exercise price (in the case of a put), or remains less than or equal to the
exercise price (in the case of a call), the Fund will lose its entire investment
in the option. Also, where a put or call option on a particular security is
purchased to hedge against price movements in a related security, the price of
the put or call option may move more or less than the price of the related
security.
There can be no assurance that a liquid market will exist when a Fund seeks
to close out an option position. Furthermore, if trading restrictions or
suspensions are imposed on the options markets, a Fund may be unable to close
out a position. Similarly, if restrictions on exercise were imposed, the Fund
might be unable to exercise an option it has purchased. Except to the extent
that a call option on an index written by the Fund is covered by an option on
the same index purchased by the Fund, movements in the index may result in a
loss to the Fund; however, such losses may be mitigated by changes in the value
of the Fund's securities during the period the option was outstanding.
For each of the International, International Growth, Renaissance, Growth,
Target, Opportunity and Innovation Funds, in the case of a written call option
on a securities index, the Fund will own corresponding securities whose historic
volatility correlates with that of the index.
Foreign Currency Options. The Equity Income, Global Innovation, Growth,
Innovation, International, International Growth, Growth & Income, Opportunity,
Renaissance, Select Growth, Structured Emerging
-18-
<PAGE>
Markets, Target, Tax-Efficient Structured Emerging Markets and Value Funds may
buy or sell put and call options on foreign currencies as a hedge against
changes in the value of the U.S. dollar (or another currency) in relation to a
foreign currency in which a Fund's securities may be denominated. In addition,
each of the Funds that may buy or sell foreign currencies may buy or sell put
and call options on foreign currencies either on exchanges or in the over-the-
counter market. A put option on a foreign currency gives the purchaser of the
option the right to sell a foreign currency at the exercise price until the
option expires. A call option on a foreign currency gives the purchaser of the
option the right to purchase the currency at the exercise price until the option
expires. Currency options traded on U.S. or other exchanges may be subject to
position limits which may limit the ability of a Fund to reduce foreign currency
risk using such options.
Futures Contracts and Options on Futures Contracts. Certain Funds may use
interest rate, foreign currency or index futures contracts. The Equity Income,
Global Innovation, Growth, Innovation, International, International Growth,
Growth & Income, Opportunity, Renaissance, Select Growth, Structured Emerging
Markets, Target, Tax-Efficient Structured Emerging Markets and Value Funds may
invest in foreign exchange futures contracts and options thereon ("futures
options") that are traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system as an adjunct to
their securities activities. The Equity Income, Global Innovation, Growth,
Innovation, International, International Growth, Growth & Income, Opportunity,
Renaissance, Select Growth, Structured Emerging Markets, Target, Tax-Efficient
Structured Emerging Markets and Value Funds may purchase and sell futures
contracts on various securities indexes ("Index Futures") and related options
for hedging purposes and for investment purposes. A Fund's purchase and sale of
Index Futures is limited to contracts and exchanges which have been approved by
the Commodity Futures Trading Commission ("CFTC"). Each of the
International, Global Innovation, International Growth, Structured Emerging
Markets and Tax-Efficient Structured Emerging Markets Funds may invest to a
significant degree in Index Futures on stock indexes and related options
(including those which may trade outside of the United States) as an alternative
to purchasing individual stocks in order to adjust the Fund's exposure to a
particular market. These Funds may invest in Index Futures and related options
when a Sub-Adviser believes that there are not enough attractive securities
available to maintain the standards of diversification and liquidity set for a
Fund pending investment in such securities if or when they do become available.
Through the use of Index Futures and related options, a Fund may diversify risk
in its portfolio without incurring the substantial brokerage costs which may be
associated with investment in the securities of multiple issuers. A Fund may
also avoid potential market and liquidity problems which may result from
increases in positions already held by the Fund.
An interest rate, foreign currency or index futures contract provides for
the future sale by one party and purchase by another party of a specified
quantity of a financial instrument, foreign currency or the cash value of an
index at a specified price and time. An Index Future is an agreement pursuant
to which two parties agree to take or make delivery of an amount of cash equal
to the difference between the value of a securities index ("Index") at the close
of the last trading day of the contract and the price at which the index
contract was originally written. Although the value of an Index might be a
function of the value of certain specified securities, no physical delivery of
these securities is made. A unit is the value of the relevant Index from time
to time. Entering into a contract to buy units is commonly referred to as
buying or purchasing a contract or holding a long position in an Index. Index
Futures contracts can be traded through all major commodity brokers. A Fund's
purchase and sale of Index Futures is limited to contracts and exchanges which
have been approved by the CFTC. A Fund will ordinarily be able to close open
positions on the futures exchange on which Index Futures are then traded at any
time up to and including the expiration day. As described below, a Fund will be
required to segregate initial margin in the name of the futures broker upon
entering into an Index Future. Variation margin will be paid to and received
from the broker on a daily basis as the contracts are marked to market. For
example, when a Fund has purchased an Index Future and the price of the relevant
Index has risen, that position will have increased in value and the Fund will
receive from the broker a variation margin payment equal to that increase in
value. Conversely, when a Fund has purchased an Index Future and the price of
the relevant Index has declined, the position would be less valuable and the
Fund would be required to make a variation margin payment to the broker.
-19-
<PAGE>
A Fund may close open positions on the futures exchanges on which Index
Futures are traded at any time up to and including the expiration day. All
positions which remain open at the close of the last business day of the
contract's life are required to settle on the next business day (based upon the
value of the relevant index on the expiration day), with settlement made with
the appropriate clearing house. Because the specific procedures for trading
foreign stock Index Futures on futures exchanges are still under development,
additional or different margin requirements as well as settlement procedures may
be applicable to foreign stock Index Futures at the time a Fund purchases such
instruments. Positions in Index Futures may be closed out by a Fund only on the
futures exchanges upon which the Index Futures are then traded.
The following example illustrates generally the manner in which Index
Futures operate. The Standard & Poor's 100 Stock Index is composed of 100
selected common stocks, most of which are listed on the New York Stock Exchange.
The S&P 100 Index assigns relative weightings to the common stocks included in
the Index, and the Index fluctuates with changes in the market values of those
common stocks. In the case of the S&P 100 Index, contracts are to buy or sell
100 units. Thus, if the value of the S&P 100 Index were $180, one contract
would be worth $18,000 (100 units x $180). The Index Future specifies that no
delivery of the actual stocks making up the Index will take place. Instead,
settlement in cash must occur upon the termination of the contract, with the
settlement being the difference between the contract price and the actual level
of the Index at the expiration of the contract. For example, if a Fund enters
into a futures contract to buy 100 units of the S&P 100 Index at a specified
future date at a contract price of $180 and the S&P 100 Index is at $184 on that
future date, the Fund will gain $400 (100 units x gain of $4). If the Fund
enters into a futures contract to sell 100 units of the Index at a specified
future date at a contract price of $180 and the S&P 100 Index is at $182 on that
future date, the Fund will lose $200 (100 units x loss of $2).
A public market exists in futures contracts covering a number of Indexes as
well as financial instruments and foreign currencies, including but not limited
to: the S&P 500; the S&P Midcap 400; the Nikkei 225; the NYSE composite; U.S.
Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S.
Treasury bills; 90-day commercial paper; bank certificates of deposit;
Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar;
the British pound; the German mark; the Japanese yen; the French franc; the
Swiss franc; the Mexican peso; and certain multinational currencies, such as the
European Currency Unit ("ECU"). It is expected that other futures contracts in
which the Funds may invest will be developed and traded in the future.
Certain Funds may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position
(put) in a futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of a call option, the holder acquires a
long position in the futures contract and the writer is assigned the opposite
short position. In the case of a put option, the holder acquires a short
position and the writer is assigned the opposite long position.
A Fund will only enter into futures contracts and futures options which are
standardized and traded on a U.S. or foreign exchange, board of trade, or
similar entity, or in the case of futures options, for which an established
over-the-counter market exists.
When a purchase or sale of a futures contract is made by a Fund, the Fund
is required to segregate a specified amount of assets determined to be liquid by
the Adviser or a Sub-Adviser in accordance with procedures established by the
Board of Trustees ("initial margin"). The margin required for a futures
contract is set by the exchange on which the contract is traded and may be
modified during the term of the contract. Margin requirements on foreign
exchanges may be different than U.S. exchanges. The initial margin is in the
nature of a performance bond or good faith deposit on the futures contract which
is returned to the Fund upon termination of the contract, assuming all
contractual obligations have been satisfied. Each Fund expects to earn interest
income on its initial margin deposits. A futures contract held by a Fund is
valued daily at the official settlement price of the exchange on which it is
traded. Each day the Fund pays or receives cash, called "variation margin,"
equal to the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a borrowing
or loan by a Fund but is instead a settlement between the Fund and the
-20-
<PAGE>
broker of the amount one would owe the other if the futures contract expired. In
computing daily net asset value, each Fund will mark to market its open futures
positions.
A Fund is also required to deposit and maintain margin with respect to put
and call options on futures contracts written by it. Such margin deposits will
vary depending on the nature of the underlying futures contract (and the related
initial margin requirements), the current market value of the option, and other
futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (i.e.,
with the same exchange, underlying security or index, and delivery month). If
an offsetting purchase price is less than the original sale price, the Fund
realizes a capital gain, or if it is more, the Fund realizes a capital loss.
Conversely, if an offsetting sale price is more than the original purchase
price, the Fund realizes a capital gain, or if it is less, the Fund realizes a
capital loss. Any transaction costs must also be included in these
calculations.
LIMITATIONS ON USE OF FUTURES AND FUTURES OPTIONS. The Funds may only
enter into futures contracts or futures options which are standardized and
traded on a U.S. or foreign exchange or board of trade, or similar entity, or
quoted on an automated quotation system. The Funds may enter into positions in
futures contracts and related options for Abona fide hedging@ purposes (as such
term is defined in applicable regulations of the CFTC), for example, to hedge
against changes in interest rates, foreign currency exchange rates or securities
prices. In addition, certain Funds may utilize futures contracts for investment
purposes. For instance, the International, International Growth, Structured
Emerging Markets and Tax-Efficient Structured Emerging Markets Funds may invest
to a significant degree in Index Futures on stock indexes and related options
(including those which may trade outside of the United States) as an alternative
to purchasing individual stocks in order to adjust their exposure to a
particular market. With respect to positions in futures and related options
that do not constitute bona fide hedging positions, a Fund will not enter into a
futures contract or futures option contract if, immediately thereafter, the
aggregate initial margin deposits relating to such positions plus premiums paid
by it for open futures option positions, less the amount by which any such
options are "in-the-money," would exceed 5% of the Fund's net assets. A call
option is "in-the-money" if the value of the futures contract that is the
subject of the option exceeds the exercise price. A put option is "in-the-
money" if the exercise price exceeds the value of the futures contract that is
the subject of the option.
When purchasing a futures contract, a Fund will segregate (and mark-to-
market on a daily basis) assets determined to be liquid by the Adviser or a Sub-
Adviser in accordance with procedures established by the Board of Trustees that,
when added to the amounts deposited with a futures commission merchant as
margin, are equal to the total market value of the futures contract.
Alternatively, the Fund may "cover" its position by purchasing a put option on
the same futures contract with a strike price as high or higher than the price
of the contract held by the Fund.
When selling a futures contract, a Fund will segregate (and mark-to-market
on a daily basis) assets determined to be liquid by the Adviser or a Sub-Adviser
in accordance with procedures established by the Board of Trustees that are
equal to the market value of the instruments underlying the contract.
Alternatively, the Fund may "cover" its position by owning the instruments
underlying the contract (or, in the case of an Index Future, a portfolio with a
volatility substantially similar to that of the Index on which the futures
contract is based), or by holding a call option permitting the Fund to purchase
the same futures contract at a price no higher than the price of the contract
written by the Fund (or at a higher price if the difference is maintained in
liquid assets with the Trust's custodian).
When selling a call option on a futures contract, a Fund will segregate
(and mark-to-market on a daily basis) assets determined to be liquid by the
Adviser or a Sub-Adviser in accordance with procedures established by the Board
of Trustees that, when added to the amounts deposited with a futures commission
merchant as margin, equal the total market value of the futures contract
underlying the call option. Alternatively, the Fund
-21-
<PAGE>
may cover its position by entering into a long position in the same futures
contract at a price no higher than the strike price of the call option, by
owning the instruments underlying the futures contract, or by holding a separate
call option permitting the Fund to purchase the same futures contract at a price
not higher than the strike price of the call option sold by the Fund.
When selling a put option on a futures contract, a Fund will segregate (and
mark-to-market on a daily basis) assets determined to be liquid by the Adviser
or a Sub-Adviser in accordance with procedures established by the Board of
Trustees that equal the purchase price of the futures contract, less any margin
on deposit. Alternatively, the Fund may cover the position either by entering
into a short position in the same futures contract, or by owning a separate put
option permitting it to sell the same futures contract so long as the strike
price of the purchased put option is the same or higher than the strike price of
the put option sold by the Fund.
RISKS ASSOCIATED WITH FUTURES AND FUTURES OPTIONS. There are several risks
associated with the use of futures contracts and futures options as hedging
techniques. A purchase or sale of a futures contract may result in losses in
excess of the amount invested in the futures contract. Some of the risk may be
caused by an imperfect correlation between movements in the price of the futures
contract and the price of the security or other investment being hedged. The
hedge will not be fully effective where there is such imperfect correlation.
Also, an incorrect correlation could result in a loss on both the hedged
securities in a Fund and the hedging vehicle, so that the portfolio return might
have been greater had hedging not been attempted. For example, if the price of
the futures contract moves more than the price of the hedged security, a Fund
would experience either a loss or gain on the future which is not completely
offset by movements in the price of the hedged securities. In addition, there
are significant differences between the securities and futures markets that
could result in an imperfect correlation between the markets, causing a given
hedge not to achieve its objectives. The degree of imperfection of correlation
depends on circumstances such as variations in speculative market demand for
futures and futures options on securities, including technical influences in
futures trading and futures options, and differences between the financial
instruments being hedged and the instruments underlying the standard contracts
available for trading in such respects as interest rate levels, maturities, and
creditworthiness of issuers. To compensate for imperfect correlations, a Fund
may purchase or sell futures contracts in a greater dollar amount than the
hedged securities if the volatility of the hedged securities is historically
greater than the volatility of the futures contracts. Conversely, a Fund may
purchase or sell fewer contracts if the volatility of the price of the hedged
securities is historically less than that of the futures contracts. The risk of
imperfect correlation generally tends to diminish as the maturity date of the
futures contract approaches. A decision as to whether, when and how to hedge
involves the exercise of skill and judgment, and even a well-conceived hedge may
be unsuccessful to some degree because of market behavior or unexpected interest
rate trends. Also, suitable hedging transactions may not be available in all
circumstances.
Additionally, the price of Index Futures may not correlate perfectly with
movement in the relevant index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and futures markets.
Second, the deposit requirements in the futures market are less onerous than
margin requirements in the securities market, and as a result, the futures
market may attract more speculators than does the securities market. Increased
participation by speculators in the futures market may also cause temporary
price distortions. In addition, trading hours for foreign stock Index Futures
may not correspond perfectly to hours of trading on the foreign exchange to
which a particular foreign stock Index Future relates. This may result in a
disparity between the price of Index Futures and the value of the relevant index
due to the lack of continuous arbitrage between the Index Futures price and the
value of the underlying index.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and
-22-
<PAGE>
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures or a futures option position, and that Fund
would remain obligated to meet margin requirements until the position is closed.
In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue to exist.
ADDITIONAL RISKS OF OPTIONS ON SECURITIES, FUTURES CONTRACTS, OPTIONS ON
FUTURES CONTRACTS AND FORWARD CURRENCY EXCHANGE CONTRACTS AND OPTIONS THEREON.
Options on securities, futures contracts, options on futures contracts, and
options on currencies may be traded on foreign exchanges. Such transactions may
not be regulated as effectively as similar transactions in the United States;
may not involve a clearing mechanism and related guarantees; and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities. Some foreign exchanges may be principal markets so that no common
clearing facility exists and a trader may look only to the broker for
performance of the contract. The value of such positions also could be
adversely affected by (i) other complex foreign political, legal and economic
factors, (ii) lesser availability than in the United States of data on which to
make trading decisions, (iii) delays in the Trust's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States and (v) lesser
trading volume. In addition, unless a Fund hedges against fluctuations in the
exchange rate between the U.S. dollar and the currencies in which trading is
done on foreign exchanges, any profits that a Fund might realize in trading
could be eliminated by adverse changes in the exchange rate, or the Fund could
incur losses as a result of those changes. The value of some derivative
instruments in which the Funds may invest may be particularly sensitive to
changes in prevailing interest rates, and, like the other investments of the
Funds, the ability of a Fund to successfully utilize these instruments may
depend in part upon the ability of the Sub-Adviser to forecast interest rates
and other economic factors correctly. If the Sub-Adviser incorrectly forecasts
such factors and has taken positions in derivative instruments contrary to
prevailing market trends, the Funds could be exposed to risk of loss. In
addition, a Fund's use of such instruments may cause the Fund to realize higher
amounts of short-term capital gains (generally taxed to shareholders at ordinary
income tax rates) than if the Fund had not used such instruments.
SWAP AGREEMENTS. The Tax-Efficient Equity, Structured Emerging Markets and
Tax-Efficient Structured Emerging Markets Funds may enter into equity index swap
agreements for purposes of attempting to gain exposure to the stocks making up
an index of securities in a market without actually purchasing those stocks.
Swap agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments, which may be adjusted for an interest factor. The
gross returns to be exchanged or "swapped" between the parties are calculated
with respect to a "notional amount," i.e., the return on or increase in value of
a particular dollar amount invested at a particular interest rate, or in a
"basket" of securities representing a particular index.
Most swap agreements entered into by the Funds calculate the obligations of
the parties to the agreement on a "net basis." Consequently, a Fund's current
obligations (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's current obligations under a swap agreement will be accrued daily
(offset against any amounts owing to the Fund) and any accrued but unpaid net
amounts owed to a swap counter party will be covered by segregating assets
determined to be liquid by the Adviser or a Sub-Adviser in accordance with
procedures established by the Board of Trustees, to avoid any potential
leveraging of the Fund's portfolio. Obligations under swap agreements so covered
will not be construed to be Asenior securities@ for purposes of a Fund's
investment restriction concerning senior securities. A Fund will
-23-
<PAGE>
not enter into a swap agreement with any single party if the net amount owed or
to be received under existing contracts with that party would exceed 5% of the
Fund's assets.
Whether a Fund's use of swap agreements will be successful in furthering
its investment objective will depend on the Sub-Adviser's ability to predict
correctly whether certain types of investments are likely to produce greater
returns than other investments. Because they are two party contracts and
because they may have terms of greater than seven days, swap agreements may be
considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount
expected to be received under a swap agreement in the event of the default or
bankruptcy of a swap agreement counterparty. The Funds will enter into swap
agreements only with counter parties that meet certain standards of
creditworthiness (generally, such counter parties would have to be eligible
counter parties under the terms of the Funds' repurchase agreement guidelines).
The swaps market is a relatively new market and is largely unregulated. It is
possible that developments in the swaps market, including potential government
regulation, could adversely affect a Fund's ability to terminate existing swap
agreements or to realize amounts to be received under such agreements.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT TRANSACTIONS
A Fund may purchase or sell securities on a when-issued or delayed delivery
basis. These transactions involve a commitment by the Fund to purchase or sell
securities for a predetermined price or yield, with payment and delivery taking
place more than seven days in the future, or after a period longer than the
customary settlement period for that type of security. When delayed delivery
purchases are outstanding, the Fund will segregate until the settlement date
assets determined to be liquid by the Adviser or a Sub-Adviser in accordance
with procedures established by the Board of Trustees in an amount sufficient to
meet the purchase price. Typically, no income accrues on securities purchased
on a delayed delivery basis prior to the time delivery of the securities is
made, although a Fund may earn income on segregated securities. When purchasing
a security on a delayed delivery basis, the Fund assumes the rights and risks of
ownership of the security, including the risk of price and yield fluctuations,
and takes such fluctuations into account when determining its net asset value.
Because a Fund is not required to pay for the security until the delivery date,
these risks are in addition to the risks associated with the Fund=s other
investments. If the Fund remains substantially fully invested at a time when
delayed delivery purchases are outstanding, the delayed delivery purchases may
result in a form of leverage. When the Fund has sold a security on a delayed
delivery basis, the Fund does not participate in future gains or losses with
respect to the security. If the other party to a delayed delivery transaction
fails to deliver or pay for the securities, the Fund could miss a favorable
price or yield opportunity or could suffer a loss. A Fund may dispose of or
renegotiate a delayed delivery transaction after it is entered into, and may
sell when-issued securities before they are delivered, which may result in a
capital gain or loss. There is no percentage limitation on the extent to which
the Funds may purchase or sell securities on a delayed delivery basis.
Each Fund may make contracts to purchase securities for a fixed price at a
future date beyond customary settlement time ("forward commitments") if the Fund
either (i) segregates until the settlement date assets determined to be liquid
by the Adviser or a Sub-Adviser in accordance with procedures established by the
Board of Trustees in an amount sufficient to meet the purchase price or (ii)
enters into an offsetting contract for the forward sale of securities of equal
value that it owns. Certain Funds may enter into forward commitments for the
purchase or sale of foreign currencies. Forward commitments may be considered
securities in themselves. They involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in value of the Fund's other assets. A Fund may
dispose of a commitment prior to settlement and may realize short-term profits
or losses upon such disposition.
WARRANTS TO PURCHASE SECURITIES
Certain Funds may invest in warrants to purchase equity or fixed income
securities. Bonds with warrants attached to purchase equity securities have
many characteristics of convertible bonds and their prices may, to some degree,
reflect the performance of the underlying stock. Bonds also may be issued with
warrants attached to purchase additional fixed income securities at the same
coupon rate. A decline in interest rates would permit a
-24-
<PAGE>
Fund to buy additional bonds at the favorable rate or to sell the warrants at a
profit. If interest rates rise, the warrants would generally expire with no
value.
REPURCHASE AGREEMENTS
For the purposes of maintaining liquidity and achieving income, each Fund
may enter into repurchase agreements with domestic commercial banks or
registered broker/dealers. A repurchase agreement is a contract under which a
Fund would acquire a security for a relatively short period (usually not more
than one week) subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the Fund's
cost plus interest). In the case of repurchase agreements with broker-dealers,
the value of the underlying securities (or collateral) will be at least equal at
all times to the total amount of the repurchase obligation, including the
interest factor. The Fund bears a risk of loss in the event that the other
party to a repurchase agreement defaults on its obligations and the Fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities. This risk includes the risk of procedural costs or delays in
addition to a loss on the securities if their value should fall below their
repurchase price. The Adviser and the Sub-Advisers, as appropriate, will
monitor the creditworthiness of the counter parties.
SECURITIES LOANS
Subject to certain conditions described in the Prospectuses and below, each
of the Equity Income, Value, NFJ Equity Income, NFJ Value, NFJ Value 25, Tax-
Efficient Equity, Enhanced Equity, Mega-Cap, Capital Appreciation, Mid-Cap,
Small-Cap Value, Select Growth, Growth & Income, Target, Micro-Cap, Structured
Emerging Markets and Tax-Efficient Structured Emerging Markets Funds may make
secured loans of its portfolio securities to brokers, dealers and other
financial institutions amounting to no more than 33a% of its total assets, and
each of the Renaissance, Growth, Opportunity, Innovation, International,
International Growth and Global Innovation Funds may make such loans amounting
to no more than 25% of its total assets. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay in
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. However, such loans will be made only to broker-
dealers that are believed by the Adviser or the Sub-Advisers to be of relatively
high credit standing. Securities loans are made to broker-dealers pursuant to
agreements requiring that loans be continuously secured by collateral consisting
of U.S. Government securities, cash or cash equivalents (negotiable certificates
of deposit, bankers' acceptances or letters of credit) maintained on a daily
mark-to-market basis in an amount at least equal at all times to the market
value of the securities lent. The borrower pays to the lending Fund an amount
equal to any dividends or interest received on the securities lent. The Fund
may invest only the cash collateral received in interest-bearing, short-term
securities or receive a fee from the borrower. In the case of cash collateral,
the Fund typically pays a rebate to the lender. Although voting rights or
rights to consent with respect to the loaned securities pass to the borrower,
the Fund retains the right to call the loans and obtain the return of the
securities loaned at any time on reasonable notice, and it will do so in order
that the securities may be voted by the Fund if the holders of such securities
are asked to vote upon or consent to matters materially affecting the
investment. The Fund may also call such loans in order to sell the securities
involved. Each Fund's performance will continue to reflect changes in the value
of the securities loaned and will also reflect the receipt of either interest,
through investment of cash collateral by the Fund in permissible investments, or
a fee, if the collateral is U.S. Government securities.
STOCKS OF SMALL AND MEDIUM CAPITALIZATION COMPANIES
Certain of the Funds may invest in common stock of companies with market
capitalizations that are small compared to those of other publicly traded
companies. Generally, small market capitalization is considered to be less than
$1.5 billion and large market capitalization is considered to be more than $5
billion. Investments in larger companies present certain advantages in that such
companies generally have greater financial resources, more extensive research
and development, manufacturing, marketing and service capabilities, and more
stability and greater depth of management and technical personnel. Investments
in smaller, less seasoned companies may present greater opportunities for growth
but also may involve greater risks than customarily are associated with
-25-
<PAGE>
more established companies. The securities of smaller companies may be subject
to more abrupt or erratic market movements than larger, more established
companies. These companies may have limited product lines, markets or financial
resources, or they may be dependent upon a limited management group. Their
securities may be traded in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. As a result of owning large
positions in this type of security, a Fund is subject to the additional risk of
possibly having to sell portfolio securities at disadvantageous times and prices
if redemptions require the Fund to liquidate its securities positions. In
addition, it may be prudent for a Fund with a relatively large asset size to
limit the number of relatively small positions it holds in securities having
limited liquidity in order to minimize its exposure to such risks, to minimize
transaction costs, and to maximize the benefits of research. As a consequence,
as a Fund's asset size increases, the Fund may reduce its exposure to illiquid
small capitalization securities, which could adversely affect performance.
Many of the Funds may also invest in stocks of companies with medium market
capitalizations. Whether a U.S. issuer's market capitalization is medium is
determined by reference to the capitalization for all issuers whose equity
securities are listed on a United States national securities exchange or which
are reported on NASDAQ. Issuers with market capitalizations within the range of
capitalization of companies included in the S&P Mid Cap 400 Index may be
regarded as being issuers with medium market capitalizations. Such investments
share some of the risk characteristics of investments in stocks of companies
with small market capitalizations described above, although such companies tend
to have longer operating histories, broader product lines and greater financial
resources, and their stocks tend to be more liquid and less volatile than those
of smaller capitalization issuers.
ILLIQUID SECURITIES
Each Fund may invest in securities that are illiquid so long as no more
than 15% of the net assets of the Fund (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A Sub-Adviser may be subject to
significant delays in disposing of illiquid securities, and transactions in
illiquid securities may entail registration expenses and other transaction costs
that are higher than those for transactions in liquid securities.
The term "illiquid securities" for this purpose means securities that
cannot be disposed of within seven days in the ordinary course of business at
approximately the amount at which a Fund has valued the securities. Illiquid
securities are considered to include, among other things, written over-the-
counter options, securities or other liquid assets being used as cover for such
options, repurchase agreements with maturities in excess of seven days, certain
loan participation interests, fixed time deposits which are not subject to
prepayment or provide for withdrawal penalties upon prepayment (other than
overnight deposits), securities that are subject to legal or contractual
restrictions on resale (such as privately placed debt securities), and other
securities which legally or in the Adviser's or a Sub-Adviser's opinion may be
deemed illiquid (not including securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper that the Adviser or a Sub-
Adviser has determined to be liquid under procedures approved by the Board of
Trustees).
INFLATION-INDEXED BONDS
Certain Funds may invest in inflation-indexed bonds, which are fixed income
securities whose value is periodically adjusted according to the rate of
inflation. Two structures are common. The U.S. Treasury and some other issuers
utilize a structure that accrues inflation into the principal value of the bond.
Most other issuers pay out the Consumer Price Index ("CPI") accruals as part of
a semiannual coupon.
Inflation-indexed securities issued by the U.S. Treasury have maturities of
approximately five, ten or thirty years, although it is possible that securities
with other maturities will be issued in the future. The U.S. Treasury securities
pay interest on a semi-annual basis equal to a fixed percentage of the
inflation-adjusted principal amount. For example, if a Fund purchased an
inflation-indexed bond with a par value of $1,000 and a
-26-
<PAGE>
3% real rate of return coupon (payable 1.5% semi-annually), and the rate of
inflation over the first six months was 1%, the mid-year par value of the bond
would be $1,010 and the first semi-annual interest payment would be $15.15
($1,010 times 1.5%). If inflation during the second half of the year resulted in
the whole year's inflation equaling 3%, the end-of-year par value of the bond
would be $1,030 and the second semi-annual interest payment would be $15.45
($1,030 times 1.5%).
If the periodic adjustment rate measuring inflation falls, the principal
value of inflation-indexed bonds will be adjusted downward, and consequently the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal upon
maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate. A Fund may also
invest in other inflation-related bonds which may or may not provide a similar
guarantee. If a guarantee of principal is not provided, the adjusted principal
value of the bond repaid at maturity may be less than the original principal
amount.
The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates in turn are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if the rate of inflation rises at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increase at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds.
While these securities are expected to be protected from long-term
inflationary trends, short-term increases in inflation may lead to a decline in
value. If interest rates rise due to reasons other than inflation (for example,
due to changes in currency exchange rates), investors in these securities may
not be protected to the extent that the increase is not reflected in the bond's
inflation measure.
The periodic adjustment of U.S. inflation-indexed bonds is tied to the
Consumer Price Index for Urban Consumers ("CPI-U"), which is calculated
monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of
changes in the cost of living, made up of components such as housing, food,
transportation and energy. Inflation-indexed bonds issued by a foreign
government are generally adjusted to reflect a comparable inflation index
calculated by that government. There can be no assurance that the CPI-U or any
foreign inflation index will accurately measure the real rate of inflation in
the prices of goods and services. Moreover, there can be no assurance that the
rate of inflation in a foreign country will be correlated to the rate of
inflation in the United States.
Any increase in the principal amount of an inflation-indexed bond will be
considered taxable ordinary income, even though investors do not receive their
principal until maturity.
DELAYED FUNDING LOANS AND REVOLVING CREDIT FACILITIES
The Funds may also enter into, or acquire participations in, delayed
funding loans and revolving credit facilities. Delayed funding loans and
revolving credit facilities are borrowing arrangements in which the lender
agrees to make loans up to a maximum amount upon demand by the borrower during a
specified term. A revolving credit facility differs from a delayed funding loan
in that as the borrower repays the loan, an amount equal to the repayment may be
borrowed again during the term of the revolving credit facility. These
commitments may have the effect of requiring a Fund to increase its investment
in a company at a time when it might not otherwise decide to do so (including a
time when the company's financial condition makes it unlikely that such amounts
will be repaid).
The Funds may acquire a participation interest in delayed funding loans or
revolving credit facilities from a bank or other financial institution. See
"Loan Participations and Assignments." The terms of the participation require a
Fund to make a pro rata share of all loans extended to the borrower and entitles
a Fund to a pro rata share of all payments made by the borrower. Delayed
funding loans and revolving credit facilities usually provide
-27-
<PAGE>
for floating or variable rates of interest. To the extent that a Fund is
committed to advance additional funds, it will at all times segregate assets,
determined to be liquid by the Adviser or a Sub-Adviser in accordance with
procedures established by the Board of Trustees, in an amount sufficient to meet
such commitments.
CATASTROPHE BONDS
The Funds may invest in "catastrophe bonds." Catastrophe bonds are fixed
income securities, for which the return of principal and payment of interest is
contingent on the non-occurrence of a specific "trigger" catastrophic event,
such as a hurricane or an earthquake. They may be issued by government
agencies, insurance companies, reinsurers, special purpose corporations or other
on-shore or off-shore entities. If a trigger event causes losses exceeding a
specific amount in the geographic region and time period specified in a bond, a
Fund investing in the bond may lose a portion or all of its principal invested
in the bond. If no trigger event occurs, the Fund will recover its principal
plus interest. For some catastrophe bonds, the trigger event or losses may be
based on company wide losses, index-portfolio losses, industry indices or
readings of scientific instruments rather than specified actual losses. Often
the catastrophe bonds provide for extensions of maturity that are mandatory, or
optional at the discretion of the issuer, in order to process and audit loss
claims in those cases where a trigger event has, or possibly has, occurred. In
addition to the specified trigger events, catastrophe bonds may also expose a
Fund to certain unanticipated risks including but not limited to issuer (credit)
default, adverse regulatory or jurisdictional interpretations and adverse tax
consequences.
Catastrophe bonds are a relatively new type of financial instrument. As
such, there is no significant trading history of these securities, and there can
be no assurance that a liquid market in these instruments will develop. See
"Characteristics and Risks of Securities and Investment Techniques--Illiquid
Securities" in the Class A, B and C, Class D and Institutional Prospectuses.
Lack of a liquid market may impose the risk of higher transaction costs and the
possibility that a Fund may be forced to liquidate positions when it would not
be advantageous to do so. Catastrophe bonds are typically rated, and the Fund
will only invest in catastrophe bonds that meet the credit quality requirements
for the Fund.
HYBRID INSTRUMENTS
The Funds may invest in "hybrid" or indexed securities. A hybrid
instrument can combine the characteristics of securities, futures, and options.
For example, the principal amount or interest rate of a hybrid could be tied
(positively or negatively) to the price of some commodity, currency or
securities index or another interest rate (each a "benchmark"). The interest
rate or (unlike most fixed income securities) the principal amount payable at
maturity of a hybrid security may be increased or decreased, depending on
changes in the value of the benchmark.
Hybrids can be used as an efficient means of pursuing a variety of
investment goals, including currency hedging, duration management, and increased
total return. Hybrids may not bear interest or pay dividends. The value of a
hybrid or its interest rate may be a multiple of a benchmark and, as a result,
may be leveraged and move (up or down) more steeply and rapidly than the
benchmark. These benchmarks may be sensitive to economic and political events,
such as commodity shortages and currency devaluations, which cannot be readily
foreseen by the purchaser of a hybrid. Under certain conditions, the redemption
value of a hybrid could be zero. Thus, an investment in a hybrid may entail
significant market risks that are not associated with a similar investment in a
traditional, U.S. dollar-denominated bond that has a fixed principal amount and
pays a fixed rate or floating rate of interest. The purchase of hybrids also
exposes a Fund to the credit risk of the issuer of the hybrids. These risks may
cause significant fluctuations in the net asset value of a Fund. Accordingly,
no Fund will invest more than 5% of its assets (taken at market value at the
time of investment) in hybrid instruments.
Certain issuers of structured products such as hybrid instruments may be
deemed to be investment companies as defined in the 1940 Act. As a result, a
Fund's investments in these products will be subject to limits applicable to
investments in investment companies and may be subject to restrictions contained
in the 1940 Act.
-28-
<PAGE>
INVESTMENT STRATEGIES OF THE PORTFOLIOS - INCORPORATION BY REFERENCE
The 90/10 Portfolio, 60/40 Portfolio and 30/70 Portfolio invest all of
their assets in Underlying PIMCO Funds, which include certain Funds of the Trust
and series of PIMS as specified in the Retail Portfolio Prospectus and
Institutional Portfolio Prospectus. By investing in Underlying PIMCO Funds, the
Portfolios may be subject to some or all of the risks associated with the
securities, instruments and techniques utilized by the Funds described above.
They may also be subject to additional risks associated with other securities,
instruments and techniques utilized by Underlying Funds which are series of
PIMS. The PIMS series and their attendant risks as described in the current
PIMS prospectus for Institutional Class and Administrative Class shares and PIMS
statement of additional information, which are included in the PIMS registration
statement (File Nos. 033-12113 and 811-5028) on file with the Securities and
Exchange Commission. The current PIMS prospectus and statement of additional
are each on file with the Securities and Exchange Commission and are
incorporated in this document by reference. The PIMS documents may also be
obtained free of charge by calling PIMCO Funds Distributors LLC at 1-800-426-
0107.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental policies of the
Renaissance, Growth, Target, Opportunity, Innovation, International,
International Growth and Global Innovation Funds and may not be changed with
respect to any such Fund without shareholder approval by vote of a majority of
the outstanding voting securities of that Fund. Under these restrictions:
(1) each of the above-mentioned Funds may borrow money to the maximum
extent permitted by law, including without limitation (i) borrowing from banks
or entering into reverse repurchase agreements, or employing similar investment
techniques, and pledging its assets in connection therewith, if immediately
after each borrowing and continuing thereafter, there is asset coverage of 300%,
and (ii) entering into reverse repurchase agreements and transactions in
options, futures, options on futures, and forward foreign currency contracts,
except that, with respect to the Innovation Fund ONLY, this fundamental
restriction is as follows: the Innovation Fund may not borrow money in excess
of 10% of the value (taken at the lower of cost or current value) of such Fund's
total assets (not including the amount borrowed) at the time the borrowing is
made, and then only from banks as a temporary measure to facilitate the meeting
of redemption requests (not for leverage) which might otherwise require the
untimely disposition of portfolio investments or for extraordinary or emergency
purposes. Such borrowings will be repaid before any additional investments are
purchased;
(2) none of the above-mentioned Funds may pledge, hypothecate, mortgage or
otherwise encumber its assets in excess of 10% of such Fund's total assets
(taken at cost) and then only to secure borrowings permitted by Restriction (1)
above. (The deposit of securities or cash or cash equivalents in escrow in
connection with the writing of covered call or put options, respectively, is not
deemed to be pledges or other encumbrances.) (For the purpose of this
restriction, collateral arrangements with respect to the writing of options,
futures contracts, options on futures contracts, and collateral arrangements
with respect to initial and variation margin are not deemed to be a pledge of
assets and neither such arrangements nor the purchase or sale of futures or
related options are deemed to be the issuance of a senior security.);
(3) none of the above-mentioned Funds may underwrite securities issued by
other persons except to the extent that, in connection with the disposition of
its portfolio investments, it may be deemed to be an underwriter under federal
securities laws;
(4) none of the above-mentioned Funds may purchase or sell real estate,
although it may purchase securities of issuers which deal in real estate,
including securities of real estate investment trusts, and may purchase
securities which are secured by interests in real estate;
-29-
<PAGE>
(5) none of the above-mentioned Funds may acquire more than 10% of the
voting securities of any issuer, both with respect to any such Fund and to the
Funds to which this policy relates, in the aggregate;
(6) none of the above-mentioned Funds may concentrate more than 25% of the
value of its total assets in any one industry, except that the Innovation and
Global Innovation Funds will each concentrate more than 25% of its assets in
companies which use innovative technologies to gain a strategic, competitive
advantage in their industry as well as companies that provide and service those
technologies;
(7) none of the above-mentioned Funds may purchase or sell commodities or
commodity contracts except that the Funds may purchase and sell financial
futures contracts and related options;
(8) none of the above-mentioned Funds may make loans, except by purchase
of debt obligations or by entering into repurchase agreements or through the
lending of the Fund's portfolio securities with respect to not more than 25% of
its total assets (33 1/3% in the case of the Target Fund); and
(9) none of the above-mentioned Funds may issue senior securities, except
insofar as such Fund may be deemed to have issued a senior security by reason of
borrowing money in accordance with the Fund's borrowing policies, and except
that for purposes of this investment restriction, collateral, escrow, or margin
or other deposits with respect to the making of short sales, the purchase or
sale of futures contracts or related options, purchase or sale of forward
foreign currency contracts, and the writing of options on securities are not
deemed to be an issuance of a senior security.
Notwithstanding the provisions of fundamental investment restrictions (1)
and (9) above, each of the above-mentioned Funds may borrow money for temporary
administrative purposes. To the extent that borrowings for temporary
administrative purposes exceed 5% of the total assets of a Fund, such excess
shall be subject to the 300% asset coverage requirements set forth above.
The investment objective of each of the above-referenced Funds and the
Mega-Cap, Tax-Efficient Equity, Tax-Efficient Structured Emerging Markets,
Select Growth, Growth & Income, NFJ Equity Income, NFJ Value and NFJ Value 25
Funds is non-fundamental and may be changed with respect to each such Fund by
the Trustees without shareholder approval.
Except as otherwise set forth below, the investment restrictions set forth
below are fundamental policies of each of the Equity Income, Value, Tax-
Efficient Equity, Enhanced Equity, Mega-Cap, Capital Appreciation, Mid-Cap,
Small-Cap Value, Select Growth, Growth & Income, Micro-Cap, Structured Emerging
Markets, Tax-Efficient Structured Emerging Markets, NFJ Equity Income, NFJ Value
and NFJ Value 25 Funds, and may not be changed with respect to any such Fund
without shareholder approval by vote of a majority of the outstanding shares of
that Fund. The investment objective of each of these Funds (with the exception
of the Mega-Cap, Tax-Efficient Equity, Tax-Efficient Structured Emerging
Markets, Select Growth, Growth & Income, NFJ Equity Income, NFJ Value and NFJ
Value 25 Funds) is also fundamental and may not be changed without such
shareholder approval. Under the following restrictions:
(1) none of the above-mentioned Funds may invest in a security if, as a
result of such investment, more than 25% of its total assets (taken at market
value at the time of such investment) would be invested in the securities of
issuers in any particular industry, except that this restriction does not apply
to securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (or repurchase agreements with respect thereto);
(2) none of the above-mentioned Funds (except for the Select Growth Fund)
may with respect to 75% of its assets, invest in a security if, as a result of
such investment, more than 5% of its total assets (taken at market value at the
time of such investment) would be invested in the securities of any one issuer,
except that this restriction does not apply to securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities (this fundamental
investment restriction does not apply to the Select Growth Fund);
-30-
<PAGE>
(3) none of the above-mentioned Funds (except for the Select Growth Fund)
may with respect to 75% of its assets, invest in a security if, as a result of
such investment, it would hold more than 10% (taken at the time of such
investment) of the outstanding voting securities of any one issuer, except that
this restriction does not apply to securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities (this fundamental investment
restriction does not apply to the Select Growth Fund);
(4) none of the above-mentioned Funds may purchase or sell real estate,
although it may purchase securities secured by real estate or interests therein,
or securities issued by companies in the real estate industry or which invest in
real estate or interests therein;
(5) none of the above-mentioned Funds may purchase or sell commodities or
commodities contracts (which, for the purpose of this restriction, shall not
include foreign currency or forward foreign currency contracts or swap
agreements), except that any such Fund may engage in interest rate futures
contracts, stock index futures contracts, futures contracts based on other
financial instruments or one or more groups of instruments, and on options on
such futures contracts;
(6) none of the above-mentioned Funds may purchase securities on margin,
except for use of short-term credit necessary for clearance of purchases and
sales of portfolio securities, but it may make margin deposits in connection
with transactions in options, futures, and options on futures, and except that
effecting short sales will be deemed not to constitute a margin purchase for
purposes of this restriction;
(7) each of the above-mentioned Funds may borrow money to the maximum
extent permitted by law, including without limitation (i) borrowing from banks
or entering into reverse repurchase agreements, or employing similar investment
techniques, and pledging its assets in connection therewith, if immediately
after each borrowing and continuing thereafter, there is asset coverage of 300%,
and (ii) entering into reverse repurchase agreements and transactions in
options, futures, options on futures, and forward foreign currency contracts,
except that, with respect to the Mid-Cap Fund ONLY, this fundamental investment
restriction is as follows: the Mid-Cap Fund may not borrow money, or pledge,
mortgage or hypothecate its assets, except that a Fund may (i) borrow from banks
or enter into reverse repurchase agreements, or employ similar investment
techniques, and pledge its assets in connection therewith, but only if
immediately after each borrowing and continuing thereafter, there is asset
coverage of 300% and (ii) enter into reverse repurchase agreements and
transactions in options, futures, options on futures, and forward foreign
currency contracts as described in the Prospectuses and in this Statement of
Additional Information (the deposit of assets in escrow in connection with the
writing of covered put and call options and the purchase of securities on a
when-issued or delayed delivery basis and collateral arrangements with respect
to initial or variation margin deposits for futures contracts, options on
futures contracts, and forward foreign currency contracts will not be deemed to
be pledges of such Fund's assets);
(8) none of the above-mentioned Funds may issue senior securities, except
insofar as such Fund may be deemed to have issued a senior security by reason of
borrowing money in accordance with the Fund's borrowing policies, and except for
purposes of this investment restriction, collateral, escrow, or margin or other
deposits with respect to the making of short sales, the purchase or sale of
futures contracts or related options, purchase or sale of forward foreign
currency contracts, and the writing of options on securities are not deemed to
be an issuance of a senior security;
(9) none of the above-mentioned Funds may lend any funds or other assets,
except that such Fund may, consistent with its investment objective and
policies: (a) invest in debt obligations, including bonds, debentures, or other
debt securities, bankers' acceptances and commercial paper, even though the
purchase of such obligations may be deemed to be the making of loans, (b) enter
into repurchase agreements and reverse repurchase agreements, and (c) lend its
portfolio securities in an amount not to exceed one-third of the value of its
total assets, provided such loans are made in accordance with applicable
guidelines established by the SEC and the Trustees of the Trust; and
-31-
<PAGE>
(10) none of the above-mentioned Funds may act as an underwriter of
securities of other issuers, except to the extent that in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter under
the federal securities laws.
Notwithstanding the provisions of fundamental investment restrictions (7)
and (8) above, each of the above-mentioned Funds may borrow money for temporary
administrative purposes. To the extent that borrowings for temporary
administrative purposes exceed 5% of the total assets of a Fund, such excess
shall be subject to the 300% asset coverage requirements set forth above.
The investment restrictions set forth below are fundamental policies of the
90/10 Portfolio, the 60/40 Portfolio and the 30/70 Portfolio and may not be
changed with respect to any such Portfolio without shareholder approval by vote
of a majority of the outstanding voting securities of that Portfolio. Under
these restrictions:
(1) none of the Portfolios may invest in a security if, as a result of such
investment, more than 25% of its total assets (taken at market value at the time
of such investment) would be invested in the securities of issuers in any
particular industry, except that this restriction does not apply to securities
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
(or repurchase agreements with respect thereto) or securities issued by any
investment company;
(2) none of the Portfolios may purchase securities of any issuer unless such
purchase is consistent with the maintenance of the Portfolio's status as a
diversified company under the Investment Company Act of 1940, as amended;
(3) none of the Portfolios may purchase or sell real estate, although it may
purchase securities secured by real estate or interests therein, or securities
issued by companies in the real estate industry or which invest in real estate
or interests therein;
(4) none of the Portfolios may purchase or sell commodities or commodities
contracts (which, for the purpose of this restriction, shall not include foreign
currency or forward foreign currency contracts or swap agreements), except that
any such Portfolio may engage in interest rate futures contracts, stock index
futures contracts, futures contracts based on other financial instruments or one
or more groups of instruments, and on options on such futures contracts;
(5) each of the Portfolios may borrow money to the maximum extent permitted
by law, including without limitation (i) borrowing from banks or entering into
reverse repurchase agreements, or employing similar investment techniques, and
pledging its assets in connection therewith if immediately after each borrowing
and continuing thereafter, there is asset coverage of 300%, and (ii) entering
into reverse repurchase agreements and transactions in options, futures, options
on futures, and forward foreign currency contracts.
(6) none of the above-mentioned Portfolios may issue senior securities,
except insofar as such Portfolio may be deemed to have issued a senior security
by reason of borrowing money in accordance with the Portfolio's borrowing
policies, and except that for purposes of this investment restriction,
collateral, escrow, or margin or other deposits with respect to the making of
short sales, the purchase or sale of futures contracts or related options,
purchase or sale of forward foreign currency contracts, and the writing of
options on securities are not deemed to be an issuance of a senior security;
(7) none of the Portfolios may lend any funds or other assets, except that
such Portfolio may, consistent with its investment objective and policies: (a)
invest in debt obligations, including bonds, debentures, or other debt
securities, bankers' acceptances and commercial paper, even though the purchase
of such obligations may be deemed to be the making of loans, (b) enter into
repurchase agreements and reverse repurchase agreements, and (c) lend its
portfolio securities in an amount not to exceed one-third of the value of its
total assets, provided such loans are made in accordance with applicable
guidelines established by the Securities and Exchange Commission and the
Trustees of the Trust; and
-32-
<PAGE>
(8) none of the Portfolios act as an underwriter of securities of other
issuers, except to the extent that in connection with the disposition of
portfolio securities, it may be deemed to be an underwriter under the federal
securities laws.
Notwithstanding the provisions of fundamental investment restrictions (5)
and (6) above, a Portfolio may borrow money for temporary administrative
purposes. To the extent that borrowings for temporary administrative purposes
exceed 5% of the total assets of a Portfolio, such excess shall be subject to
the 300% asset coverage requirement of fundamental investment restriction (5).
Notwithstanding any other fundamental investment restriction or policy, each
Portfolio may invest some or all of its assets in a single registered open-end
investment company or a series thereof. Unless specified above, any
fundamental investment restriction or policy of any such registered open-end
investment company or series thereof shall not be considered a fundamental
investment restriction or policy of a Portfolio investing therein.
The investment objective of each of the Portfolios is non-fundamental and may
be changed with respect to each such Portfolio by the Trustees without
shareholder approval.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Fund (but not any Portfolio) is also subject to the following non-
fundamental restrictions and policies (which may be changed without shareholder
approval) and, unless otherwise indicated, may not:
(1) invest in (a) securities which at the time of such investment are not
readily marketable, (b) securities the disposition of which is restricted under
federal securities laws, (c) repurchase agreements maturing in more than seven
days, (d) OTC options (to the extent described above under "Derivative
Instruments -- OTC Options"), and (e) IO/PO SMBS (as described above under
"Mortgage-Related and Asset-Backed Securities -- Stripped Mortgage - Backed
Securities") if, as a result, more than 15% of a Fund's net assets, taken at
current value, would then be invested in securities described in (a), (b), (c),
(d) and (e) above. For the purpose of this restriction, securities subject to a
7-day put option or convertible into readily saleable securities or commodities
are not included with subsections (a) or (b);
(2) purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities. (For this
purpose, the deposit or payment by a Fund of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.);
(3) make short sales of securities or maintain a short position for the
account of a Fund unless at all times when a short position is open such Fund
owns an equal amount of such securities or owns or has the right to acquire
securities which, without payment of any further consideration, are convertible
into or exchangeable for securities of the same issue as, and equal in amount
to, the securities sold short;
(4) with respect to the Renaissance, Growth, Target, Opportunity, Innovation,
International, International Growth and Global Innovation Funds, and in each
case with respect to 75% of such Fund's total assets, invest in securities of
any issuer if, immediately after such investment, more than 5% of the total
assets of such Fund (taken at current value) would be invested in the securities
of such issuer; provided that this limitation does not apply to bank
certificates of deposit or to obligations issued or guaranteed as to interest
and principal by the U.S. government or its agencies or instrumentalities;
(5) purchase securities the disposition of which is restricted under the
federal securities laws (excluding for purposes of this restriction securities
offered and sold pursuant to Rule 144A of the 1933 Act and Section 4(2)
commercial paper) if, as a result, such investments would exceed 15% of the
value of the net assets of the relevant Fund;
-33-
<PAGE>
(6) write (sell) or purchase options except that each Fund may (a) write
covered call options or covered put options on securities that it is eligible to
purchase and enter into closing purchase transactions with respect to such
options, and (b) in combination therewith, or separately, purchase put and call
options on securities it is eligible to purchase, and (c) each Fund may engage
in options on securities indexes, options on foreign currencies, options on
futures contracts, and options on other financial instruments or one or more
groups of instruments; provided that the premiums paid by each Fund on all
outstanding options it has purchased do not exceed 5% of its total assets. Each
Fund may enter into closing sale transactions with respect to options it has
purchased; or
(7) invest more than 15% of the net assets of a Fund (taken at market value at
the time of the investment) in "illiquid securities," illiquid securities being
defined to include repurchase agreements maturing in more than seven days,
certain loan participation interests, fixed time deposits which are not subject
to prepayment or provide withdrawal penalties upon prepayment (other than
overnight deposits), or other securities which legally or in the Adviser's or
Sub-Adviser's opinion may be deemed illiquid (other than securities issued
pursuant to Rule 144A under the 1933 Act and certain commercial paper that the
Adviser or Sub-Adviser has determined to be liquid under procedures approved by
the Board of Trustees).
(8) borrow money, except for temporary administrative purposes as provided
above and as provided in the fundamental investment restrictions set forth
above.
The Trust has not adopted any non-fundamental investment restrictions or
policies for the 90/10 Portfolio, 60/40 Portfolio or 30/70 Portfolio.
Unless otherwise indicated, all limitations applicable to a Fund's or
Portfolio's investments apply only at the time a transaction is entered into.
Any subsequent change in a rating assigned by any rating service to a security
(or, if unrated, deemed to be of comparable quality), or change in the
percentage of a Fund's or Portfolio's assets invested in certain securities or
other instruments resulting from market fluctuations or other changes in a
Fund's or Portfolio's total assets will not require the Fund or Portfolio to
dispose of an investment until the Adviser or Sub-Adviser determines that it is
practicable to sell or close out the investment without undue market or tax
consequences to the Fund or Portfolio. In the event that ratings services
assign different ratings to the same security, the Adviser or Sub-Adviser will
determine which rating it believes best reflects the security's quality and risk
at that time, which may be the higher of the several assigned ratings.
The phrase "shareholder approval," as used in the Prospectuses, and the
phrase a "vote of a majority of the outstanding voting securities," as used
herein, means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, the Portfolio or the Trust, as the case may be,
or (2) 67% or more of the shares of the Fund, the Portfolio or the Trust, as the
case may be, present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The business of the Trust is managed under the direction of the Trust's
Board of Trustees. Subject to the provisions of the Trust's Declaration of
Trust, its By-Laws and Massachusetts law, the Trustees have all powers necessary
and convenient to carry out this responsibility, including the election and
removal of the Trust's officers.
The Trustees and officers of the Trust, their ages, and a description of
their principal occupations during the past five years are listed below. Except
as shown, each Trustee's and officer's principal occupation and business
experience for the last five years have been with the employer(s) indicated,
although in some cases the Trustee may have held different positions with such
employer(s). Unless otherwise indicated, the business address of the persons
listed below is 840 Newport Center Drive, Suite 300, Newport Beach, California
92660.
-34-
<PAGE>
<TABLE>
<CAPTION>
Position(s) With the Principal Occupation(s) During the Past Five
Name, Address and Age Trust Years
------------------------- ----------------------- ---------------------------------------------
<S> <C> <C>
E. Philip Cannon Trustee Proprietor, Cannon & Company, an affiliate
3838 Olympia of Inverness Management LLC, a private
Houston, TX 77019 equity investment firm; Trustee of PIMS,
Age 59 PIMCO Variable Insurance Trust ("PVIT") and
PIMCO Commercial Mortgage Securities Trust,
Inc. ("PCM"). Formerly, Headmaster, St.
John's School, Houston, Texas; Trustee of
PIMCO Advisors Funds ("PAF") and Cash
Accumulation Trust ("CAT"); General Partner,
J.B. Poindexter & Co., Houston, Texas, a
private equity investment firm; and Partner,
Iberia Petroleum Company, an oil and gas
production company.
Donald P. Carter Trustee Formerly, Trustee of PAF and CAT; Chairman,
434 Stable Lane Executive Vice President and Director,
Lake Forest, IL 60045 Cunningham & Walsh, Inc., Chicago, an
Age 73 advertising agency; Chairman and Director,
Moduline Industries, Inc., a manufacturer of
commercial windows and curtain walls.
Gary A. Childress Trustee Private investor. Formerly, Chairman and
11 Longview Terrace Director, Bellefonte Lime Company, Inc., a
Madison, CT 06443 calcitic lime producer, and partner in
Age 66 GenLime, L.P., a dolomitic lime producer,
which filed a petition in bankruptcy within
the last five years. Formerly, Trustee of
PAF and CAT.
Richard L. Nelson Trustee President, Nelson Financial Consultants;
8 Cherry Hills Lane Director, Wynn's International, Inc., a
Newport Beach, CA 92660 building supplies company; and Trustee,
Age 70 Pacific Select Fund. Formerly, Partner,
Ernst & Young.
Kenneth M. Poovey* Trustee Managing Director and Chief Executive
1345 Avenue of the Officer of the U.S. Equity Division of PIMCO
Americas Advisors
New York, NY 10150
Age 68
Lyman W. Porter Trustee Professor of Management at the University of
2639 Bamboo Street California, Irvine; and Trustee, Pacific
Newport Beach, CA 92660 Select Fund.
Age 70
Alan Richards Trustee Retired Chairman of E.F. Hutton Insurance
7381 Elegans Place Group; Former Director of E.F. Hutton and
Carlsbad, CA 92009 Company, Inc.; Chairman of IBIS Capital,
Age 69 LLC, a reverse mortgage company; Director,
Inspired Arts, Inc.; Former Director of
Western National Corporation, a life
insurance holding company.
</TABLE>
-35-
<PAGE>
<TABLE>
<CAPTION>
Position(s) With the Principal Occupation(s) During the Past Five
Name, Address and Age Trust Years
------------------------- ----------------------- ---------------------------------------------
<S> <C> <C>
W. Bryant Stooks Trustee President, Bryant Investments, Ltd.;
9701 E. Happy Valley Rd. Director, American Agritec LLC, a
# 15 manufacturer of hydrophonics products; and
Scottsdale, AZ 85255 Director, Valley Isle Excursions, Inc., a
Age 59 tour operator. Formerly, Trustee of PAF and
CAT, President, Senior Vice President,
Director and Chief Executive Officer,
Archirodon Group Inc., an international
construction firm; Partner, Arthur Andersen
& Co.
Gerald M. Thorne Trustee Director, VPI Inc., a plastics company, and
5 Leatherwood Lane American Orthodontics Corp. Formerly,
Savannah, GA 31414 Trustee of PAF and CAT; Director, Kaytee,
Age 62 Inc., a birdseed company; President and
Director, Firstar National Bank of
Milwaukee; Chairman, President and
Director, Firstar National Bank of
Sheboygan; Director, Bando-McGlocklin, a
small business investment company.
Stephen J. Treadway* Trustee, President and Managing Director, PIMCO Advisors; Chairman
2187 Atlantic Street Chief Executive Officer and President, PIMCO Funds Distributors LLC
Stamford, CT 06902 ("PFD"); Chairman, Municipal Advantage Fund,
Age 52 Inc.; President, The Emerging Markets Income
Fund, Inc., The Emerging Markets Income Fund
II, Inc., The Emerging Markets Floating Rate
Fund, Inc., Global Partners Income Fund,
Inc., Municipal Partners Fund, Inc. and
Municipal Partners Fund II, Inc. Formerly,
Trustee, President and Chief Executive
Officer of CAT; Executive Vice President,
Smith Barney Inc.
Newton B. Schott, Jr. Vice President and Director, Executive Vice President, Chief
2187 Atlantic Street Secretary Administrative Officer, General Counsel and
Stamford, CT 06902 Secretary, PFD; Executive Vice President,
Age 58 The Emerging Markets Income Fund, Inc., The
Emerging Markets Income Fund II, Inc., The
Emerging Markets Floating Rate Fund, Inc.,
Global Partners Income Fund, Inc., Municipal
Advantage Fund, Inc., Municipal Partners
Fund, Inc. and Municipal Partners Fund II,
Inc. Formerly, Vice President and Clerk of
PAF and CAT.
Jeffrey M. Sargent Senior Vice President Senior Vice President and Manager
Age 37 Shareholder Services and Fund
Administration, Pacific Investment
Management; Senior Vice President of PIMS,
PVIT and PCM. Formerly Vice President,
Pacific Investment Management.
</TABLE>
-36-
<PAGE>
<TABLE>
<CAPTION>
Position(s) With the Principal Occupation(s) During the Past Five
Name, Address and Age Trust Years
------------------------- ----------------------- ---------------------------------------------
<S> <C> <C>
John P. Hardaway Treasurer Senior Vice President and Manager of
Age 43 Investment Operations Accounting, Pacific
Investment Management; Treasurer, PIMS, PVIT
and PCM. Formerly, Vice President, Pacific
Investment Management.
Joseph D. Hattesohl Assistant Treasurer Vice President and Manger of Financial
Age 36 Reporting and Taxation, Pacific Investment
Management; Assistant Treasurer, PIMS, PVIT
and PCM. Formerly, Manager of Fund
Taxation, Pacific Investment Management,
Director of Financial Reporting, Carl I.
Brown & Co.
Garlin G. Flynn Assistant Secretary Specialist, Pacific Investment Management;
Age 53 Secretary, PIMS, PVIT and PCM. Formerly,
Senior Fund Administrator, Pacific
Investment Management; Senior Mutual Fund
Analyst, PIMCO Advisors Institutional
Services.
</TABLE>
* Trustee, is an "interested person" of the Trust (as defined in Section
2(a)(19) of the 1940 Act).
TRUSTEES' COMPENSATION
Trustees, other than those affiliated with PIMCO Advisors, a Sub-Adviser,
or Pacific Investment Management, receive an annual retainer of $47,000, plus
$2,000 for each Board of Trustees meeting attended ($1,000 if the meeting is
attended by telephone), and $1,000 for each Audit and Performance Committee
meeting attended, plus reimbursement of related expenses. Each Audit and
Performance Committee member receives an additional annual retainer of $2,000,
the Chairman of the Audit and Performance Committees receives an additional
annual retainer of $2,000, the Chairman of the Independent Trustees receives an
additional annual retainer of $6,000, and each Vice Chairman of the Independent
Trustees receives an additional annual retainer of $3,000. If in the judgment
of the Independent Trustees, it is necessary or appropriate for any Independent
Trustee, including the Chairman, to perform services in connection with
extraordinary Fund activities or circumstances, the Trustee shall be compensated
for such services at the rate of $2,000 per day, plus reimbursement of
reasonable expenses. Trustees do not currently receive any pension or
retirement benefits from the Trust or the Fund Complex (see below). The Trust
has adopted a deferred compensation plan for the Trustees, which went into place
during 1997, which permits the Trustees to defer their receipt of compensation
from the Trust, at their election, in accordance with the terms of the plan.
-37-
<PAGE>
The following table sets forth information regarding compensation received
by those Trustees who are not "interested persons" (as defined in the 1940 Act)
of the Trust for the fiscal year ended June 30, 1999:
<TABLE>
<S> <C> <C>
(1) (2) (3)
Total
Aggregate Compensation from
Compensation from Trust and Fund
Name of Trustee Trust Complex
-------------------------- ----------------- ------------------
E. Philip Cannon (2) $57,000.00 $ 57,000.00
Donald P. Carter $66,500.00 $ 66,500.00
Gary A. Childress $58,000.00 $ 58,000.00
Richard L. Nelson $58,500.00 $ 96,500.00
Lyman W. Porter (2) $57,000.00 $ 96,000.00
Alan Richards $62,000.00 $100,000.00
Joel Segall (3) $58,000.00 $ 58,000.00
W. Bryant Stooks $56,500.00 $ 56,500.00
Gerald M. Thorne (2) $57,500.00 $ 57,500.00
</TABLE>
INVESTMENT ADVISER
PIMCO Advisors serves as investment adviser to each of the Funds and
Portfolios pursuant to an investment advisory agreement ("Advisory Agreement")
between PIMCO Advisors and the Trust. PIMCO Advisors was organized as a limited
partnership under Delaware law in 1987. PIMCO Advisors sole general partner is
Pacific-Allianz Partners LLC. Pacific-Allianz Partners LLC is a Delaware
limited liability company with two members, Allianz GP Sub LLC, a Delaware
limited liability company and Pacific Asset Management LLC, a Delaware limited
liability company. Allianz GP Sub LLC is a wholly-owned subsidiary of Allianz
of America, Inc., which is wholly owned by Allianz AG. Pacific Asset Management
LLC is a wholly-owned subsidiary of Pacific Life Insurance Company, which is a
wholly-owned subsidiary of Pacific Mutual Holding Company.
The general partner of PIMCO Advisors has substantially delegated its
management and control of PIMCO Advisors to an Executive Committee. The
Executive Committee of PIMCO Advisors is comprised of Joachim Faber, Udo Frank,
Kenneth M. Poovey, William S. Thompson, Jr. and Marcus Riess.
PIMCO Advisors is located at 800 Newport Center Drive, Newport Beach,
California 92660. PIMCO Advisors and its subsidiary partnerships had
approximately $264 billion of assets under management as of June 30, 2000.
--------------------------
(1) The amounts listed in column (3) include total compensation paid to the
Trustees for their services as Trustees of the Trust (for all Trustees) and
Pacific Select Fund (for Messrs. Nelson, Porter, and Richards) for the twelve-
month period ended June 30, 1999. By virtue of having PIMCO Advisors or an
affiliate of PIMCO Advisors as investment adviser, the Trust and Pacific Select
Fund were considered to be part of the same "Fund Complex" for these purposes.
(2) The Trust has adopted a deferred compensation plan (the "Plan") which went
into place during fiscal 1997. Of the amounts listed in column (2), the
following Trustees elected to have the following amounts deferred from the Trust
and all investment companies in the Fund Complex, respectively: Cannon -
$57,000, $57,000; Porter - $57,000, $57,000; and Thorne - $57,500, $57,500.
(3) Mr. Segall retired as a Trustee in December 1999.
-38-
<PAGE>
Agreement with Allianz AG
-------------------------
On May 5, 2000 the general partners of PIMCO Advisors closed the
transactions contemplated by the Implementation and Merger Agreement dated as of
October 31, 1999 ("Implementation Agreement"), as amended March 3, 2000, with
Allianz of America, Inc., Pacific Asset Management LLC, PIMCO Partners, LLC,
PIMCO Holding LLC, PIMCO Partners, G.P., and other parties to the Implementation
Agreement. As a result of completing these transactions, PIMCO Advisors is now
majority-owned indirectly by Allianz AG, with subsidiaries of Pacific Life
Insurance Company retaining a significant minority interest. Allianz AG is a
German based insurer. Pacific Life Insurance Company is a Newport Beach,
California based insurer.
In connection with the closing, Allianz of America entered into a put/call
arrangement for the possible disposition of Pacific Life's indirect interest in
PIMCO Advisors. The put option held by Pacific Life will allow it to require
Allianz of America, on the last business day of each calendar quarter following
the closing, to purchase at a formula-based price all of the PIMCO Advisors'
units owned directly or indirectly by Pacific Life. The call option held by
Allianz of America will allow it, beginning January 31, 2003 or upon a change in
control of Pacific Life, to require Pacific Life to sell or cause to be sold to
Allianz of America, at the same formula-based price, all of the PIMCO Advisors'
units owned directly or indirectly by Pacific Life.
Allianz AG's address is Koniginstrasse 28, D-80802, Munich, Germany.
Advisory Agreement
------------------
PIMCO Advisors, subject to the supervision of the Board of Trustees, is
responsible for providing advice and guidance with respect to the Funds and
Portfolios and for managing, either directly or through others selected by the
Adviser, the investments of the Funds and Portfolios. PIMCO Advisors also
furnishes to the Board of Trustees periodic reports on the investment
performance of each Fund and Portfolio. As more fully discussed below, for all
of the Funds except the Growth, Target, Opportunity, Innovation, Global
Innovation, Renaissance, International, Select Growth, Growth & Income and
International Growth Funds, PIMCO Advisors has engaged affiliates to serve as
Sub-Advisers. The PIMCO Equity Advisors division ("PIMCO Equity Advisors") of
PIMCO Advisors manages the investment portfolios of the Growth, Target,
Opportunity, Innovation, Global Innovation, Renaissance, Select Growth, Growth &
Income and International Growth Funds. Acting in this capacity, PIMCO Equity
Advisors is also referred to herein as a "Sub-Adviser." If a Sub-Adviser ceases
to manage the portfolio of a Fund, PIMCO Advisors will either assume full
responsibility for the management of that Fund, or retain a new Sub-Adviser
subject to the approval of the Trustees and, if required, the Fund's
shareholders.
PIMCO Advisors selects the Underlying Funds in which the 90/10 Portfolio,
the 60/40 Portfolio and the 30/70 Portfolio invest. PIMCO Advisors' Asset
Allocation Committee is responsible for determining how the assets of the
Portfolios are allocated and reallocated from time to time among the Underlying
PIMCO Funds selected by PIMCO Advisors. The Portfolios do not pay any fees to
PIMCO Advisors in return for these services under the Advisory Agreement. The
Portfolios do, however, indirectly pay a proportionate share of the advisory
fees paid to PIMCO Advisors and Pacific Investment Management by the Underlying
PIMCO Funds in which the Portfolios invest.
Under the terms of the Advisory Agreement, PIMCO Advisors is obligated to
manage the Funds and the Portfolios in accordance with applicable laws and
regulations. The investment advisory services of PIMCO Advisors to the Trust
are not exclusive under the terms of the Advisory Agreement. PIMCO Advisors is
free to, and does, render investment advisory services to others.
The Advisory Agreement will continue in effect with respect to a Fund and
Portfolio for two years from its effective date, and thereafter on a yearly
basis, provided such continuance is approved annually (i) by the holders of a
majority of the outstanding voting securities of the Fund or Portfolio, or by
the Board of Trustees,
-39-
<PAGE>
and (ii) by a majority of the Trustees who are not "interested persons" of the
Trust (as defined in the 1940 Act) and who have no direct or indirect financial
interest in the Advisory Agreement. The Advisory Agreement may be terminated
without penalty by vote of the Trustees or the vote of a majority of the
outstanding voting shares of the Trust (or with respect to a particular Fund or
Portfolio, by the vote of a majority of the outstanding voting shares of such
Fund or Portfolio), or by the Adviser, on 60 days' written notice to the other
party and will terminate automatically in the event of its assignment. In
addition, the Advisory Agreement may be terminated with regard to the
Renaissance, Growth, Target, Opportunity, Innovation and International Funds by
vote of a majority of the Trustees who are not interested persons of the Trust,
on 60 days' written notice to PIMCO Advisors.
The Adviser currently receives a monthly investment advisory fee from each
Fund at the following annual rates (based on the average daily net assets of the
particular Funds):
FUND ADVISORY
---- FEE RATE
--------
Equity Income, Value, Tax-Efficient Equity, Mega-Cap,
Capital Appreciation, Mid-Cap, NFJ Equity Income,
NFJ Value, Structured Emerging Markets, Tax-Efficient
Structured Emerging Markets and Enhanced Equity Funds.. .45%
Growth and NFJ Value 25 Funds........................... .50%
International and Target Funds.......................... .55%
Small-Cap Value, Renaissance and Select Growth Funds.... .60%
Growth & Income Fund.................................... .60%
Opportunity and Innovation Funds........................ .65%
International Growth Fund............................... .75%
Global Innovation Fund.................................. 1.00%
Micro-Cap Fund.......................................... 1.25%
-40-
<PAGE>
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997
the Funds paid the Adviser (or its predecessor) the following amounts under the
Advisory Contract:
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
FUND 6/30/99 6/30/98 6/30/97
------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Equity Income Fund $ 892,889 $ 795,252 $ 555,146
Value Fund 1,043,826 951,140 463,869
Small-Cap Value Fund 2,215,048 1,395,130 249,347
Select Growth Fund(1) 413,258 504,760 234,333
Growth & Income Fund 74,646 53,956 48,656
Capital Appreciation Fund 5,057,813 3,627,790 1,953,374
Mid-Cap Fund(1) 3,926,642 2,622,029 1,219,531
Micro-Cap Fund(1) 3,035,025 2,759,876 1,390,317
Small-Cap Fund(1) 574,447 411,785 327,245
Enhanced Equity Fund 238,001 199,467 292,187
Emerging Markets Fund (1) N/A 349,026 568,277
International Developed Fund (1) N/A 653,050 525,817
Balanced Fund (1) 311,190 300,049 306,756
Renaissance Fund* 3,771,388 3,010,051 913,256
Growth Fund* 10,728,640 9,329,701 3,758,433
Target Fund* 5,837,985 6,607,151 2,887,743
Opportunity Fund* 3,171,024 5,172,363 2,324,663
Innovation Fund* 4,453,888 2,028,712 750,414
International Fund* 753,828 922,680 559,353
International Growth Fund** 58,010 24,756 N/A
Precious Metals Fund*(1) 125,947 165,918 119,710
Tax Exempt Fund* (1) N/A 144,515 66,977
Value 25 Fund (1) 7,550 N/A N/A
Tax-Efficient Equity Fund 56,985 N/A N/A
Structured Emerging Markets Fund 156,322 N/A N/A
Tax-Efficient Structured Emerging Markets Fund 212,327 N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio N/A N/A N/A
70/30 Portfolio N/A N/A N/A
90/10 Portfolio N/A N/A N/A
----------- ----------- -----------
TOTAL $47,116,679 $42,029,157 $19,515,404
--------------
</TABLE>
* Amounts for the year ended June 30, 1997 are for the period 1/18/97 through
6/30/97.
** Amounts for the year ended June 30, 1998 are for the period 12/31/97 through
6/30/98.
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
-41-
<PAGE>
In addition, the predecessors of the Renaissance, Growth, Target,
Opportunity, Innovation, International, Precious Metals and Tax Exempt Funds
(each of which is a former series of PAF which reorganized as a Fund of the
Trust on January 17, 1997) paid the Adviser the following amounts for the fiscal
period ended January 17, 1997 and the fiscal year ended September 30, 1996 under
separate management contracts between the Adviser and PAF:
<TABLE>
<CAPTION>
10/1/96 YEAR
TO ENDED
Fund 1/17/97 9/30/96
------------------------- ---------- -----------
<S> <C> <C>
Renaissance Fund $ 653,744 $ 1,627,632
Growth Fund 3,370,567 9,987,541
Target Fund 2,584,257 7,295,767
Opportunity Fund 1,898,337 6,183,575
Innovation Fund 545,586 1,063,584
International Fund 537,647 1,872,608
Precious Metals Fund(1) 107,290 397,969
Tax Exempt Fund(1) 99,023 333,349
---------- -----------
TOTAL $9,796,451 $28,762,025
</TABLE>
--------------
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
PORTFOLIO MANAGEMENT AGREEMENTS
PIMCO Equity Advisors manages the investment portfolios of the Growth,
Target, Opportunity, Innovation, Renaissance, Select Growth, Equity Income,
Value, Growth & Income and International Growth Funds. The Adviser employs Sub-
Advisers to provide investment advisory services to each other Fund pursuant to
portfolio management agreements (each a "Portfolio Management Agreement")
between the Adviser and the Fund's Sub-Adviser. Each Sub-Adviser retained by
the Adviser is an affiliate of the Adviser except for Blairlogie Capital
Management ("Blairlogie"), which advises the International Fund. The Adviser
currently has eight subsidiary partnerships, the following three of which manage
one or more of the Funds: Parametric Portfolio Associates ("Parametric"),
Cadence Capital Management ("Cadence") and NFJ Investment Group ("NFJ"). On
April 30, 1999, the Adviser sold all of its ownership interest in Blairlogie.
See "Blairlogie" below.
Shareholders of each Fund (except the Innovation, Mid-Cap and Micro-Cap
Funds) and Portfolio have approved a proposal permitting PIMCO Advisors to enter
into new or amended portfolio management agreements with one or more sub-
advisers with respect to each Fund and Portfolio without obtaining shareholder
approval of such portfolio management agreements, and to permit such sub-
adviser(s) to manage the assets of each Fund and Portfolio pursuant to such
agreements. PIMCO Advisors is able to take these actions only to the extent
permitted by any exemption or exemptions that may be granted by the Securities
and Exchange Commission. Although the Trust has filed a request for such an
exemption or exemptions with the Securities and Exchange Commission, there is no
assurance that such exemption(s) will be granted, and the Trust reserves the
right to withdraw such request if the Trustees believe such action is in the
best interests of the Funds and Portfolios and their shareholders.
PIMCO Equity Advisors
---------------------
PIMCO Equity Advisors, a division of PIMCO Advisors, acts as the Sub-Adviser
and provides investment advisory services to the Growth, Target, Opportunity,
Innovation, Renaissance, Select Growth, Equity Income, Value, Growth & Income
and International Growth Funds. PIMCO Equity Advisors' address is 1345 Avenue
of the Americas, 50th Floor, New York, NY 10105. Additional information about
PIMCO Advisors, including information regarding investment advisory fees paid to
PIMCO Advisors by the Growth, Target, Opportunity,
-42-
<PAGE>
Innovation, Renaissance, Select Growth, Equity Income, Value, Growth & Income
and International Growth Funds, is provided above under "Investment Adviser."
Prior to March 5, 1999, Columbus Circle Investors ("Columbus Circle"), a former
subsidiary partnership of the Adviser, served as Sub-Adviser to the Growth,
Target, Opportunity and Innovation Funds. Columbus Circle served as Sub-Adviser
to the Renaissance Fund until May 7, 1999, and it served as Sub-Adviser to the
Select Growth, Growth & Income and International Growth Funds until July 1,
1999. On July 1, 1999, the Adviser sold all of its ownership interest in
Columbus Circle to certain of Columbus Circle's employees. Prior to May 8, 2000,
NFJ served as Sub-Adviser to the Equity Income and Value Funds.
Parametric
----------
Pursuant to a Portfolio Management Agreement between the Adviser and
Parametric, Parametric is the Sub-Adviser and provides investment advisory
services to the Tax-Efficient Equity, Enhanced Equity, Structured Emerging
Markets and Tax-Efficient Structured Emerging Markets Funds. For the services
provided to each Fund, the Adviser (not the Trust) pays Parametric a monthly fee
for each Fund at the following annual rates (based on the average daily net
assets of the particular Fund): .35% for the Tax-Efficient Equity Fund, .35%
for the Enhanced Equity Fund, .35% for the Structured Emerging Markets Fund, and
.35% for the Tax-Efficient Structured Emerging Markets Fund.
Parametric is an investment management firm organized as a general
partnership. Parametric is the successor investment adviser to Parametric
Portfolio Associates, Inc., which commenced operations in 1987. Parametric has
two partners: PIMCO Advisors as the supervisory partner, and Parametric
Management Inc. as the managing partner. The predecessor investment adviser to
Parametric commenced operations in 1987. Parametric is located at 7310 Columbia
Center, 701 Fifth Avenue, Seattle, Washington 98104-7090. Parametric provides
investment management services to a number of institutional accounts, including
employee benefit plans, college endowment funds and foundations. Accounts
managed by Parametric had combined assets, as of June 30, 2000, of approximately
$4.0 billion.
Cadence
-------
Pursuant to a Portfolio Management Agreement between the Adviser and
Cadence, Cadence provides investment advisory services to the Mega-Cap, Capital
Appreciation, Mid-Cap and Micro-Cap Funds. For the services provided, the
Adviser (not the Trust) pays Cadence a monthly fee for each Fund at the
following annual rates (based on the average daily net assets of the particular
Fund): .35% for the Mega-Cap Fund, .35% for the Capital Appreciation Fund, .35%
for the Mid-Cap Fund, and 1.15% for the Micro-Cap Fund.
Cadence is an investment management firm organized as a general partnership.
Cadence is the successor investment adviser to Cadence Capital Management
Corporation, which commenced operations in 1988. Cadence has two partners:
PIMCO Advisors as the supervisory partner, and Cadence Capital Management Inc.
as the managing partner. Cadence is located at Exchange Place, 53 State Street,
Boston, Massachusetts 02109. Cadence provides investment management services to
a number of institutional accounts, including employee benefit plans, college
endowment funds and foundations. Accounts managed by Cadence had combined
assets, as of June 30, 2000, of approximately $6.3 billion.
NFJ
---
Pursuant to a Portfolio Management Agreement between the Adviser and NFJ,
NFJ provides investment advisory services to the Small-Cap Value, NFJ Value 25,
NFJ Value and NFJ Equity Income Funds. For the services provided, the Adviser
(not the Trust) pays NFJ a monthly fee for each Fund at the following annual
rates (based on the average daily net assets of the particular Fund): .40% for
the NFJ Value 25 Fund, .50% for the Small-Cap Value Fund, .35% for the NFJ
Equity Income Fund and .35% for the NFJ Value Fund.
NFJ is an investment management firm organized as a general partnership.
NFJ is the successor investment adviser to NFJ Investment Group, Inc., which
commenced operations in 1989. NFJ has two partners:
-43-
<PAGE>
PIMCO Advisors as the supervisory partner, and NFJ Management Inc. as the
managing partner. NFJ is located at 2121 San Jacinto, Suite 1840, Dallas, Texas
75201. NFJ provides investment management services to a number of institutional
accounts, including employee benefit plans, college endowment funds and
foundations. Accounts managed by NFJ had combined assets, as of June 30, 2000,
of approximately $1.7 billion.
Blairlogie
----------
Pursuant to a Portfolio Management Agreement between the Adviser and
Blairlogie, Blairlogie provides investment advisory services to the
International Fund. For the services provided, the Adviser (not the Trust) pays
Blairlogie a monthly fee for the Fund at the annual rate of .40% based on the
average daily net assets of the International Fund.
Blairlogie is an investment management firm organized as a limited
partnership under the laws of the United Kingdom. Blairlogie is the successor
investment adviser to Blairlogie Capital Management Ltd., which commenced
operations in 1992. Blairlogie is an indirect majority-owned subsidiary of the
Alleghany Corporation. The Alleghany Corporation is engaged through its
subsidiaries in the businesses of title insurance, reinsurance, other financial
services and industrial minerals. Blairlogie is located at 125 Princes Street,
4th Floor, Edinburgh EH2 4AD, Scotland. Blairlogie provides investment
management services to a number of institutional accounts, including employee
benefit plans, college endowment funds and foundations. Accounts managed by
Blairlogie had combined assets, as of June 30, 2000, of approximately $1.1
billion.
Until April 30, 1999, Blairlogie was an affiliate of the Adviser. On April
30, 1999, the Adviser sold all of its ownership interests in Blairlogie to
subsidiaries of the Alleghany Corporation (the "Blairlogie Transaction") and
Blairlogie is no longer affiliated with the Adviser.
In connection with the Blairlogie Transaction, the Emerging Markets and
International Developed Funds (the "Transferred Funds") transferred all of their
assets and liabilities to newly formed series of Alleghany Funds managed by
Blairlogie. The Transferred Funds were liquidated in connection with the
Blairlogie Transaction and are no longer series of the Trust.
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the amount of portfolio management fees paid by the Adviser (or its predecessor)
to the applicable Sub-Adviser (or its predecessor) for each of the Funds was as
follows:
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
06/30/99 06/30/98 06/30/97
----------- ----------- -----------
<S> <C> <C> <C>
Equity Income Fund $ 694,469 $ 618,529 $ 492,429
Value Fund 811,864 739,776 388,966
Small-Cap Value Fund 1,845,873 1,162,608 224,788
Select Growth Fund(1) 340,758 416,205 215,998
Growth & Income Fund 62,797 45,391 45,074
Capital Appreciation Fund 3,933,855 2,821,614 1,714,191
Mid-Cap Fund(1) 3,054,054 2,039,356 1,059,242
Micro-Cap Fund(1) 2,794,415 2,539,086 1,325,695
Small-Cap Fund(1) 517,002 370,606 311,280
Enhanced Equity Fund 185,113 155,141 268,021
Emerging Markets Fund(1) 133,867 307,963 501,411
International Developed Fund(1) 509,210 544,208 478,789
Balanced Fund(1) 212,316 212,532 228,898
Renaissance Fund* 2,033,332 1,906,366 575,288
Growth Fund* 4,727,674 6,344,197 2,544,364
Target Fund* 2,563,818 4,324,681 1,869,073
Opportunity Fund* 1,682,634 3,819,591 1,709,827
</TABLE>
-44-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Innovation Fund* 1,325,219 1,186,016 435,246
International Fund* 540,637 671,040 348,938
International Growth Fund** 27,298 11,650 N/A
Precious Metal Fund*(1) 73,469 96,785 66,070
Value 25 Fund(1) 6,021 N/A N/A
Tax-Efficient Equity Fund 44,322 N/A N/A
Structured Emerging Markets Fund 121,584 N/A N/A
Tax-Efficient Structured Emerging Markets Fund 165,144 N/A N/A
Tax Exempt Fund*(1) N/A 144,515 66,756
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
----------- ----------- -----------
TOTAL $28,406,745 $30,477,856 $14,870,344
-----------------
</TABLE>
*Amounts for the year ended June 30, 1997 are for the period 1/18/97 through
6/30/97.
**Amounts for the year ended June 30, 1998 are for the period 12/31/97 through
6/30/98.
(1) Please see the section captioned "The Trust" in this Statement of Additional
Information for information about these Funds.
The Adviser paid the Sub-Advisers for the predecessors of the Renaissance,
Growth, Target, Opportunity, Innovation, International, Precious Metals and Tax
Exempt Funds (each of which is a former series of PAF which reorganized as a
Fund of the Trust on January 17, 1997) the following amounts for the fiscal
period ended January 17, 1997 and the fiscal year ended September 30, 1996 under
separate sub-advisory agreements between the Adviser and the relevant Sub-
Adviser:
<TABLE>
<CAPTION>
10/1/96 YEAR
TO ENDED
FUND 1/17/97 09/30/96
------------------------- ---------- -----------
<S> <C> <C>
Renaissance Fund $ 326,864 $ 813,816
Growth Fund 1,685,284 4,993,770
Target Fund 1,292,168 3,647,884
Opportunity Fund 949,192 3,091,788
Innovation Fund 272,772 531,792
International Fund 268,824 936,304
Precious Metals Fund(1) 53,837 198,985
Tax Exempt Fund(1) 49,512 166,675
---------- -----------
TOTAL $4,898,453 $14,381,014
-----------------
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of Additional
Information for information about these Funds.
FUND ADMINISTRATOR
In addition to its services as Adviser, PIMCO Advisors serves as
administrator (and is referred to in this capacity as the "Administrator") to
the Funds and Portfolios pursuant to an administration agreement (the
"Administration Agreement") with the Trust. The Administrator provides or
procures administrative services to the Funds and Portfolios, which include
clerical help and accounting, bookkeeping, internal audit services and certain
other services they require, and preparation of reports to the Trust's
shareholders and regulatory filings. PIMCO Advisors has retained Pacific
Investment Management as sub-administrator to provide such services
-45-
<PAGE>
pursuant to a sub-administration agreement (the "Sub-Administration Agreement").
PIMCO Advisors may also retain other affiliates to provide such services. In
addition, the Administrator arranges at its own expense for the provision of
legal, audit, custody, transfer agency and other services necessary for the
ordinary operation of the Funds and Portfolios, and is responsible for the costs
of registration of the Trust's shares and the printing of prospectuses and
shareholder reports for current shareholders. Under the Administration
Agreement, the Administrator has agreed to provide or procure these services,
and to bear these expenses, at the following annual rates for each Fund and
Portfolio (each expressed as a percentage of the Fund's or Portfolio's average
daily net assets attributable to the indicated class or classes of shares on an
annual basis):
ADMINISTRATIVE FEE RATE
-----------------------
<TABLE>
<CAPTION>
INSTITUTIONAL AND CLASS A, CLASS B,
ADMINISTRATIVE AND CLASS C CLASS D
FUND OR PORTFOLIO CLASSES* SHARES* SHARES**
------------------------ ----------------- ------------------------------------- -------------
<S> <C> <C> <C>
Equity Income Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Tax-Efficient Equity .25% .40% of first $2.5 billion .65%
Fund .35% of amounts in excess of $2.5
billion
Value Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Small-Cap Value Fund .25% .40% of first $2.5 billion N/A
.35% of amounts in excess of $2.5
billion
Select Growth Fund .25% .40% of the first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Growth & Income Fund .25% .50% of the first $2.5 billion .75%
.45% of amounts in excess of $2.5
billion
NFJ Value 25 Fund .25% N/A N/A
Mega-Cap Fund(1) .25% N/A N/A
Capital Appreciation .25% .40% of first $2.5 billion .65%
Fund .35% of amounts in excess of $2.5
billion
Mid-Cap Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Micro-Cap Fund .25% N/A N/A
Enhanced Equity Fund .25% N/A N/A
Renaissance Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Growth Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Target Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
Opportunity Fund .25% .40% of first $2.5 billion N/A
.35% of amounts in excess of $2.5
billion
Innovation Fund .25% .40% of first $2.5 billion .65%
.35% of amounts in excess of $2.5
billion
International Fund .50% .65% of first $2.5 billion N/A
.60% of amounts in excess of $2.5
billion
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL AND CLASS A, CLASS B,
ADMINISTRATIVE AND CLASS C CLASS D
FUND OR PORTFOLIO CLASSES* SHARES* SHARES**
------------------------ ----------------- ------------------------------------- -------------
<S> <C> <C> <C>
International Growth .50% .65% of the first $2.5 billion .90%
Fund .60% of amounts in excess of $2.5
billion
Global Innovation .40% .60% of first $2.5 billion .85%
Fund(1) .55% of amounts in excess of $2.5
billion
Tax-Efficient .50% N/A N/A
Structured Emerging
Markets Fund
Structured Emerging .50% N/A N/A
Markets Fund
NFJ Equity Income .25% N/A N/A
NFJ Value .25% N/A N/A
90/10 Portfolio .10%*** .40% of first $2.5 billion N/A
.35% of amounts in excess of $2.5
billion
60/40 Portfolio .10%*** .40% of first $2.5 billion N/A
.35% of amounts in excess of $2.5
billion
30/70 Portfolio .10%*** .40% of first $2.5 billion N/A
.35% of amounts in excess of $2.5
billion
</TABLE>
* The Administrator receives administrative fees based on a Fund's or
Portfolio's average daily net assets attributable in the aggregate to its
Institutional and Administrative Class shares on the one hand, and to its Class
A, Class B and Class C shares on the other.
** As described below, the Administration Agreement includes a plan adopted in
conformity with Rule 12b-1 which provides for the payment of up to .25% of the
.65% (.75%, .85% and .90% with respect to Class D shares of the Growth & Income
Fund, Global Innovation Fund and the International Growth Fund, respectively)
Class D Administrative Fee rate as reimbursement for expenses in respect of
activities that may be deemed to be primarily intended to result in the sale of
Class D shares.
*** The Administrative Fee for Institutional and Administrative Class shares of
each Portfolio reflects a fee waiver currently in effect. In the absence of
this waiver, the Administrative Fee rate for Institutional and Administrative
Class shares of each Portfolio would be 0.15% per annum.
(1) The Administrator has contractually agreed to waive, reduce or reimburse
its Administrative Fee for each class of shares for each of the Mega-Cap and
Global Innovation Funds in an amount that, in essence, is equal to such Fund's
organizational expenses and disinterested Trustees' expenses (as defined below)
attributed to that class.
Except for the expenses paid by the Administrator, the Trust bears all costs of
its operations. The Trust is responsible for the following expenses: (i)
salaries and other compensation of any of the Trust's executive officers and
employees who are not officers, directors, stockholders, or employees of PIMCO
Advisors, Pacific Investment Management or their subsidiaries or affiliates;
(ii) taxes and governmental fees; (iii) brokerage fees and commissions and other
portfolio transaction expenses; (iv) costs of borrowing money, including
interest expenses; (v) fees and expenses of the Trustees who are not "interested
persons" of PIMCO Advisors, and Sub-Adviser, or the Trust, and any counsel
retained exclusively for their benefit ("disinterested Trustees' expenses");
(vi) extraordinary expenses, including costs of litigation and indemnification
expenses; (vii) expenses which are capitalized in accordance with generally
accepted accounting principals; and (viii) any expenses allocated or allocable
to a specific class of shares ("Class-specific expenses").
-47-
<PAGE>
Class-specific expenses include distribution and/or service fees payable
with respect to the Class A, Class B, Class C, Class D or Administrative Class
shares and administrative fees as described above, and may include certain other
expenses as permitted by the Trust's Amended and Restated Multi-Class Plan (the
"Multi-Class Plan") adopted pursuant to Rule 18f-3 under the 1940 Act, which is
subject to review and approval by the Trustees. It is not presently anticipated
that any expenses other than distribution and/or service fees and administrative
fees will be allocated on a class-specific basis.
The Administration Agreement may be terminated by the Trust at any time by
vote of (1) a majority of the Trustees, (2) a majority of the outstanding voting
securities of the Trust, or (3) with respect to the Renaissance, Growth, Target,
Opportunity, Innovation and International Funds, by a majority of the Trustees
who are not interested persons of the Trust or PIMCO Advisors, on 60 days'
written notice to PIMCO Advisors.
Under the Administration Agreement, the Administrator or an affiliate may
pay financial service firms a portion of the Class D administration fees in
return for the firms' services (normally not to exceed an annual rate of .35% of
a Fund's average daily net assets attributable to Class D shares purchased
through such firms). The Administration Agreement includes a plan specific to
Class D shares which has been adopted in conformity with the requirements set
forth under Rule 12b-1 of the 1940 Act to allow for payment of up to .25% per
annum of the Class D administrative fees as reimbursement for expenses in
respect of activities that may be deemed to be primarily intended to result in
the sale of Class D shares. The principal types of activities for which such
payments may be made are services in connection with the distribution of Class D
shares and/or the provision of shareholder services. See "Distribution of Trust
Shares--Plan for Class D Shares."
After an initial two-year term, the Sub-Administration Agreement will
continue from year to year upon the approval of the parties thereto. The Sub-
Administration Agreement may be terminated at any time by PIMCO Advisors or
Pacific Investment Management upon 60 days' written notice to the other party
and, with respect to the services rendered to the Trust, at any time by vote of
a majority of the disinterested Trustees of the Trust. The Sub-Administration
Agreement will also terminate upon termination of the Administration Agreement.
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the aggregate amount of the administration fees paid by the Funds and Portfolios
was as follows (Class A, Class B and Class C shares were not offered prior to
January 17, 1997 and Class D shares were not offered prior to April 8, 1998):
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
FUND 06/30/99 06/30/98 06/30/97
------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Equity Income Fund $ 579,501 $ 487,106 $ 311,798
Value Fund 778,004 720,965 318,624
Small-Cap Value Fund 1,373,378 850,182 114,067
Select Growth Fund/(1)/ 181,254 221,386 102,634
Growth & Income Fund 29,621 21,411 19,291
Capital Appreciation Fund 3,129,528 2,144,151 1,093,013
Mid-Cap Fund/(1)/ 2,641,971 1,722,412 729,997
Micro-Cap Fund/(1)/ 607,005 551,975 278,025
Small-Cap Fund/(1)/ 143,612 102,410 81,774
Enhanced Equity Fund 132,223 110,815 161,982
Emerging Markets Fund/(1)/ N/A 208,654 312,540
International Developed Fund/(1)/ N/A 555,314 437,490
Balanced Fund/(1)/ 220,148 186,627 170,134
Renaissance Fund* 2,513,413 2,006,144 605,566
Growth Fund* 8,581,473 7,463,761 2,993,370
Target Fund* 4,244,469 4,805,201 2,076,748
Opportunity Fund* 1,950,916 3,182,992 1,424,856
Innovation Fund* 2,740,592 1,248,438 458,154
International Fund* 877,968 1,090,440 567,025
International Growth Fund** 34,123 14,562 N/A
Precious Metals Fund*/(1)/ 94,460 124,438 84,947
Tax Exempt Fund*/(1)/ N/A 193,724 89,008
Value 25 Fund/(1)/ 5,790 N/A N/A
Tax-Efficient Equity Fund 49,326 N/A N/A
Structured Emerging Markets Fund 173,691 N/A N/A
Tax-Efficient Structured Emerging Markets Fund 235,919 N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 20,123 N/A N/A
70/30 Portfolio 10,422 N/A N/A
90/10 Portfolio 14,344 N/A N/A
----------- ----------- -----------
TOTAL $31,363,276 $28,013,108 $12,431,043
</TABLE>
* Amounts for the year ended June 30, 1997 are for the period from 1/17/97
through 6/30/97.
** Amounts for the year ended June 30, 1998 are for the period from 12/31/97
through 6/30/98.
(1) Please see the section captioned "The Trust" in this Statement of Additional
Information for information about these Funds.
-48-
<PAGE>
The predecessor series of the Renaissance, Growth, Target, Opportunity,
Innovation, International, Precious Metals and Tax Exempt Funds (each a series
of PAF which reorganized as a Fund of the Trust on January 17, 1997) received
administrative services during fiscal years 1997 and 1996 under separate
management contracts between the Adviser and PAF on behalf of each such series.
See "Investment Adviser" above for the amounts paid to the Adviser by these
series under such management contracts during fiscal years 1997 and 1996.
Shares of the Portfolios were not offered during the periods listed above.
DISTRIBUTION OF TRUST SHARES
DISTRIBUTOR AND MULTI-CLASS PLAN
PIMCO Funds Distributors LLC (the "Distributor") serves as the principal
underwriter of each class of the Trust's shares pursuant to a distribution
contract (the "Distribution Contract") with the Trust. The Distributor is a
wholly-owned subsidiary of PIMCO Advisors. The Distributor, located at 2187
Atlantic Street, Stamford, Connecticut 06902, is a broker-dealer registered
with the Securities and Exchange Commission. The Distribution Contract is
terminable with respect to a Fund, Portfolio or class of shares without penalty,
at any time, by the Fund, Portfolio or class by not more than 60 days' nor less
than 30 days' written notice to the Distributor, or by the Distributor upon not
more than 60 days' nor less than 30 days' written notice to the Trust. The
Distributor is not obligated to sell any specific amount of Trust shares.
The Distribution Contract will continue in effect with respect to each Fund
and Portfolio, and each class of shares thereof, for successive one-year
periods, provided that each such continuance is specifically approved (i) by the
vote of a majority of the entire Board of Trustees or by the majority of the
outstanding shares of the Fund, Portfolio or class, and (ii) by a majority of
the Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust and who have no direct or indirect interest financial interest in the
Distribution Contract or the Distribution and/or Servicing Plans described
below, by vote cast in person at a meeting called for the purpose. If the
Distribution Contract is terminated (or not renewed) with respect to one or more
Funds, Portfolios or classes, it
-49-
<PAGE>
may continue in effect with respect to any Fund, Portfolio or class as to which
it has not been terminated (or has been renewed).
The Trust currently offers up to six classes of shares of each of the
Funds: Class A, Class B, Class C, Class D, Institutional Class and
Administrative Class shares. The Trust currently offers Class A, Class B, Class
C, Institutional Class and Administrative Class shares of each Portfolio.
Class A, Class B and Class C shares of the Trust are offered through firms
("participating brokers") which are members of the National Association of
Securities Dealers, Inc. ("NASD"), and which have dealer agreements with the
Distributor, or which have agreed to act as introducing brokers for the
Distributor ("introducing brokers").
Class D shares are generally offered to clients of financial service firms,
such as broker-dealers or registered investment advisers, with which the
Distributor has an agreement for the use of PIMCO Funds: Multi-Manager Series in
particular investment products, programs or accounts for which a fee may be
charged.
Institutional Class shares are offered primarily for direct investment by
investors such as pension and profit sharing plans, employee benefit trusts,
endowments, foundations, corporations, and high net worth individuals
(Institutional Class shares may also be offered through certain financial
intermediaries that charge their customers transaction or other fees with
respect to the customers' investments in the Funds). Administrative Class
shares are offered primarily through employee benefit plan alliances, broker-
dealers, and other intermediaries, and each Fund pays service or distribution
fees to such entities for services they provide to Administrative Class
shareholders.
Under the Trust's Multi-Class Plan, shares of each class of each Fund and
Portfolio represent an equal pro rata interest in the Fund or Portfolio and,
generally, have identical voting, dividend, liquidation, and other rights
preferences, powers, restrictions, limitations, qualifications and terms and
conditions, except that: (a) each class has a different designation; (b) each
class has exclusive voting rights on any matter submitted to shareholders that
relates solely to its distribution or service arrangements; and (c) each class
has separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class.
Each class of shares bears any class specific expenses allocated to such
class, such as expenses related to the distribution and/or shareholder servicing
of such class. In addition, each class may, at the Trustees' discretion, also
pay a different share of other expenses, not including advisory or custodial
fees or other expenses related to the management of the Trust's assets, if these
expenses are actually incurred in a different amount by that class, or if the
class receives services of a different kind or to a different degree than the
other classes. All other expenses are allocated to each class on the basis of
the net asset value of that class in relation to the net asset value of the
particular Fund. Each class may have a differing sales charge structure, and
differing exchange and conversion features.
CONTINGENT DEFERRED SALES CHARGE AND INITIAL SALES CHARGE
As described in the Class A, B and C Prospectus and the Retail Portfolio
Prospectus under the caption "Investment Options (Class A, B and C Shares)," a
contingent deferred sales charge is imposed upon certain redemptions of Class A,
Class B and Class C shares. No contingent deferred sales charge is currently
imposed upon redemptions of Class D, Institutional Class or Administrative Class
shares. Because contingent deferred sales charges are calculated on a series-
by-series basis, shareholders should consider whether to exchange shares of one
Fund or Portfolio for shares of another Fund or Portfolio prior to redeeming an
investment if such an exchange would reduce the contingent deferred sales charge
applicable to such redemption.
-50-
<PAGE>
During the fiscal years ended June 30, 1999, June 30, 1998 and June 30,
1997, the Distributor received the following aggregate amounts in contingent
deferred sales charges on Class A shares, Class B shares and Class C shares of
the Funds and the Portfolios:
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
CLASS 6/30/99 6/30/98 6/30/97
--------- ---------- -------- --------
<S> <C> <C> <C>
Class A $ 5,341 $ 2,273 $ 40,456
Class B $2,063,747 $945,353 $789,851
Class C $ 618,030 $480,061 $533,975
</TABLE>
The Funds did not offer Class A, B and C shares in fiscal years prior to
the fiscal year ended June 30, 1997. However, during the fiscal year ended
September 30, 1996, the Distributor received the following amounts in contingent
deferred sales charges on shares of series of PAF which reorganized as the
following Funds of the Trust: Class A shares: Growth - $9,168, Target - $14
and Opportunity - $4,190. Class B shares: Renaissance -$8,722, Growth -
$37,445, Target - $31,670, Innovation - $36,477, International - $6,359,
Precious Metals -$1,179 and Tax Exempt - $4,055. Class C shares: Renaissance
- $12,809, Growth - $124,264, Target - $89,334, Opportunity - $37,154,
Innovation - $29,110, International - $22,016, Precious Metals - $15,384 and Tax
Exempt -$1,596.
As described in the Class A, B and C Prospectus and the Retail Portfolio
Prospectus under the caption "Investment Options (Class A, B and C Shares),"
Class A shares of the Trust are sold pursuant to an initial sales charge, which
declines as the amount of the purchase reaches certain defined levels. For the
fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997, the
Distributor received an aggregate of $7,013,745, $4,878,434 and $2,927,636,
respectively, and retained an aggregate of $904,586, $506,878 and $369,546,
respectively, in initial sales charges paid by Class A shareholders of the
Trust.
The Trust did not offer Class A shares in fiscal years prior to the fiscal
year ended June 30, 1997. However, during the fiscal year ended September 30,
1996, the Distributor received the following amounts in initial sales charges
paid by shareholders of PAF series which reorganized as the following Funds of
the Trust: Renaissance - $205,419, Growth - 549,330, Target - $852,363,
Opportunity - $176,391, Innovation - $685,093, International - $91,177, Precious
Metals - $72,503 and Tax Exempt - $37,180, and retained the following amounts:
Renaissance - $27,477, Growth - $83,657, Target - $126,693, Opportunity -
$29,605, Innovation - $114,091, International - $13,871, Precious Metals -
$7,738 and Tax Exempt - $3,140.
DISTRIBUTION AND SERVICING PLANS FOR CLASS A, CLASS B AND CLASS C SHARES
As stated in the Class A, B and C Prospectus and the Retail Portfolio
Prospectus under the caption "Investment Options -- Class A, B and C Shares--
Distribution and Servicing (12b-1) Plans," Class A, Class B and Class C shares
of the Trust are continuously offered through participating brokers which are
members of the NASD and which have dealer agreements with the Distributor, or
which have agreed to act as introducing brokers.
Pursuant to separate Distribution and Servicing Plans for Class A, Class B
and Class C shares (the "Retail Plans"), the Distributor receives (i) in
connection with the distribution of Class B and Class C shares of the Trust,
certain distribution fees from the Trust, and (ii) in connection with personal
services rendered to Class A, Class B and Class C shareholders of the Trust and
the maintenance of shareholder accounts, certain servicing fees from the Trust.
Subject to the percentage limitations on these distribution and servicing fees
set forth below, the distribution and servicing fees may be paid with respect to
services rendered and expenses borne in the past with respect to Class A, Class
B and Class C shares as to which no distribution and servicing fees were paid on
account of such limitations.
The Distributor makes distribution and servicing payments to participating
brokers and servicing payments to certain banks and other financial
intermediaries in connection with the sale of Class B and Class C shares and
servicing payments to participating brokers, certain banks and other financial
intermediaries in connection with the
-51-
<PAGE>
sale of Class A shares. In the case of Class A shares, these parties are also
compensated based on the amount of the front-end sales charge reallowed by the
Distributor, except in cases where Class A shares are sold without a front-end
sales charge (although the Distributor may pay brokers additional compensation
in connection with sales of Class A shares without a sales charge). In the case
of Class B shares, participating brokers and other financial intermediaries are
compensated by an advance of a sales commission by the Distributor. In the case
of Class C shares, part or all of the first year's distribution and servicing
fee is generally paid at the time of sale. Pursuant to the Distribution
Agreement, with respect to each Fund's or Portfolio's Class A, Class B and Class
C shares, the Distributor bears various other promotional and sales related
expenses, including the cost of printing and mailing prospectuses to persons
other than current shareholders.
Class A Servicing Fees
----------------------
As compensation for services rendered and expenses borne by the Distributor
in connection with personal services rendered to Class A shareholders of the
Trust and the maintenance of Class A shareholder accounts, the Trust pays the
Distributor servicing fees up to the annual rate of .25% (calculated as a
percentage of each Fund's or Portfolio's average daily net assets attributable
to Class A shares).
Class B and Class C Distribution and Servicing Fees
---------------------------------------------------
As compensation for services rendered and expenses borne by the Distributor
in connection with the distribution of Class B and Class C shares of the Trust,
and in connection with personal services rendered to Class B and Class C
shareholders of the Trust and the maintenance of Class B and Class C shareholder
accounts, the Trust pays the Distributor servicing and distribution fees up to
the annual rates set forth below (calculated as a percentage of each Fund's or
Portfolio's average daily net assets attributable to Class B and Class C shares,
respectively):
SERVICING DISTRIBUTION
FEE FEE
----------- ----------------
All Funds and Portfolios .25% .75%
The Retail Plans were adopted pursuant to Rule 12b-1 under the 1940 Act and
are of the type known as "compensation" plans. This means that, although the
Trustees of the Trust are expected to take into account the expenses of the
Distributor and its predecessors in their periodic review of the Retail Plans,
the fees are payable to compensate the Distributor for services rendered even if
the amount paid exceeds the Distributor's expenses.
The distribution fee applicable to Class B and Class C shares may be spent
by the Distributor on any activities or expenses primarily intended to result in
the sale of Class B or Class C shares, respectively, including compensation to,
and expenses (including overhead and telephone expenses) of, financial
consultants or other employees of the Distributor or of participating or
introducing brokers who engage in distribution of Class B or Class C shares,
printing of prospectuses and reports for other than existing Class B or Class C
shareholders, advertising, and preparation, printing and distributions of sales
literature. The servicing fee, which is applicable to Class A, Class B and
Class C shares of the Trust, may be spent by the Distributor on personal
services rendered to shareholders of the Trust and the maintenance of
shareholder accounts, including compensation to, and expenses (including
telephone and overhead expenses) of, financial consultants or other employees of
participating or introducing brokers, certain banks and other financial
intermediaries who aid in the processing of purchase or redemption requests or
the processing of dividend payments, who provide information periodically to
shareholders showing their positions in a Fund's or Portfolio's shares, who
forward communications from the Trust to shareholders, who render ongoing advice
concerning the suitability of particular investment opportunities offered by the
Trust in light of the shareholders' needs, who respond to inquiries from
shareholders relating to such services, or who train personnel in the provision
of such services. Distribution and servicing fees may also be spent on interest
relating to unreimbursed distribution or servicing expenses from prior years.
-52-
<PAGE>
Many of the Distributor's sales and servicing efforts involve the Trust as
a whole, so that fees paid by Class A, Class B or Class C shares of any Fund or
Portfolio may indirectly support sales and servicing efforts relating to the
other Funds' or Portfolios' shares of the same class. In reporting its expenses
to the Trustees, the Distributor itemizes expenses that relate to the
distribution and/or servicing of a single Fund's or Portfolio's shares, and
allocates other expenses among the Funds or Portfolios based on their relative
net assets. Expenses allocated to each Fund or Portfolio are further allocated
among its classes of shares annually based on the relative sales of each class,
except for any expenses that relate only to the sale or servicing of a single
class. The Distributor may make payments to brokers (and with respect to
servicing fees only, to certain banks and other financial intermediaries) of up
to the following percentages annually of the average daily net assets
attributable to shares in the accounts of their customers or clients:
<TABLE>
<CAPTION>
ALL FUNDS AND PORTFOLIOS/(1)/
SERVICING DISTRIBUTION
FEE FEE
---------- -------------
<S> <C> <C>
Class A .25% N/A
Class B /(2)/ .25% None
Class C (purchased before July 1, .25% None
1991)
Class C/(3)/ (purchased on or after .25% .65%
July 1, 1991)
</TABLE>
1. Applies, in part, to Class A, Class B and Class C shares of the Trust issued
to former shareholders of PIMCO Advisors Funds in connection with the
reorganizations/mergers of series of PIMCO Advisors Funds as/with Funds of
the Trust in transactions which took place on January 17, 1997
2. Payable only with respect to shares outstanding for one year or more.
3. Payable only with respect to shares outstanding for one year or more except
in the case of shares for which no payment is made to the party at the time
of sale.
The Distributor may from time to time pay additional cash bonuses or other
incentives to selected participating brokers in connection with the sale or
servicing of Class A, Class B and Class C shares of the Funds or Portfolios. On
some occasions, such bonuses or incentives may be conditioned upon the sale of a
specified minimum dollar amount of the shares of a Fund or Portfolio and/or all
of the Funds or Portfolios together or a particular class of shares, during a
specific period of time. The Distributor currently expects that such additional
bonuses or incentives will not exceed .50% of the amount of any sale. In its
capacity as administrator for the Funds and Portfolios, PIMCO Advisors may pay
participating brokers and other intermediaries for sub-transfer agency and other
services.
If in any year the Distributor's expenses incurred in connection with the
distribution of Class B and Class C shares and, for Class A, Class B and Class C
shares, in connection with the servicing of shareholders and the maintenance of
shareholder accounts, exceed the distribution and/or servicing fees paid by the
Trust, the Distributor would recover such excess only if the Retail Plan with
respect to such class of shares continues to be in effect in some later year
when such distribution and/or servicing fees exceed the Distributor's expenses.
The Trust is not obligated to repay any unreimbursed expenses that may exist at
such time, if any, as the relevant Retail Plan terminates.
Each Retail Plan may be terminated with respect to any Fund or Portfolio to
which the Plan relates by vote of a majority of the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of the Plan or the
Distribution Contract ("disinterested Retail Plan Trustees"), or by vote of a
majority of the outstanding voting securities of the relevant class of that Fund
or Portfolio. Any change in any Retail Plan that would materially increase the
cost to the class of shares of any
-53-
<PAGE>
Fund or Portfolio to which the Plan relates requires approval by the affected
class of shareholders of that Fund or Portfolio. The Trustees review quarterly
written reports of such costs and the purposes for which such costs have been
incurred. Each Retail Plan may be amended by vote of the Trustees, including a
majority of the disinterested Retail Plan Trustees, cast in person at a meeting
called for the purpose. As long as the Retail Plans are in effect, selection and
nomination of those Trustees who are not interested persons of the Trust shall
be committed to the discretion of such disinterested Trustees.
The Retail Plans will continue in effect with respect to each Fund and
Portfolio, and each class of shares thereof, for successive one-year periods,
provided that each such continuance is specifically approved (i) by the vote of
a majority of the disinterested Retail Plan Trustees and (ii) by the vote of a
majority of the entire Board of Trustees cast in person at a meeting called for
the purpose of voting on such approval.
If a Retail Plan is terminated (or not renewed) with respect to one or more
Funds or Portfolios, or classes thereof, it may continue in effect with respect
to any class of any Fund or Portfolio as to which it has not been terminated (or
has been renewed).
The Trustees believe that the Retail Plans will provide benefits to the
Trust. In this regard, the Trustees believe that the Retail Plans will result
in greater sales and/or fewer redemptions of Trust shares, although it is
impossible to know for certain the level of sales and redemptions of Trust
shares that would occur in the absence of the Retail Plans or under alternative
distribution schemes. Although the expenses of the Funds and Portfolios are
essentially fixed, the Trustees believe that the effect of the Retail Plans on
sales and/or redemptions may benefit the Trust by reducing expense ratios and/or
by affording greater flexibility to the Sub-Advisers. From time to time,
expenses of the Distributor incurred in connection with the sale of Class B and
Class C shares of the Trust, and in connection with the servicing of Class B and
Class C shareholders and the maintenance of shareholder accounts, may exceed the
distribution and servicing fees collected by the Distributor. The Trustees
consider such unreimbursed amounts, among other factors, in determining whether
to cause the Funds and Portfolios to continue payments of distribution and
servicing fees in the future with respect to Class B and Class C shares.
PAYMENTS PURSUANT TO CLASS A PLANS
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the Trust paid the Distributor an aggregate of $2,635,864, $2,017,316 and
$1,147,572, respectively, pursuant to the Class A Retail Plan. Such payments
were allocated among the operational Funds and Portfolios as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/99 06/30/98 06/30/97
----------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Equity Income Fund $ 37,477 $ 20,227 $ 938
Value Fund 51,171 46,720 14,876
Small-Cap Value Fund 226,167 91,688 2,770
Select Growth Fund/(1)/ N/A N/A N/A
Growth & Income Fund N/A N/A N/A
Capital Appreciation Fund 224,084 75,035 5,510
Mid-Cap Fund/(1)/ 251,954 72,631 12,246
Micro-Cap Fund/(1)/ N/A N/A N/A
Small-Cap Fund/(1)/ N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund/(1)/ N/A 697 108
International Developed Fund/(1)/ N/A 2,903 169
Balanced Fund/(1)/ 23,696 12,278 173
Renaissance Fund 214,100 130,230 53,527
Growth Fund 464,918 403,013 290,828
Target Fund 347,814 394,300 288,012
Opportunity Fund 338,303 531,993 320,127
Innovation Fund 406,854 164,089 99,910
International Fund 29,153 42,700 34,195
International Growth Fund N/A N/A N/A
Precious Metals Fund/(1)/ 8,880 13,370 14,218
Tax Exempt Fund/(1)/ N/A 15,442 9,965
Value 25 Fund/(1)/ 1,189 N/A N/A
Tax-Efficient Equity Fund 7,937 N/A N/A
Structured Emerging Markets Fund N/A N/A N/A
Tax-Efficient Structured Emerging Markets Fund N/A N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 1,312 N/A N/A
70/30 Portfolio 348 N/A N/A
90/10 Portfolio 504 N/A N/A
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
-54-
<PAGE>
During the fiscal year ended June 30, 1999, the amounts collected pursuant
to the Class A Retail Plan were used as follows by the Distributor: sales
commissions and other compensation to sales personnel, $2,135,047; preparing,
printing and distributing sales material and advertising (including preparing,
printing and distributing prospectuses to non-shareholders) and other expenses
(including data processing, legal and operations), $500,814. These totals,
allocated among (i) compensation and (ii) sales material and other expenses for
each Fund and Portfolio, were as follows:
<TABLE>
<CAPTION>
SALES MATERIAL
AND OTHER
COMPENSATION EXPENSES TOTAL
------------ -------------- --------
<S> <C> <C> <C>
Equity Income Fund $ 30,356 $ 7,121 $ 37,477
Value Fund 41,449 9,722 51,171
Small-Cap Value Fund 183,195 42,972 226,167
Select Growth Fund/(1)/ N/A N/A N/A
Growth & Income Fund N/A N/A N/A
Capital Appreciation Fund 181,508 42,576 224,084
Mid-Cap Fund/(1)/ 204,083 47,871 251,954
Micro-Cap Fund/(1)/ N/A N/A N/A
Small-Cap Fund /(1)/ N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund/(1)/ N/A N/A N/A
International Developed Fund/(1)/ N/A N/A N/A
Balanced Fund/(1)/ 19,194 4,502 23,696
Renaissance Fund 173,421 40,679 214,100
Growth Fund 376,584 88,334 464,918
Target Fund 281,729 66,085 347,814
Opportunity Fund 274,025 64,278 338,303
Innovation Fund 329,552 77,302 406,854
International Fund 23,614 5,539 29,153
International Growth Fund N/A N/A N/A
Precious Metals Fund/(1)/ 7,193 1,687 8,880
Tax Exempt Fund/(1)/ N/A N/A N/A
Value 25 Fund/(1)/ 963 226 1,189
Tax-Efficient Equity Fund 6,429 1,508 7,937
Structured Emerging Markets Fund N/A N/A N/A
Tax-Efficient Structured Emerging Markets Fund N/A N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value N/A N/A N/A
NFJ Equity Income N/A N/A N/A
NFJ Value 25 N/A N/A N/A
60/40 Portfolio 1,063 249 1,312
70/30 Portfolio 282 66 348
90/10 Portfolio 408 96 504
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
-55-
<PAGE>
The Trust did not offer Class A shares in fiscal years prior to the fiscal
year ended June 30, 1997. For the fiscal year ended September 30, 1996, PAF
paid the Distributor an aggregate of $1,556,119 pursuant to a Distribution and
Servicing Plan applicable to the Class A shares of PAF (the "PAF Class A Plan"),
which is similar to the Class A Plan of the Trust. Such payments were
allocated among the predecessors of the following Funds (each of which was
formerly a series of PAF which reorganized as a series of the Trust on January
17, 1997) as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPT. 30, 1996
--------------
<S> <C>
Renaissance Fund $ 38,973
Growth Fund 351,506
Target Fund 338,598
Opportunity Fund 308,794
Innovation Fund 88,089
International Fund 42,411
Precious Metals Fund/(1)/ 21,416
Tax Exempt Fund/(1)/ 10,288
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
The remainder of the total payments made under the PAF Class A Plan for
such fiscal years was allocated among other series of PAF which either merged
with Funds of the Trust or merged with/reorganized as series of PIMS, an
affiliated mutual fund family, in transactions which took place on January 17,
1997.
-56-
<PAGE>
PAYMENTS PURSUANT TO CLASS B PLANS
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the Trust paid the Distributor an aggregate of $7,649,186, $4,549,168 and
$1,670,623, respectively, pursuant to the Class B Retail Plan. Such payments
were allocated among the operational Funds and Portfolios as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/99 06/30/98 06/30/97
------------------------------------------------ ---------- --------- ---------
<S> <C> <C> <C>
Equity Income Fund $ 174,783 $ 80,992 $ 5,019
Value Fund 332,761 311,768 101,067
Small-Cap Value Fund 984,479 611,536 17,419
Select Growth Fund/(1)/ N/A N/A N/A
Growth & Income Fund N/A N/A N/A
Capital Appreciation Fund 483,520 165,015 5,077
Mid-Cap Fund/(1)/ 834,091 528,760 104,374
Micro-Cap Fund/(1)/ N/A N/A N/A
Small-Cap Fund/(1)/ N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund/(1)/ N/A 4,696 633
International Developed Fund/(1)/ N/A 21,969 2,256
Balanced Fund/(1)/ 109,348 42,373 2,223
Renaissance Fund 1,133,814 603,997 204,965
Growth Fund 996,276 660,761 351,684
Target Fund 703,506 727,857 450,009
Opportunity Fund 428 N/A N/A
Innovation Fund 1,707,917 629,537 332,295
International Fund 84,644 85,359 53,098
International Growth Fund N/A N/A N/A
Precious Metals Fund/(1)/ 40,742 41,484 21,713
Tax Exempt Fund/(1)/ N/A 33,064 18,818
Value 25 Fund/(1)/ 3,700 N/A N/A
Tax-Efficient Equity Fund 28,316 N/A N/A
Structured Emerging Markets Fund N/A N/A N/A
Tax-Efficient Structured Emerging Markets Fund N/A N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 15,370 N/A N/A
70/30 Portfolio 8,250 N/A N/A
90/10 Portfolio 7,240 N/A N/A
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
During the fiscal year ended June 30, 1999, the amounts collected pursuant
to the Class B Retail Plan were used as follows by the Distributor: sales
commissions and other compensation to sales personnel, $6,195,840; preparing,
printing and distributing sales material and advertising (including preparing,
printing and distributing prospectuses to non-shareholders), and other expenses
(including data processing, legal and operations), $1,453,345. These totals,
-57-
<PAGE>
allocated among (i) compensation and (ii) sales material and other expenses for
each Fund and Portfolio, were as follows:
<TABLE>
<CAPTION>
SALES MATERIAL
AND OTHER
COMPENSATION EXPENSES TOTAL
------------ -------------- ----------
<S> <C> <C> <C>
Equity Income Fund $ 141,574 $ 33,209 $ 174,783
Value Fund 269,536 63,225 332,761
Small-Cap Value Fund 797,428 187,051 984,479
Select Growth Fund/(1)/ N/A N/A N/A
Growth & Income Fund N/A N/A N/A
Capital Appreciation Fund 391,651 91,869 483,520
Mid-Cap Fund/(1)/ 675,614 158,477 834,091
Micro-Cap Fund/(1)/ N/A N/A N/A
Small-Cap Fund/(1)/ N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund/(1)/ N/A N/A N/A
International Developed Fund/(1)/ N/A N/A N/A
Balanced Fund/(1)/ 88,572 20,776 109,348
Renaissance Fund 918,389 215,425 1,133,814
Growth Fund 806,984 189,292 996,276
Target Fund 569,840 133,666 703,506
Opportunity Fund 347 81 428
Innovation Fund 1,383,413 324,504 1,707,917
International Fund 68,562 16,082 84,644
International Growth Fund N/A N/A N/A
Precious Metals Fund/(1)/ 33,001 7,741 40,742
Tax Exempt Fund/(1)/ N/A N/A N/A
Value 25 Fund/(1)/ 2,997 703 3,700
Tax-Efficient Equity Fund 22,936 5,380 28,316
Structured Emerging Markets Fund N/A N/A N/A
Tax-Efficient Structured Emerging Markets Fund N/A N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 12,450 2,920 15,370
70/30 Portfolio 6,683 1,568 8,250
90/10 Portfolio 5,864 1,376 7,240
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
The Trust did not offer Class B shares in fiscal years prior to the fiscal
year ended June 30, 1997. For the fiscal year ended September 30, 1996, PAF
paid the Distributor an aggregate of $1,839,931 pursuant to a Distribution and
Servicing Plan applicable to the Class B shares of PAF (the "PAF Class B Plan"),
which is similar to the Class B Plan of the Trust. Such payments were allocated
among the predecessors of the following Funds (each of which was formerly a
series of PAF which reorganized as a series of the Trust on January 17, 1997) as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPT. 30, 1996
--------------
<S> <C>
Renaissance Fund $ 62,195
Growth Fund 211,778
Target Fund 241,125
Opportunity Fund N/A
Innovation Fund 166,747
International Fund 289,719
Precious Metals Fund/(1)/ 14,083
Tax Exempt Fund/(1)/ 14,673
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
-58-
<PAGE>
The remainder of the total payments made under the PAF Class B Plan for
such fiscal years was allocated among other series of PAF which either merged
with Funds of the Trust or merged with/reorganized as series of PIMS, an
affiliated mutual fund family, in transactions which took place on January 17,
1997.
PAYMENTS PURSUANT TO CLASS C PLANS
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the Trust paid the Distributor an aggregate of $43,907,220, $42,819,673 and
$28,944,078, respectively, pursuant to the Class C Retail Plan. Such payments
were allocated among the operational Funds and Portfolios as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/99 06/30/98 06/30/97
------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Equity Income Fund $ 230,353 $ 139,875 $ 13,919
Value Fund 779,730 784,829 245,893
Small-Cap Value Fund 1,113,794 814,232 39,558
Select Growth Fund/(1)/ N/A N/A N/A
Growth & Income Fund N/A N/A N/A
Capital Appreciation Fund 748,698 392,705 28,078
Mid-Cap Fund/(1)/ 1,225,691 951,993 197,365
Micro-Cap Fund/(1)/ N/A N/A N/A
Small-Cap Fund/(1)/ N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund/(1)/ N/A 14,813 5,070
International Developed Fund/(1)/ N/A 40,459 4,936
Balanced Fund/(1)/ 110,967 41,412 1,876
Renaissance Fund 4,288,538 3,887,867 2,024,245
Growth Fund 18,591,740 16,386,591 11,107,219
Target Fund 8,510,832 9,707,945 7,238,372
Opportunity Fund 3,521,632 5,829,510 4,950,118
Innovation Fund 3,440,411 1,834,958 1,149,018
International Fund 1,083,209 1,421,443 1,354,452
International Growth Fund N/A N/A N/A
Precious Metals Fund/(1)/ 133,650 181,565 255,508
Tax Exempt Fund/(1)/ N/A 389,476 328,451
Value 25 Fund/(1)/ 4,980 N/A N/A
Tax-Efficient Equity Fund 50,345 N/A N/A
Structured Emerging Markets Fund N/A N/A N/A
Tax-Efficient Structured Emerging Markets Fund N/A N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 29,671 N/A N/A
70/30 Portfolio 16,395 N/A N/A
90/10 Portfolio 26,585 N/A N/A
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
During the fiscal year ended June 30, 1999, the amounts collected pursuant
to the Class C Retail Plan were used as follows by the Distributor: sales
commissions and other compensation to sales personnel, $35,564,849; preparing,
printing and distributing sales material and advertising (including preparing,
printing and
-59-
<PAGE>
distributing prospectuses to non-shareholders) and other expenses (including
data processing, legal and operations), $8,342,372. These totals, allocated
among (i) compensation and (ii) sales material and other expenses for each Fund
and Portfolio, were as follows:
<TABLE>
<CAPTION>
SALES MATERIAL
COMPENSATION AND OTHER EXPENSES TOTAL
------------ ------------------ -----------
<S> <C> <C> <C>
Equity Income Fund $ 186,586 $ 43,767 $ 230,353
Value Fund 631,581 148,149 779,730
Small-Cap Value Fund 902,173 211,621 1,113,794
Select Growth Fund/(1)/ N/A N/A N/A
Growth & Income Fund N/A N/A N/A
Capital Appreciation Fund 606,445 142,253 748,698
Mid-Cap Fund/(1)/ 992,810 232,881 1,225,691
Micro-Cap Fund/(1)/ N/A N/A N/A
Small-Cap Fund/(1)/ N/A N/A N/A
Enhanced Equity Fund N/A N/A N/A
Emerging Markets Fund/(1)/ N/A N/A N/A
International Developed Fund/(1)/ N/A N/A N/A
Balanced Fund/(1)/ 89,883 21,084 110,967
Renaissance Fund 3,473,716 814,822 4,288,538
Growth Fund 15,059,309 3,532,431 18,591,740
Target Fund 6,893,774 1,617,058 8,510,832
Opportunity Fund 2,852,522 669,110 3,521,632
Innovation Fund 2,786,733 653,678 3,440,411
International Fund 877,399 205,810 1,083,209
International Growth Fund N/A N/A N/A
Precious Metals Fund/(1)/ 108,257 25,394 133,650
Tax Exempt Fund/(1)/ N/A N/A N/A
Value 25 Fund/(1)/ 4,034 946 4,980
Tax-Efficient Equity Fund 40,779 9,566 50,345
Structured Emerging Markets Fund N/A N/A N/A
Tax-Efficient Structured Emerging Markets Fund N/A N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 24,034 5,637 29,671
70/30 Portfolio 13,280 3,115 16,395
90/10 Portfolio 21,534 5,051 26,585
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
The Trust did not offer Class C shares in fiscal years prior to the fiscal
year ended June 30, 1997. For the fiscal year ended September 30, 1996, PAF
paid the Distributor an aggregate of $41,704,155 pursuant to a Distribution and
Servicing Plan applicable to the Class C shares of PAF (the "PAF Class C Plan"),
which is similar to the Class C Plan of the Trust. Such payments were allocated
among the predecessors of the following Funds (each of which was formerly a
series of PAF Fund which reorganized as a series of the Trust on January 17,
1997) as follows:
-60-
<PAGE>
<TABLE>
<CAPTION>
Year Ended
Sept. 30, 1996
--------------
<S> <C>
Renaissance Fund $ 1,965,449
Growth Fund 13,593,775
Target Fund 8,684,223
Opportunity Fund 7,455,633
Innovation Fund 899,377
International Fund 1,858,512
Precious Metals Fund/(1)/ 430,849
Tax Exempt Fund/(1)/ 499,738
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
The remainder of the total payments made under the PAF Class C Plan for
such fiscal years was allocated among other series of PAF which either merged
with Funds of the Trust or merged with/reorganized as series of PIMS, an
affiliated mutual fund family, in transactions which took place on January 17,
1997.
From time to time, expenses of principal underwriters incurred in
connection with the distribution of Class B and Class C shares of the Funds and
Portfolios, and in connection with the servicing of Class A, Class B and Class C
shareholders of the Funds and Portfolios and the maintenance of Class A, Class B
and Class C shareholder accounts, may exceed the distribution and/or servicing
fees collected by the Distributor. As noted above, Class A, Class B and Class C
Distribution and Servicing Plans, which are similar to the Trust's current
Retail Plans, were in effect prior to January 17, 1997 in respect of series of
PAF that were predecessors of certain of the Funds listed below. The remaining
Funds and the Portfolios did not offer Class A, Class B or Class C shares prior
to January 17, 1997. As of June 30, 1999, such expenses were approximately
$18,240,00 in excess of payments under the Class A Plan, $29,500,00 in excess of
payments under the Class B Plan and $2,068,00 in excess of payments under the
Class C Plan.
The allocation of such excess (on a pro rata basis) among the Funds and
Portfolios listed below as of June 30, 1999 was as follows:
<TABLE>
<CAPTION>
Fund Class A Class B Class C
----------------------------------- ----------- ---------- ------------
<S> <C> <C> <C>
Balanced Fund/(1)/ $ 45,000 $ 398,000 $ 59,000
Capital Appreciation Fund 617,000 1,471,000 125,000
Emerging Markets Fund/(1)/ (3,000) 25,000 9,000
Equity Income Fund 116,000 579,000 118,000
Growth Fund 6,987,000 4,479,000 (4,815,000)
Innovation Fund 728,000 7,949,000 1,820,000
International Developed Fund/(1)/ 33,000 76,000 (2,000)
International Fund 641,000 368,000 1,541,000
Mid-Cap Fund 1,242,000 2,468,000 340,000
Opportunity Fund 2,772,000 3,000 (5,601,000)
Precious Metals Fund/(1)/ 98,000 333,000 186,000
Renaissance Fund 1,095,000 3,832,000 1,279,000
Small-Cap Value Fund 652,000 3,845,000 389,000
Target Fund 3,041,000 2,590,000 6,109,000
Value Fund 170,000 733,000 352,000
Value 25 Fund/(1)/ (1,000) 16,000 3,000
Tax-Efficient Equity Fund 14,000 154,000 34,000
Global Innovation Fund N/A N/A N/A
Select Growth Fund N/A N/A N/A
60/40 Portfolio (1,000) 91,000 57,000
70/30 Portfolio (2,000) 41,000 35,000
90/10 Portfolio (4,000) 49,000 30,000
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
-61-
<PAGE>
The allocation of such excess (on a pro rata basis) among the Funds and
Portfolios, calculated as a percentage of net assets of each Fund listed below
as of June 30, 1999, was as follows:
<TABLE>
<CAPTION>
Fund Class A Class B Class C
----------------------------------- -------- -------- --------
<S> <C> <C> <C>
Balanced Fund/(1)/ 0.46% 3.23% 0.45%
Capital Appreciation Fund 0.68 2.67 0.15
Emerging Markets Fund/(1)/ N/A N/A N/A
Equity Income Fund 0.67 2.66 0.45
Growth Fund 3.07 3.35 -0.23
Innovation Fund 0.23 2.26 0.31
International Developed Fund/(1)/ N/A N/A N/A
International Fund 3.40 3.88 1.52
Mid-Cap Fund 1.00 2.91 0.30
Opportunity Fund 2.28 1.20 -1.81
Precious Metals Fund/(1)/ 1.25 8.49 1.62
Renaissance Fund 1.21 3.03 0.29
Small-Cap Value Fund 0.61 3.96 0.34
Target Fund 1.79 3.29 0.67
Value Fund 0.76 2.02 0.44
Value 25 Fund/(1)/ -0.35 1.90 0.36
Tax-Efficient Equity Fund 0.21 2.42 0.32
Select Growth Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
60/40 Portfolio -0.05 2.49 0.58
70/30 Portfolio -0.49 2.36 0.70
90/10 Portfolio -0.62 2.55 0.38
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
DISTRIBUTION AND ADMINISTRATIVE SERVICES PLANS FOR ADMINISTRATIVE CLASS SHARES
The Trust has adopted an Administrative Services Plan with respect to the
Administrative Class shares of each Fund and Portfolio. The Trust also has
adopted an Administrative Distribution Plan (together with the Administrative
Services Plan, the "Administrative Plans") with respect to the Administrative
Class shares of each Fund and Portfolio.
Under the terms of the Administrative Distribution Plan, the Trust is
permitted to reimburse, out of the assets attributable to the Administrative
Class shares of each applicable Fund or Portfolio, in an amount up to 0.25% on
an annual basis of the average daily net assets of that class, financial
intermediaries for costs and expenses incurred in connection with the
distribution and marketing of Administrative Class shares and/or the provision
of certain shareholder services to its customers that invest in Administrative
Class shares of the Funds or Portfolios. Such services may include, but are not
limited to, the following: providing facilities to answer questions from
prospective investors about a Fund or Portfolio; receiving and answering
correspondence, including requests for prospectuses and statements of additional
information; preparing, printing and delivering prospectuses and shareholder
reports to prospective shareholders; complying with federal and state securities
laws pertaining to
-62-
<PAGE>
the sale of Administrative Class shares; and assisting investors in completing
application forms and selecting dividend and other account options.
Under the terms of the Administrative Services Plan, the Trust is permitted
to reimburse, out of the assets attributable to the Administrative Class shares
of each Fund or Portfolio, in an amount up to 0.25% on an annual basis of the
average daily net assets of that class, financial intermediaries that provide
certain administrative services for Administrative Class shareholders. Such
services may include, but are not limited to, the following: receiving,
aggregating and processing shareholder orders; furnishing shareholder sub-
accounting; providing and maintaining elective shareholder services such as
check writing and wire transfer services; providing and maintaining pre-
authorized investment plans; communicating periodically with shareholders;
acting as the sole shareholder of record and nominee for shareholders;
maintaining accounting records for shareholders; answering questions and
handling correspondence from shareholders about their accounts; and performing
similar account administrative services.
The same entity may be the recipient of fees under both the Administrative
Distribution Plan and the Administrative Services Plan, but may not receive fees
under both plans with respect to the same assets. Fees paid pursuant to either
Plan may be paid for shareholder services and the maintenance of shareholder
accounts, and therefore may constitute "service fees" for purposes of applicable
rules of the National Association of Securities Dealers, Inc. Each Plan has
been adopted in accordance with the requirements of Rule 12b-1 under the 1940
Act and will be administered in accordance with the provisions of that rule,
except that shareholders will not have the voting rights set forth in Rule 12b-1
with respect to the Administrative Services Plan that they will have with
respect to the Administrative Distribution Plan.
Each Administrative Plan provides that it may not be amended to increase
materially the costs which Administrative Class shareholders may bear under the
Plan without the approval of a majority of the outstanding voting securities of
the Administrative Class, and by vote of a majority of both (i) the Trustees of
the Trust and (ii) those Trustees ("disinterested Administrative Plan Trustees")
who are not "interested persons" of the Trust (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of the Plan
or any agreements related to it, cast in person at a meeting called for the
purpose of voting on the Plan and any related amendments.
Each Administrative Plan provides that it may not take effect until
approved by vote of a majority of both (i) the Trustees of the Trust and (ii)
the disinterested Administrative Plan Trustees. The Administrative Distribution
Plan further provides that it may not take effect unless approved by the vote of
a majority of the outstanding voting securities of the Administrative Class.
Each Administrative Plan provides that it shall continue in effect so long
as such continuance is specifically approved at least annually by the Trustees
and the disinterested Administrative Plan Trustees. Each Administrative Plan
provides that any person authorized to direct the disposition of monies paid or
payable by a class pursuant to the Plan or any related agreement shall provide
to the Trustees, and the Board shall review at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
Each Administrative Plan is a "reimbursement plan," which means that fees
are payable to the relevant financial intermediary only to the extent necessary
to reimburse expenses incurred pursuant to such plan. Each Administrative Plan
provides that expenses payable under the Plan may be carried forward for
reimbursement for up to twelve months beyond the date in which the expense is
incurred, subject to the limit that not more than 0.25% of the average daily net
assets of Administrative Class shares may be used in any month to pay expenses
under the Plan. Each Administrative Plan requires that Administrative Class
shares incur no interest or carrying charges.
Rules of the NASD limit the amount of distribution fees that may be paid by
mutual funds. "Service fees," defined to mean fees paid for providing
shareholder services or the maintenance of accounts (but not transfer
-63-
<PAGE>
agency services) are not subject to the limits. The Trust believes that some, if
not all, of the fees paid pursuant to both Administrative Plans will qualify as
"service fees" and therefore will not be limited by NASD rules.
Institutional and Administrative Class shares of the Trust may also be
offered through certain brokers and financial intermediaries ("service agents")
that have established a shareholder servicing relationship with the Trust on
behalf of their customers. The Trust pays no compensation to such entities
other than service and/or distribution fees paid with respect to Administrative
Class shares. Service agents may impose additional or different conditions than
the Trust on the purchase, redemption or exchanges of Trust shares by their
customers. Service agents may also independently establish and charge their
customers transaction fees, account fees and other amounts in connection which
purchases, sales and redemption of Trust shares in addition to any fees charged
by the Trust. Each service agent is responsible for transmitting to its
customers a schedule of any such fees and information regarding any additional
or different conditions regarding purchases and redemptions. Shareholders who
are customers of service agents should consult their service agents for
information regarding these fees and conditions.
PAYMENTS PURSUANT TO THE ADMINISTRATIVE PLANS
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the Trust paid qualified service providers an aggregate of $1,120,693, $502,216
and $132,422, respectively, pursuant to the Administrative Services Plan and the
Administrative Distribution Plan.
Of these aggregate totals, $602,519, $362,416 and $128,406, respectively,
were paid pursuant to the Administrative Services Plan and/or the Administrative
Distribution Plan for the Funds and Portfolios listed below and were allocated
among the operational Funds and Portfolios as Follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/99 06/30/98 06/30/97
----------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Equity Income Fund $ 29,362 $ 25,885 $ 16,938
Value Fund 39,528 11,304 0
Small-Cap Value Fund 40,618 22,930 12,276
Select Growth Fund/(1)/ 176,827 211,557 79,366
Growth & Income Fund 7,757 1,846 0
Mid-Cap Fund/(1)/ 234,913 64,116 4,723
Micro-Cap Fund/(1)/ 7,665 8,918 1,898
Enhanced Equity Fund 41,681 9,207 0
International Developed Fund/(1)/ N/A 6,653 13,205
Renaissance Fund 507 N/A N/A
Growth Fund 1,939 N/A N/A
Target Fund 1,725 N/A N/A
Opportunity Fund 633 N/A N/A
International Fund 17,126 N/A N/A
Tax-Efficient Equity Fund 2,213 N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 9 N/A N/A
70/30 Portfolio 9 N/A N/A
90/10 Portfolio 9 N/A N/A
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
-64-
<PAGE>
The additional portions of the aggregate totals, $518,174, $139,800 and
$4,016, respectively, were paid pursuant to the Administrative Services Plan
only for the Capital Appreciation, Emerging Markets and Small-Cap Funds, and
were allocated among these Funds as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FUND 06/30/99 06/30/98 06/30/97
---------------------------- --------- --------- ---------
<S> <C> <C> <C>
Capital Appreciation Fund $ 514,736 $ 137,462 $ 3,297
Emerging Markets Fund/(1)/ N/A 1,802 582
Small-Cap Fund 3,438 536 137
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about this Fund.
The remaining Funds did not make payments under either Administrative Plan.
The Administrative Plans were not in effect in prior fiscal years.
PLAN FOR CLASS D SHARES
As described above under "Management of the Trust--Fund Administrator," the
Trust's Administration Agreement includes a plan (the "Class D Plan") adopted in
conformity with Rule 12b-1 under the 1940 Act which provides for the payment of
up to .25% of the Class D administrative fees as reimbursement for expenses in
respect of activities that may be deemed to be primarily intended to result in
the sale of Class D shares.
Specifically, the Administration Agreement provides that the Administrator
shall provide in respect of Class D shares (either directly or by procuring
through other entities, including various financial services firms such as
broker-dealers and registered investment advisers ("Service Organizations"))
some or all of the following services and facilities in connection with direct
purchases by shareholders or in connection with products, programs or accounts
offered by such Service Organizations ("Special Class D Services"): (i)
facilities for placing orders directly for the purchase of a Fund's Class D
shares and tendering a Fund's Class D shares for redemption; (ii) advertising
with respect to a Fund's Class D shares; (iii) providing information about the
Funds; (iv) providing facilities to answer questions from prospective investors
about the Funds; (v) receiving and answering correspondence, including requests
for prospectuses and statements of additional information; (vi) preparing,
printing and delivering prospectuses and shareholder reports to prospective
shareholders; (vii) assisting investors in applying to purchase Class D shares
and selecting dividend and other account options; and (viii) shareholder
services provided by a Service Organization that may include, but are not
limited to, the following functions: receiving, aggregating and processing
shareholder orders; furnishing shareholder sub-accounting; providing and
maintaining elective shareholder services such as check writing and wire
transfer services; providing and maintaining pre-authorized investment plans;
communicating periodically with shareholders; acting as the sole shareholder of
record and nominee for shareholders; maintaining accounting records for
shareholders; answering questions and handling correspondence from shareholders
about their accounts; issuing confirmations for transactions by shareholders;
performing similar account administrative services; providing such shareholder
communications and recordkeeping services as may be required for any program for
which the Service Organization is a sponsor that relies on Rule 3a-4 under the
1940 Act; and providing such other similar services as may reasonably be
requested to the extent the Service Organization is permitted to do so under
applicable statutes, rules, or regulations.
The Administrator has entered into an agreement with the Distributor under
which the Distributor is compensated for providing or procuring certain of the
Special Class D Services at the rate of 0.25% per annum of all assets
attributable to Class D shares sold through the Distributor.
The Trust and the Administrator understand that some or all of the Special
Class D Services provided pursuant to the Administration Agreement may be deemed
to represent services primarily intended to result in the sale of Class D
shares. The Administration Agreement includes the Class D Plan to account for
this possibility. The Administration Agreement provides that any portion of the
fees paid thereunder in respect of Class D shares
-65-
<PAGE>
representing reimbursement for the Administrator's and the Distributor's
expenditures and internally allocated expenses in respect of Class D Services of
any Fund shall not exceed the rate of 0.25% per annum of the average daily net
assets of such Fund attributable to Class D shares.
In accordance with Rule 12b-1 under the 1940 Act, the Class D Plan may not
be amended to increase materially the costs which Class D shareholders may bear
under the Plan without the approval of a majority of the outstanding Class D
shares, and by vote of a majority of both (i) the Trustees of the Trust and (ii)
those Trustees ("disinterested Class D Plan Trustees") who are not "interested
persons" of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to it, cast in person at a meeting called for the purpose of voting on
the Plan and any related amendments. The Class D Plan may not take effect until
approved by vote of a majority of both (i) the Trustees of the Trust and (ii)
the disinterested Class D Plan Trustees. In addition, the Class D Plan may not
take effect unless it is approved by the vote of a majority of the outstanding
Class D shares and it shall continue in effect only so long as such continuance
is specifically approved at least annually by the Trustees and the disinterested
Class D Plan Trustees.
With respect to the Class D Plan, the Administration Agreement requires the
Administrator to present reports as to out-of-pocket expenditures and internal
expense allocations of the Administrator and the Distributor at least quarterly
and in a manner that permits the disinterested Class D Plan Trustees to
determine that portion of the Class D administrative fees paid thereunder which
represents reimbursements in respect of Special Class D Services.
Rules of the NASD limit the amount of distribution fees that may be paid by
mutual funds. "Service fees," defined to mean fees paid for providing
shareholder services or the maintenance of accounts (but not transfer agency
services) are not subject to the limits. The Trust believes that most, if not
all, of the fees paid pursuant to the Class D Plan will qualify as "service
fees" and therefore will not be limited by NASD rules.
For the fiscal years ended June 30, 1999 and June 30, 1998, the Trust paid
qualified service providers an aggregate of $22,580 and $353, respectively,
pursuant to the Class D Plan. Such payments were allocated among the Funds as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
FUND 6/30/99 6/30/98
--------------------------- -------- --------
<S> <C> <C>
Capital Appreciation Fund $ 581 $ 56
Mid-Cap Fund/(1)/ 606 63
Equity Income Fund 325 56
Renaissance Fund 309 63
Value Fund 252 53
Tax-Efficient Equity Fund 1,843 N/A
Innovation Fund 18,664 61
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
The Portfolios do not offer Class D shares.
PURCHASES, EXCHANGES AND REDEMPTIONS
Purchases, exchanges and redemptions of the Trust's shares are discussed in
the Class A, B and C Prospectus, the Class D Prospectus and the Retail Portfolio
Prospectus under the headings "Investment Options --Class A, B and C Shares"
and "How to Buy and Sell Shares," and in the Institutional Prospectus and the
Institutional Portfolio Prospectus under the headings ""Investment Options --
Institutional Class and Administrative Class Shares" and "Purchases, Redemptions
& Exchanges."
-66-
<PAGE>
Certain clients of the Adviser or a Sub-Adviser whose assets would be
eligible for purchase by one or more of the Funds may purchase shares of the
Trust with such assets. Assets so purchased by a Fund will be valued in
accordance with procedures adopted by the Board of Trustees.
One or more classes of shares of the Funds and Portfolios may not be
qualified or registered for sale in all States. Prospective investors should
inquire as to whether shares of a particular Fund or Portfolio, or class of
shares thereof, are available for offer and sale in their State of domicile or
residence. Shares of a Fund or Portfolio may not be offered or sold in any
State unless registered or qualified in that jurisdiction, unless an exemption
from registration or qualification is available.
As described in the Class A, B and C Prospectus, the Class D Prospectus and
the Retail Portfolio Prospectus under the caption "How to Buy and Sell Shares--
Exchanging Shares," and in the Institutional Prospectus and the Institutional
Portfolio Prospectus under the caption "Purchases, Redemptions and Exchanges--
Exchange Privilege," a shareholder may exchange shares of any Fund or Portfolio
for shares of the same class of any other Fund or Portfolio of the Trust that is
available for investment, or any series of PIMS, on the basis of their
respective net asset values. The original purchase date(s) of shares exchanged
for purposes of calculating any contingent deferred sales charge will carry over
to the investment in the new Fund or Portfolio. For example, if a shareholder
invests in Class C shares of one Fund and 6 months later (when the contingent
deferred sales charge upon redemption would normally be 1%) exchanges his shares
for Class C shares of another Fund, no sales charge would be imposed upon the
exchange, but the investment in the other Fund would be subject to the 1%
contingent deferred sales charge until one year after the date of the
shareholder's investment in the first Fund as described in the Class A, B and C
Prospectus and the Retail Portfolio Prospectus under "Alternative Purchase
Arrangements." With respect to Class B or Class C shares, or Class A shares
subject to a contingent deferred sales charge, if less than all of an investment
is exchanged, any portion of the investment attributable to capital appreciation
and/or reinvested dividends or capital gains distributions will be exchanged
first, and thereafter any portions exchanged will be from the earliest
investment made in the Fund or Portfolio from which the exchange was made. For
federal income tax purposes, an exchange is treated as a sale of shares and
generally results in a capital gain or loss.
Orders for exchanges accepted prior to the close of regular trading on the
New York Stock Exchange on any day the Trust is open for business will be
executed at the respective net asset values determined as of the close of
business that day. Orders for exchanges received after the close of regular
trading on the New York Stock Exchange on any business day will be executed at
the respective net asset values determined at the close of the next business
day.
An excessive number of exchanges may be disadvantageous to the Trust.
Therefore, the Trust, in addition to its right to reject any exchange, reserves
the right to adopt a policy of terminating the exchange privilege of any
shareholder who makes more than a specified number of exchanges in a 12 month
period or in any calendar year. For example, the Trust currently limits the
number of "round trip" exchanges an investor may make. An investor makes a
"round trip" exchange when the investor purchases shares of a particular Fund or
Portfolio, subsequently exchanges those shares for shares of a different Fund or
Portfolio and then exchanges back into the originally purchased Fund or
Portfolio. The Trust has the right to refuse any exchange for any investor who
completes (by making the exchange back into the shares of the originally
purchased Fund or Portfolio) more than six round trip exchanges in any twelve-
month period. Although the Trust has no current intention of terminating or
modifying the exchange privilege other than as set forth in the preceding
sentence, it reserves the right to do so as described in the Prospectuses.
Redemptions of Fund shares may be suspended when trading on the New York
Stock Exchange is restricted or during an emergency which makes it impracticable
for the Funds or Portfolios to dispose of their securities or to determine
fairly the value of their net assets, or during any other period as permitted by
the Securities and Exchange Commission for the protection of investors. Under
these and other unusual circumstances, the Trust may suspend redemptions or
postpone payments for more than seven days, as permitted by law.
-67-
<PAGE>
The Trust is committed to paying in cash all requests for redemptions by
any shareholder of record of the Funds and Portfolios, limited in amount with
respect to each shareholder during any 90-day period to the lesser of (i)
$250,000, or (ii) 1% of the net asset value of the Trust at the beginning of
such period. Although the Trust will normally redeem all shares for cash, it may
redeem amounts in excess of the lesser of (i) or (ii) above by payment in kind
of securities held by the particular Fund or Portfolio. When shares are
redeemed in kind, the redeeming shareholder should expect to incur transaction
costs upon the disposition of the securities received in the distribution.
Due to the relatively high cost of maintaining smaller accounts, the Trust
reserves the right to redeem shares in any account for their then-current value
(which will be promptly paid to the investor) if at any time, due to shareholder
redemption, the shares in the account do not have a value of at least a
specified amount, the minimums of which are set forth in the applicable
Prospectus or in the Guide. An investor will be notified that the value of the
account is less than the minimum and allowed at least 30 days to bring the value
of the account up to at least the specified amount before the redemption is
processed. The Trust's Agreement and Declaration of Trust, as amended and
restated (the "Declaration of Trust"), also authorizes the Trust to redeem
shares under certain other circumstances as may be specified by the Board of
Trustees. The Funds and Portfolios may also charge periodic account fees for
accounts that fall below minimum balances as described in the Prospectuses.
FUND REIMBURSEMENT FEES
Investors in Institutional Class and Administrative Class shares of the
Structured Emerging Markets and Tax-Efficient Structured Emerging Markets Funds
are subject to a fee (a "Fund Reimbursement Fee"), both at the time of
purchase and at the time of redemption, equal to 1.00% of the net asset value of
the shares purchased or redeemed. Fund Reimbursement Fees are deducted
automatically from the amount invested or the amount to be received in
connection with a redemption; the fees are not paid separately. Fund
Reimbursement Fees are paid to and retained by the Funds to defray certain costs
described below and no portion of such fees are paid to or retained by the
Adviser, the Distributor or the Sub-Adviser. Fund Reimbursement Fees are not
sales loads or contingent deferred sales charges. Reinvestment of dividends and
capital gains distributions paid to shareholders by the Funds are not subject to
Fund Reimbursement Fees, but redemptions of shares acquired by such
reinvestments are subject to Fund Reimbursement Fees.
The purpose of Fund Reimbursement Fees is to defray the costs associated
with investing the proceeds of the sale of shares to investors (in the case of
purchases) or the costs associated with the sale of portfolio securities to
satisfy redemption requests (in the case of redemptions), thus insulating
existing shareholders from such costs. The amount of a Fund Reimbursement Fee
represents the Sub-Adviser's estimate of the costs reasonably anticipated to be
incurred by the Funds in connection with the purchase or sale of portfolio
securities, including international stocks, associated with an investor's
purchase or redemption proceeds. These costs include brokerage costs, market
impact costs (i.e., the increase in market prices which may result when a Fund
purchases or sells thinly traded stocks), and the effect of "bid/asked"
spreads in international markets. Transaction costs incurred when purchasing or
selling stocks of companies in foreign countries, and particularly emerging
market countries, may be significantly higher than those in more developed
countries. This is due, in part, to less competition among brokers,
underutilization of technology on the part of foreign exchanges and brokers, the
lack of less expensive investment options (such as derivative instruments) and
lower levels of liquidity in foreign and underdeveloped markets.
On July 1, 1998, the Structured Emerging Markets and Tax-Efficient
Structured Emerging Markets Funds commenced investment operations immediately
following a transaction (the "Parametric Transaction") in which each Fund
issued Institutional Class shares to unit holders of the Parametric Portfolio
Associates Emerging Markets Trust, a separate account managed by Parametric (the
"EM Trust"), in exchange for the EM Trust's assets. The EM Trust's unit
holders were divided into two categories: participants who pay taxes ("Taxable
Participants") and participants that are non-taxable entities ("Non-Taxable
Participants" and, together with the Taxable Participants, the
"Participants"). Assets in the EM Trust equal in value to the value of the
Taxable Participants' participation in the EM Trust were transferred to the Tax-
Efficient Structured Emerging Markets Fund in exchange for Institutional
-68-
<PAGE>
Class shares of that Fund. Assets in the EM Trust equal in value to the value of
the Non-Taxable Participants' participation in the EM Trust were transferred to
the Structured Emerging Markets Fund in exchange for Institutional Class shares
of that Fund. The Participants' interests in the EM Trust were then terminated
and Institutional Class shares of the Tax-Efficient Structured Emerging Markets
Fund were distributed to the Taxable Participants and Institutional Class shares
of the Structured Emerging Markets Fund were distributed to the Non-Taxable
Participants, in each case in proportion to each Participant's interest in the
EM Trust. After the completion of the Parametric Transaction, the portfolio
securities which were owned by the EM Trust became portfolio securities of the
Funds (allocated to the Funds on a substantially pro-rata basis), to be held or
sold as Parametric deems appropriate.
Portfolio securities transferred to the Funds pursuant to the Parametric
Transaction will have the same tax basis as they had when held by the EM Trust.
Such securities have "built-in" capital gains if their market value at the
time of the Parametric Transaction was greater than their tax basis (other
securities may have "built-in" capital losses for tax purposes if their market
value at the time of the Parametric Transaction was less than their tax basis).
Built-in capital gains realized upon the disposition of these securities will be
distributed to all Fund shareholders who are shareholders of record on the
record date for the distribution, even if such shareholders were not
Participants in the EM Trust prior to the Parametric Transaction. This means
that investors purchasing Fund shares after the date of this Prospectus may be
required to pay taxes on distributions that economically represent a return of a
portion of the amount invested. For further information, see "Taxation--
Distributions" below.
In connection with the Parametric Transaction, the Participants in the EM
Trust will not be subject to Fund Reimbursement Fees with respect to any shares
of these Funds they acquired through June 30, 1998, and will not be subject to
Fund Reimbursement Fees upon the subsequent redemption (including any redemption
in connection with an exchange) of any shares acquired by any such Participant
through June 30, 1998. Such Participants will be subject to such Fund
Reimbursement Fees to the same extent as any other shareholder on any shares of
either Fund acquired (whether by reinvestment of dividends or capital gain
distributions or otherwise) after June 30, 1998.
PORTFOLIO TRANSACTIONS AND BROKERAGE
INVESTMENT DECISIONS AND PORTFOLIO TRANSACTIONS
Investment decisions for the Trust and for the other investment advisory
clients of the Adviser and Sub-Advisers are made with a view to achieving their
respective investment objectives. Investment decisions are the product of many
factors in addition to basic suitability for the particular client involved
(including the Trust). Some securities considered for investment by the Funds
may also be appropriate for other clients served by the Adviser or a Sub-
Adviser. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. If a purchase or sale of securities consistent with the investment
policies of a Fund and one or more of these clients is considered at or about
the same time, transactions in such securities will be allocated among the Fund
and clients in a manner deemed fair and reasonable by the Adviser or Sub-
Adviser. Particularly when investing in less liquid or illiquid securities of
smaller capitalization companies, such allocation may take into account the
asset size of a Fund in determining whether the allocation of an investment is
suitable. As a result, larger Funds may become more concentrated in more liquid
securities than smaller Funds or private accounts of the Adviser or a Sub-
Adviser pursuing a small capitalization investment strategy, which could
adversely affect performance. The Adviser or a Sub-Adviser may aggregate orders
for the Funds with simultaneous transactions entered into on behalf of its other
clients so long as price and transaction expenses are averaged either for the
portfolio transaction or for that day. Likewise, a particular security may be
bought for one or more clients when one or more clients are selling the
security. In some instances, one client may sell a particular security to
another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged as to price and
allocated between such clients in a manner which in the Adviser's or the Sub-
Adviser's opinion is equitable to each and in accordance with the amount being
purchased or sold by
-69-
<PAGE>
each. There may be circumstances when purchases or sales of portfolio securities
for one or more clients will have an adverse effect on other clients.
BROKERAGE AND RESEARCH SERVICES
There is generally no stated commission in the case of fixed-income
securities, which are traded in the over-the-counter markets, but the price paid
by the Trust usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Trust includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. Transactions on
U.S. stock exchanges and other agency transactions involve the payment by the
Trust 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.
Transactions in foreign securities generally involve the payment of fixed
brokerage commissions, which are generally higher than those in the United
States.
The Adviser and/or each Sub-Adviser places orders for the purchase and sale
of portfolio securities, options and futures contracts and buys and sells such
securities, options and futures for the Trust through a substantial number of
brokers and dealers. In so doing, the Adviser or Sub-Adviser uses its best
efforts to obtain for the Trust 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, the Adviser or Sub-Adviser, having in mind the Trust's best
interests, considers all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the transaction 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. Because the Portfolios invest
exclusively in Institutional Class shares of Underlying PIMCO Funds, they
generally do not pay brokerage commissions and related costs, but do indirectly
bear a proportionate share of these costs incurred by the Underlying PIMCO Funds
in which they invest.
For the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997,
the following amounts of brokerage commissions were paid by the Funds and
Portfolios:
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
FUND 6/30/99 6/30/98 6/30/97
----------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Equity Income Fund $ 370,906 $ 239,458 $ 161,012
Value Fund 590,816 437,002 203,403
Small-Cap Value Fund 973,236 810,211 146,551
Capital Appreciation Fund 2,099,694 1,384,393 889,931
Mid-Cap Fund/(1)/ 1,648,830 1,115,609 634,436
Micro-Cap Fund/(1)/ 381,825 237,969 315,009
Small-Cap Fund/(1)/ 149,013 71,734 113,103
Enhanced Equity Fund 34,926 61,193 196,460
Emerging Markets Fund/(1)/ 94,539 238,241 591,312
International Developed Fund/(1)/ 266,609 326,193 498,041
Balanced Fund/(1)/ 108,337 91,788 197,598
Select Growth Fund/(1)/ 154,017 219,194 114,173
Growth & Income Fund 53,303 44,404 31,940
Renaissance Fund* 4,009,076 2,539,296 717,040
Growth Fund* 4,502,200 4,154,740 2,632,126
Target Fund* 3,661,375 5,577,623 2,584,198
Opportunity Fund* 1,778,867 1,345,809 1,187,818
Innovation Fund* 782,662 412,457 224,529
International Fund* 566,950 785,827 748,412
International Growth Fund** 77,095 26,179 N/A
Precious Metals Fund*/(1)/ 105,266 98,635 81,251
Tax Exempt Fund*/(1)/ N/A N/A 0
Value 25 Fund/(1)/ 15,802 N/A N/A
Tax-Efficient Equity Fund 28,136 N/A N/A
Structured Emerging Markets Fund 85,087 N/A N/A
Tax-Efficient Structured Emerging Markets Fund 153,831 N/A N/A
Mega-Cap Fund N/A N/A N/A
Global Innovation Fund N/A N/A N/A
NFJ Value Fund N/A N/A N/A
NFJ Equity Income Fund N/A N/A N/A
NFJ Value 25 Fund N/A N/A N/A
60/40 Portfolio 1,646 N/A N/A
70/30 Portfolio 348 N/A N/A
90/10 Portfolio 65 N/A N/A
----------- ----------- -----------
TOTAL $22,684,457 $20,217,955 $12,268,343
-------------
</TABLE>
* Amounts for the year ending June 30, 1997 are for the period 1/18/97 through
6/30/97.
** Amounts for the year ended June 30, 1998 are for the period from 12/31/97
through 6/30/98.
(1) Please see the section captioned "The Trust" in this Statement of Additional
Information for information about these Funds.
-70-
<PAGE>
For the fiscal period ended January 17, 1997 and the fiscal year ended
September 30, 1996, the following amounts of brokerage commissions were paid by
the predecessors of the Funds listed below (each of which was a series of PAF
during such periods and reorganized as a Fund of the Trust on January 17, 1997):
<TABLE>
<CAPTION>
10/1/96 YEAR
TO ENDED
FUND 1/17/97 9/30/96
--------------------------- ---------- -----------
<S> <C> <C>
Renaissance Fund $ 363,501 $ 993,617
Growth Fund 1,064,573 2,985,777
Target Fund 1,375,601 3,080,238
Opportunity Fund 505,221 1,757,263
Innovation Fund 105,556 228,473
International Fund 393,808 1,530,476
Precious Metals Fund/(1)/ 53,096 79,838
Tax Exempt Fund/(1)/ 0 0
---------- -----------
TOTAL $3,861,356 $10,655,682
</TABLE>
(1) Please see the section captioned "The Trust" in this Statement of
Additional Information for information about these Funds.
The Adviser or, pursuant to the portfolio management agreements, a Sub-
Adviser, places orders for the purchase and sale of portfolio investments for a
Fund's accounts with brokers or dealers selected by it in its discretion. In
effecting purchases and sales of portfolio securities for the accounts of the
Funds, the Adviser and the Sub-Advisers will seek the best price and execution
of the Funds' orders. In doing so, a Fund may pay higher commission rates than
the lowest available when the Adviser or Sub-Adviser believes it is reasonable
to do so in light of the value of the brokerage and research services provided
by the broker effecting the transaction, as discussed below. The Adviser and
Sub-Advisers also may consider sales of shares of the Trust as a factor in the
selection of broker-dealers to execute portfolio transactions for the Trust.
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 services from broker-dealers which
-71-
<PAGE>
execute portfolio transactions for the clients of such advisers. Consistent with
this practice, the Adviser and Sub-Advisers receive research services from many
broker-dealers with which the Adviser and Sub-Advisers place the Trust's
portfolio transactions. These services, which in some cases may 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 the Adviser and Sub-Advisers in advising various of
their clients (including the Trust), although not all of these services are
necessarily useful and of value in managing the Trust. The advisory fees paid by
the Trust are not reduced because the Adviser and Sub-Advisers receive such
services.
In reliance on the "safe harbor" provided by Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the Adviser and
Sub-Advisers may cause the Trust to pay broker-dealers which provide them with
"brokerage and research services" (as defined in the 1934 Act) an amount of
commission for effecting a securities transaction for the Trust in excess of the
commission which another broker-dealer would have charged for effecting that
transaction.
Consistent with the Rules of the NASD and subject to seeking the most
favorable price and execution available and such other policies as the Trustees
may determine, the Adviser or Sub-Advisers may also consider sales of shares of
the Trust as a factor in the selection of broker-dealers to execute portfolio
transactions for the Trust.
The Adviser or a Sub-Adviser may place orders for the purchase and sale of
exchange-listed portfolio securities with a broker-dealer that is an affiliate
of the Adviser or Sub-Adviser where, in the judgment of the Adviser or Sub-
Adviser, such firm will be able to obtain a price and execution at least as
favorable as other qualified broker-dealers.
Pursuant to rules of the SEC, a broker-dealer that is an affiliate of the
Adviser or a Sub-Adviser may receive and retain compensation for effecting
portfolio transactions for a Fund on a national securities exchange of which the
broker-dealer is a member if the transaction is "executed" on the floor of the
exchange by another broker which is not an "associated person" of the affiliated
broker-dealer, and if there is in effect a written contract between the Adviser
or Sub-Adviser and the Trust expressly permitting the affiliated broker-dealer
to receive and retain such compensation.
SEC rules further require that commissions paid to such an affiliated
broker-dealer, the Adviser, or Sub-Adviser by a Fund on exchange transactions
not exceed "usual and customary brokerage commissions." The rules define "usual
and customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time."
PORTFOLIO TURNOVER
A change in the securities held by a Fund is known as "portfolio
turnover." With the exception of the Tax-Efficient Structured Emerging Markets
and Tax-Efficient Equity Funds (which may attempt to minimize portfolio turnover
as a tax-efficient management strategy), the Sub-Advisers manage the Funds
without regard generally to restrictions on portfolio turnover. The use of
futures contracts and other derivative instruments with relatively short
maturities may tend to exaggerate the portfolio turnover rate for some of the
Funds. Trading in fixed income securities does not generally involve the payment
of brokerage commissions, but does involve indirect transaction costs. The use
of futures contracts may involve the payment of commissions to futures
commission merchants. High portfolio turnover (e.g., greater than 100%)
involves correspondingly greater expenses to a Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestments in other securities. The higher the rate of
portfolio turnover of a Fund, the higher these transaction costs borne by the
Fund generally will be. Such sales may result in realization of taxable capital
gains (including short-term capital gains which are generally taxed to
shareholders at ordinary income tax rates). To the extent
-72-
<PAGE>
portfolio turnover results in the realization of net short-term capital gains,
such gains are generally taxed to shareholders at ordinary income tax rates. See
"Taxation."
The portfolio turnover rate of a Fund or Portfolio is calculated by
dividing (a) the lesser of purchases or sales of portfolio securities for the
particular fiscal year by (b) the monthly average of the value of the portfolio
securities owned by the Fund or Portfolio during the particular fiscal year. In
calculating the rate of portfolio turnover, there is excluded from both (a) and
(b) all securities, including options, whose maturities or expiration dates at
the time of acquisition were one year or less. Proceeds from short sales and
assets used to cover short positions undertaken are included in the amounts of
securities sold and purchased, respectively, during the year.
Because the Adviser does not expect to reallocate the Portfolio's assets
among the Underlying Funds on a frequent basis, the portfolio turnover rates for
the Portfolios are expected to be modest (i.e., less than 25%) in comparison to
most mutual funds. However, the Portfolios indirectly bear the expenses
associated with the portfolio turnover of the Underlying Funds, a number of
which have high (i.e., greater than 100%) portfolio turnover rates.
Portfolio turnover rates for each Fund for which financial highlights are
available are provided under "Financial Highlights" in the applicable
Prospectus. In connection with the change in Sub-Advisers of the Equity Income,
Value, Growth, Target, Opportunity, Innovation, Renaissance, Select Growth,
Growth & Income and International Growth Funds, these Funds may experience
increased turnover due to the differences, if any, between the portfolio
management strategies of PIMCO Equity Advisors and the particular Fund's
previous Sub-Adviser. See "Management of the Trust--Portfolio Management
Agreements."
NET ASSET VALUE
As indicated in the Prospectuses under the heading "How Fund Shares are
Priced," the net asset value ("NAV") of a class of a Fund's or Portfolio's
shares is determined by dividing the total value of a Fund's or Portfolio's
portfolio investments and other assets attributable to that class, less any
liabilities, by the total number of shares outstanding of that class.
For purposes of calculating the NAV, portfolio securities and other assets
for which market quotes are available are stated at market value. Market value
is generally determined on the basis of last reported sales prices, or if no
sales are reported, based on quotes obtained from a quotation reporting system,
established market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily available may be
valued, pursuant to guidelines established by the Board of Trustees, with
reference to other securities or indices. Short-term investments having a
maturity of 60 days or less are generally valued at amortized cost. Exchange
traded options, futures and options on futures are valued at the settlement
price determined by the exchange. Other securities for which market quotes are
not readily available are valued at fair value as determined in good faith by
the Board of Trustees or persons acting at their direction.
Investments initially valued in currencies other than the U.S. dollar are
converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of a Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of securities traded in
markets outside the United States or denominated in currencies other than the
U.S. dollar may be affected significantly on a day that the New York Stock
Exchange is closed and an investor is not able to purchase, redeem or exchange
shares. In particular, calculation of the NAV of the International Growth,
Structured Emerging Markets, Tax-Efficient Structured Emerging Markets, Global
Innovation and International Funds may not take place contemporaneously with the
determination of the prices of foreign securities used in NAV calculations.
Fund and Portfolio shares are valued at the close of regular trading
(normally 4:00 p.m., Eastern time) (the "NYSE Close") on each day that the New
York Stock Exchange is open. For purposes of calculating the NAV, the Funds
normally use pricing data for domestic equity securities received shortly after
the NYSE Close
-73-
<PAGE>
and do not normally take into account trading, clearances or settlements that
take place after the NYSE Close. Domestic fixed income and foreign securities
are normally priced using data reflecting the earlier closing of the principal
markets for those securities. Information that becomes known to the Funds or
their agents after the NAV has been calculated on a particular day will not
generally be used to retroactively adjust the price of the security or the NAV
determined earlier that day.
In unusual circumstances, instead of valuing securities in the usual
manner, the Funds may value securities at fair value or estimate their value as
determined in good faith by the Board of Trustees, pursuant to procedures
approved by the Board of Trustees. Fair valuation may also be used by the Board
of Trustees if extraordinary events occur after the close of the relevant market
but prior to the NYSE Close.
Each Fund's liabilities are allocated among its classes. The total of such
liabilities allocated to a class plus that class's distribution and/or servicing
fees and any other expenses specially allocated to that class are then deducted
from the class's proportionate interest in the Fund's assets, and the resulting
amount for each class is divided by the number of shares of that class
outstanding to produce the class's "net asset value" per share. Under certain
circumstances, the per share net asset value of classes of shares of the Funds
and Portfolios with higher service and/or distribution fees applicable to such
shares may be lower than the per share net asset value of the classes of shares
with lower or no service and/or distribution fees as a result of the higher
daily expense accruals of the service and/or distribution fees applicable to
such classes. Generally, for Funds and Portfolios that pay income dividends,
those dividends are expected to differ over time by approximately the amount of
the expense accrual differential between a particular Fund's or Portfolio's
classes.
The Trust expects that the holidays upon which the Exchange will be closed
are as follows: New Year's Day, Martin Luther King, Jr. Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
TAXATION
The following discussion is general in nature and should not be regarded as
an exhaustive presentation of all possible tax ramifications. All shareholders
should consult a qualified tax adviser regarding their investment in a Fund or
Portfolio.
Each Fund and Portfolio intends to qualify annually and elect to be treated
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). To qualify as a regulated investment
company, each Fund and Portfolio generally must, among other things, (a) derive
in each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of stock, securities or foreign currencies, or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies ("Qualifying Income Test") and (b) diversify its holdings so that, at
the end of each quarter of the taxable year, (i) at least 50% of the value of
the Fund's or Portfolio's total assets is represented by cash, cash items
(including receivables), U.S. Government securities, securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of the Fund's or Portfolio's total assets and 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its total assets is invested in the securities (other than U.S.
Government securities or the securities of other regulated investment companies)
of any one issuer or of two or more issuers which the Fund or Portfolio controls
and which are engaged in the same, similar or related trades or businesses. In
order to qualify for the special tax treatment accorded regulated investment
companies, each Fund and Portfolio must distribute each taxable year an amount
at least equal to the sum of (i) 90% of its investment company taxable income
(which includes dividends, interest and net short-term capital gains in excess
of any net long-term capital losses) and (ii) 90% of its tax exempt interest,
net of expenses allocable thereto. For purposes of the Qualifying Income Test,
the Treasury Department is authorized to promulgate regulations under which
gains from foreign currencies (and options, futures, and forward contracts on
-74-
<PAGE>
foreign currency) would not constitute qualifying income if such gains are not
directly related to investing in securities (or options and futures with respect
to stock or securities). To date, such regulations have not been issued.
In years when a Fund or Portfolio distributes amounts in excess of its
earnings and profits, such distributions may be treated in part as a return of
capital. A return of capital is not taxable to a shareholder and has the effect
of reducing the shareholder's basis in the shares.
DISTRIBUTIONS
As a regulated investment company, each Fund and Portfolio generally will
not be subject to U.S. federal income tax on its investment company taxable
income and net capital gains (that is, any net long-term capital gains in excess
of the sum of net short-term capital losses and capital loss carryovers from
prior years) designated by the Fund or Portfolio as capital gain dividends, if
any, that it distributes to shareholders on a timely basis. Each Fund and
Portfolio intends to distribute to its shareholders, at least annually,
substantially all of its investment company taxable income and any net capital
gains. In addition, amounts not distributed by a Fund or Portfolio on a timely
basis in accordance with a calendar year distribution requirement are subject to
a nondeductible 4% excise tax. To avoid the tax, each Fund and Portfolio must
distribute during each calendar year an amount at least equal to the sum of (1)
98% of its ordinary income (not taking into account any capital gains or losses)
for the calendar year, (2) 98% of its capital gains in excess of its capital
losses (and adjusted for certain ordinary losses) for the twelve month period
ending on October 31 of the calendar year, and (3) all ordinary income and
capital gains for previous years that were not distributed during such years. A
distribution will be treated as paid on December 31 of the calendar year if it
is declared by a Fund or Portfolio in October, November or December of that year
to shareholders of record on a date in such a month and paid by the Fund or
Portfolio during January of the following year.
Shareholders subject to U.S. federal income tax will be subject to tax on
dividends received from a Fund or Portfolio, regardless of whether received in
cash or reinvested in additional shares. Such distributions will be taxable to
shareholders (other than those not subject to federal income tax) in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received. To avoid application of the
excise tax, each Fund and Portfolio intends to make its distributions in
accordance with the calendar year distribution requirement.
Distributions received by tax-exempt shareholders generally will not be
subject to federal income tax to the extent permitted under applicable tax law.
All shareholders must treat dividends, other than capital gain dividends,
exempt-interest dividends, if any, and dividends that represent a return of
capital to shareholders, as ordinary income. In particular, distributions
derived from short-term gains will be treated as ordinary income. Dividends, if
any, derived from interest on certain U.S. Government securities may be exempt
from state and local taxes, although interest on mortgage-backed U.S. Government
securities is generally not so exempt. While the Tax-Efficient Equity and Tax-
Efficient Structured Emerging Markets Funds seek to minimize taxable
distributions, the Funds may be expected to earn and distribute taxable income
and may also be expected to realize and distribute capital gains from time to
time.
Dividends designated by a Fund as capital gain dividends derived from the
Fund's net capital gains are taxable to shareholders as long-term capital gains
(generally subject to a 20% tax rate for shareholders who are individuals)
except as provided by an applicable tax exemption. Any distributions that are
not from a Fund's net investment income or net capital gains may be
characterized as a return of capital to shareholders or, in some cases, as
capital gain. Each Fund will advise shareholders annually of the amount and
nature of the dividends paid to them.
The tax status of each Fund and Portfolio and the distributions which it
may make are summarized in the Prospectuses under the captions "Fund
Distributions" and "Tax Consequences." All dividends and distributions of
-75-
<PAGE>
a Fund or Portfolio, whether received in shares or cash, are taxable and must be
reported on each shareholder's federal income tax return.
A portion of the dividends paid by Funds that invest in stock of U.S.
corporations may qualify for the deduction for dividends received by
corporations (subject generally to a 46-day holding period requirement).
Dividends paid by the other Funds generally are not expected to qualify for the
deduction for dividends received by corporations.
Distributions of net capital gains, if any, designated as capital gain
dividends, are taxable as long-term capital gains (generally subject to a 20%
tax rate for shareholders who are individuals), regardless of how long the
shareholder has held a Fund's or Portfolio's shares and are not eligible for the
dividends received deduction. Any distributions that are not from a Fund's
investment company taxable income or net capital gains may be characterized as a
return of capital to shareholders or, in some cases, as capital gain. The tax
treatment of dividends and distributions will be the same whether a shareholder
reinvests them in additional shares or elects to receive them in cash. A
Portfolio will not be able to offset gains realized by one Fund in which such
Portfolio invests against losses realized by another Fund in which such
Portfolio invests. A Portfolio's use of the fund-of-funds structure could
therefore affect the amount, timing and character of distributions to
shareholders. In addition, Funds that invest in other investment companies will
not be able to offset gains realized by one underlying investment company
against losses realized by another underlying investment company. A Fund's
investment in other investment companies could therefore affect the amount,
timing and character of distributions to shareholders of such Fund.
Taxable shareholders should note that the timing of their investment or
redemptions could have undesirable tax consequences. Dividends and
distributions on shares of a Fund or Portfolio are generally subject to federal
income tax as described herein to the extent they do not exceed the Fund's or
Portfolio's realized income and gains, even though such dividends and
distributions may economically represent a return of a particular shareholder's
investment. Such distributions are likely to occur in respect of shares
purchased at a time when the net asset value of a Fund or Portfolio reflects
gains that are either unrealized, or realized but not distributed. Such
realized gains may be required to be distributed even when a Fund's or
Portfolio's net asset value also reflects unrealized losses.
SALES OF SHARES
Upon the disposition of shares of a Fund or Portfolio (whether by
redemption, sale or exchange), a shareholder will realize a gain or loss. Such
gain or loss will be capital gain or loss if the shares are capital assets in
the shareholder's hands, and will be long-term or short-term generally depending
upon the shareholder's holding period for the shares. Long-term capital gains
will generally be taxed at a federal income tax rate of 20% to shareholders who
are individuals. Any loss realized on a disposition will be disallowed to the
extent the shares disposed of are replaced within a period of 61 days beginning
30 days before and ending 30 days after the shares are disposed of. In such a
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on a disposition of shares
held by the shareholder for six months or less will be treated as a long-term
capital loss to the extent of any distributions of capital gain dividends
received by the shareholder with respect to such shares. Depending on a
Portfolio's percentage ownership in an Underlying PIMCO Fund both before and
after a redemption, a Portfolio's redemption of shares of such Fund may cause
the Portfolio to be treated as not receiving capital gain income on the amount
by which the distribution exceeds the Portfolio's tax basis in the shares of the
Underlying PIMCO Fund, but instead to be treated as receiving a dividend taxable
as ordinary income on the full amount of the distribution. This could cause
shareholders of a Portfolio to recognize higher amounts of ordinary income than
if the shareholders had held the shares of the Underlying PIMCO Funds directly.
-76-
<PAGE>
BACKUP WITHHOLDING
A Fund or Portfolio may be required to withhold 31% of all taxable
distributions payable to shareholders who fail to provide the Fund or Portfolio
with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Corporate shareholders and certain
other shareholders specified in the Code generally are exempt from such backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against the shareholder's U.S. federal tax liability.
OPTIONS, FUTURES, FORWARD CONTRACTS AND SWAP AGREEMENTS
To the extent such investments are permissible for a Fund, the Fund's
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles and foreign currencies will be subject to special tax rules
(including mark-to-market, constructive sale, straddle, wash sale and short sale
rules), the effect of which may be to accelerate income to the Fund, defer
losses to the Fund, cause adjustments in the holding periods of the Fund's
securities, convert long-term capital gains into short-term capital gains and
convert short-term capital losses into long-term capital losses. These rules
could therefore affect the amount, timing and character of distributions to
shareholders, including the Portfolios.
PASSIVE FOREIGN INVESTMENT COMPANIES
Investment by a Fund in certain "passive foreign investment companies"
could subject the Fund to a U.S. federal income tax (including interest charges)
on distributions received from the company or on proceeds received from the
disposition of shares in the company, which tax cannot be eliminated by making
distributions to Fund shareholders. However, the Fund may elect to treat a
passive foreign investment company as a "qualified electing fund," in which case
the Fund will be required to include its share of the company's income and net
capital gains annually, regardless of whether it receives any distribution from
the company. The Fund also may make an election to mark the gains (and to a
limited extent losses) in such holdings "to the market" as though it had sold
and repurchased its holdings in those PFICs on the last day of the Fund's
taxable year. Such gains and losses are treated as ordinary income and loss.
The QEF and mark-to-market elections may have the effect of accelerating the
recognition of income (without the receipt of cash) and increase the amount
required to be distributed for the Fund to avoid taxation. Making either of
these elections therefore may require a Fund to liquidate other investments
(including when it is not advantageous to do so) to meet its distribution
requirement, which also may accelerate the recognition of gain and affect a
Fund's total return.
FOREIGN CURRENCY TRANSACTIONS
A Fund's transactions in foreign currencies, foreign currency-denominated
debt securities and certain foreign currency options, futures contracts and
forward contracts (and similar instruments) may give rise to ordinary income or
loss to the extent such income or loss results from fluctuations in the value of
the foreign currency concerned.
FOREIGN TAXATION
Income received by the Funds from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. In addition, the Adviser and each Sub-Adviser intends to manage the
Funds with the intention of minimizing foreign taxation in cases where it is
deemed prudent to do so. If more than 50% of the value of a Fund's total assets
at the close of its taxable year consists of securities of foreign corporations,
such Fund will be eligible to elect to "pass-through" to the Fund's shareholders
the amount of eligible foreign income and similar taxes paid by the Fund. If
this election is made, a shareholder generally subject to tax will be required
to include in gross income (in addition to taxable dividends actually received)
his pro rata share of the foreign taxes
-77-
<PAGE>
paid by the Fund, and may be entitled either to deduct (as an itemized
deduction) his or her pro rata share of foreign taxes in computing his taxable
income or to use it as a foreign tax credit against his or her U.S. federal
income tax liability, subject to certain limitations. In particular,
shareholders must hold their shares (without protection from risk of loss) on
the ex-dividend date and for at least 15 more days during the 30-day period
surrounding the ex-dividend date to be eligible to claim a foreign tax credit
with respect to a gain dividend. No deduction for foreign taxes may be claimed
by a shareholder who does not itemize deductions. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will "pass-through" for that year.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his or her total
foreign source taxable income. For this purpose, if the pass-through election
is made, the source of the electing Fund's income will flow through to
shareholders of the Trust. With respect to such Funds, gains from the sale of
securities will be treated as derived from U.S. sources and certain currency
fluctuation gains, including fluctuation gains from foreign currency-denominated
debt securities, receiv ables and payables will be treated as ordinary income
derived from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source passive income, and to certain other types of
income. Shareholders may be unable to claim a credit for the full amount of
their proportionate share of the foreign taxes paid by the Fund. The foreign tax
credit can be used to offset only 90% of the revised alternative minimum tax
imposed on corporations and individuals and foreign taxes generally are not
deductible in computing alternative minimum taxable income. Although a
Portfolio may itself be entitled to a deduction for such taxes paid by an
Underlying PIMCO Fund in which the Portfolio invests, the Portfolio will not be
able to pass any such credit or deduction through to its own shareholders. In
addition, a Fund which invests in other investment companies may not be able to
pass any such credit or deduction for taxes paid by the underlying investment
company through to its own shareholders.
ORIGINAL ISSUE DISCOUNT AND PAY-IN-KIND SECURITIES
Current federal tax law requires the holder of a U.S. Treasury or other
fixed income zero coupon security to accrue as income each year a portion of the
discount at which the security was purchased, even though the holder receives no
interest payment in cash on the security during the year. In addition, pay-in-
kind securities will give rise to income which is required to be distributed and
is taxable even though the Fund holding the security receives no interest
payment in cash on the security during the year.
Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Fund may be treated as
debt securities that are issued originally at a discount. Generally, the amount
of the original issue discount ("OID") is treated as interest income and is
included in income over the term of the debt security, even though payment of
that amount is not received until a later time, usually when the debt security
matures. A portion of the OID includable in income with respect to certain
high-yield corporate debt securities (including certain pay-in-kind securities)
may be treated as a dividend for U.S. federal income tax purposes.
Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Fund in the secondary
market may be treated as having market discount. Generally, any gain recognized
on the disposition of, and any partial payment of principal on, a debt security
having market discount is treated as ordinary income to the extent the gain, or
principal payment, does not exceed the "accrued market discount" on such debt
security. Market discount generally accrues in equal daily installments. A
Fund may make one or more of the elections applicable to debt securities having
market discount, which could affect the character and timing of recognition of
income.
Some debt securities (with a fixed maturity date of one year or less from
the date of issuance) that may be acquired by a Fund may be treated as having
acquisition discount, or OID in the case of certain types of debt securities.
Generally, the Fund will be required to include the acquisition discount, or
OID, in income over the term of the debt security, even though payment of that
amount is not received until a later time, usually when the
-78-
<PAGE>
debt security matures. The Fund may make one or more of the elections applicable
to debt securities having acquisition discount, or OID, which could affect the
character and timing of recognition of income.
Each Fund that holds the foregoing kinds of securities may be required to
pay out as an income distribution each year an amount which is greater than the
total amount of cash interest the Fund actually received. Such distributions may
be made from the cash assets of the Fund or by liquidation of portfolio
securities, if necessary. The Fund may realize gains or losses from such
liquidations. In the event the Fund realizes net capital gains from such
transactions, its shareholders may receive a larger capital gain distribution,
if any, than they would in the absence of such transactions.
OTHER TAXATION
Pursuant to Treasury Department regulations, certain expenses of
nonpublicly offered regulated investment companies, including advisory fees, may
not be deductible by certain shareholders, generally including individuals and
entities that compute their taxable income in the same manner as an individual
(thus, for example, a qualified pension plan is not subject to this rule). Such
a shareholder's pro rata portion of the affected expenses will be treated as an
additional dividend to the shareholder and will be deductible by such
shareholder, subject to the 2% "floor" on miscellaneous itemized deductions and
other limitations on itemized deductions set forth in the Code. A regulated
investment company generally will be classified as nonpublicly offered unless it
either has 500 shareholders at all times during a taxable year or continuously
offers shares pursuant to a public offering.
Distributions also may be subject to additional state, local and foreign
taxes, depending on each shareholder's particular situation. Under the laws of
various states, distributions of investment company taxable income generally are
taxable to shareholders even though all or a substantial portion of such
distributions may be derived from interest on certain federal obligations which,
if the interest were received directly by a resident of such state, would be
exempt from such state's income tax ("qualifying federal obligations").
However, some states may exempt all or a portion of such distributions from
income tax to the extent the shareholder is able to establish that the
distribution is derived from qualifying federal obligations. Moreover, for
state income tax purposes, interest on some federal obligations generally is not
exempt from taxation, whether received directly by a shareholder or through
distributions of investment company taxable income (for example, interest on
FNMA Certificates and GNMA Certificates). Each Fund and Portfolio will provide
information annually to shareholders indicating the amount and percentage of its
dividend distribution which is attributable to interest on federal obligations,
and will indicate to the extent possible from what types of federal obligations
such dividends are derived. The Trust is organized as a Massachusetts business
trust. Under current law, so long as each Fund and Portfolio qualifies for the
federal income tax treatment described above, it is believed that neither the
Trust nor any Fund or Portfolio will be liable for any income or franchise tax
imposed by Massachusetts. Shareholders, in any event, are advised to consult
their own tax advisers with respect to the particular tax consequences to them
of an investment in a Fund or Portfolio.
OTHER INFORMATION
CAPITALIZATION
The Trust is a Massachusetts business trust established under an Agreement
and Declaration of Trust as amended and restated on January 14, 1997. The
capitalization of the Trust consists solely of an unlimited number of shares of
beneficial interest. The Board of Trustees may establish additional series
(with different investment objectives and fundamental policies) at any time in
the future. Establishment and offering of additional series will not alter the
rights of the Trust's shareholders. When issued, shares are fully paid, non-
assessable, redeemable and freely transferable. Shares do not have preemptive
rights or subscription rights. In liquidation of a Fund or Portfolio, each
shareholder is entitled to receive his pro rata share of the net assets of that
Fund or Portfolio.
-79-
<PAGE>
Shares begin earning dividends on Fund shares the day after the Trust
receives the shareholder's purchase payment. Net investment income from
interest and dividends, if any, will be declared and paid monthly to
shareholders of record by the 30/70 Portfolio. Net investment income from
interest and dividends, if any, will be declared and paid quarterly to
shareholders of record by the NFJ Equity Income, NFJ Value, Equity Income, Value
and Renaissance Funds and the 60/40 Portfolio. Net investment income from
interest and dividends, if any, will be declared and paid at least annually to
shareholders of record by the other Funds and the 90/10 Portfolio. Any net
capital gains from the sale of portfolio securities will be distributed no less
frequently than once annually. Net short-term capital gains may be paid more
frequently. Dividend and capital gain distributions of a Fund or Portfolio will
be reinvested in additional shares of that Fund or Portfolio unless the
shareholder elects to have them paid in cash.
Under Massachusetts law, shareholders could, under certain circumstances,
be held liable for the obligations of the Trust. However, the Second Amended and
Restated Agreement and Declaration of Trust (the "Declaration of Trust") of
the Trust disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the Trustees.
The Declaration of Trust also provides for indemnification out of a Fund's or
Portfolio's property for all loss and expense of any shareholder of that Fund or
Portfolio held liable on account of being or having been a shareholder. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which such disclaimer is inoperative or
the Fund or Portfolio of which he or she is or was a shareholder is unable to
meet its obligations, and thus should be considered remote.
PERFORMANCE INFORMATION
From time to time the Trust may make available certain information about
the performance of some or all classes of shares of some or all of the Funds or
Portfolios. Information about a Fund's or Portfolio's performance is based on
that Fund's (or its predecessor's) or Portfolio's record to a recent date and is
not intended to indicate future performance.
The total return of the classes of shares of the Funds and Portfolios may
be included in advertisements or other written material. When a Fund's or
Portfolio's total return is advertised, it will be calculated for the past year,
the past five years, and the past ten years (or if the Fund or Portfolio has
been offered for a period shorter than one, five or ten years, that period will
be substituted) since the establishment of the Fund (or its predecessor series
of PIMCO Advisors Funds) or Portfolio, as more fully described below. For
periods prior to the initial offering date of the advertised class of shares,
total return presentations for such class will be based on the historical
performance of an older class of the Fund (if any) restated, as necessary, to
reflect any different sales charges and/or operating expenses (such as different
administrative fees and/or 12b-1/servicing fee charges) associated with the
newer class. In certain cases, such a restatement will result in performance
which is higher than if the performance of the older class were not restated to
reflect the different operating expenses of the newer class. In such cases, the
Trust's advertisements will also, to the extent appropriate, show the lower
performance figure reflecting the actual operating expenses incurred by the
older class for periods prior to the initial offering date of the newer class.
Total return for each class is measured by comparing the value of an investment
in the Fund or Portfolio at the beginning of the relevant period to the
redemption value of the investment in the Fund or Portfolio at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions at net asset value). Total return may be advertised using
alternative methods that reflect all elements of return, but that may be
adjusted to reflect the cumulative impact of alternative fee and expense
structures.
The Funds and Portfolios may also provide current distribution information
to their shareholders in shareholder reports or other shareholder
communications, or in certain types of sales literature provided to prospective
investors. Current distribution information for a particular class of a Fund or
Portfolio will be based on distributions for a specified period (i.e., total
dividends from net investment income), divided by the relevant class net asset
value per share on the last day of the period and annualized. The rate of
current distributions does not reflect deductions for unrealized losses from
transactions in derivative instruments such as options and futures, which may
reduce total return. Current distribution rates differ from standardized yield
rates in that they represent
-80-
<PAGE>
what a class of a Fund or Portfolio has declared and paid to shareholders as of
the end of a specified period rather than the Fund's or Portfolio's actual net
investment income for that period.
Performance information is computed separately for each class of a Fund or
Portfolio. Each Fund and Portfolio may from time to time include the total
return of each class of its shares in advertisements or in information furnished
to present or prospective shareholders. The Equity Income, Value and
Renaissance Funds and the 60/40 and 30/70 Portfolios may from time to time
include the yield and total return of each class of their shares in
advertisements or information furnished to present or prospective shareholders.
Each Fund and Portfolio may from time to time include in advertisements the
total return of each class (and yield of each class in the case of the Equity
Income, Value and Renaissance Funds and the 60/40 and 30/70 Portfolios) and the
ranking of those performance figures relative to such figures for groups of
mutual funds categorized by Lipper Analytical Services as having the same
investment objectives. Information provided to any newspaper or similar listing
of the Fund's or Portfolio's net asset values and public offering prices will
separately present each class of shares. The Funds and Portfolios also may
compute current distribution rates and use this information in their
Prospectuses and Statement of Additional Information, in reports to current
shareholders, or in certain types of sales literature provided to prospective
investors.
Investment results of the Funds and Portfolios will fluctuate over time,
and any representation of the Funds' or Portfolio's total return or yield for
any prior period should not be considered as a representation of what an
investor's total return or yield may be in any future period. The Trust's Annual
and Semi-Annual Reports contain additional performance information for the Funds
and Portfolios and are available upon request, without charge, by calling the
telephone numbers listed on the cover of this Statement of Additional
Information.
CALCULATION OF YIELD
Quotations of yield for certain of the Funds and Portfolios will be based
on all investment income per share (as defined by the SEC) during a particular
30-day (or one month) period (including dividends and interest), less expenses
accrued during the period ("net investment income"), and are computed by
dividing net investment income by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)/6/ -1]
---
cd
where a = dividends and interest earned during the period,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
For the one month period ended September 30, 1999, the yields of the Equity
Income, Value and Renaissance Funds and the 60/40 and 30/70 Portfolios were as
follows (Class D shares were not offered during the period listed):
-81-
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL ADMINISTRATIVE
FUND CLASS CLASS CLASS A CLASS B CLASS C CLASS D
-------------------- -------------- --------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Fund 3.37% 3.12% 2.80% 2.19% 2.19% 2.96%
Value Fund 2.37% 2.12% 1.87% 1.20% 1.20% 1.95%
Renaissance Fund 0.38% 0.11% -0.05% -0.84% -0.84% -0.06%
60/40 Portfolio 4.53% 4.28% 3.75% 3.20% 3.20% N/A
30/70 Portfolio 5.39% 5.14% 4.62% 4.08% 4.08% N/A
</TABLE>
The yield of a Fund or Portfolio will vary from time to time depending upon
market conditions, the composition of its portfolio and operating expenses of
the Trust allocated to the Fund or Portfolio or its classes of shares. These
factors, possible differences in the methods used in calculating yield should be
considered when comparing a Fund's or Portfolio's yield to yields published for
other investment companies and other investment vehicles. Yield should also be
considered relative to changes in the value of a Fund's or Portfolio's various
classes of shares. These yields do not take into account any applicable
contingent deferred sales charges.
The Trust, in its advertisements, may refer to pending legislation from
time to time and the possible impact of such legislation on investors,
investment strategy and related matters. This would include any tax proposals
and their effect on marginal tax rates and tax-equivalent yields. At any time
in the future, yields and total return may be higher or lower than past yields
and there can be no assurance that any historical results will continue.
CALCULATION OF TOTAL RETURN
Quotations of average annual total return for a Fund or Portfolio, or a
class of shares thereof, will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in the Fund, Portfolio or
class over periods of one, five, and ten years (up to the life of the Fund or
Portfolio), calculated pursuant to the following formula: P (1 + T)/n/ = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). Except as
noted below, all total return figures reflect the deduction of a proportionate
share of Fund, Portfolio or class expenses on an annual basis, and assume that
(i) the maximum sales load (or other charges deducted from payments) is deducted
from the initial $1,000 payment and that the maximum contingent deferred sales
charge, if any, is deducted at the times, in the amounts, and under the terms
disclosed in the Prospectuses and (ii) all dividends and distributions are
reinvested when paid. Quotations of total return may also be shown for other
periods. The Funds and Portfolios may also, with respect to certain periods of
less than one year, provide total return information for that period that is
unannualized. Under applicable regulations, any such information is required to
be accompanied by standardized total return information.
THE PERFORMANCE RESULTS SHOWN ON THE SUBSEQUENT PAGES FOR THE EQUITY
INCOME, VALUE, RENAISSANCE, GROWTH, SELECT GROWTH, TARGET, OPPORTUNITY, GROWTH &
INCOME, INNOVATION AND INTERNATIONAL GROWTH FUNDS REFLECTS THE RESULTS OF
OPERATIONS UNDER THESE FUNDS' PREVIOUS SUB-ADVISER. THESE FUNDS WOULD NOT
NECESSARILY HAVE ACHIEVED THE RESULTS SHOWN UNDER THEIR CURRENT INVESTMENT
MANAGEMENT ARRANGEMENTS. THE MEGA-CAP, GLOBAL INNOVATION, NFJ EQUITY INCOME,
NFJ VALUE AND NFJ VALUE 25 FUNDS DID NOT OFFER SHARES DURING THE PERIODS ENDED
JUNE 30, 1999, AND THEREFORE NO PERFORMANCE INFORMATION IS SHOWN FOR THESE
FUNDS.
-82-
<PAGE>
The table below sets forth the average annual total return of certain
classes of shares of the following Funds for periods ended June 30, 1999. For
periods prior to the "Inception Date" of a particular class of a Fund's shares,
total return presentations for the class are based on the historical performance
of Institutional Class shares of the Fund (the oldest class) adjusted, as
necessary, to reflect any current sales charges (including any contingent
deferred sales charges) associated with the newer class and any different
operating expenses associated with the newer class, such as 12b-1 distribution
and servicing fees (which are not paid by the Institutional Class) and
administrative fee charges.
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999*
<TABLE>
<CAPTION>
SINCE
INCEPTION INCEPTION INCEPTION
FUND CLASS** 1 YEAR 5 YEARS OF FUND DATE OF DATE OF
(ANNUALIZED) FUND CLASS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Institutional 12.56% 21.02% 16.89% 03/08/91 03/08/91
Administrative 12.31% 20.72% 16.61% 11/30/94
Class A 6.08% 19.21% 15.66% 1/20/97
Class B 6.50% 19.48% 15.71% 1/20/97
Class C 10.31% 19.66% 15.58% 1/20/97
Class D 12.21% 20.56% 16.45% 4/8/98
----------------------------------------------------------------------------------------
Value Institutional 12.30% 21.23% 17.09% 12/30/91 12/30/91
Administrative 11.91% 20.93% 16.79% 8/21/97
Class A 5.78% 19.40% 15.75% 1/13/97
Class B 6.17% 19.67% 15.83% 1/13/97
Class C 10.06% 19.87% 15.77% 1/13/97
Class D 12.00% 20.79% 16.65% 4/8/98
----------------------------------------------------------------------------------------
Small-Cap Value Institutional -5.11% 15.78% 14.43% 10/1/91 10/1/91
Administrative -5.40% 15.48% 14.14% 11/1/95
Class A -10.70% 14.03% 13.15% 1/20/97
Class B -10.75% 14.24% 13.22% 1/20/97
Class C -7.12% 14.48% 13.14% 1/20/97
----------------------------------------------------------------------------------------
Capital Institutional 10.57% 24.49% 19.51% 3/8/91 3/8/91
Appreciation Administrative 10.30% 24.18% 19.22% 7/31/96
Class A 4.08% 22.61% 18.23% 1/20/97
Class B 4.39% 22.94% 18.30% 1/20/97
Class C 8.34% 23.10% 18.17% 1/20/97
Class D 10.17% 24.00% 19.04% 4/8/98
----------------------------------------------------------------------------------------
Mid-Cap Institutional 0.33% 20.56% 16.91% 8/26/91 8/26/91
Administrative 0.31% 20.29% 16.63% 11/30/94
Class A -5.63% 18.73% 15.60% 1/13/97
Class B -5.58% 18.99% 15.67% 1/13/97
Class C -1.76% 19.20% 15.59% 1/13/97
Class D 0.25% 20.16% 16.49% 4/8/98
----------------------------------------------------------------------------------------
Micro-Cap Institutional -12.66% 19.33% 17.61% 6/25/93 6/25/93
Administrative -12.90% 19.03% 17.32% 4/1/96
----------------------------------------------------------------------------------------
Enhanced Equity Institutional 17.95% 25.44% 17.73% 2/11/91 2/11/91
Administrative 17.63% 25.10% 17.42% 8/21/97
----------------------------------------------------------------------------------------
International Institutional 28.62% N/A 44.97% 12/31/97 12/31/97
Growth
----------------------------------------------------------------------------------------
Select Institutional 24.27% 27.09% 27.06% 12/28/94 12/28/94
Growth*** Administrative 23.75% 26.69% 26.67% 5/31/95
----------------------------------------------------------------------------------------
</TABLE>
-83-
<PAGE>
<TABLE>
<CAPTION>
SINCE
INCEPTION INCEPTION INCEPTION
FUND CLASS** 1 YEAR 5 YEARS OF FUND DATE OF DATE OF
(ANNUALIZED) FUND CLASS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth & Institutional 51.81% 28.77% 28.72% 12/28/94 12/28/94
Income*** Administrative 51.32% 28.48% 28.41% 5/31/95
----------------------------------------------------------------------------------------
Structured Institutional 29.21% N/A 29.21% 6/30/98 6/30/98
Emerging
Markets
----------------------------------------------------------------------------------------
Tax-Efficient Institutional 33.39% N/A 33.39% 6/30/98 6/30/98
Structured
Emerging
Markets
----------------------------------------------------------------------------------------
</TABLE>
* The information for the Select Growth and Growth & Income Funds is for
periods ending December 31, 1999. Average annual total return presentations
for a particular class of shares assume payment of the current maximum sales
charge (if any) applicable to that class at the time of purchase and assume
that the maximum CDSC (if any) for Class A, Class B and Class C shares was
deducted at the times, in the amounts, and under the terms discussed in the
Class A, B and C Prospectus.
** For all Funds listed above, Class A, Class B, Class C, Class D and
Administrative Class total return presentations for periods prior to the
Inception Date of a particular class reflect the prior performance of
Institutional Class shares of the Fund (the oldest class) adjusted to
reflect the actual sales charges (none in the case of Class D and the
Administrative Class) of the newer class. The adjusted performance also
reflects the higher Fund operating expenses applicable to Class A, Class B,
Class C, Class D and Administrative Class shares. These include (i) 12b-1
distribution and servicing fees, which are not paid by the Institutional
Class and are paid by Class B and Class C (at a maximum rate of 1.00% per
annum) and Class A and the Administrative Class (at a maximum rate of .25%
per annum), and may be paid by Class D (at a maximum rate of .25% per annum)
and (ii) administrative fee charges associated with Class A, Class B and
Class C shares (a maximum differential of .15% per annum) and Class D shares
(a maximum differential of 0.40% per annum).
*** The investment objective and policies of the Select Growth Fund were changed
effective April 1, 2000. The investment objective and policies of the Growth
& Income Fund were changed effective August 1, 2000. Performance information
for prior periods does not necessarily represent results that would have
been obtained had the current investment objective and policies been in
effect for all periods.
The following table sets forth the average annual total return of certain
classes of shares of the following Funds (each of which, except for the Tax-
Efficient Equity Fund, was a series of PAF prior to its reorganization as a Fund
of the Trust on January 17, 1997) for periods ended June 30, 1999 (December 31,
1999 for the Target Fund). Accordingly, "Inception Date of Fund" for these Funds
refers to the inception date of the PAF predecessor series. Since Class C shares
were offered since the inception of each PAF series, total return presentations
for periods prior to the Inception Date of the other classes (with the exception
of Class D, Institutional Class and Administrative Class shares of the
Innovation Fund, Institutional Class and Administrative Class shares of the
Target Fund and Administrative Class shares of the Tax-Efficient Equity Fund)
are based on the historical performance of Class C shares, adjusted to reflect
any current sales charges (including any contingent deferred sales charges)
associated with the newer class and any different operating expenses associated
with the newer class, such as 12b-1 distribution and servicing fees and
administrative fee charges. As described below, performance presentations for
periods prior to the Inception Date of Class D, Institutional Class and
Administrative Class shares of the Innovation Fund, Institutional Class and
Administrative Class shares of the Target Fund and Administrative Class Shares
of the Tax-Efficient Equity Fund are based on the historical performance of
Class A shares.
-84-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999*
<TABLE>
<CAPTION>
SINCE INCEPTION INCEPTION DATE
INCEPTION DATE OF FUND OF CLASS
FUND CLASS*** 1 YEAR 5 YEARS 10 YEARS OF FUND
(ANNUALIZED)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Renaissance** Class A 3.90% 21.45% 14.26%(#) 14.22%(#) 4/18/88 2/1/91
Class B 4.22% 21.71% 14.31% 14.26% 5/22/95
Class C 8.17% 21.91% 14.05% 13.94% 4/18/88
Class D 10.01% 22.84%(#) 14.91%(#) 14.80%(#) 4/8/98
Institutional 10.24%(#) 23.28%(#) 15.34%(#) 15.24%(#) 12/30/97
Administrative 9.91%(#) 22.96%(#) 15.05%(#) 14.94%(#) 8/31/98
-----------------------------------------------------------------------------------------------------------------------
Growth Class A 12.13% 22.65% 17.13%(#) 18.35%(#) 2/24/84 10/26/90
Class B 12.72% 22.93% 17.19% 18.39% 5/23/95
Class C 16.76% 23.11% 16.93% 17.91% 2/24/84
Class D 18.64%(#) 24.02%(#) 17.80%(#) 18.79%(#) 4/1/99
Institutional 19.11%(#) 24.51%(#) 18.27%(#) 19.26%(#) 4/1/99
Administrative 18.86% 24.21% 17.98% 18.97%
-----------------------------------------------------------------------------------------------------------------------
Target Class A 57.10% 28.28% N/A 24.13% 12/17/92 12/17/92
Class B 60.05% 28.62% N/A 24.19% 5/22/95
Class C 64.05% 28.77% N/A 24.19% 12/17/92
Class D 66.25% 29.74% N/A 25.13% 6/1/00
Institutional 66.50%(#) 30.31%(#) N/A 25.66% 4/1/99
Administrative 66.28%(#) 30.02%(#) N/A 25.37% 4/1/99
-----------------------------------------------------------------------------------------------------------------------
Opportunity Class A -1.74% 14.50% 17.18%(#) 17.08%(#) 2/24/84 12/17/90
Class B -0.95% 14.72% 17.25% 17.11% 4/1/99
Class C 2.36% 14.94% 16.99% 16.65% 2/24/84
Institutional 4.42%(#) 16.27%(#) 18.33%(#) 17.99%(#) 4/1/99
Administrative 4.21%(#) 15.99%(#) 18.04%(#) 17.70%(#) 4/1/99
-----------------------------------------------------------------------------------------------------------------------
Innovation Class A 52.48% N/A N/A 36.53% 12/22/94 12/22/94
Class B 55.17% N/A N/A 37.07% 5/22/95
Class C 59.20% N/A N/A 37.21% 12/22/94
Class D 61.62% N/A N/A 38.30% 4/8/98
Institutional 61.96%(#) N/A N/A 38.79%(#) 3/5/99
Administrative 61.60%(#) N/A N/A 38.45%(#) Not yet offered
-----------------------------------------------------------------------------------------------------------------------
International** Class A -9.57% 3.73% 6.00%(#) 6.86%(#) 8/25/86 2/1/91
Class B -9.42% 3.79% 6.06% 6.90% 5/22/95
Class C -6.01% 4.10% 5.80% 6.53% 8/25/86
Institutional -3.89%(#) 5.34%(#) 7.04%(#) 7.77%(#) 9/30/98
Administrative -4.43%(#) 5.01%(#) 6.74%(#) 7.48%(#) 9/30/98
-----------------------------------------------------------------------------------------------------------------------
Tax-Efficient Class A N/A 9.55% 7/10/98 7/10/98
Equity Class B N/A 10.10% 7/10/98
Class C N/A 14.10% 7/10/98
Class D N/A 15.90% 7/10/98
Institutional N/A 16.35%(#) 7/2/99
Administrative N/A 16.10% 9/30/98
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
* The information for the Target Fund is for the periods ended December 31,
1999. Average annual total return presentations for a particular class of
shares assume payment of the current maximum sales charge (if any)
applicable to that class at the time of purchase and assume that the maximum
CDSC (if any) for Class A, B and C shares was deducted at the times, in the
amounts, and under the terms discussed in the Class A, B and C Prospectus.
** The investment objective and policies of the Renaissance Fund, Select Growth
Fund and International Fund were changed effective February 1, 1992, March
31, 2000 and September 1, 1992, respectively. Performance information for
prior periods does not necessarily represent results that would have been
obtained had the current investment objective and policies been in effect
for all periods.
-85-
<PAGE>
*** Class A, Class B, Class D, Institutional Class and Administrative Class
total return presentations for the Funds listed for periods prior to the
Inception Date of the particular class of a Fund (with the exception of
Class D, Institutional Class and Administrative Class shares of the
Innovation Fund, Class D, Institutional Class and Administrative Class
shares of the Target Fund and Administrative Class shares of the Tax-
Efficient Equity Fund) reflect the prior performance of Class C shares of
the Fund, adjusted to reflect the actual sales charges (or no sales charges
in the case of Class D, Institutional Class and Administrative Class shares)
of the newer class. The adjusted performance also reflects any different
operating expenses associated with the newer class. These include (i) 12b-1
distribution and servicing fees, which are paid by Class C and Class B (at a
maximum rate of 1.00% per annum) and Class A and the Administrative Class
(at a maximum rate of .25% per annum), may be paid by Class D (at a maximum
rate of .25% per annum), and are not paid by the Institutional Class and
(ii) administrative fee charges, which are lower than Class C charges for
the Institutional and Administrative Classes (a maximum differential of .15%
per annum) and higher for Class D (a maximum differential of .25% per
annum). (Administrative fee charges are the same for Class A, B and C
shares.) Performance presentations for periods prior to the Inception Date
of Class D, Institutional Class and Administrative Class shares of the
Innovation Fund, Class D, Institutional Class and Administrative Class
shares of the Target Fund and Administrative Class Shares of the Tax-
Efficient Equity Fund are based on the historical performance of Class A
shares (which were also offered since inception of the Fund), adjusted in
the manner described above.
Note also that, prior to January 17, 1997, Class A, Class B and Class C shares
of the former PAF series were subject to a variable level of expenses for such
services as legal, audit, custody and transfer agency services. As described in
the Class A, B and C Prospectus, for periods subsequent to January 17, 1997,
Class A, Class B and Class C shares of the Trust are subject to a fee structure
which essentially fixes these expenses (along with other administrative
expenses) under a single administrative fee based on the average daily net
assets of a Fund attributable to Class A, Class B and Class C shares. Under the
current fee structure, the Growth Fund, Target Fund, Opportunity Fund and
International Fund are expected to have higher total Fund operating expenses
than their predecessors had under the fee structure for PAF (prior to January
17, 1997). All other things being equal, such higher expenses have an adverse
effect on total return performance for these Funds after January 17, 1997.
(#) WHERE NOTED, THE METHOD OF ADJUSTMENT USED IN THE TABLE ABOVE FOR PERIODS
PRIOR TO THE INCEPTION DATE OF THE NOTED CLASSES OF THE NOTED FUNDS RESULTED IN
PERFORMANCE FOR THE PERIOD SHOWN WHICH IS HIGHER THAN IF THE HISTORICAL CLASS C
OR CLASS A SHARE PERFORMANCE (I.E., THE OLDER CLASS USED FOR PRIOR PERIODS) WERE
NOT ADJUSTED TO REFLECT THE LOWER OPERATING EXPENSES OF THE NEWER CLASS. The
following table shows the lower performance figures that would be obtained if
the performance for newer classes with lower operating expenses were calculated
by essentially tacking to such classes' actual performance the actual
performance (with adjustment for actual sales charges) of the older Class of
shares, with their higher operating expenses, for periods prior to the initial
offering date of the newer class (i.e., the total return presentations below are
based, for periods prior to the Inception Date of the noted classes, on the
historical performance of the older class adjusted to reflect the current sales
charges (if any) associated with the newer class, but not reflecting lower
operating expenses associated with the newer class, such as lower administrative
fee charges and/or 12b-1 distribution and servicing fee charges).
-86-
<PAGE>
TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999*
(with no adjustment for operating expenses of the noted
classes for periods prior to their inception dates)
<TABLE>
<CAPTION>
SINCE INCEPTION
OF FUND
FUND CLASS 1 YEAR 5 YEARS 10 YEARS (ANNUALIZED)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Renaissance Class A -- -- 14.12% 14.01%
Class D -- 22.16% 14.16% 14.04%
Institutional 10.24% 22.30% 14.23% 14.10%
Administrative 9.72% 22.05% 14.11% 14.00%
-------------------------------------------------------------------------------
Growth Class A -- -- 17.01% 17.97%
Institutional 18.10% 23.18% 16.96% 17.93%
Administrative 18.06% 23.17% 16.96% 17.93%
-------------------------------------------------------------------------------
Target Institutional 66.34% 29.87% -- 25.22%
Administrative 66.22% 29.85% -- 25.21%
-------------------------------------------------------------------------------
Opportunity Class A -- -- 17.06% 16.69%
Institutional 3.50% 15.01% 17.02% 16.67%
Administrative 3.50% 15.01% 17.02% 16.67%
-------------------------------------------------------------------------------
Innovation Institutional 61.53% -- -- 38.28%
-------------------------------------------------------------------------------
International Class A -- -- 5.87% 6.59%
Institutional 4.20% 4.31% 5.90% 6.61%
Administrative 4.66% 4.21% 5.85% 6.57%
-------------------------------------------------------------------------------
Tax-Efficient Institutional -- -- -- 15.90%
Equity
-------------------------------------------------------------------------------
</TABLE>
* The information for the Target Fund is for the periods ended December 31,
1999.
The following table sets forth the average annual total return of each
class of shares of the Portfolios for periods ended June 30, 1999. Total return
presentations for periods prior to the Inception Date of Institutional Class and
Administrative Class shares are based on the historical performance of Class A
shares (which were offered since the inception of the Portfolios), adjusted to
reflect that there are no sales charges associated with Institutional Class and
Administrative Class shares and any different operating expenses associated with
these newer classes, such as lower 12b-1 distribution and servicing fees and/or
administrative fee charges.
-87-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999*
<TABLE>
<CAPTION>
SINCE INCEPTION INCEPTION INCEPTION
OF PORTFOLIO DATE OF DATE OF CLASS
PORTFOLIO CLASS** 1 YEAR (ANNUALIZED) PORTFOLIO
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
90/10 Portfolio Class A N/A 16.91% 9/30/98 9/30/98
Class B N/A 18.03% 9/30/98
Class C N/A 22.03% 9/30/98
Institutional N/A 24.17%(#) 3/1/99
Administrative N/A 23.94%(#) 3/1/99
---------------------------------------------------------------------------------------
60/40 Portfolio Class A N/A 9.17% 9/30/98 9/30/98
Class B N/A 9.83% 9/30/98
Class C N/A 13.82% 9/30/98
Institutional N/A 15.95%(#) 3/1/99
Administrative N/A 15.74%(#) 3/1/99
---------------------------------------------------------------------------------------
30/70 Portfolio Class A N/A 2.11% 9/30/98 9/30/98
Class B N/A 1.29% 9/30/98
Class C N/A 5.27% 9/30/98
Institutional N/A 7.32%(#) 3/1/99
Administrative N/A 7.12%(#) 3/1/99
---------------------------------------------------------------------------------------
</TABLE>
* Average annual total return presentations for a particular class of shares
assume payment of the current maximum sales charge (if any) applicable to
that class at the time of purchase and assume that the maximum CDSC (if any)
for Class A, B and C shares was deducted at the times, in the amounts, and
under the terms discussed in the Retail Portfolio Prospectus.
** Institutional Class and Administrative Class total return presentations for
the Portfolios for periods prior to the Inception Date of these classes
reflect the prior performance of Class A shares, adjusted to reflect that
there are no sales charges associated with Institutional Class and
Administrative Class shares. The adjusted performance also reflects any
different operating expenses associated with the newer classes. These
include (i) 12b-1 distribution and servicing fees, which are the same for
Class A and the Administrative Class but are not paid by the Institutional
Class and (ii) administrative fee charges, which are lower than Class A
charges for the Institutional and Administrative Classes (a differential of
.30% per annum).
(#) WHERE NOTED, THE METHOD OF ADJUSTMENT USED IN THE TABLE ABOVE FOR PERIODS
PRIOR TO THE INCEPTION DATE OF THE NOTED CLASSES OF THE PORTFOLIOS RESULTED IN
PERFORMANCE FOR THE PERIOD SHOWN WHICH IS HIGHER THAN IF THE HISTORICAL CLASS A
SHARE PERFORMANCE WERE NOT ADJUSTED TO REFLECT THE LOWER OPERATING EXPENSES OF
THE NEWER CLASS. The following table shows the lower performance figures that
would be obtained if the performance for the newer classes with lower operating
expenses were calculated by essentially tacking to such classes' actual
performance the actual performance (with adjustment for actual sales charges) of
Class A shares, with their higher operating expenses, for periods prior to the
initial offering date of the newer class (i.e., the total return presentations
below are based, for periods prior to the Inception Date of the noted classes,
on the historical performance of Class A shares adjusted to reflect the current
sales charges (if any) associated with the newer class, but not reflecting lower
operating expenses associated with the newer class, such as lower administrative
fee charges and/or 12b-1 distribution and servicing fee charges).
-88-
<PAGE>
TOTAL RETURN FOR PERIODS ENDED JUNE 30, 1999
(with no adjustment for operating expenses of the noted
classes for periods prior to their inception dates)
<TABLE>
<CAPTION>
SINCE INCEPTION
OF PORTFOLIO
PORTFOLIO CLASS** 1 YEAR (ANNUALIZED)
----------------------------------------------------------
<S> <C> <C> <C>
90/10 Portfolio Institutional N/A 23.89%
Administrative N/A 23.79%
----------------------------------------------------------
60/40 Portfolio Institutional N/A 15.11%
Administrative N/A 15.08%
----------------------------------------------------------
30/70 Portfolio Institutional N/A 7.08%
Administrative N/A 6.99%
----------------------------------------------------------
</TABLE>
Performance information for a Fund or Portfolio may also be compared to:
(i) the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, the Morgan Stanley Capital International EAFE (Europe,
Australia, Far East) Index, the Morgan Stanley Capital International Emerging
Markets Free Index, the International Finance Corporation Emerging Markets
Index, the Baring Emerging Markets Index, or other unmanaged indexes that
measure performance of a pertinent group of securities; (ii) other groups of
mutual funds tracked by Lipper Analytical Services ("Lipper"), a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment in the Funds. Unmanaged indexes
(i.e., other than Lipper) generally do not reflect deductions for administrative
and management costs or expenses. The Adviser and any of the Sub-Advisers may
also report to shareholders or to the public in advertisements concerning the
performance of the Adviser and/or the Sub-Advisers as advisers to clients other
than the Trust, and on the comparative performance or standing of the Adviser
and/or the Sub-Advisers in relation to other money managers. Such comparative
information may be compiled or provided by independent ratings services or by
news organizations. Any performance information, whether related to the Funds
or Portfolios, the Adviser or the Sub-Advisers, should be considered in light of
the Funds' or Portfolios' investment objectives and policies, characteristics
and quality, and the market conditions during the time period indicated, and
should not be considered to be representative of what may be achieved in the
future.
The total return of each class (and yield of each class in the case of the
Renaissance Fund and the 30/70 Portfolio) may be used to compare the performance
of each class of a Fund's or Portfolio's shares against certain widely
acknowledged standards or indexes for stock and bond market performance, against
interest rates on certificates of deposit and bank accounts, against the yield
on money market funds, against the cost of living (inflation) index, and against
hypothetical results based on a fixed rate of return.
The S&P's Composite Index of 500 Stocks (the "S&P 500") is a market value-
weighted and unmanaged index showing the changes in the aggregate market value
of 500 stocks relative to the base period 1941-43. The S&P 500 is composed
almost entirely of common stocks of companies listed on the New York Stock
Exchange, although the common stocks of a few companies listed on the American
Stock Exchange or traded over-the-counter are included. The 500 companies
represented include 380 industrial, 10 transportation, 39 utilities and 71
financial services concerns. The S&P 500 represents about 73% of the market
value of all issues traded on the New York Stock Exchange.
The S&P's 400 Mid-Cap Index (the "S&P 400 Mid-Cap Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of 400 stocks of companies whose capitalization range from $100 million to
over $5 billion and which represent a wide range of industries. As of February
26, 1999, approximately 25% of the 400 stocks were stocks listed on the National
Association of
-89-
<PAGE>
Securities Dealers Automated Quotations ("NASDAQ") system, 73% were stocks
listed on the New York Stock Exchange and 2% were stocks listed on the American
Stock Exchange. The Standard & Poor's Midcap 400 Index P/TR consists of 400
domestic stocks chosen for market size (median market capitalization of $1.54
billion), liquidity and industry group representation. It is a market value-
weighted index (stock price times shares outstanding), with each stock affecting
the index in proportion to its market value. The index is comprised of
industrials, utilities, financials and transportation, in size order.
The NASDAQ-OTC Price Index (the "NASDAQ Index") is a market value-weighted
and unmanaged index showing the changes in the aggregate market value of
approximately 3,500 stocks relative to the base measure of 100.00 on February 5,
1971. The NASDAQ Index is composed entirely of common stocks of companies
traded over-the-counter and often through the NASDAQ system. Only those over-
the-counter stocks having only one market maker or traded on exchanges are
excluded.
The Russell 2000 Small Stock Index is an unmanaged index of the 2000
smallest securities in the Russell 3000 Index, representing approximately 7% of
the Russell 3000 Index. The Russell 3000 Index represents approximately 98% of
the U.S. equity market by capitalization. The Russell 1000 Index is composed of
the 1,000 largest companies in the Russell 3000 Index. The Russell 1000 Index
represents the universe of stocks from which most active money managers
typically select. This large cap index is highly correlated with the S&P 500.
The Russell 1000 Value Index contains stocks from the Russell 1000 Index with a
less-than-average growth orientation. It represents the universe of stocks from
which value managers typically select.
The Lehman Government Bond Index (the "SL Government Index") is a measure
of the market value of all public obligations of the U.S. Treasury; all
publicly-issued debt of all agencies of the U.S. Government and all quasi-
federal corporations; and all corporate debt guaranteed by the U.S. Government.
Mortgage-backed securities, flower bonds and foreign targeted issues are not
included in the SL Government Index.
The Lehman Government/Corporate Bond Index (the "SL Government/Corporate
Index") is a measure of the market value of approximately 5,000 bonds. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher by an NRSRO.
BanXquote Money Market, a service of Masterfund Inc., provides the average
rate of return paid on 3-month certificates of deposit offered by major banks
and the average rate paid by major banks on bank money market funds. The
Donoghue Organization, Inc., a subsidiary of IBC USA Inc., publishes the Money
Fund Report which lists the 7-day average yield paid on money market funds.
From time to time, the Trust may use, in its advertisements or information
furnished to present or prospective shareholders, data concerning the
performance and ranking of certain countries' stock markets, including
performance and ranking data based on annualized returns over one-, three-,
five- and ten-year periods. The Trust may also use data about the portion of
world equity capitalization represented by U.S. securities. As of December 31,
1998, the U.S. equity market capitalization represented approximately 40% of the
equity market capitalization of all the world's markets. This compares with 52%
in 1980 and 70% in 1972.
From time to time, the Trust may use, in its advertisements and other
information relating to certain of the Funds and Portfolios, data concerning the
performance of stocks relative to that of fixed income investments and relative
to the cost of living over various periods of time. The table below sets forth
the annual returns for each calendar year from 1973 through 1999 (as well as a
cumulative return and average annual return for this period) for the S&P 500 and
Treasury bills (using the formula set forth after the table) as well as the
rates of inflation (based on the Consumer Price Index) during such periods.
-90-
<PAGE>
<TABLE>
<CAPTION>
Consumer Price
Period S&P 500 Treasury Bills Index
----------------------- ------------------ --------------- ---------------
<S> <C> <C> <C>
1973 -14.7 6.9 8.8
1974 -26.5 8.0 12.2
1975 37.2 5.8 7.0
1976 23.8 5.0 4.8
1977 -7.2 5.1 6.8
1978 6.5 7.2 9.0
1979 18.4 10.4 13.3
1980 32.4 11.2 12.4
1981 -4.9 14.7 8.9
1982 21.4 10.5 3.8
1983 22.5 8.8 3.8
1984 6.3 9.9 3.9
1985 32.2 7.7 3.8
1986 18.5 6.1 1.1
1987 5.2 5.5 4.4
1988 16.8 6.3 4.4
1989 31.5 8.4 4.6
1990 -3.2 7.8 6.1
1991 30.5 5.6 3.1
1992 7.7 3.5 2.9
1993 10.1 2.9 2.7
1994 1.3 3.9 2.7
1995 37.4 5.6 2.7
1996 23.1 5.2 3.3
1997 33.4 5.3 1.7
1998 28.6 4.9 1.6
1999 21.0 4.7 2.7
-----------------------------------------------------------------------------
Cumulative Return
1973-1999 3,839.47% 477.8% 264.0%
-----------------------------------------------------------------------------
Average Annual Return
1973-1999 15.18% 7.0% 5.1%
-----------------------------------------------------------------------------
</TABLE>
The average returns for Treasury bills were computed using the following
method. For each month during a period, the Treasury bill having the shortest
remaining maturity (but not less than one month) was selected. (Only the
remaining maturity was considered; the bill's original maturity was not
considered). The return for the selected Treasury bill was computed based on
the price of the bill as of the last trading day of the previous month and the
price on the last trading day of the current month. The price of the bill (P)
at each time (t) is given by:
P\\t\\ = [ 1- rd ]
---
[ 360 ]
where,
r = decimal yield on the bill at time t (the average
of bid and ask quotes); and
d = the number of days to maturity as of time t.
Advertisements and information relating to the Target Fund may use data
comparing the performance of stocks of medium-sized companies to that of other
companies. The following table sets forth the annual returns for each year from
March 1981 (inception of Mid-Cap Index) through December 31, 1999 (as well as a
cumulative return and average annual return for this period) for stocks of
medium-sized companies (based on the Standard & Poor's Mid-Cap Index), stocks
of small companies (based on the Russell 2000 Index) and stocks of larger
companies (based on the S&P 500).
-91-
<PAGE>
<TABLE>
<CAPTION>
Small Mid-Size Large
Period Companies Companies Companies
----------------------- ---------- ---------- ----------
<S> <C> <C> <C>
1981 (2/28 -12/31) 1.8 10.6 -2.5
1982 25.0 22.7 21.4
1983 29.1 26.1 22.5
1984 -7.3 1.2 6.3
1985 31.1 36.0 32.2
1986 5.7 16.2 18.5
1987 -8.8 -2.0 5.2
1988 24.9 20.9 16.8
1989 16.2 35.6 31.5
1990 -19.5 -5.1 -3.2
1991 46.1 50.1 30.5
1992 18.4 11.9 7.7
1993 18.9 14.0 10.1
1994 -1.8 -3.6 1.3
1995 28.4 30.9 37.6
1996 16.5 19.2 22.9
1997 22.8 32.3 33.4
1998 -2.6 19.1 28.6
1999 21.26 14.72 21.04
-----------------------------------------------------------
Cumulative Return
2/28/81-12/31/99 882.79% 2,061.89% 1,978.23%
-----------------------------------------------------------
Average Annual Return
2/28/81-12/31/99 12.9% 17.73% 17.48%
-----------------------------------------------------------
</TABLE>
From time to time, the Trust may use, in its advertisements and other
information, data concerning the average price-to-earnings ("P/E") ratios of
"Value Stocks" and "Growth Stocks." For these purposes, the P/E ratios of Value
Stocks are measured by the P/E ratios of the stocks comprising the Russell 1000
Value Index, and the P/E ratios of Growth Stocks are measured by the P/E ratios
of the stocks comprising the Russell 1000 Growth Index. Both the Russell 1000
Value Index and Russell 1000 Growth Index are unmanaged indexes, and it is not
possible to invest directly in either index. The table below sets forth the
average P/E ratio of Value Stocks and the Average P/E ratio of Growth Stocks for
the period beginning December 31, 1992 and ending March 31, 2000.
<TABLE>
<CAPTION>
Average P/E ratio
-------------------
Period
Ending Growth Stocks Value Stocks
------------------- ------------- ------------
<S> <C> <C>
12/31/92 21.76 21.40
3/31/93 21.59 22.36
6/30/93 20.86 21.41
9/30/93 20.25 21.05
12/31/93 18.33 17.84
3/31/94 18.07 17.69
6/30/94 16.70 16.31
9/30/94 15.98 15.28
12/31/94 15.98 14.97
3/31/95 15.80 14.62
6/30/95 16.50 14.87
9/30/95 17.85 16.17
12/31/95 17.91 15.82
3/31/96 18.24 16.07
6/30/96 18.57 15.93
</TABLE>
-92-
<PAGE>
<TABLE>
<CAPTION>
Average P/E ratio
-------------------
Period
Ending Growth Stocks Value Stocks
------------------- ------------- ------------
<S> <C> <C>
9/30/96 18.88 15.80
12/31/96 20.45 17.03
3/31/97 20.28 16.78
6/30/97 22.85 18.44
9/30/97 23.80 19.60
12/31/97 22.93 19.06
3/31/98 26.46 21.32
6/30/98 26.55 20.69
9/30/98 25.77 19.31
12/31/98 31.31 22.92
3/31/99 39.46 24.33
6/30/99 45.05 25.93
9/30/99 43.93 23.80
12/31/99 52.31 23.60
3/3/00 55.58 22.94
6/30/00 54.43 22.66
</TABLE>
Advertisements and information relating to the Growth Fund may use data
comparing the performance of a hypothetical investment in Growth Stocks, Value
Stocks, "Bonds" and "Savings Accounts." For these purposes, the performance of
an investment in "Bonds" is measured by the Lehman Aggregate Bond Index, an
unmanaged index representative of the U.S. taxable fixed income universe. It is
not possible to invest in this index. The performance of an investment in
"Savings Accounts" is measured by the return on 3-month U.S. Treasury bills.
Similarly, advertisements and information relating to the Renaissance Fund may
use data comparing the performance of a hypothetical investment in "Stocks,"
Bonds and Savings Accounts. For these purposes, the performance of the
investment in "Stocks" is measured by the S&P 500, while the performance of
Bonds and Savings Accounts is measured as discussed above. The table below sets
forth the value at March 31, 2000 of a hypothetical $10,000 investment in
Stocks, Growth Stocks, Value Stocks, Bonds and Savings Accounts made at March
31, 1980.
<TABLE>
<CAPTION>
Asset Category March 31, 2000 Value of $10,000 Investment made at March 31, 1980
------------------ -----------------------------------------------------------------
<S> <C>
Growth Stocks $300,600
Value Stocks $237,924
Stocks $286,384
Bonds $ 75,828
Savings Accounts $ 37,929
</TABLE>
Advertisements and information may compare the average annual total return
of the Growth, Renaissance and Innovation Funds with that of the Lipper Growth
Fund Average, Lipper Equity Income Fund Average and Lipper Science & Technology
Fund Average, respectively. The Innovation Fund may also be compared to the S&P
500. The Lipper Growth Fund Average is a total-return performance average of
funds that are tracked by Lipper, Inc. and have an investment objective of long-
term growth. The Lipper Equity Income Fund Average is a total-return
performance average of funds tracked by Lipper that have an investment objective
of income and growth through investment in stocks. The Lipper Science and
Technology Fund Average is a total-return performance average of funds tracked
by Lipper with an investment objective of capital appreciation through
investment in technology-oriented companies. None of the averages take into
account sales charges. It is not possible to invest directly in the averages.
The average annual total return of the Growth Fund, the Renaissance Fund, the
Innovation Fund, the Lipper Growth Fund Average, the Lipper Equity Income Fund
Average and the Lipper Science and Technology Fund Average are set forth below.
The inception date of the Growth and Opportunity Funds is February 24, 1984.
The inception date of the Innovation Fund is December 27, 1994. The inception
date of the Mid-Cap Fund is August 26, 1991.
-93-
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return
(for periods ending 3/31/00)
--------------------------------------
Fund
1 Year 3 Years 5 Years 10 Years Inception
------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Growth Fund 44.25% 40.61% 30.91% 21.20% 20.56%
Lipper Large-Cap Growth Fund Average 38.08% 36.45% 29.39% 20.07% 17.96%
Renaissance Fund 4.95% 18.71% 20.80% 14.96% 13.79%
Lipper Multi-Cap Value Fund Average 7.97% 12.96% 16.32% 13.40% 13.40%
Innovation Fund 165.41% 89.10% 57.75% -- 56.50%
Lipper Science and Technology 137.75% 68.77% 44.10% -- 43.65%
Fund Average
S&P 500 17.94% 27.40% 26.76% -- 27.58%
Opportunity Fund 101.15% 34.75% 23.80% 24.00% 20.86%
Lipper Small-Cap Growth 93.41% 37.34% 23.03% 20.03% 15.74%
Fund Average
Target Fund 121.55% 50.52% 35.84% -- 29.42%
Lipper Multi-Cap Growth Fund 65.13% 40.24% 30.23% -- 22.60%
Average
Capital Appreciation Fund 32.40% 27.28% `27.11% -- 20.27%
Lipper Muti-Cap Core 25.51% 23.13% 21.96% -- 17.05%
Fund Average
Mid-Cap Fund 53.09% 26.22% 25.39% -- 19.50%
Lipper Mid-Cap Core 25.51% 23.13% 21.96% -- 18.29%
Fund Average
</TABLE>
From time to time, the Trust may use, in its advertisements and other
information, data comparing the average annual total return of "Small-Caps,"
which are stocks represented by the Ibbotson's U.S. Small Company Stock Total
Return Index, and "Large-Caps," which are stocks represented by the Ibbotson's
Large Company Stock Total Return Index. Both indexes are unmanaged indexes, and
it is not possible to invest directly in either index. For example, for the
period from December 31, 1925 through December 31, 1999, the average annual
total return of Small-Caps was 12.6%, and for Large-Caps was 11.3%.
Advertisements and other information and other information relating to the
Funds may list the annual total returns of certain asset classes during
specified years. In such advertisements, the return of "Small Company Stocks"
will be measured by the Russell 2000 Index of small company stocks, the returns
of "Large Company Stocks" will be measured by the S&P 500, and the return of
"Intermediate-Term Government Bonds" will be measured by a one-bond portfolio
with a 5-year maturity as measured by Ibbotson Associates.
Advertisements and other information relating to the Innovation Fund may
include information pertaining to the number of home internet subscriptions and
cellular phone users and sales of personal computers.
The Trust may use, in its advertisements and other information, data
concerning the projected cost of a college education in future years based on
1997/1998 costs of college (using tuition and fees only) and an assumed rate of
increase for such costs. For example, the table below sets forth the projected
cost of four years of college at a public college and a private college assuming
a steady increase in both cases of 3% per year. In presenting this information,
the Trust is making no prediction regarding what will be the actual growth rate
in the cost of a college education, which may be greater or less than 3% per
year and may vary significantly from year to year.
-94-
<PAGE>
The Trust makes no representation that an investment in any of the Funds will
grow at or above the rate of growth of the cost of a college education.
<TABLE>
<CAPTION>
POTENTIAL COLLEGE COST TABLE
Start Public Private Start Public Private
Year College College Year College College
--------- --------- -------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
1997 $13,015 $57,165 2005 $16,487 $72,415
1998 $13,406 $58,880 2006 $16,982 $74,587
1999 $13,808 $60,646 2007 $17,491 $76,825
2000 $14,222 $62,466 2008 $18,016 $79,130
2001 $14,649 $64,340 2009 $18,557 $81,504
2002 $15,088 $66,270 2010 $19,113 $83,949
2003 $15,541 $68,258 2011 $19,687 $86,467
2004 $16,007 $70,306 2012 $20,278 $89,061
</TABLE>
Costs assume a steady increase in the annual cost of college of 3% per year from
a 1996-97 base year amount. Actual rates of increase may be more or less than 3%
and may vary.
In its advertisements and other materials, the Trust may compare the returns
over periods of time of investments in stocks, bonds and treasury bills to each
other and to the general rate of inflation. For example, the average annual
return of each category* during the period from 1974 through 1999 was:
Stocks: 15.2%
Bonds: 9.2%
T-Bills: 6.9%
Inflation: 5.1%
* Returns of unmanaged indexes do not reflect past or future performance of
any of the Funds or Portfolios of PIMCO Funds: Multi-Manager Series.
Stocks are represented by Ibbotson's Large Company Stock Total Return
Index. Bonds are represented by Ibbotson's Long-term Corporate Bond Index.
Treasury bills are represented by Ibbotson's Treasury Bill Index and
Inflation is represented by the Cost of Living Index. These are all
unmanaged indexes, which can not be invested in directly. While Treasury
bills are insured and offer a fixed rate of return, both the principal and
yield of investment securities will fluctuate with changes in market
conditions. Source: Ibbotson, Roger G., and Rex A. Sinquefiled, Stocks,
Bonds, Bill and Inflation (SBBI), 1989, updated in Stocks, Bonds, Bills and
Inflation 2000 Yearbook, Ibbotson Associates, Chicago. All rights reserved.
The Trust may also compare the relative historic returns and range of
returns for an investment in each of common stocks, bonds and treasury bills to
a portfolio that blends all three investments. For example, over the period
from 1980 through 1999, the average annual return of stocks comprising the
Ibbotson's Large Company Stock Total Return Index ranged from -4.9% to 37.4%
while the annual return of a hypothetical portfolio comprised 40% of such common
stocks, 40% of bonds comprising the Ibbotson's Long-term Corporate bond Index
and 20% of Treasury bills comprising the Ibbottson's Treasury Bill Index (a
"mixed portfolio") would have ranged from -1.00% to 28.19% over the same period.
The average annual returns of each investment category* for each of the years
from 1980 through 1999 is set forth in the following table.
-95-
<PAGE>
<TABLE>
<CAPTION>
MIXED
YEAR STOCKS BONDS T-BILLS INFLATION PORTFOLIO
------ ------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1980 32.42% 2.61% 11.24% 12.40% 14.17%
1981 -4.91% -0.96% 14.71% 8.94% 0.59%
1982 21.41% 43.79% 10.54% 3.87% 28.19%
1983 22.51% 4.70% 8.80% 3.80% 12.64%
1984 6.27% 16.39% 9.85% 3.95% 11.03%
1985 32.16% 30.90% 7.72% 3.77% 26.77%
1986 18.47% 19.85% 6.16% 1.13% 16.56%
1987 5.23% -0.27% 5.46% 4.41% 3.08%
1988 16.81% 10.70% 6.35% 4.42% 12.28%
1989 31.49% 16.23% 8.37% 4.65% 20.76%
1990 -3.17% 6.87% 7.52% 6.11% 2.98%
1991 30.55% 19.79% 5.88% 3.06% 21.31%
1992 7.67% 9.39% 3.51% 2.90% 7.53%
1993 10.06% 13.17% 2.89% 2.75% 9.84%
1994 1.31% -5.76% 3.90% 2.67% -1.00%
1995 37.40% 27.20% 5.60% 2.70% 26.90%
1996 23.10% 1.40% 5.20% 3.30% 10.84%
1997 33.40% 12.90% 7.10% 1.70% 19.94%
1998 28.58% 10.76% 4.86% 1.61% 16.70%
1999 21.00% -7.40% 4.70% 2.70% 5.9%
</TABLE>
* Returns of unmanaged indexes do not reflect past or future
performance of any of the Funds or Portfolios of PIMCO Funds: Multi-
Manager Series. Stocks are represented by Ibbotson's Large Company
Stock Total Return Index. Bonds are represented by Ibbotson's Long-
term Corporate Bond Index. Treasury bills are represented by
Ibbotson's Treasury Bill Index and Inflation is represented by the Cost
of Living Index. Treasury bills are all unmanaged indexes, which can
not be invested in directly. While Treasury bills are insured and
offer a fixed rate of return, both the principal and yield of
investment securities will fluctuate with changes in market conditions.
Source: Ibbotson, Roger G., and Rex A. Sinquefiled, Stocks, Bonds,
Bill and Inflation (SBBI), 1989, updated in Stocks, Bonds, Bills and
Inflation 2000 Yearbook, Ibbotson Associates, Chicago. All rights
reserved.
The Trust may use in its advertisements and other materials examples
designed to demonstrate the effect of compounding when an investment is
maintained over several or many years. For example, the following table shows
the annual and total contributions necessary to accumulate $200,000 of savings
(assuming a fixed rate of return) over various periods of time:
<TABLE>
<CAPTION>
Investment Annual Total Total
Period Contribution Contribution Saved
---------------- ------------ ------------ --------
<S> <C> <C> <C>
30 Years $ 1,979 $ 59,370 $200,000
25 Years $ 2,955 $ 73,875 $200,000
20 Years $ 4,559 $ 91,180 $200,000
15 Years $ 7,438 $111,570 $200,000
10 Years $13,529 $135,290 $200,000
</TABLE>
This hypothetical example assumes a fixed 7% return compounded annually and
a guaranteed return of principal. The example is intended to show the
benefits of a long-term, regular investment program, and is in no way
representative of any past or future performance of a Fund or Portfolio of
PIMCO Funds: Multi-Manager Series. There can be no guarantee that you
will be able to find an investment that would provide such a return at the
times you invest and an investor in any of the Funds or Portfolio of PIMCO
Funds: Multi-Manager Series should be aware that certain of the Funds and
Portfolios of PIMCO Funds: Multi-Manager Series have experienced and may
experience in the future periods of negative growth.
-96-
<PAGE>
The Trust may set forth in its advertisements and other materials
information regarding the relative reliance in recent years on personal savings
for retirement income versus reliance on Social Security benefits and company
sponsored retirement plans. For example, the following table offers such
information for 1998:
% of Income for Individuals
Aged 65 Years and Older in 1997*
-------------------------------
Social Security
Year and Pension Plans Other
---- ----------------- -----
1997 43% 57%
* For individuals with an annual income of at least $51,000. Other
includes personal savings, earnings and other undisclosed sources of
income. Source: Social Security Administration.
Articles or reports which include information relating to performance,
rankings and other characteristics of the Funds and Portfolios may appear in
various national publications and services including, but not limited to: The
Wall Street Journal, Barron's, Pensions and Investments, Forbes, Smart Money,
Mutual Fund Magazine, The New York Times, Kiplinger's Personal Finance, Fortune,
Money Magazine, Morningstar's Mutual Fund Values, CDA Investment Technologies
and The Donoghue Organization. Some or all of these publications or reports may
publish their own rankings or performance reviews of mutual funds, including the
Funds, and may provide information relating to the Adviser and the Sub-Advisers,
including descriptions of assets under management and client base, and opinions
of the author(s) regarding the skills of personnel and employees of the Adviser
or the Sub-Advisers who have portfolio management responsibility. From time to
time, the Trust may include references to or reprints of such publications or
reports in its advertisements and other information relating to the Funds and
Portfolios.
From time to time, the Trust may set forth in its advertisements and other
materials information about the growth of a certain dollar-amount invested in
one or more of the Funds or Portfolios over a specified period of time and may
use charts and graphs to display that growth.
From time to time, the Trust may set forth in its advertisements and other
materials the names of and additional information regarding investment analysts
employed by the Sub-Advisers who assist with portfolio management and research
activities on behalf of the Funds.
Ibbotson Associates ("Ibbotson") has analyzed the risk and returns of the
Funds and relevant benchmark market indexes in a variety of market conditions.
Based on its independent research and analysis, Ibbotson may develop, from time
to time, model portfolios of the Funds and series of PIMS which indicate how, in
Ibbotson's opinion, a hypothetical investor with a 5+ year investment horizon
might allocate his or her assets among the Funds and series of PIMS. Ibbotson
bases its model portfolios on five levels of investor risk tolerance which it
developed and defines as ranging from "Very Conservative" (low volatility;
emphasis on capital preservation, with some growth potential) to "Very
Aggressive" (high volatility; emphasis on long-term growth potential). However,
neither Ibbotson nor the Trust offers Ibbotson's model portfolios as
investments. Moreover, neither the Trust, the Adviser, the Sub-Advisers nor
Ibbotson represent or guarantee that investors who allocate their assets
according to Ibbotson's models will achieve their desired investment results.
-97-
<PAGE>
COMPLIANCE EFFORTS RELATED TO THE EURO
A computer system problem may arise in conjunction with the recent and
ongoing introduction of the euro. Whether introducing the euro to financial
companies' systems will be problematic is not fully known; however, the cost
associated with making systems recognize the euro is not currently expected to
be material.
VOTING RIGHTS
Under the Declaration of Trust, the Trust is not required to hold annual
meetings of Trust shareholders to elect Trustees or for other purposes. It is
not anticipated that the Trust will hold shareholders' meetings unless required
by law or the Declaration of Trust. In this regard, the Trust will be required
to hold a meeting to elect Trustees to fill any existing vacancies on the Board
if, at any time, fewer than a majority of the Trustees have been elected by the
shareholders of the Trust. Shareholders may remove a person serving as Trustee
either by declaration in writing or at a meeting called for such purpose. The
Trustees are required to call a meeting for the purpose of considering the
removal of a person serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the Trust. In the
event that such a request was made, the Trust has represented that it would
assist with any necessary shareholder communications. Shareholders of a class
of shares have different voting rights with respect to matters that affect only
that class.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). All classes of shares of the Funds and
Portfolios have identical voting rights except that each class of shares has
exclusive voting rights on any matter submitted to shareholders that relates
solely to that class, and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class. Each class of shares has exclusive voting rights with respect
to matters pertaining to any distribution or servicing plan or agreement
applicable to that class. These shares are entitled to vote at meetings of
shareholders. Matters submitted to shareholder vote must be approved by each
Fund and Portfolio separately except (i) when required by the 1940 Act shares
shall be voted together and (ii) when the Trustees have determined that the
matter does not affect all Funds and Portfolios, then only shareholders of the
Fund(s) or Portfolio(s) affected shall be entitled to vote on the matter. All
classes of shares of a Fund or Portfolio will vote together, except with respect
to the Distribution and Servicing Plan applicable to Class A, Class B or Class C
shares, to the Distribution or Administrative Services Plans applicable to
Administrative Class shares, to the Administration Agreement as applicable to a
particular class or classes, or when a class vote is required as specified above
or otherwise by the 1940 Act.
The Trust's shares do not have cumulative voting rights. Therefore, the
holders of more than 50% of the outstanding shares may elect the entire Board of
Trustees, in which case the holders of the remaining shares would not be able to
elect any Trustees.
The Portfolios will vote shares of each Underlying PIMCO Fund which they
own in their discretion in accordance with their proxy voting policies.
CERTAIN OWNERSHIP OF TRUST SHARES
As of March 15, 2000, the Trust believes that the Trustees and officers of
the Trust, as a group, owned less than one percent of each class of each Fund
and Portfolio and of the Trust as a whole. Appendix B list persons who own of
record or beneficially 5% or more of the noted class of shares of the Funds, as
well as information about owners of 25% or more of the outstanding shares of
beneficial interest of the Funds, and therefore may be presumed to "control" the
Fund, as that term is defined in the 1940 Act.
CUSTODIAN
State Street Bank & Trust Co. ("State Street"), 801 Pennsylvania, Kansas
City, Missouri 64105, serves as custodian for assets of all Funds and
Portfolios, including as custodian of the Trust for the custody of the foreign
securities acquired by those Funds that invest in foreign securities. Under the
agreement, State Street may hold foreign securities at its principal offices and
its branches, and subject to approval by the Board of Trustees, at a foreign
branch of a qualified U.S. bank, with an eligible foreign subcustodian, or with
an eligible foreign securities depository.
-98-
<PAGE>
Pursuant to rules or other exemptions under the 1940 Act, the Trust may
maintain foreign securities and cash in the custody of certain eligible foreign
banks and securities depositories. Selection of these foreign custodial
institutions is currently made by the Board of Trustees following a
consideration of a number of factors, including (but not limited to) the
reliability and financial stability of the institution; the ability of the
institution to perform capably custodial services for the Trust; the reputation
of the institution in its national market; the political and economic stability
of the country in which the institution is located; and further risks of
potential nationalization or expropriation of Trust assets, although the
Trustees reserve the right to delegate their selection responsibilities in light
of recent amendments to Rule 17f-5 under the 1940 Act, in which case the factors
for consideration would differ from those referenced above. Currently, the
Board of Trustees reviews annually the continuance of foreign custodial
arrangements for the Trust, but reserves the right to discontinue this practice
as permitted by the recent amendments to Rule 17f-5. No assurance can be given
that the Trustees' appraisal of the risks in connection with foreign custodial
arrangements will always be correct or that expropriation, nationalization,
freezes, or confiscation of assets that would impact assets of the Funds will
not occur, and shareholders bear the risk of losses arising from these or other
events.
CODES OF ETHICS
The Trust, PIMCO Advisors, Cadence, NFJ, Parametric, Blairlogie and the
Distributor have adopted Codes of Ethics pursuant to the requirements of the
1940 Act. These Codes of Ethics permit personnel subject to the Codes to invest
in securities, including securities that may be purchased or held by the Funds
or Portfolios.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, Missouri 64105,
serves as the independent public accountants for the Funds and Portfolios.
PricewaterhouseCoopers LLP provides audit services, accounting assistance, and
consultation in connection with SEC filings.
TRANSFER AND SHAREHOLDER SERVICING AGENTS
PFPC, Inc., P.O. Box 9688, Providence, Rhode Island 02940, serves as the
Transfer and Shareholder Servicing Agent for the Trust's Class A, Class B, Class
C and Class D shares. National Financial Data Services, 330 West 9th Street,
4th Floor, Kansas City, Missouri 64105, serves as the Transfer Agent for the
Trust's Institutional and Administrative Class shares.
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, Massachusetts 02110 serves
as legal counsel to the Trust.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectuses do not
contain all of the information included in the Trust's registration statements
filed with the SEC under the 1933 Act with respect to the securities offered
hereby, certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The registration statements, including the exhibits
filed therewith, may be examined at the offices of the SEC in Washington, D.C.
Statements contained herein and in the Prospectuses as to the contents of
any contract or other documents referred to are not necessarily complete, and,
in each instance, reference is made to the copy of such contract or other
documents filed as an exhibit to the relevant registration statement, each such
statement being qualified in all respects by such reference.
-99-
<PAGE>
FINANCIAL STATEMENTS
Audited financial statements for the Funds, as of June 30, 2000, for the
fiscal year then ended, including notes thereto, and the reports of [ ] thereon,
each dated [ ], 2000, are incorporated by reference from the Trust's [ ] June
30, 2000 Annual Reports. One Annual Report (the "Retail Annual Report")
corresponds to the Class A, B and C Prospectus, another (the "Institutional
Annual Report") corresponds to the Institutional Prospectus, another (the "Class
D Annual Report") corresponds to the Class D Prospectus, another (the "Retail
Portfolio Annual Report") corresponds to the Retail Portfolio Prospectus and the
fifth (the "Institutional Portfolio Annual Report") corresponds to the
Institutional Portfolio Prospectus. The Trust's June 30, 2000 Annual Reports
were filed electronically with the SEC on [ ] (Accession No. ______________).
[To be updated in a subsequent post-effective amendment.]
-100-
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
Certain of the Funds make use of average portfolio credit quality standards
to assist institutional investors whose own investment guidelines limit their
investments accordingly. In determining a Fund's overall dollar-weighted
average quality, unrated securities are treated as if rated, based on the
Adviser's or Sub-Adviser's view of their comparability to rated securities. A
Fund's use of average quality criteria is intended to be a guide for those
investors whose investment guidelines require that assets be invested according
to comparable criteria. Reference to an overall average quality rating for a
Fund does not mean that all securities held by the Fund will be rated in that
category or higher. A Fund's investments may range in quality from securities
rated in the lowest category in which the Fund is permitted to invest to
securities rated in the highest category (as rated by Moody's or S&P or, if
unrated, determined by the Adviser or a Sub-Adviser to be of comparable
quality). The percentage of a Fund's assets invested in securities in a
particular rating category will vary. Following is a description of Moody's and
S&P's ratings applicable to fixed income securities.
MOODY'S INVESTORS SERVICE, INC.
CORPORATE AND MUNICIPAL BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than with Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present that suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
A-1
<PAGE>
Ca: Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classified from Aa through B in its corporate bond rating system. The modifier
1 indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
CORPORATE SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as letters
of credit and bonds of indemnity are excluded unless explicitly rated.
Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:
PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and well-
established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime
rating categories.
STANDARD & POOR'S RATINGS SERVICES
CORPORATE AND MUNICIPAL BOND RATINGS
Investment Grade
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A-2
<PAGE>
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
Speculative Grade
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to adverse
conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C: The rating C is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI: The rating CI is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the debt being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment
A-3
<PAGE>
on the likelihood of, or the risk of default upon failure of, such completion.
The investor should exercise his own judgment with respect to such likelihood
and risk.
r: The "r" is attached to highlight derivative, hybrid, and certain other
obligations that S&P believes may experience high volatility or high variability
in expected returns due to non-credit risks. Examples of such obligations are:
securities whose principal or interest return is indexed to equities,
commodities, or currencies; certain swaps and options; and interest only and
principal only mortgage securities.
The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.
N.R.: Not rated.
Debt obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
COMMERCIAL PAPER RATING DEFINITIONS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into several categories, ranging from A for the
highest quality obligations to D for the lowest. These categories are as
follows:
A-1: This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.
B: Issues rated B are regarded as having only speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
A commercial paper rating is not a recommendation to purchase, sell or hold
a security inasmuch as it does not comment as to market price or suitability for
a particular investor. The ratings are based on current information furnished
to Standard & Poor's by the issuer or obtained from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information.
A-4
<PAGE>
APPENDIX B
CERTAIN OWNERSHIP OF TRUST SHARES
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
PIMCO CAPITAL APPRECIATION FUND
Institutional
Donaldson Lufkin & Jenrette** 2,139,263.644 13.29%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Charles Schwab & Co., Inc. - Reinvest ** 2,118,544.866 13.16%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
MAC & Co. A/C ALNF5039832 999,870.979 6.21%
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
ADMINISTRATIVE
Certain Employee (Fidelity) ** 2,527,889.941 31.43%
100 Magetian KWIC
Covington, Kentucky 41015
Invesco Trust Company FBO 2,448,186.814 30.44%
Reynolds & Reynolds 401k Plan
P. O. Box 77405
Atlanta, Georgia 30357
First Union National Bank ** 1,278,244.980 15.90%
401 S. Tryon Street, FRB-3
Charlotte, North Carolina 28202
New York Life Trust Company ** 435,271.898 5.41%
51 Madison Avenue, Room 117A
New York, New York 10010
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc. ** 804,134.927 25.17%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Carn & Co. 02087501 602,020.485 18.84%
American Yazaki Employee Savings
and Retirement Plan
Attn: Mutual Funds - Star
P. O. Box 96211
Washington, D.C. 20090-6211
Prudential Bank & Trust Co. 223,140.498 6.98%
Defined Contribution Plan
FBO Plan Participants
30 Scranton Office Park
Scranton, Pennsylvania 18507-1755
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc. ** 398,906.767 16.35%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc. ** 428,941.317 13.58%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS D
Charles Schwab & Co., Inc. - Reinvest.** 15,388.433 99.00%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
PIMCO ENHANCED EQUITY FUND
INSTITUTIONAL
CMTA-GMPP & Allied Workers Pension 413,340.550 25.09%
c/o Associated Third Party Administrator
1640 South Loop Road
Alameda, California 94502
BAC Local #19 Pension Trust 298,527.827 18.12%
Attn: Allied Administrators Inc.
777 Davis Street
San Francisco, California 94126-2500
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
California Race Track Association 222,004.290 13.47%
P.O. Box 67
LaVerne, California 91750
Asbestos Workers Local #87 153,252.951 9.30%
Employee Defined Contribution Pension Trust
1635 N.E. Loop 410, #700
San Antonio, Texas 78209
90/10 Portfolio 137,445.837 8.34%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
Fort Wayne Newspaper Inc. 125,829.775 7.64%
600 W. Main Street
Fort Wayne, Indiana 46802
60/40 Portfolio 99,353.077 6.03%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
PIMCO EQUITY INCOME FUND
INSTITUTIONAL
Bank of New York Western Trust Co. 1,462,833.175 17.03%
as Trustee for
Pacific Life Insurance Company R.I.S.P.
700 S. Flower Street, 2nd Floor
Los Angeles, California 90017
AM Castle & Co Emp Pension Equity Seg 1,439,294.708 16.76%
A/C #22-39912
P.O. Box 92956
Chicago, Illinois 60675-2956
Miter & Co. 1,272,142.068 14.81%
C/O Marshall & Ilsley Trust Co. (Plymouth Tube)
P.O. Box 2977
Milwaukee, Wisconsin 53201
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Northern Trust Co. TTEE FBO 806,643.115 9.39%
Mazda Motor of America
A/C #22-89188
P.O. Box 92956
Chicago, Illinois 60675-2956
Northern Trust Company as Trustee for 794,636.801 9.25%
Brush Wellman Inc.
P.O. Box 92956
Chicago, Illinois 60675-0001
ADMINISTRATIVE
First Union National Bank ** 490,506.697 62.54%
401 S. Tyon Street, FRB-3
CMG Fiduciary Operations Funds Group
Mail Code CMG-2-1151
Charlotte, North Carolina 28288-1151
Invesco Trust Co. TTEE 171,568.887 21.87%
Pasco Acquisition Inc. & Affiliates 401k Plan
P.O. Box 77405
Atlanta, Georgia 30357
Invesco Trust Co. TTEE FBO Lykes Retirement 97,558.808 12.44%
Savings Plan
P.O. Box 77405
Atlanta, Georgia 30357
CLASS A
Carn & Co. ** 277,136.563 23.00%
USI Insurance Services Corporation
401(k) Plan
P.O. Box 96211
Washington, D.C. 20090-6211
Merrill Lynch Pierce Fenner & Smith Inc. ** 158,689.905 13.17%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Khosrow B. Semnani 104,042.948 8.64%
P.O. Box 3508
Salt Lake City, Utah 84110-3508
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc. ** 176,234.552 13.20%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc. ** 151,521.085 10.83%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS D
Charles Schwab & Co., Inc. - Reinvest ** 9,796.940 100.00%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
PIMCO GLOBAL INNOVATION FUND
INSTITUTIONAL CLASS
PIMCO Advisors L.P. 300,000.000 100.00%*
800 Newport Center Drive
Newport Beach, California 92660
PIMCO GROWTH FUND
INSTITUTIONAL CLASS
Pacific Mutual Life Insurance Co. 219,034.270 57.05%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
Bac Local #19 Pension Trust 49,325.119 12.85%
c/o Allied Administrators Inc.
777 Davis Street
San Francisco, CA 94111
Pacific Life Foundation 37,155.061 9.68%
Attn: Michele Myszka
700 Newport Center Drive
Newport Beach, California 92660
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
90/10 Portfolio 28,087.976 7.32%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
ADMINISTRATIVE CLASS
Chase Bank of Texas, N.A. Trustee 271,907.885 61.35%
1111 Fannin, 10th Floor
Houston, Texas 77002
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc.** 486,880.155 7.20%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc.** 1,310,696.010 23.31%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 8,904,696.782 12.66%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO INNOVATION FUND
INSTITUTIONAL CLASS
Pacific Mutual Life Insurance Co. 139,148.627 46.76%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
PIMCO Advisors 401(k) Savings & Invest. Plan 64,672.210 21.73%
c/o Carn & Co.
P.O. Box 96211
Washington, D.C. 20090
Alpine Trust & Asset Management 38,105.816 12.81%
225 North 5th Street
Grand Junction, Colorado 81501
</TABLE>
B-6
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Pacific Life Foundation 17,490.937 5.88%
Attn: Michele Myszka
700 Newport Center Drive
Newport Beach, California 92660
ADMINISTRATIVE CLASS
PIMCO Advisors L.P. 100.301 100.00%
800 Newport Center Drive
Newport Beach, California 92660
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc.** 2,642,995.254 15.85%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc.** 3,253,751.721 15.63%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 4,128,680.231 13.98%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS D
Charles Schwab & Co., Inc. - Reinvest.** 662,906.935 71.91%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
PIMCO INTERNATIONAL FUND
INSTITUTIONAL
90/10 Portfolio 283,734.859 56.51%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
</TABLE>
B-7
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
60/40 Portfolio 181,573.461 36.16%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
30/70 Portfolio 36,832.427 7.34%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
CLASS A
Trout Trading Fund Pledged Coll. 153,102.337 6.84%
A/C for Credit Lyonnais
c/o Prudential Securities Inc.
Washington Mall One
Church Street, 4th Floor
Hamilton HM11
Merrill Lynch Pierce Fenner & Smith Inc.** 152,404.873 6.81%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc.** 109,427.204 11.64%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 988,288.561 10.50%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO INTERNATIONAL GROWTH FUND
INSTITUTIONAL
PIMCO Advisors L.P. 348,273.405 58.40%*
800 Newport Center Drive, 6th Floor
Newport Beach, CA 92660
Charles Schwab & Co., Inc. - Reinvest.** 236,489.595 39.65%*
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
</TABLE>
B-8
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
PIMCO MEGA-CAP FUND
INSTITUTIONAL
PIMCO Advisors L.P. 300,100.418 100.00%*
800 Newport Center Drive, 6th Floor
Newport Beach, California 92660
PIMCO MICRO-CAP FUND
INSTITUTIONAL
Charles Schwab & Co., Inc. - Reinvest.** 1,819,521.738 19.04%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
Dominion Resources 1,572,192.506 16.45%
c/o Bost & Co.
P. O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
University of Southern California 1,054,372.511 11.04%
Treasurer's Office
University Park, BKS 402
Los Angeles, California 90089-2541
Oberlin College 984,714.133 10.31%
c/o Mac & Co.
P. O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
Public Service of New Mexico 883,353.905 9.25%
c/o Mac & Co.
P. O. Box 3198
Pittsburgh, Pennsylvania 15230-3198
U.S. Bank National Assoc. Custodian 676,025.739 6.50%
Comm. Invest Group-Cadence
Trust Mutual Funds
P.O. Box 64010
St. Paul, Minnesota 55164
The Northern Trust Company Trustee 599,955.053 5.77%
Toyota Directed Retirement Trust
P.O. Box 92956
Chicago, Illinois 60675
</TABLE>
B-9
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
ADMINISTRATIVE
Centurion Trust Company 89,390.375 37.50%
FBO Omnibus/Centurion Capital Management
2425 EB Camelback Road, Suite 530
Phoenix, Arizona 85016
Northern Trust as Trustee for 87,391.742 36.67%
Sunday School Board
dba LifeWay Christian Resources
P.O. Box 92956
Chicago, Illinois 60675
New York Life Trust Company ** 56,020.438 23.50%
51 Madison Avenue, Room 117A
New York, New York 10010
PIMCO GROWTH & INCOME FUND***
INSTITUTIONAL
IFTC as Custodian for 148,223.759 40.20%*
John W. Barnum
c/o McGuire Woods
901 E. Cary Street
Richmond, VA 23219-4057
PIMCO Advisors L.P. 193,566.201 52.50%*
800 Newport Center Dr., 6th Floor
Newport Beach, California 92660
PIMCO MID-CAP FUND
INSTITUTIONAL
Charles Schwab & Co., Inc. - Reinvest ** 5,468,354.130 25.93%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
Norwest Bank Minnesota NA Custodian FBO 1,629,566.599 7.73%
Parkview Memorial Hospital
c/o Mutual Fund Processing
733 Marquette Avenue MS 0036
Minneapolis, Minnesota 55479-0036
</TABLE>
B-10
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Ameritech Savings Plan for Salaried Employees 1,386,617.149 6.57%
c/o State Street Bank & Trust Co. as Trustee
105 Rosemont Road
Westwood, Massachusetts 02090
ADMINISTRATIVE
Certain Employee (Fidelity) ** 2,144,318.319 49.45%
100 Magellan KW1C
Covington, Kentucky 41015
UMB TTEE FBO Andrew Profit Sharing Trust 400,418.354 9.23%
JP Morgan/American Century
P.O. Box 419784
Kansas City, Missouri 64141
First Union National Bank ** 313,451.902 7.23%
401 S. Tryon Street, FRB-3
Charlotte, North Carolina 28202
New York Life Trust Company 267,765.963 6.17%
51 Madison Avenue
Room 117A
New York, New York 10010
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc. ** 2,526,663.961 48.12%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc. ** 636,306.600 21.54%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc. ** 568,958.887 16.03%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
B-11
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS D
Charles Schwab & Co., Inc. - Reinvest.** 11,983.271 99.80%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
PIMCO OPPORTUNITY FUND
INSTITUTIONAL CLASS
LaSalle Bank, N.A., Custodian 257,853.052 40.54%
AMFAC - 408039428
P.O. Box 1443
Chicago, Illinois 60690
Pacific Mutual Life Insurance Co. 132,145.995 20.78%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
West Central Initiative Endowment 108,991.329 17.14%
c/o Norwest Bank MN NA
P.O. Box 1533
Minneapolis, Minnesota 55480
AAR Corp. 72,647.841 11.42%
c/o Northern Trust Co.
P.O. Box 92956
Chicago, Illinois 60675
ADMINISTRATIVE CLASS
Chase Bank of Texas, N.A., Trustee 232,586.034 75.86%
1111 Fannin, 10th Floor
Houston, Texas 77002
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc.** 718,876.042 15.28%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
American Express Trust Company 541,136.684 11.50%
FBO WESCO Distribution Inc.
Retirement Savings Plan
733 Marquette Avenue
Minneapolis, Minnesota 55402-2309
</TABLE>
B-12
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 3,147,845.871 21.08%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO RENAISSANCE FUND
INSTITUTIONAL CLASS
National Investor Services Corp. 8,079.041 99.14%
for the Exclusive Benefit of our Customers
55 Water Street, 32nd Floor
New York, New York 10041
ADMINISTRATIVE
MetLife Defined Contribution Group 44,292.988 91.62%
c/o Chase Manhattan Bank Trustee
770 Broadway, 10th Floor
New York, New York 10003
Eastern Bank & Trust FBO APB 4,053.162 8.38%
217 Essex Street
Salem, Massachusetts 01970
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc.** 700,084.195 14.59%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc.** 1,438,509.306 21.70%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 3,487,212.624 14.87%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
B-13
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS D
Charles Schwab & Co., Inc. - Reinvest.** 2,514.357 46.92%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
National Investor Services Corp. 2,094.762 39.09%
for the Exclusive Benefit of our Customers
55 Water Street, 32nd Floor
New York, New York 10041
PIMCO Advisors L.P. 749.261 13.98%
800 Newport Center Drive
Newport Beach, California 92660
PIMCO SELECT GROWTH FUND
INSTITUTIONAL
PIMCO Advisors L.P. 47,089.945 76.15%*
800 Newport Center Dr., 6th Floor
Newport Beach, California 92660
National Financial Services Corp. for 11,241.082 18.18%
Exclusive Benefit of their Customers
P.O. Box 3908
Church Street Station
New York, New York 10008-3908
ADMINISTRATIVE
Donaldson Lufkin & Jenrette** 921.965 44.59%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303
PIMCO Advisors L.P. 542.018 26.21%
800 Newport Center Dr., 6th Floor
Newport Beach, California 92660
Norwest Bank MN NA 435.087 21.91%
FBO Hanna & Morton LLP Emp. 401K
2700 Snelling Avenue, Suite 300
Minneapolis, Minnesota 55479
</TABLE>
B-14
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
National Financial Services Corp. for 148.122 7.16%
Exclusive Benefit of their Customers
P.O. Box 3908
Church Street Station
New York, New York 10008-3908
PIMCO SMALL-CAP VALUE FUND
INSTITUTIONAL
Charles Schwab & Co., Inc. Rein** 141,062.248 6.64%
Attn: Mutual Funds Dept
101 Montgomery Street
San Francisco, California 94104-4122
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
PIMCO Advisors 401(k) Savings & Invest. Plan 140,252.700 6.60%
c/o Carn & Co.
P.O. Box 96211
Washington, D.C. 20090
Empire Health Systems 403(b) Low Risk Acct. 133,801.219 6.29%
c/o US Bank National Association
P.O. Box 64010
St. Paul, Minnesota 55164
Donaldson Lufkin & Jenrette** 128,750.806 6.06%
Pershing Division
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Wendel & Co. 119,905.985 5.64%
c/o The Bank of New York
P.O. Box 1066, Wall Street Station
New York, New York 10268
ADMINISTRATIVE
National Financial Services Corporation for the 261,387.842 26.38%
Exclusive Benefit of Our Customers**
1 World Trade Center
200 Liberty Street
New York, New York 10281
First Union National Bank ** 199,580.332 20.14%
1525 West WT Harris Boulevard NC 1151
Charlotte, North Carolina 28288-1151
Norwest Bank MN NA FBO 62,000.892 6.26%
Heller Financial Corp. Def. Comp. #13581311
P.O. Box 1533
Minneapolis, Minnesota 55480-1533
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc. ** 2,329,389.869 30.08%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
B-16
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Norwest Bank MN NA 789,303.936 10.19%
Dain Rauscher Retirement Plan
#13281312 DTD 1/97
Attn: EBS MS 0035
510 Marquette, Suite 500
Minneapolis, Minnesota 55479-0035
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc. ** 1,199,415.033 27.37%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc. ** 1,282,728.727 24.32%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO STRUCTURED EMERGING MARKETS FUND
INSTITUTIONAL
Rhode Island Foundation 955,315.005 24.19%
Attn: Michael Jenkenson
70 Elm Street
Providence, Rhode Island 02903
Berklee College of Music, Inc. 562,163.537 14.24%
1140 Boylston Street
Boston, Massachusetts 02215-3693
Hartford Foundation 356,606.997 9.03%
159 E. Main Street
Rochester, New York 14638
Munsen-Williams-Proctor Institute 317,937.259 8.05%
Attn: Anthony Spiridigloizzi
310 Genesee Street
Utica, New York 13502
The Reeves Foundation 286,810.624 7.26%
115 Summit Avenue
Summit, New Jersey 07901
</TABLE>
B-17
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Brockton Health Corp. Endowment 222,238.242 5.63%
Attn: Steven Connolly
680 Centre Street
Brockton, Massachusetts 02402-3395
Desert Mutual Retiree Med. & Life Pl. Tr. 214,378.592 5.43%
60 East South Temple Street
Salt Lake City, Utah 84147
PIMCO TARGET FUND
INSTITUTIONAL CLASS
Pacific Mutual Life Insurance Co. 234,099.426 54.13%
Employees Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
BAC Local #19 Pension Trust 47,948.427 11.09%
c/o Allied Administrators Inc.
777 Davis Street
San Francisco, California 94111
90/10 Portfolio 46,207.436 10.68%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
Pacific Life Foundation 41,851.610 9.38%
Attn: Michele Myszka
700 Newport Center Drive
Newport Beach, California 92660
60/40 Portfolio 27,104.339 6.27%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc.** 1,433,986.893 14.68%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
B-18
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc.** 1,786,075.319 27.69%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 13,913,212.365 24.00%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
PIMCO TAX-EFFICIENT EQUITY FUND
INSTITUTIONAL
Loni Austin Parrish UAW 12,574.156 13.13%
Joan D. Austin Dtd. 12-26-86
FBO Ashley Nicole Parrish
C/O Austin Industries
P.O. Box 1060
Newberg, Oregon 97132
Loni Austin Parrish UAW 11,199.270 11.69%
G. Kenneth Austin Jr. Dtd. 12-26-86
FBO Ashley Nicole Parrish
C/O Austin Industries
P.O. Box 1060
Newberg, Oregon 97132
Loni Austin Parrish UAW 10,745.961 11.22%
G. Kenneth Austin Jr. Dtd. 9-26-88
FBO Jessica Danielle Parrish
C/O Austin Industries
P.O. Box 1060
Newberg, Oregon 97132
Loni Austin Parrish UAW 10,745.961 11.22%
Joan D. Austin Dtd. 9-26-88
FBO Jessica Danielle Parrish
C/O Austin Industries
P.O. Box 1060
Newberg, Oregon 97132
</TABLE>
B-19
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Scott N. Parrish 9,066.183 9.46%
C/O Austin Industries
P.O. Box 1060
Newberg, Oregon 97132
US Bank National Association Custodian 8,626.782 9.01%
JD Gray Irrv. Trust FBO JGG Dtd. 5-13-99
Trust Mutual Funds #97349240
P.O. Box 64010
St. Paul, Minnesota 55164
US Bank National Association Custodian 8,579.271 8.96%
JD Gray Irrv. Trust FBO SWG Dtd. 5-13-99
Trust Mutual Funds #97349230
P.O. Box 64010
St. Paul, Minnesota 55164
US Bank National Association Custodian 8,264.126 8.63%
FBO T.G. Gearhart Dtd. 5-13-99
Trust Mutual Funds #97349260
P.O. Box 64010
St. Paul, Minnesota 55164
US Bank National Association Custodian 7,921.337 8.27%
JD Gray Irrv. Trust FBO M.E. Gray Dtd. 5-13-99
Trust Mutual Funds #97349250
P.O. Box 64010
St. Paul, Minnesota 55164
US Bank National Association Custodian 7,425.686 7.75%
JD Gray Irrv. Trust FBO GBH Dtd. 5-13-99
Trust Mutual Funds #97349270
P.O. Box 64010
St. Paul, Minnesota 55164
ADMINISTRATIVE
Centurion Trust Company 1,093,145.712 70.82%
FBO Omnibus/Centurion Capital Management
2425 EB Camelback Road, Suite 530
Phoenix, Arizona 85016
CLASS A
Merrill Lynch Pierce Fenner & Smith Inc.** 79,532.318 10.57%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
</TABLE>
B-20
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
NFSC FEBO #0C8-332321 49,164.208 6.54%
The Robb Charitable Trust
Richard A. Robb
U/A 09/04/1990
56 Pilgrim Road
Marblehead, Massachusetts 01945-1750
Dain Rauscher Inc. FBO 44,283.521 5.89%
Michael G. King and Elizabeth W. King
Long Term Account JT TEN/WROS
14800 164th Place N.E.
Seattle, WA 98101
LEWCO Securities Corp. 42,824.236 5.69%
FBO A/C #H10-690959-1-01
34 Exchange Place, 4th Floor
Jersey City, New Jersey 07311
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc.** 190,858.790 21.88%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc.** 304,644.529 23.66%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS D
PIMCO Advisors L.P. 932.836 100.00%
800 Newport Center Drive
Newport Beach, California 92660
PIMCO TAX-EFFICIENT STRUCTURED EMERGING MARKETS FUND
INSTITUTIONAL
Alscott Investments, LLC 1,002,480.560 16.03%
501 Baybrook Court
Boise, Idaho 83706
</TABLE>
B-21
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
Charles Schwab & Co., Inc. - Reinvest.** 729,222.679 11.66%
The Schwab Building
101 Montgomery Street
San Franciso, California 94104-4122
Rede & Company (Weyerhaeuser) 708,643.576 11.33%
4380 S.W. Macadam, Suite 450
Portland, Oregon 97201
Waycrosse, Inc./International Equity Fund II 629,689.755 10.07%
P. O. Box 9300, MS 28
Minneapolis, Minnesota 55440-9300
Ruby Trust 593,483.297 9.49%
499 Park Avenue
New York, New York 10022
Alscott Investments, LLC 483,727.227 7.74%
501 Baybrook Court
Boise, Idaho 83706
Topaz Trust 351,055.597 5.61%
499 Park Avenue
New York, New York 10022
PIMCO VALUE FUND
INSTITUTIONAL
Pacific Mutual Life Insurance Co. 1,124,638.355 22.57%
Employee's Retirement Plan Trust
700 Newport Center Drive
Newport Beach, California 92660
CMTA-GMPP & Allied Workers Pension Trust 896,538.909 17.99%
c/o Associated Third Party Administrator
1640 South Loop Road
Alameda, California 94502
BAC Local #19 Pension Trust 647,511.208 12.99%
Attn: Allied Administrators Inc.
777 Davis Street
San Francisco, California 94126-2500
Pacific Life Foundation 511,575.652 10.27%
700 Newport Center Drive
Newport Beach, California 92660-6307
</TABLE>
B-22
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
California Race Track Association 447,403.850 8.98%
P.O. Box 60014
Arcadia, California 91006-6014
90/10 Portfolio 310,139.719 6.22%
PIMCO Funds Asset Allocation Series
800 Newport Center Drive
Newport Beach, California 92660
Fort Wayne Newspaper Inc. 253,587.773 5.09%
600 W. Main Street
Fort Wayne, Indiana 46802
CLASS A
Teamsters Union Loc. No. 52 Pension Fund 342,145.533 20.18%
Attn: Dennis Vadini
3150 Chester Avenue
Cleveland, Ohio 44114
Merrill Lynch Pierce Fenner & Smith Inc. ** 114,119.438 6.91%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc. ** 507,889.898 20.61%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS C
Merrill Lynch Pierce Fenner & Smith Inc. ** 477,037.129 9.66%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
CLASS D
Charles Schwab & Co., Inc. - Reinvest ** 1,322.192 54.19%
The Schwab Building
101 Montgomery Street
San Francisco, California 94104-4122
PIMCO Advisors L.P. 883.960 36.23%
800 Newport Center Drive
Newport Beach, California 92660
</TABLE>
B-23
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
90/10 PORTFOLIO
INSTITUTIONAL
PIMCO Advisors L.P. 974.818 100.00%
800 Newport Center Drive
Newport Beach, California 92660
ADMINISTRATIVE
PIMCO Advisors L.P. 973.813 100.00%
800 Newport Center Drive
Newport Beach, California 92660
CLASS A
Charles Baumstark and Daniel Baumstark TTEES 17,483.451 19.28%
Herman Lumber Company Penion Plan DTD 1/1/99
603 Market Street, P.O. Box 500
Hermann, Missouri 65041
CLASS B
Donaldson Lufkin Jenrette 9,397.462 5.08%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, New Jersey 07303
60/40 PORTFOLIO
INSTITUTIONAL
PIMCO Advisors 401(k) Savings & Invest. Plan 3,382.197 76.90%
c/o Carn & Co.
P.O. Box 96211
Washington, D.C. 20090
PIMCO Advisors L.P. 1,015.730 23.10%
800 Newport Center Drive
Newport Beach, California 92660
ADMINISTRATIVE
PIMCO Advisors L.P. 1,013.636 100.00%
800 Newport Center Drive
Newport Beach, California 92660
</TABLE>
B-24
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS A
Charles Baumstark and Daniel Baumstark TTEES 70,274.372 29.76%
Herman Lumber Company Pension Plan DTD 1/1/99
603 Market Street, P.O. Box 500
Hermann, Missouri 65041
BSDT CUST Rollover IRA FBO 35,514.502 15.04%
Edmund A. Louie
1165 Corvallis Drive
San Jose, California 95120
BSDT Cust. IRA 24,662.427 10.45%
FBO Lloyd B. Bremer
7841 Bouma Circle
La Palma, CA 90623
CLASS B
Merrill Lynch Pierce Fenner & Smith Inc. ** 28,250.042 8.19%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Painewebber For the Benefit of 19,546.275 5.67%
Painewebber FBO
Elizabeth B. Stoeffler
P.O. Box 3321
Weehawken, New Jersey 07087-8154
CLASS C
John H. & Susan Hutchison TTEES 94,805.861 11.78%
Jack & Susan Hutchison Living TR
DTD 10/30/1985
2441 Bayshore Drive
Newport Beach, California 92663
30/70 PORTFOLIO
INSTITUTIONAL
PIMCO Advisors L.P. 1,058.162 100.00%
800 Newport Center Drive
Newport Beach, California 92660
ADMINISTRATIVE
PIMCO Advisors L.P. 1,055.575 100.00%
800 Newport Center Drive
Newport Beach, California 92660
</TABLE>
B-25
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
CLASS A
Stuart B. Crawford & Virginia Crawford 7,637.878 19.11%
JT TEN WROS NOT TC
4929 Whitcomb Drive
Madison, Wisconsin 53711
Donaldson Lufkin Jenrette 6,843.885 17.12%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, New Jersey 07303
Donaldson Lufkin Jenrette 5,603.816 14.02%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, New Jersey 07303
Mei W. Quinn 5,387.525 13.48%
TOD Howard Wong and Tom E. McGrath
Subject to FDISG TOD Rules
2425 W. New Street
Blue Island, Illinois 60406
Charles Baumstark and Daniel Baumstark TTEES 3,012.427 7.54%
Hermann Lumber Company Pension Plan DTD 1/1/99
603 Market Street, P.O. Box 500
Hermann, Missouri 65041
Raymond James & Assoc. Inc. 2,490.040 6.23%
FAO Carolyn Union Grdn
FBO Jessica M. Pearce
A/C# 79537630
Route 3, Box 364
Lake City, Florida 32025
Raymond James & Assoc. Inc. 2,490.040 6.23%
FAO Carolyn Union Grdn
FBO Carolyn L. Pearce
A/C# 79537625 (Pass)
Route 3, Box 364
Lake City, Florida 32025
</TABLE>
B-26
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
NFSC FEBO #ORP-030368 2,336.750 5.85%
NFSC/FMTC IRA
FBO Jack A. Wedner
4729-D La Villa Marina
Marina del Rey, California 90292
CLASS B
BSDT CUST IRA 23,710.719 14.75%
FBO Miriam P. Squillace
1941 E. River Road
Livingston, Montana 59047-9146
A. G. Edwards & Sons, Inc. C/F 19,877.893 12.37%
Dr. James R. Drake
IRA Account
3004 Brownwood Drive
Chattanooga, Tennessee 37404-6309
Merrill Lynch Pierce Fenner & Smith Inc. ** 18,515.097 11.52%
Attn: Book Entry Department
4800 Deer Lake Drive E., Fl. 3
Jacksonville, Florida 32246-6484
Janney Montgomery Scott, Inc. 14,346.098 8.93%
A/C 1021-6717
Joseph L. Abriola & Gloria C. Abriola JT TEN
1801 Market Street
Philadelphia, Pennsylvania 19103-1675
N. F. Verratti, Inc. 10,196.900 6.34%
Profit Sharing Plan DTD 1-1-1983
Nicholas F. Verratti, Jr. TTEE
450 Knowlton Road
Media, Pennsylvania 19063
Joseph L. Abriola (IRA) 9,221.657 5.74%
JMS Inc. CUST FBO
A/C 1021-6665
2 Steeplechase Lane
Blue Bell, Pennsylvania 19422-2460
CLASS C
Jeffrey Le B. Morse 53,703.028 11.25%
P.O. Box 127
Sextonville, Wisconsin 53584
</TABLE>
B-27
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
BENEFICIAL OUTSTANDING SHARES OF
OWNERSHIP CLASS OWNED
-------------- ----------------------
<S> <C> <C>
John P. Bohlman TTEE 46,011.071 9.64%
Bohlman Drug Store Inc. PSP
1028 Wisconsin Ave.
Boscobel, Wisconsin 53805
Sheila T. Fitzgerald 45,237.196 9.48%
1325 Buttermilk Lane
Reston, Virginia 20190
Rachel G. Pontzer 34,361.708 7.20%
18040 33rd Place North
Minneapolis, Minnesota 55447
Louis D. Gura IRA 32,667.883 6.84%
c/o First Clearing Corporation
85 Dogwood Terrace
Ramsey, New Jersey 07446
</TABLE>
---------------------------------
* Entity owned 25% or more of the outstanding shares of beneficial interest of
the Fund, and therefore may be presumed to "control" the Fund, as that term
is defined in the 1940 Act.
** Shares are believed to be held only as nominee.
*** The information for the Growth & Income Fund is as of July 23, 2000.
B-28
<PAGE>
PIMCO Funds Shareholders' Guide
for Class A, B and C Shares
November 1, 2000
This Guide relates to the mutual funds (each, a "Fund") that are series of PIMCO
Funds: Multi-Manager Series (the "MMS Trust") and PIMCO Funds: Pacific
Investment Management Series (the "PIMS Trust" and, together with the MMS Trust,
the "Trusts"). Unless otherwise indicated, references to the Funds include the
PIMCO Funds Asset Allocation Series portfolios (the "Portfolios"). The
Portfolios are so called "funds of funds" which are series of the MMS Trust.
Class A, B and C shares of the MMS Trust, the PIMS Trust and the Portfolios are
offered through four separate prospectuses (each, a "Retail Prospectus"). The
information in this Guide is subject to change without notice at the option of
the Trusts, the Advisers or the Distributor.
This Guide contains detailed information about Fund purchase, redemption and
exchange options and procedures and other information about the Funds. This
Guide is not a prospectus, and should be used in conjunction with the applicable
Retail Prospectus. This Guide, and the information disclosed herein, is
incorporated by reference in, and considered part of, the Statement of
Additional Information corresponding to each Retail Prospectus.
PIMCO Funds Distributors LLC distributes the Funds' shares. You can call PIMCO
Funds Distributors LLC at 1-800-426-0107 to find out more about the Funds and
other funds in the PIMCO Funds family. You can also visit our Web site at
www.pimcofunds.com.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
How to Buy Shares.................................................... SG-3
Alternative Purchase Arrangements.................................... SG-9
Exchange Privilege................................................... SG-24
How to Redeem........................................................ SG-26
</TABLE>
SG-2
<PAGE>
HOW TO BUY SHARES
Class A, Class B and Class C shares of each Fund are continuously offered
through the Trusts' principal underwriter, PIMCO Funds Distributors LLC (the
"Distributor") and through other firms which have dealer agreements with the
Distributor ("participating brokers") or which have agreed to act as introducing
brokers for the Distributor ("introducing brokers"). The Distributor is a
wholly owned subsidiary of PIMCO Advisors L.P. ("PIMCO Advisors"), the
investment adviser to the Funds that are series of the MMS Trust, and an
affiliate of Pacific Investment Management Company LLC ("Pacific Investment
Management Company"), the investment adviser to the Funds that are series of the
PIMS Trust. PIMCO Advisors and Pacific Investment Management Company are each
referred to herein as an "Adviser."
There are two ways to purchase Class A, Class B or Class C shares: either
(i) through your dealer or broker which has a dealer agreement with the
Distributor or (ii) directly by mailing a PIMCO Funds account application (an
"account application") with payment, as described below under the heading
Direct Investment, to the Distributor (if no dealer is named in the account
application, the Distributor may act as dealer). Class A, Class B and Class C
shares of the Short Duration Municipal Income Fund and Class B and Class C
shares of the California Municipal Bond, California Intermediate Municipal Bond
and New York Municipal Bond Funds are not offered as of the date of this Guide;
however, investment opportunities in these Funds may be available in the future.
Shares may be purchased at a price equal to their net asset value per share
next determined after receipt of an order, plus a sales charge which, at the
election of the purchaser, may be imposed either (i) at the time of the purchase
in the case of Class A shares (the "initial sales charge alternative"), (ii) on
a contingent deferred basis in the case of Class B shares (the "deferred sales
charge alternative") or (iii) by the deduction of an ongoing asset based sales
charge in the case of Class C shares (the "asset based sales charge alternative"
circumstances, Class A and Class C shares are also subject to a Contingent
Deferred Sales Charge ("CDSC"). See "Alternative Purchase Arrangements."
Purchase payments for Class B and Class C shares are fully invested at the net
asset value next determined after acceptance of the trade. Purchase payments for
Class A shares, less the applicable sales charge, are invested at the net asset
value next determined after acceptance of the trade.
All purchase orders received by the Distributor prior to the close of
regular trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange on a regular business day are processed at that day's offering price.
However, orders received by the Distributor from dealers or brokers after the
offering price is determined that day will receive such offering price if the
orders were received by the dealer or broker from its customer prior to such
determination and were transmitted to and received by the Distributor prior to
its close of business that day (normally 5:00 p.m., Eastern time) or, in the
case of certain retirement plans, received by the Distributor prior to 9:30
a.m., Eastern time on the next business day. Purchase
SG-3
<PAGE>
orders received on other than a regular business day will be executed on the
next succeeding regular business day. The Distributor, in its sole discretion,
may accept or reject any order for purchase of Fund shares. The sale of shares
will be suspended during any period in which the New York Stock Exchange is
closed for other than weekends or holidays, or, if permitted by the rules of the
Securities and Exchange Commission, when trading on the New York Stock Exchange
is restricted or during an emergency which makes it impracticable for the Funds
to dispose of their securities or to determine fairly the value of their net
assets, or during any other period as permitted by the Securities and Exchange
Commission for the protection of investors.
Except for purchases through the PIMCO Funds Auto-Invest plan, the PIMCO
Funds Auto-Exchange plan, investments pursuant to the Uniform Gifts to Minors
Act, and tax-qualified and wrap programs referred to below under "Tax-Qualified
Retirement Plans" and Alternative Purchase Arrangements--Sales at Net Asset
Value," the minimum initial investment in Class A, Class B or Class C shares of
any Fund is $2,500, and the minimum additional investment is $100 per Fund. For
information about dealer commissions, see "Alternative Purchase Arrangements"
below. Persons selling Fund shares may receive different compensation for
selling Class A, Class B or Class C shares. Normally, Fund shares purchased
through participating brokers are held in the investor's account with that
broker. No share certificates will be issued unless specifically requested in
writing by an investor or broker-dealer.
Direct Investment
Investors who wish to invest in Class A, Class B or Class C shares of a
Fund directly, rather than through a participating broker, may do so by opening
an account with the Distributor. To open an account, an investor should complete
the account application. All shareholders who open direct accounts with the
Distributor will receive from the Distributor individual confirmations of each
purchase, redemption, dividend reinvestment, exchange or transfer of Fund
shares, including the total number of Fund shares owned as of the confirmation
date, except that purchases which result from the reinvestment of daily-accrued
dividends and/or distributions will be confirmed once each calendar quarter. See
"Distributions" in the applicable Retail Prospectus. Information regarding
direct investment or any other features or plans offered by the Trusts may be
obtained by calling the Distributor at 1-800-426-0107 or by calling your broker.
Purchase by Mail
Investors who wish to invest directly may send a check payable to PIMCO
Funds Distributors LLC, along with a completed application form to:
SG-4
<PAGE>
PIMCO Funds Distributors LLC
P.O. Box 9688
Providence, RI 02940-0926
Purchases are accepted subject to collection of checks at full value and
conversion into federal funds. Payment by a check drawn on any member of the
Federal Reserve System can normally be converted into federal funds within two
business days after receipt of the check. Checks drawn on a non-member bank may
take up to 15 days to convert into federal funds. In all cases, the purchase
price is based on the net asset value next determined after the purchase order
and check are accepted, even though the check may not yet have been converted
into federal funds.
Subsequent Purchases of Shares
Subsequent purchases of Class A, Class B or Class C shares can be made as
indicated above by mailing a check with a letter describing the investment or
with the additional investment portion of a confirmation statement. Except for
subsequent purchases through the PIMCO Funds Auto-Invest plan, the PIMCO Funds
Auto-Exchange plan, tax-qualified programs and PIMCO Funds Fund Link referred to
below, and except during periods when an Automatic Withdrawal Plan is in effect,
the minimum subsequent purchase is $100 in any Fund. All payments should be made
payable to PIMCO Funds Distributors LLC and should clearly indicate the
shareholder's account number. Checks should be mailed to the address above under
"Purchase by Mail."
Tax-Qualified Retirement Plans
The Distributor makes available retirement plan services and documents for
Individual Retirement Accounts (IRAs), including Roth IRAs, for which Boston
Safe Deposit & Trust Company serves as trustee and for IRA Accounts established
with Form 5305-SIMPLE under the Internal Revenue Code of 1986, as amended (the
"Code"). These accounts include Simplified Employee Pension Plan (SEP) and
Salary Reduction Simplified Employee Pension Plan (SAR/SEP) IRA and SIMPLE IRA
accounts and prototype documents. In addition, prototype documents are available
for establishing 403(b)(7) custodial accounts with Boston Safe Deposit & Trust
Company as custodian. This type of plan is available to employees of certain
non-profit organizations.
The Distributor also makes available prototype documents for establishing
Money Purchase and/or Profit Sharing Plans and 401(k) Retirement Savings Plans.
These prototype plans require certain minimum per participant account sizes and
certain minimum aggregate investments in the Trust, and are subject to the small
account fees described below that will apply to other plans. Investors should
call the Distributor at 1-800-426-0107 for further information about these plans
and should consult with their own tax advisers before establishing any
retirement plan. Investors who maintain their accounts with participating
SG-5
<PAGE>
brokers should consult their broker about similar types of accounts that may be
offered through the broker. The minimum initial investment for all tax-qualified
plans (except for employer-sponsored plans, SIMPLE IRAs, SEPs and SAR/SEPs) is
$1,000 per Fund and the minimum subsequent investment is $100. The minimum
initial investment for employer-sponsored plans, SIMPLE IRAs, SEPs and SAR/SEPs
and the minimum subsequent investment per Fund for all such plans is $50.
PIMCO Funds Auto-Invest
The PIMCO Funds Auto-Invest plan provides for periodic investments into the
shareholder's account with the Trust by means of automatic transfers of a
designated amount from the shareholder's bank account. The minimum investment
for eligibility in the PIMCO Funds Auto-Invest plan is $1,000 per Fund.
Investments may be made monthly or quarterly, and may be in any amount subject
to a minimum of $50 per month for each Fund in which shares are purchased
through the plan. Further information regarding the PIMCO Funds Auto-Invest
plan is available from the Distributor or participating brokers. You may enroll
by completing the appropriate section on the account application, or you may
obtain an Auto-Invest application by calling the Distributor or your broker.
PIMCO Funds Auto-Exchange
The PIMCO Funds Auto-Exchange plan establishes regular, periodic exchanges
from one Fund account to another Fund account. The plan provides for regular
investments into a shareholder's account in a specific Fund by means of
automatic exchanges of a designated amount from another Fund account of the same
class of shares and with identical account registration.
Exchanges may be made monthly or quarterly, and may be in any amount
subject to a minimum of $1,000 to open a new Fund account and of $50 for any
existing Fund account for which shares are purchased through the plan.
Further information regarding the PIMCO Funds Auto-Exchange plan is
available from the Distributor at 1-800-426-0107 or participating brokers. You
may enroll by completing an application which may be obtained from the
Distributor or by telephone request at 1-800-426-0107. For more information on
exchanges, see "Exchange Privilege."
PIMCO Funds Fund Link
PIMCO Funds Fund Link ("Fund Link") connects your Fund account(s) with a
bank account. Fund Link may be used for subsequent purchases and for redemptions
and other transactions described under "How to Redeem." Purchase transactions
are effected by electronic funds transfers from the shareholder's account at a
U.S. bank or other financial institution that is an Automated Clearing House
("ACH") member. Investors may use Fund
SG-6
<PAGE>
Link to make subsequent purchases of shares in amounts from $50 to $10,000. To
initiate such purchases, call 1-800-426-0107. All such calls will be recorded.
Fund Link is normally established within 45 days of receipt of a Fund Link
application by PFPC, Inc. (the "Transfer Agent"), the Funds' transfer agent for
Class A, B and C shares. The minimum investment by Fund Link is $50 per Fund.
Shares will be purchased on the regular business day the Distributor receives
the funds through the ACH system, provided the funds are received before the
close of regular trading on the New York Stock Exchange. If the funds are
received after the close of regular trading, the shares will be purchased on the
next regular business day.
Fund Link privileges must be requested on the account application. To
establish Fund Link on an existing account, complete a Fund Link application,
which is available from the Distributor or your broker, with signatures
guaranteed from all shareholders of record for the account. See "Signature
Guarantee" below. Such privileges apply to each shareholder of record for the
account unless and until the Distributor receives written instructions from a
shareholder of record canceling such privileges. Changes of bank account
information must be made by completing a new Fund Link application signed by all
owners of record of the account, with all signatures guaranteed. The
Distributor, the Transfer Agent and the Fund may rely on any telephone
instructions believed to be genuine and will not be responsible to shareholders
for any damage, loss or expenses arising out of such instructions. The Fund
reserves the right to amend, suspend or discontinue Fund Link privileges at any
time without prior notice. Fund Link does not apply to shares held in broker
"street name" accounts.
Signature Guarantee
When a signature guarantee is called for, the shareholder should have
"Signature Guaranteed" stamped under his signature and guaranteed by any of the
following entities: U.S. banks, foreign banks having a U.S. correspondent bank,
credit unions, savings associations, U.S. registered dealers and brokers,
municipal securities dealers and brokers, government securities dealers and
brokers, national securities exchanges, registered securities associations and
clearing agencies (each an "Eligible Guarantor Institution"). The Distributor
reserves the right to reject any signature guarantee pursuant to its written
signature guarantee standards or procedures, which permit it to reject signature
guarantees from Eligible Guarantor Institutions that do not, based on credit
guidelines or other requirements, satisfy such written standards or
procedures.
Beginning January 1, 2001, when a signature guarantee is called for, a
"medallion" signature guarantee will be required. A medallion signature
guarantee may be obtained from a domestic bank or trust company, broker, dealer,
clearing agency, savings association or other financial institution which is
participating in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP) Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (NYSE MSP). Signature
guarantees from financial institutions which are not participating in one of
these programs will not be
SG-7
<PAGE>
accepted. Please note that financial institutions participating in a recognized
medallion program may still be ineligible to provide a signature guarantee for
transactions of greater than a specified dollar amount.
The Distributor reserves the right to modify its signature guarantee
standards at any time. The Funds may change the signature guarantee requirements
from time to time upon notice to shareholders, which may, but is not required
to, be given by means of a new or supplemented Retail Prospectus or a new or
supplemented Guide. Shareholders should contact the Distributor for additional
details regarding the Funds' signature guarantee requirements.
Account Registration Changes
Changes in registration or account privileges may be made in writing to the
Transfer Agent. Signature guarantees may be required. See "Signature Guarantee"
above. All correspondence must include the account number and must be sent
to:
PIMCO Funds Distributors LLC
P.O. Box 9688
Providence, RI 02940-0926
Small Account Fee
Because of the disproportionately high costs of servicing accounts with low
balances, a fee at an annual rate of $16 (paid to the applicable Fund's
administrator) will automatically be deducted from direct Fund accounts with
balances falling below a minimum level. The valuation of Fund accounts and the
deduction are expected to take place during the last five business days of each
calendar quarter. The fee will be deducted in quarterly installments from Fund
accounts with balances below $2,500, except for Uniform Gift to Minors, IRA,
Roth IRA and Auto-Invest accounts, for which the limit is $1,000. The fee also
applies to employer-sponsored retirement plan accounts, Money Purchase and/or
Profit Sharing plans, 401(k) plans, 403(b)(7) custodial accounts, SIMPLE IRAs,
SEPs and SAR/SEPs. (A separate custodial fee may apply to IRAs, Roth IRAs and
other retirement accounts.) No fee will be charged on any Fund account of a
shareholder if the aggregate value of all of the shareholder's Fund accounts is
at least $50,000. Any applicable small account fee will be deducted
automatically from your below-minimum Fund account in quarterly installments and
paid to the Administrator. Each Fund account will normally be valued, and any
deduction taken, during the last five business days of each calendar quarter.
No small account fee will be charged to employee and employee-related accounts
of PIMCO Advisors and/or, in the discretion of PIMCO Advisors, its affiliates.
SG-8
<PAGE>
Minimum Account Size
Due to the relatively high cost to the Funds of maintaining small accounts,
you are asked to maintain an account balance in each Fund in which you invest of
at least the amount necessary to open the type of account involved. If your
balance for any Fund is below such minimum for three months or longer, the
applicable Fund's administrator shall have the right (except in the case of
employer-sponsored retirement accounts) to close that Fund account after giving
you 60 days in which to increase your balance. Your Fund account will not be
liquidated if the reduction in size is due solely to market decline in the value
of your Fund shares or if the aggregate value of all your accounts in PIMCO
Funds exceeds $50,000.
ALTERNATIVE PURCHASE ARRANGEMENTS
The Funds offer investors Class A, Class B and Class C shares in the
applicable Retail Prospectus. Class A, B and C shares bear sales charges in
different forms and amounts and bear different levels of expenses, as described
below. Through separate prospectuses, certain of the Funds currently offer up to
three additional classes of shares in the United States: Class D, Institutional
Class and Administrative Class shares. Class D shares are offered through
financial intermediaries. Institutional Class shares are offered to pension and
profit sharing plans, employee benefit trusts, endowments, foundations,
corporations and other high net worth individuals. Administrative Class shares
are offered primarily through employee benefit plan alliances, broker-dealers
and other intermediaries. Class D, Institutional Class and Administrative Class
shares are sold without a sales charge and have different expenses than Class A,
Class B and Class C shares. As a result of lower sales charges and/or operating
expenses, Class D, Institutional Class and Administrative Class shares are
generally expected to achieve higher investment returns than Class A, Class B or
Class C shares. Certain Funds also offer up to two additional classes of shares
that are offered only to non-U.S. investors outside the United States: Class J
and Class K shares. To obtain more information about the other classes of
shares, please call the applicable Trust at 1-800-927-4648 (for Institutional
and Administrative Class shares) or the Distributor at 1-888-87-PIMCO (for Class
D shares).
The alternative purchase arrangements described in this Guide are designed
to enable a retail investor to choose the method of purchasing Fund shares that
is most beneficial to the investor based on all factors to be considered,
including the amount and intended length of the investment, the particular Fund
and whether the investor intends to exchange shares for shares of other Funds.
Generally, when making an investment decision, investors should consider the
anticipated life of an intended investment in the Funds, the accumulated
distribution and servicing fees plus CDSCs on Class B or Class C shares, the
initial sales charge plus accumulated servicing fees on Class A shares (plus a
CDSC in certain circumstances), the possibility that the anticipated higher
return on Class A shares due to the lower ongoing charges will offset the
initial sales charge paid on such shares, the automatic conversion of
SG-9
<PAGE>
Class B shares to Class A shares and the difference in the CDSCs applicable to
Class A, Class B and Class C shares.
Class A The initial sales charge alternative (Class A) might be preferred by
investors purchasing shares of sufficient aggregate value to qualify for
reductions in the initial sales charge applicable to such shares. Similar
reductions are not available on the contingent deferred sales charge alternative
(Class B) or the asset based sales charge alternative (Class C). Class A shares
are subject to a servicing fee but are not subject to a distribution fee and,
accordingly, such shares are expected to pay correspondingly higher dividends on
a per share basis. However, because initial sales charges are deducted at the
time of purchase, not all of the purchase payment for Class A shares is invested
initially. Class B and Class C shares might be preferable to investors who wish
to have all purchase payments invested initially, although remaining subject to
higher distribution and servicing fees and, for certain periods, being subject
to a CDSC. An investor who qualifies for an elimination of the Class A initial
sales charge should also consider whether he or she anticipates redeeming shares
in a time period which will subject such shares to a CDSC as described below.
See "Initial Sales Charge Alternative--Class A Shares--Class A Deferred Sales
Charge" below.
Class B Class B shares might be preferred by investors who intend to invest in
the Funds for longer periods and who do not intend to purchase shares of
sufficient aggregate value to qualify for sales charge reductions applicable to
Class A shares. Both Class B and Class C shares can be purchased at net asset
value without an initial sales charge. However, unlike Class C shares, Class B
shares convert into Class A shares after the shares have been held for seven
years. After the conversion takes place, the shares will no longer be subject to
a CDSC, and will be subject to the servicing fees charged for Class A shares
which are lower than the distribution and servicing fees charged on either Class
B or Class C shares. See "Deferred Sales Charge Alternative--Class B Shares"
below. Class B shares are not available for purchase by employer sponsored
retirement plans.
Class C Class C shares might be preferred by investors who intend to purchase
shares which are not of sufficient aggregate value to qualify for Class A sales
charges of 1% or less and who wish to have all purchase payments invested
initially. Class C shares are preferable to Class B shares for investors who
intend to maintain their investment for intermediate periods and therefore may
also be preferable for investors who are unsure of the intended length of their
investment. Unlike Class B shares, Class C shares are not subject to a CDSC
after they have been held for one year and are subject to only a 1% CDSC during
the first year. However, because Class C shares do not convert into Class A
shares, Class B shares are preferable to Class C shares for investors who intend
to maintain their investment in the Funds for long periods. See "Asset Based
Sales Charge Alternative--Class C Shares" below.
In determining which class of shares to purchase, an investor should always
consider whether any waiver or reduction of a sales charge or a CDSC is
available. See generally
SG-10
<PAGE>
"Initial Sales Charge Alternative--Class A Shares" and "Waiver of Contingent
Deferred Sales Charges" below.
The maximum single purchase of Class B shares of a Fund is $249,999. The
maximum single purchase of Class C shares of a Fund is $999,999. The Funds may
refuse any order to purchase shares.
For a description of the Distribution and Servicing Plans and distribution
and servicing fees payable thereunder with respect to Class A, Class B and Class
C shares, see "Distributor and Distribution and Servicing Plans" below.
Waiver of Contingent Deferred Sales Charges The CDSC applicable to Class A and
Class C shares is currently waived for (i) any partial or complete redemption in
connection with (a) required minimum distributions to IRA account owners or
beneficiaries who are age 70 1/2 or older or (b) distributions to participants
in employer-sponsored retirement plans upon attaining age 59 1/2 or on account
of death or disability; (ii) any partial or complete redemption in connection
with a qualifying loan or hardship withdrawal from an employer sponsored
retirement plan; (iii) any complete redemption in connection with a distribution
from a qualified employer retirement plan in connection with termination of
employment or termination of the employer's plan and the transfer to another
employer's plan or to an IRA (with the exception of a Roth IRA); (iv) any
partial or complete redemption following death or disability (as defined in the
Internal Revenue Code) of a shareholder (including one who owns the shares as
joint tenant with his or her spouse) from an account in which the deceased or
disabled is named, provided the redemption is requested within one year of the
death or initial determination of disability; (v) any redemption resulting from
a return of an excess contribution to a qualified employer retirement plan or an
IRA (with the exception of a Roth IRA); (vi) up to 10% per year of the value of
a Fund account which (a) has the value of at least $10,000 at the start of such
year and (b) is subject to an Automatic Withdrawal Plan; (vii) redemptions by
Trustees, officers and employees of either Trust, and by directors, officers and
employees of the Distributor, PIMCO Advisors or Pacific Investment Management
Company; (viii) redemptions effected pursuant to a Fund's right to involuntarily
redeem a shareholder's Fund account if the aggregate net asset value of shares
held in such shareholder's account is less than a minimum account size specified
in such Fund's prospectus; (ix) involuntary redemptions caused by operation of
law; (x) redemptions of shares of any Fund that is combined with another Fund,
investment company, or personal holding company by virtue of a merger,
acquisition or other similar reorganization transaction; (xi) redemptions by a
shareholder who is a participant making periodic purchases of not less than $50
through certain employer sponsored savings plans that are clients of a broker-
dealer with which the Distributor has an agreement with respect to such
purchases; (xii) redemptions effected by trustees or other fiduciaries who have
purchased shares for employer-sponsored plans, the trustee, administrator,
fiduciary, broker, trust company or registered investment adviser for which has
an agreement with the Distributor with respect to such purchases; (xiii)
redemptions in connection with IRA accounts established with Form 5305-SIMPLE
under the Code for which
SG-11
<PAGE>
the Trust is the designated financial institution; (xiv) a redemption by a
holder of Class A shares who purchased $1,000,000 or more of Class A shares (and
therefore did not pay a sales charge) where the participating broker or dealer
involved in the sale of such shares waived the commission it would normally
receive from the Distributor pursuant to an agreement with the Distributor; or
(xv) a redemption by a holder of Class A shares where the participating broker
or dealer involved in the purchase of such shares waived the commission it
normally would receive from the Distributor in connection with such purchase
pursuant to an agreement with the Distributor.
The CDSC applicable to Class B shares is currently waived for any partial
or complete redemption in each of the following cases: (a) in connection with
required minimum distributions to IRA account owners or to plan participants or
beneficiaries who are age 70 1/2 or older; (b) involuntary redemptions caused by
operation of law; (c) redemption of shares of any Fund that is combined with
another Fund, investment company, or personal holding company by virtue of a
merger, acquisition or other similar reorganization transaction; (d) following
death or disability (as defined in the Code) of a shareholder (including one who
owns the shares as joint tenant with his or her spouse) from an account in which
the deceased or disabled is named, provided the redemption is requested within
one year of the death or initial determination of disability; and (e) up to 10%
per year of the value of a Fund account which (i) has a value of at least
$10,000 at the start of such year and (ii) is subject to an Automatic Withdrawal
Plan. See "How to Redeem--Automatic Withdrawal Plan."
The Distributor may require documentation prior to waiver of the CDSC for
any class, including distribution letters, certification by plan administrators,
applicable tax forms, death certificates, physicians' certificates, etc.
Initial Sales Charge Alternative--Class A Shares
Class A shares are sold at a public offering price equal to their net asset
value per share plus a sales charge, as set forth below. As indicated below
under "Class A Deferred Sales Charge," certain investors that purchase
$1,000,000 or more of any Fund's Class A shares (and thus pay no initial sales
charge) may be subject to a 1% CDSC if they redeem such shares during the first
18 months after their purchase.
SG-12
<PAGE>
Initial Sales Charge -- Class A Shares
Growth, Select Growth, Target, Opportunity, Capital Appreciation, Mid-Cap,
Growth & Income,* Equity Income, Renaissance, Value, Small-Cap Value, Tax-
Efficient Equity, International, Innovation and Global Innovation Funds, and
PIMCO Funds Asset Allocation Series -- 90/10 and 40/60 Portfolios
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Public Discount or Commission to
Amount Invested Offering Price dealers as % of Public Offering
Price
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 5.82% 5.50% 4.75%
-----------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.71% 4.50% 4.00%
-----------------------------------------------------------------------------------------------------------------
$100,000 - 249,999 3.63% 3.50% 3.00%
-----------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.56% 2.50% 2.00%
-----------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
-----------------------------------------------------------------------------------------------------------------
$1,000,000 + 0.00%/(1)/ 0.00%/(1)/ 0.75%/(2)/
-----------------------------------------------------------------------------------------------------------------
</TABLE>
* Class A, B and C shares of the Growth & Income Fund will not be available
for purchase prior to August 7, 2000.
PIMCO Funds Asset Allocation Series -- 30/70 Portfolio
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Public Discount or Commission to
Amount Invested Offering Price dealers as % of Public Offering
Price
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 4.71% 4.50% 4.00%
----------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.17% 4.00% 3.50%
----------------------------------------------------------------------------------------------------------------
$100,000 - 249,999 3.63% 3.50% 3.00%
----------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.56% 2.50% 2.00%
----------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
----------------------------------------------------------------------------------------------------------------
$1,000,000 + 0.00%/(1)/ 0.00%/(1)/ 0.50%/(2)/
----------------------------------------------------------------------------------------------------------------
</TABLE>
SG-13
<PAGE>
Total Return, High Yield, Long-Term U.S. Government, Global Bond II, Foreign
Bond, Emerging Markets Bond, Strategic Balanced and Convertible Funds
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Public Discount or Commission to
Amount Invested Offering Price dealers as % of Public Offering
Price
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 4.71% 4.50% 4.00%
-----------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 4.17% 4.00% 3.50%
-----------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 3.63% 3.50% 3.00%
-----------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 2.56% 2.50% 2.00%
-----------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
-----------------------------------------------------------------------------------------------------------------
$1,000,000+ 0.00%/(1)/ 0.00%/(1)/ 0.50%/(3)/
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Low Duration, Real Return Bond, Municipal Bond and StocksPLUS Funds
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Public Discount or Commission to
Amount Invested Offering Price dealers as % of Public Offering
Price
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 3.09% 3.00% 2.50%
-------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 2.56% 2.50% 2.00%
-------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 2.04% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------------
$250,000 - $499,999 1.52% 1.50% 1.25%
-------------------------------------------------------------------------------------------------------------------
$500,000 - $999,999 1.27% 1.25% 1.00%
-------------------------------------------------------------------------------------------------------------------
$1,000,000+ 0.00%/(1)/ 0.00%/(1)/ 0.50%/(3)/
-------------------------------------------------------------------------------------------------------------------
</TABLE>
SG-14
<PAGE>
Short-Term Fund
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Public Discount or Commission to
Amount Invested Offering Price dealers as % of Public Offering
Price
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 2.04% 2.00% 1.75%
------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 1.78% 1.75% 1.50%
------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 1.52% 1.50% 1.25%
------------------------------------------------------------------------------------------------------------------
$250,000+ 0.00%/(1)/ 0.00%/(1)/ 0.25%/(3)/
------------------------------------------------------------------------------------------------------------------
</TABLE>
California Municipal Bond, California Intermediate Municipal Bond and New York
Municipal Bond Funds
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Public Discount or Commission to
Amount Invested Offering Price dealers as % of Public Offering
Price
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$0 - $49,999 3.09% 3.00% 2.75%
-------------------------------------------------------------------------------------------------------------------
$50,000 - $99,999 2.04% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------------
$100,000 - $249,999 2.01% 1.00% 0.90%
-------------------------------------------------------------------------------------------------------------------
$250,000+ 0.00%/(1)/ 0.00%/(1)/ 0.25%/(4)/
-------------------------------------------------------------------------------------------------------------------
</TABLE>
1. As shown, investors that purchase more than $1,000,000 of any Fund's Class
A shares ($250,000 in the case of the Short-Term Fund) will not pay any
initial sales charge on such purchase. However, except with regard to
purchases of Class A shares of the Money Market, California Municipal Bond,
California Intermediate Municipal Bond and New York Municipal Bond Funds,
purchasers of $1,000,000 or more ($250,000 in the case of the Short-Term
Fund) of Class A shares (other than those purchasers described below under
"Sales at Net Asset Value" where no commission is paid) will be subject to
a CDSC of 1% if such shares are redeemed during the first 18 months after
such shares are purchased unless such purchaser is eligible for a waiver of
the CDSC as described under "Waiver of Contingent Deferred Sales Charges"
above. See "Class A Deferred Sales Charge" below.
2. The Distributor will pay a commission to dealers who sell amounts of
$1,000,000 or more of Class A shares (or who sell Class A shares at net
asset value to certain employer-sponsored plans as outlined in ''Sales at
Net Asset Value'' below) of each of these Funds and the Portfolios (except
for the 30/70 Portfolio) according to the following schedule: 0.75% of the
first $2,000,000, 0.50% of amounts from $2,000,001 to $5,000,000, and 0.25%
of amounts over $5,000,000; and of the 30/70 Portfolio according to the
following schedule: 0.50% of the first $2,000,000, and 0.25% of amounts
over $2,000,000.
3. The Distributor will pay a commission to dealers who sell amounts of
$1,000,000 ($250,000 in the case of the Short-Term Fund) or more of Class A
shares (or who sell Class A shares at net asset value to certain employer-
sponsored plans as outlined in "Sales at Net Asset Value") of each of these
Funds except for the Money Market Fund (for which no payment is made) and
the Short-Term and Short Duration Municipal Income Funds, according to the
following schedule: 0.50% of the first $2,000,000 and 0.25% of amounts over
$2,000,000; and 0.25% of sales of Class A shares of the Short-Term and
Short Duration Municipal Income Funds in excess of $250,000.
4. The Distributor will pay a commission to dealers who sell $250,000 or more
of Class A shares of the California Municipal Bond, California Intermediate
Municipal Bond and New York Municipal Bond Funds at an annual rate of
0.25%, to be paid in quarterly installments.
Each Fund receives the entire net asset value of its Class A shares
purchased by investors. The Distributor receives the sales charge shown above
less any applicable discount or commission "reallowed" to participating brokers
in the amounts indicated in the table above. The Distributor may, however, elect
to reallow the entire sales charge to participating brokers for all sales with
respect to which orders are placed with the Distributor for any particular Fund
during a particular period. During such periods as may from time to time be
designated by the Distributor, the Distributor will pay an additional amount of
up to 0.50% of the
SG-15
<PAGE>
purchase price on sales of Class A shares of all or selected Funds purchased to
each participating broker which obtains purchase orders in amounts exceeding
thresholds established from time to time by the Distributor. From time to time,
the Distributor, its parent and/or its affiliates may make additional payments
to one or more participating brokers based upon factors such as the level of
sales or the length of time clients' assets have remained in the Trust.
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are issued at net asset value and are not subject to
any sales charges.
Under the circumstances described below, investors may be entitled to pay
reduced sales charges for Class A shares.
Combined Purchase Privilege Investors may qualify for a reduced sales charge by
combining purchases of the Class A shares of one or more Funds which offer Class
A shares (together, "eligible PIMCO Funds") into a "single purchase," if the
resulting purchase totals at least $50,000. The term single purchase refers
to:
(i) a single purchase by an individual, or concurrent purchases, which
in the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of 21
years purchasing Class A shares of the eligible PIMCO Funds for his,
her or their own account;
(ii) single purchase by a trustee or other fiduciary purchasing shares
for a single trust, estate or fiduciary account although more than
one beneficiary is involved; or
(iii) a single purchase for the employee benefit plans of a single
employer.
For further information, call the Distributor at 1-800-426-0107 or your
broker.
Cumulative Quantity Discount (Right of Accumulation) A purchase of additional
Class A shares of any eligible PIMCO Fund may qualify for a Cumulative Quantity
Discount at the rate applicable to the discount bracket obtained by adding:
(i) the investor's current purchase;
(ii) the value (at the close of business on the day of the current
purchase) of all Class A shares of any eligible PIMCO Fund held by
the investor computed at the maximum offering price; and
SG-16
<PAGE>
(iii) the value of all shares described in paragraph (ii) owned by another
shareholder eligible to be combined with the investor's purchase
into a "single purchase" as defined above under "Combined
Purchase Privilege."
For example, if you owned Class A shares of the Equity Income Fund worth
$25,000 at the current maximum offering price and wished to purchase Class
A shares of the Growth Fund worth an additional $30,000, the sales charge
for the $30,000 purchase would be at the 4.50% rate applicable to a single
$55,000 purchase of shares of the Growth Fund, rather than the 5.50%
rate.
Letter of Intent An investor may also obtain a reduced sales charge by means of
a written Letter of Intent, which expresses an intention to invest not less than
$50,000 within a period of 13 months in Class A shares of any eligible PIMCO
Fund(s) other than the Money Market Fund. Each purchase of shares under a Letter
of Intent will be made at the public offering price or prices applicable at the
time of such purchase to a single transaction of the dollar amount indicated in
the Letter. At the investor's option, a Letter of Intent may include purchases
of Class A shares of any eligible PIMCO Fund (other than the Money Market Fund)
made not more than 90 days prior to the date the Letter of Intent is signed;
however, the 13-month period during which the Letter is in effect will begin on
the date of the earliest purchase to be included and the sales charge on any
purchases prior to the Letter will not be adjusted.
Investors qualifying for the Combined Purchase Privilege described above
may purchase shares of the eligible PIMCO Funds under a single Letter of Intent.
For example, if at the time you sign a Letter of Intent to invest at least
$100,000 in Class A shares of any Fund (other than the Money Market Fund), you
and your spouse each purchase Class A shares of the Growth Fund worth $30,000
(for a total of $60,000), it will only be necessary to invest a total of $40,000
during the following 13 months in Class A shares of any of the Funds (other than
the Money Market Fund) to qualify for the 3.50% sales charge on the total amount
being invested (the sales charge applicable to an investment of $100,000 in any
of the Funds other than the Money Market, Short-Term, Low Duration, Real Return
Bond, Short Duration Municipal Income, California Municipal Bond, Municipal
Bond, California Intermediate Municipal Bond, New York Municipal Bond and
StocksPLUS Funds).
A Letter of Intent is not a binding obligation to purchase the full amount
indicated. The minimum initial investment under a Letter of Intent is 5% of such
amount. Shares purchased with the first 5% of such amount will be held in escrow
(while remaining registered in your name) to secure payment of the higher sales
charge applicable to the shares actually purchased in the event the full
intended amount is not purchased. If the full amount indicated is not purchased,
a sufficient amount of such escrowed shares will be involuntarily redeemed to
pay the additional sales charge applicable to the amount actually purchased, if
necessary. Dividends on escrowed shares, whether paid in cash or reinvested in
additional eligible PIMCO Fund shares, are not subject to escrow. When the full
amount indicated has been purchased, the escrow will be released.
SG-17
<PAGE>
If you wish to enter into a Letter of Intent in conjunction with your
initial investment in Class A shares of a Fund, you should complete the
appropriate portion of the account application. If you are a current Class A
shareholder desiring to do so you may obtain a form of Letter of Intent by
contacting the Distributor at 1-800-426-0107 or any broker participating in this
program.
Reinstatement Privilege A Class A shareholder who has caused any or all of his
shares (other than the Money Market Fund shares that were not acquired by
exchanging Class A shares of another Fund) to be redeemed may reinvest all or
any portion of the redemption proceeds in Class A shares of any eligible PIMCO
Fund at net asset value without any sales charge, provided that such
reinvestment is made within 120 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined. See "How Net Asset Value is Determined" in the applicable Retail
Prospectus. A reinstatement pursuant to this privilege will not cancel the
redemption transaction and, consequently, any gain or loss so realized may be
recognized for federal tax purposes except that no loss may be recognized to the
extent that the proceeds are reinvested in shares of the same Fund within 30
days. The reinstatement privilege may be utilized by a shareholder only once,
irrespective of the number of shares redeemed, except that the privilege may be
utilized without limit in connection with transactions whose sole purpose is to
transfer a shareholder's interest in a Fund to his Individual Retirement Account
or other qualified retirement plan account. An investor may exercise the
reinstatement privilege by written request sent to the Distributor or to the
investor's broker.
Sales at Net Asset Value Each Fund may sell its Class A shares at net asset
value without a sales charge to (a) current or retired officers, trustees,
directors or employees of either Trust, PIMCO Advisors, Pacific Investment
Management Company or the Distributor, other affiliates of PIMCO Advisors at the
discretion of PIMCO Advisors, Pacific Investment Management Company or the
Distributor, a parent, brother or sister of any such officer, trustee, director
or employee or a spouse or child of any of the foregoing persons, or any trust,
profit sharing or pension plan for the benefit of any such person and to any
other person if the Distributor anticipates that there will be minimal sales
expenses associated with the sale, (b) current registered representatives and
other full-time employees of participating brokers or such persons' spouses or
for trust or custodial accounts for their minor children, (c) trustees or other
fiduciaries purchasing shares for certain plans sponsored by employers,
professional organizations or associations or charitable organizations, the
trustee, administrator, fiduciary, broker, trust company or registered
investment adviser for which has an agreement with the Distributor, PIMCO
Advisors or Pacific Investment Management Company with respect to such purchases
(including provisions related to minimum levels of investment in the Trust), and
to participants in such plans and their spouses purchasing for their account(s)
or IRAs (with the exception of Roth IRAs), (d) participants investing through
accounts known as "wrap accounts" established with brokers or dealers approved
by the Distributor where such brokers or dealers are paid a single, inclusive
fee for brokerage and investment management services, (e) client accounts of
broker-dealers or registered investment advisers affiliated with such
SG-18
<PAGE>
broker-dealers with which the Distributor, PIMCO Advisors or Pacific Investment
Management Company has an agreement for the use of a Fund in particular
investment products or programs, (f) accounts for which certain trust companies
that may be affiliated with the Trust or the Fund's Adviser serves as trustee or
custodian, and (g) investors who are investing the proceeds from a redemption of
shares of another open-end investment company (mutual fund) on which the
investor paid an initial sales charge, but only to the extent of such proceeds.
As described above, the Distributor will only pay service fees and not pay any
initial commission or other fees to dealers upon the sale of Class A shares to
the purchasers described in this paragraph except for sales to purchasers
described under (c) in this paragraph.
Notification of Distributor An investor or participating broker must notify the
Distributor whenever a quantity discount or reduced sales charge is applicable
to a purchase and must provide the Distributor with sufficient information at
the time of purchase to verify that each purchase qualifies for the privilege or
discount. Upon such notification, the investor will receive the lowest
applicable sales charge. The quantity discounts described above may be modified
or terminated at any time.
Class A Deferred Sales Charge For all Funds, except the Money Market, California
Municipal Bond, California Intermediate Municipal Bond and New York Municipal
Bond Funds, investors who purchase $1,000,000 ($250,000 in the case of the
Short-Term Fund) or more of Class A shares (and, thus, purchase such shares
without any initial sales charge) may be subject to a 1% CDSC (the "Class A
CDSC") if such shares are redeemed within 18 months of their purchase. The Class
A CDSC does not apply to investors purchasing $1,000,000 ($250,000 in the case
of the Short-Term and Short Duration Municipal Income Funds) or more of any
Fund's Class A shares if such investors are otherwise eligible to purchase Class
A shares without any sales charge because they are described under "Sales at Net
Asset Value" above.
For purchases subject to the Class A CDSC, a 1% CDSC will apply for any
redemption of such Class A shares that occurs within 18 months of their
purchase. No CDSC will be imposed if the shares redeemed have been acquired
through the reinvestment of dividends or capital gains distributions or if the
amount redeemed is derived from increases in the value of the account above the
amount of purchase payments subject to the CDSC. In determining whether a CDSC
is payable, it is assumed that Class A shares acquired through the reinvestment
of dividends and distributions are redeemed first, and thereafter that Class A
shares that have been held by an investor for the longest period of time are
redeemed first.
The Class A CDSC does not apply to Class A shares of the Money Market,
California Municipal Bond, California Intermediate Municipal Bond and New York
Municipal Bond Funds but, if Class A shares of these Funds are purchased in a
transaction that, for any other Fund, would be subject to the CDSC (i.e., a
purchase of $1,000,000 ($250,000 in the case of the Short-Term and Short
Duration Municipal Income Funds) or more) and are subsequently exchanged for
Class A shares of any other Fund, a Class A CDSC will apply to the shares of the
Fund(s) acquired by exchange for a period of 18 months from the date of the
exchange.
SG-19
<PAGE>
The Class A CDSC is currently waived in connection with certain redemptions
as described above under "Alternative Purchase Arrangements--Waiver of
Contingent Deferred Sales Charges." For more information about the Class A CDSC,
call the Distributor at 1-800-426-0107.
Participating Brokers Investment dealers and other financial intermediaries
provide varying arrangements for their clients to purchase and redeem Fund
shares. Some may establish higher minimum investment requirements than set
forth above. Firms may arrange with their clients for other investment or
administrative services and may independently establish and charge transaction
fees and/or other additional amounts to their clients for such services, which
charges would reduce clients' return. Firms also may hold Fund shares in
nominee or street name as agent for and on behalf of their customers. In such
instances, the Trust's transfer agent will have no information with respect to
or control over accounts of specific shareholders. Such shareholders may obtain
access to their accounts and information about their accounts only from their
broker. In addition, certain privileges with respect to the purchase and
redemption of shares or the reinvestment of dividends may not be available
through such firms. Some firms may participate in a program allowing them access
to their clients' accounts for servicing including, without limitation,
transfers of registration and dividend payee changes; and may perform functions
such as generation of confirmation statements and disbursement of cash
dividends. This Guide and the Retail Prospectuses should be read in connection
with such firms' material regarding their fees and services.
Deferred Sales Charge Alternative--Class B Shares
Class B shares are sold at their current net asset value without any
initial sales charge. The full amount of an investor's purchase payment will be
invested in shares of the Fund(s) selected. A CDSC will be imposed on Class B
shares if an investor redeems an amount which causes the current value of the
investor's account for a Fund to fall below the total dollar amount of purchase
payments subject to the CDSC, except that no CDSC is imposed if the shares
redeemed have been acquired through the reinvestment of dividends or capital
gains distributions or if the amount redeemed is derived from increases in the
value of the account above the amount of purchase payments subject to the CDSC.
Class B shares of the Short-Term Fund and the Money Market Fund are not
offered for initial purchase but may be obtained through exchanges of Class B
shares of other Funds. See "Exchange Privilege" below. Class B shares are not
available for purchase by employer sponsored retirement plans.
Whether a CDSC is imposed and the amount of the CDSC will depend on the
number of years since the investor made a purchase payment from which an amount
is being redeemed. Purchases are subject to the CDSC according to the following
schedule:
SG-20
<PAGE>
Years Since Purchase Percentage Contingent
Payment was Made Deferred Sales Charge
---------------- ---------------------
First 5
Second 4
Third 3
Fourth 3
Fifth 2
Sixth 1
Seventh 0*
* After the seventh year, Class B shares convert into Class A shares as
described below.
In determining whether a CDSC is payable, it is assumed that the purchase
payment from which a redemption is made is the earliest purchase payment from
which a redemption or exchange has not already been fully effected.
The following example will illustrate the operation of the Class B CDSC:
Assume that an individual opens a Fund account and makes a purchase payment
of $10,000 for Class B shares of a Fund and that six months later the value of
the investor's account for that Fund has grown through investment performance
and reinvestment of distributions to $11,000. The investor then may redeem up
to $1,000 from that Fund account ($11,000 minus $10,000) without incurring a
CDSC. If the investor should redeem $3,000 from that Fund account, a CDSC would
be imposed on $2,000 of the redemption (the amount by which the investor's
account for the Fund was reduced below the amount of the purchase payment). At
the rate of 5%, the Class B CDSC would be $100.
In determining whether an amount is available for redemption without
incurring a CDSC, the purchase payments made for all Class B shares in the
shareholder's account for the particular Fund are aggregated, and the current
value of all such shares is aggregated. Any CDSC imposed on a redemption of
Class B shares is paid to the Distributor.
Class B shares are subject to higher distribution fees than Class A shares
for a fixed period after their purchase, after which they automatically convert
to Class A shares and are no longer subject to such higher distribution fees.
Class B shares of each Fund automatically convert into Class A shares after they
have been held for seven years.
For sales of Class B shares made and services rendered to Class B
shareholders, the Distributor intends to make payments to participating brokers,
at the time a shareholder purchases Class B shares, of 4.00% of the purchase
amount for each of the Funds. During
SG-21
<PAGE>
such periods as may from time to time be designated by the Distributor, the
Distributor will pay selected participating brokers an additional amount of up
to .50% of the purchase price on sales of Class B shares of all or selected
Funds purchased to each participating broker which obtains purchase orders in
amounts exceeding thresholds established from time to time by the Distributor.
The Class B CDSC is currently waived in connection with certain redemptions
as described above under "Alternative Purchase Arrangements --Waiver of
Contingent Deferred Sales Charges." For more information about the Class B
CDSC, call the Distributor at 1-800-426-0107.
Asset Based Sales Charge Alternative--Class C Shares
Class C shares are sold at their current net asset value without any
initial sales charge. A CDSC is imposed on Class C shares if an investor redeems
an amount which causes the current value of the investor's account for a Fund to
fall below the total dollar amount of purchase payments subject to the CDSC,
except that no CDSC is imposed if the shares redeemed have been acquired through
the reinvestment of dividends or capital gains distributions or if the amount
redeemed is derived from increases in the value of the account above the amount
of purchase payments subject to the CDSC. All of an investor's purchase payments
are invested in shares of the Fund(s) selected.
Whether a CDSC is imposed and the amount of the CDSC will depend on the
number of years since the investor made a purchase payment from which an amount
is being redeemed. Purchases are subject to the CDSC according to the following
schedule:
Years Since Purchase Percentage Contingent
Payment was Made Deferred Sales Charge
---------------- ---------------------
First 1
Thereafter 0
In determining whether a CDSC is payable, it is assumed that the purchase
payment from which the redemption is made is the earliest purchase payment (from
which a redemption or exchange has not already been effected).
The following example will illustrate the operation of the Class C CDSC:
Assume that an individual opens a Fund account and makes a purchase payment
of $10,000 for Class C shares of a Fund and that six months later the value of
the investor's account for that Fund has grown through investment performance
and reinvestment of distributions to $11,000. The investor then may redeem up to
$1,000 from that Fund account ($11,000 minus $10,000) without incurring a CDSC.
If the investor should redeem $3,000
SG-22
<PAGE>
from that Fund account, a CDSC would be imposed on $2,000 of the redemption (the
amount by which the investor's account for the Fund was reduced below the amount
of the purchase payment). At the rate of 1%, the Class C CDSC would be $20.
In determining whether an amount is available for redemption without
incurring a CDSC, the purchase payments made for all Class C shares in the
shareholder's account for the particular Fund are aggregated, and the current
value of all such shares is aggregated. Any CDSC imposed on a redemption of
Class C shares is paid to the Distributor. Unlike Class B shares, Class C shares
do not automatically convert to any other class of shares of the Funds.
Except as described below, for sales of Class C shares made and services
rendered to Class C shareholders, the Distributor expects to make payments to
participating brokers, at the time the shareholder purchases Class C shares, of
1.00% (representing .75% distribution fees and .25% servicing fees) of the
purchase amount for all Funds, except the Money Market, Short-Term Duration,
Real Return Bond, Municipal Bond and StocksPLUS Funds. For the Low Duration,
Real Return Bond, Municipal Bond and StocksPLUS Funds, the Distributor expects
to make payments of .75% (representing .50% distribution fees and .25% service
fees); for the Short-Term Fund, the Distributor expects to make payments of .55%
(representing .30% distribution fees and .25% service fees); and for the Money
Market Fund, the Distributor expects to make no payment. For sales of Class C
shares made to participants making periodic purchases of not less than $50
through certain employer sponsored savings plans which are clients of a broker-
dealer with which the Distributor has an agreement with respect to such
purchases, no payments are made at the time of purchase. During such periods as
may from time to time be designated by the Distributor, the Distributor will pay
an additional amount of up to .50% of the purchase price on sales of Class C
shares of all or selected Funds purchased to each participating broker which
obtains purchase orders in amounts exceeding thresholds established from time to
time by the Distributor.
The Class C CDSC is currently waived in connection with certain redemptions
as described above under "Alternative Purchase Arrangements--Waiver of
Contingent Deferred Sales Charges." For more information about the Class C
CDSC, contact the Distributor at 1-800-426-0107.
SG-23
<PAGE>
EXCHANGE PRIVILEGE
Except with respect to exchanges for shares of Funds for which sales may be
suspended to new investors or as provided in the applicable Retail Prospectus or
in this Guide, a shareholder may exchange Class A, Class B and Class C shares of
any Fund for the same Class of shares of any other Fund in an account with
identical registration on the basis of their respective net asset values (except
that a sales charge will apply on exchanges of Class A shares of the Money
Market Fund on which no sales charge was paid at the time of purchase.) Class A
shares of the Money Market Fund may be exchanged for Class A shares of any other
Fund, but the usual sales charges applicable to investments in such other Fund
apply on shares for which no sales charge was paid at the time of purchase.
There are currently no exchange fees or charges. All exchanges are subject to
the $2,500 minimum initial purchase requirement for each Fund, except with
respect to tax-qualified programs and exchanges effected through the PIMCO Funds
Auto-Exchange plan. An exchange will constitute a taxable sale for federal
income tax purposes.
Investors who maintain their account with the Distributor may exchange
shares by a written exchange request sent to PIMCO Funds Distributors LLC, P.O.
Box 9688, Providence, RI 02940-0926 or, unless the investor has specifically
declined telephone exchange privileges on the account application or elected in
writing not to utilize telephone exchanges, by a telephone request to the
Distributor at 1-800-426-0107. Each Trust will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and may be
liable for any losses due to unauthorized or fraudulent instructions if it fails
to employ such procedures. Each Trust will require a form of personal
identification prior to acting on a caller's telephone instructions, will
provide written confirmations of such transactions and will record telephone
instructions. Exchange forms are available from the Distributor at 1-800-426-
0107 and may be used if there will be no change in the registered name or
address of the shareholder. Changes in registration information or account
privileges may be made in writing to the Transfer Agent, PFPC, Inc., P.O. Box
9688, Providence, RI 02940-0926, or by use of forms which are available from
the Distributor. A signature guarantee is required. See "How to Buy Shares--
Signature Guarantee." Telephone exchanges may be made between 9:00 a.m., Eastern
time and the close of regular trading (normally 4:00 p.m., Eastern time) on the
New York Stock Exchange on any day the Exchange is open (generally weekdays
other than normal holidays). The Trusts reserve the right to refuse exchange
purchases if, in the judgment of the Fund's Adviser, the purchase would
adversely affect the Fund and its shareholders. In particular, a pattern of
exchanges characteristic of "market-timing" strategies may be deemed by an
Adviser to be detrimental to a Trust or a particular Fund.
The Trusts reserve the right to refuse exchange purchases if, in the
judgment of an Adviser or a Fund's sub-adviser, the purchase would adversely
affect a Fund and its shareholders. In particular, a pattern of exchanges
characteristic of "market-timing" strategies may be deemed by an Adviser to be
detrimental to a Trust or a particular Fund. Currently, each Trust limits the
number of "round trip" exchanges an investor may make. An investor makes a
"round trip" exchange when the investor purchases shares of a particular Fund,
subsequently exchanges those shares for shares of a different PIMCO Fund, and
then exchanges back into the originally purchased Fund. The Trusts have the
right to refuse any exchange for any investor who completes (by making the
exchange back into the shares of the originally purchased Fund) more than six
round trip exchanges in any twelve-month period. Although the Trusts have no
current intention of terminating or modifying the exchange privilege other than
as set forth in the preceding sentence, each reserves the right to do so at
SG-24
<PAGE>
any time. Except as otherwise permitted by the Securities and Exchange
Commission, each Trust will give 60 days' advance notice to shareholders of any
termination or material modification of the exchange privilege. For further
information about exchange privileges, contact your participating broker or call
the Distributor at 1-800-426-0107.
With respect to Class B and Class C shares, or Class A shares subject to a
CDSC, if less than all of an investment is exchanged out of a Fund, any portion
of the investment attributable to capital appreciation and/or reinvested
dividends or capital gains distributions will be exchanged first, and thereafter
any portions exchanged will be from the earliest investment made in the Fund
from which the exchange was made. Shareholders should take into account the
effect of any exchange on the applicability of any CDSC that may be imposed upon
any subsequent redemption.
Investors may also select the PIMCO Funds Auto-Exchange plan which
establishes automatic periodic exchanges. For further information on automatic
exchanges see "How to Buy Shares--PIMCO Funds Auto-Exchange" above.
Exchange Limitations
Until July 3, 2000, shareholders will not be permitted to exchange their
shares of any Fund or series of the Trusts for shares of the Global Innovation
Fund, although investors will be permitted to exchange their shares of the
Global Innovation Fund for shares of the same class of any other Fund or series
of the Trusts, subject to any restrictions on exchanges in the applicable
Prospectus(es). This restriction may be changed or eliminated at any time at
the discretion of the Distributor.
SG-25
<PAGE>
HOW TO REDEEM
Class A, Class B or Class C shares may be redeemed through a participating
broker, by telephone, by submitting a written redemption request directly to the
Transfer Agent (for non-broker accounts), or through an Automatic Withdrawal
Plan or PIMCO Funds Fund Link.
A CDSC may apply to a redemption of Class A, Class B or Class C shares. See
"Alternative Purchase Arrangements" above. Shares are redeemed at their net
asset value next determined after a redemption request has been received as
described below, less any applicable CDSC. There is no charge by the Distributor
(other than an applicable CDSC) with respect to a redemption; however, a
participating broker who processes a redemption for an investor may charge
customary commissions for its services (which may vary). Dealers and other
financial services firms are obligated to transmit orders promptly. Requests for
redemption received by dealers or other firms prior to the close of regular
trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on a
regular business day and received by the Distributor prior to the close of the
Distributor's business day will be confirmed at the net asset value effective at
the closing of the Exchange on that day, less any applicable CDSC.
Other than an applicable CDSC, you will not pay any special fees or charges
to the Trust or the Distributor when you sell your shares. However, if you sell
your shares through your broker, dealer or other financial intermediary, that
firm may charge you a commission or other fee for processing your redemption
request.
Redemptions of Fund shares may be suspended when trading on the New York
Stock Exchange is restricted or during an emergency which makes it impracticable
for the Funds to dispose of their securities or to determine fairly the value of
their net assets, or during any other period as permitted by the Securities and
Exchange Commission for the protection of investors. Under these and other
unusual circumstances, the Trust may suspend redemptions or postpone payments
for more than seven days, as permitted by law.
Direct Redemption
A shareholder's original account application permits the shareholder to
redeem by written request and by telephone (unless the shareholder specifically
elects not to utilize telephone redemptions) and to elect one or more of the
additional redemption procedures described below. A shareholder may change the
instructions indicated on his original account application, or may request
additional redemption options, only by transmitting a written direction to the
Transfer Agent. Requests to institute or change any of the additional redemption
procedures will require a signature guarantee.
Redemption proceeds will normally be mailed to the redeeming shareholder
within seven days or, in the case of wire transfer or Fund Link redemptions,
sent to the designated bank account within one business day. Fund Link
redemptions may be received by the bank on the second or third business day. In
cases where shares have recently been purchased by personal check, redemption
proceeds may be withheld until the check has been collected, which may take up
to 15 days. To avoid such withholding, investors should purchase shares by
certified or bank check or by wire transfer.
Written Requests
To redeem shares in writing (whether or not represented by certificates), a
shareholder must send the following items to the Transfer Agent, PFPC, Inc.,
P.O. Box 9688, Providence, RI 02940-0926.
(1) a written request for redemption signed by all registered owners exactly as
the account is registered on the Transfer Agent's records, including
fiduciary titles, if any, and
SG-26
<PAGE>
specifying the account number and the dollar amount or number of shares to
be redeemed;
(2) for certain redemptions described below, a guarantee of all signatures on
the written request or on the share certificate or accompanying stock
power, if required, as described under "How to Buy Shares--Signature
Guarantee";
(3) any share certificates issued for any of the shares to be redeemed (see
"Certificated Shares" below); and
(4) any additional documents which may be required by the Transfer Agent for
redemption by corporations, partnerships or other organizations, executors,
administrators, trustees, custodians or guardians, or if the redemption is
requested by anyone other than the shareholder(s) of record.
Transfers of shares are subject to the same requirements. A signature
guarantee is not required for a redemption requested by and payable to all
shareholders of record for the account that is to be sent to the address of
record for that account. To avoid delay in redemption or transfer, shareholders
having any questions about these requirements should contact the Transfer Agent
in writing or call the Distributor at 1-800-426-0107 before submitting a
request. Redemption or transfer requests will not be honored until all required
documents have been completed by the shareholder and received by the Transfer
Agent. This redemption option does not apply to shares held in broker "street
name" accounts. Shareholders whose shares are held in broker "street name"
accounts must redeem through their broker.
If the proceeds of the redemption (i) are to be paid to a person other than
the record owner, (ii) are to be sent to an address other than the address of
the account on the Transfer Agent's records or (iii) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power must be guaranteed as
described above, except that the Distributor may waive the signature guarantee
requirement for redemptions up to $2,500 by a trustee of a qualified retirement
plan, the administrator for which has an agreement with the Distributor.
Telephone Redemptions
Each Trust accepts telephone requests for redemption of uncertificated
shares, except for investors who have specifically declined telephone redemption
privileges on the account application or elected in writing not to utilize
telephone redemptions. The proceeds of a telephone redemption will be sent to
the record shareholder at his record address. Changes in account information
must be made in a written authorization with a signature guarantee. See "How to
Buy Shares--Signature Guarantee." Telephone redemptions will not be accepted
during the 30-day period following any change in an account's record address.
This
SG-27
<PAGE>
redemption option does not apply to shares held in broker "street name"
accounts. Shareholders whose shares are held in broker "street name" accounts
must redeem through their broker.
By completing an account application, an investor agrees that the
applicable Trust, the Distributor and the Transfer Agent shall not be liable for
any loss incurred by the investor by reason of the Trust accepting unauthorized
telephone redemption requests for his account if the Trust reasonably believes
the instructions to be genuine. Thus, shareholders risk possible losses in the
event of a telephone redemption not authorized by them. Each Trust may accept
telephone redemption instructions from any person identifying himself as the
owner of an account or the owner's broker where the owner has not declined in
writing to utilize this service. Each Trust will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine, and may be
liable for any losses due to unauthorized or fraudulent instructions if it fails
to employ such procedures. Each Trust will require a form of personal
identification prior to acting on a caller's telephone instructions, will
provide written confirmations of such transactions and will record telephone
instructions.
A shareholder making a telephone redemption should call the Distributor at
1-800-426-0107 and state (i) the name of the shareholder as it appears on the
Transfer Agent's records, (ii) his account number with the Trust, (iii) the
amount to be withdrawn and (iv) the name of the person requesting the
redemption. Usually the proceeds are sent to the investor on the next Trust
business day after the redemption is effected, provided the redemption request
is received prior to the close of regular trading (normally 4:00 p.m., Eastern
time) on the New York Stock Exchange that day. If the redemption request is
received after the close of the New York Stock Exchange, the redemption is
effected on the following Trust business day at that day's net asset value and
the proceeds are usually sent to the investor on the second following Trust
business day. Each Trust reserves the right to terminate or modify the
telephone redemption service at any time. During times of severe disruptions in
the securities markets, the volume of calls may make it difficult to redeem by
telephone, in which case a shareholder may wish to send a written request for
redemption as described under "Written Requests" above. Telephone communications
may be recorded by the Distributor or the Transfer Agent.
Fund Link Redemptions
If a shareholder has established Fund Link, the shareholder may redeem
shares by telephone and have the redemption proceeds sent to a designated
account at a financial institution. Fund Link is normally established within 45
days of receipt of a Fund Link application by the Transfer Agent. To use Fund
Link for redemptions, call the Distributor at 1-800-426-0107. Subject to the
limitations set forth above under "Telephone Redemptions," the Distributor, a
Trust and the Transfer Agent may rely on instructions by any registered owner
believed to be genuine and will not be responsible to any shareholder for any
loss, damage or expense arising out of such instructions. Requests received by
the Transfer Agent prior to the close of regular trading (normally 4:00 p.m.,
Eastern time) on the New York Stock Exchange
SG-28
<PAGE>
on a business day will be processed at the net asset value on that day and the
proceeds (less any CDSC) will normally be sent to the designated bank account on
the following business day and received by the bank on the second or third
business day. If the redemption request is received after the close of regular
trading on the New York Stock Exchange, the redemption is effected on the
following business day. Shares purchased by check may not be redeemed through
Fund Link until such shares have been owned (i.e., paid for) for at least 15
days. Fund Link may not be used to redeem shares held in certificated form.
Changes in bank account information must be made by completing a new Fund
Link application, signed by all owners of record of the account, with all
signatures guaranteed. See "How to Buy Shares--Signature Guarantee." See "How to
Buy Shares--PIMCO Funds Fund Link" for information on establishing the Fund Link
privilege. Either Trust may terminate the Fund Link program at any time without
notice to its shareholders. This redemption option does not apply to shares held
in broker "street name" accounts. Shareholders whose shares are held in broker
"street name" accounts must redeem through their broker.
PIMCO Funds Automated Telephone System
PIMCO Funds Automated Telephone System ("ATS") is an automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone telephone. ATS may be used on already-
established Fund accounts after you obtain a Personal Identification Number
(PIN) by calling the special ATS number: 1-800-223-2413.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
telephone by calling 1-800-223-2413. You must have established ATS privileges to
link your bank account with the Fund to pay for these purchases.
Exchanging Shares. With the PIMCO Funds Exchange Privilege, you can exchange
shares automatically by telephone from your Fund Link Account to another PIMCO
Funds account you have already established by calling 1-800-223-2413. Please
refer to "Exchange Privilege" for details.
Redemptions. You may redeem shares by telephone automatically by calling 1-
800-223-2413 and the Fund will send the proceeds directly to your Fund bank
account. Please refer to "How to Redeem" for details.
Expedited Wire Transfer Redemptions
If a shareholder has given authorization for expedited wire redemption,
shares can be redeemed and the proceeds sent by federal wire transfer to a
single previously designated bank account. Requests received by a Trust prior to
the close of the New York Stock Exchange will result in shares being redeemed
that day at the next determined net asset value (less any
SG-29
<PAGE>
CDSC). Normally the proceeds will be sent to the designated bank account the
following business day. The bank must be a member of the Federal Reserve wire
system. Delivery of the proceeds of a wire redemption request may be delayed by
the applicable Trust for up to 7 days if the Distributor deems it appropriate
under then current market conditions. Once authorization is on file with a
Trust, such Trust will honor requests by any person identifying himself as the
owner of an account or the owner's broker by telephone at 1-800-426-0107 or by
written instructions. A Trust cannot be responsible for the efficiency of the
Federal Reserve wire system or the shareholder's bank. Neither Trust currently
charges for wire transfers. The shareholder is responsible for any charges
imposed by the shareholder's bank. The minimum amount that may be wired is
$2,500. Each Trust reserves the right to change this minimum or to terminate the
wire redemption privilege. Shares purchased by check may not be redeemed by wire
transfer until such shares have been owned (i.e., paid for) for at least 15
days. Expedited wire transfer redemptions may be authorized by completing a form
available from the Distributor. Wire redemptions may not be used to redeem
shares in certificated form. To change the name of the single bank account
designated to receive wire redemption proceeds, it is necessary to send a
written request with signatures guaranteed to PIMCO Funds Distributors LLC, P.O.
Box 9688, Providence, RI 02940-0926. See "How to Buy Shares--Signature
Guarantee." This redemption option does not apply to shares held in broker
"street name" accounts. Shareholders whose shares are held in broker "street
name" accounts must redeem through their broker.
Certificated Shares
To redeem shares for which certificates have been issued, the certificates
must be mailed to or deposited with the applicable Trust, duly endorsed or
accompanied by a duly endorsed stock power or by a written request for
redemption. Signatures must be guaranteed as described under "How to Buy Shares-
-Signature Guarantee." Further documentation may be requested from institutions
or fiduciary accounts, such as corporations, custodians (e.g., under the Uniform
Gifts to Minors Act), executors, administrators, trustees or guardians
("institutional account owners"). The redemption request and stock power must be
signed exactly as the account is registered, including indication of any special
capacity of the registered owner.
Automatic Withdrawal Plan
An investor who owns or buys shares of a Fund having a net asset value of
$10,000 or more may open an Automatic Withdrawal Plan and have a designated sum
of money (not less than $100 per Fund) paid monthly (or quarterly) to the
investor or another person. Such a plan may be established by completing the
appropriate section of the account application or by obtaining an Automatic
Withdrawal Plan application from the Distributor or your broker. If an Automatic
Withdrawal Plan is set up after the account is established providing for payment
to a person other than the record shareholder or to an address other than the
address of record, a signature guarantee is required. See "How to Buy Shares--
Signature Guarantee." Class A,
SG-30
<PAGE>
Class B and Class C shares of any Fund are deposited in a plan account and all
distributions are reinvested in additional shares of the particular class of the
Fund at net asset value. Shares in a plan account are then redeemed at net asset
value (less any applicable CDSC) to make each withdrawal payment. Any applicable
CDSC may be waived for certain redemptions under an Automatic Withdrawal Plan.
See "Alternative Purchase Arrangements--Waiver of Contingent Deferred Sales
Charges."
Redemptions for the purpose of withdrawals are ordinarily made on the
business day preceding the day of payment at that day's closing net asset value
and checks are mailed on the day of payment selected by the shareholder. The
Transfer Agent may accelerate the redemption and check mailing date by one day
to avoid weekend delays. Payment will be made to any person the investor
designates; however, if the shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary, except in the case
of a profit-sharing or pension plan where payment will be made to the designee.
As withdrawal payments may include a return of principal, they cannot be
considered a guaranteed annuity or actual yield of income to the investor. The
redemption of shares in connection with an Automatic Withdrawal Plan may result
in a gain or loss for tax purposes. Continued withdrawals in excess of income
will reduce and possibly exhaust invested principal, especially in the event of
a market decline. The maintenance of an Automatic Withdrawal Plan concurrently
with purchases of additional shares of the Fund would be disadvantageous to the
investor because of the CDSC that may become payable on such withdrawals in the
case of Class A, Class B or Class C shares and because of the initial sales
charge in the case of Class A shares. For this reason, the minimum investment
accepted for a Fund while an Automatic Withdrawal Plan is in effect for that
Fund is $1,000, and an investor may not maintain a plan for the accumulation of
shares of the Fund (other than through reinvestment of distributions) and an
Automatic Withdrawal Plan at the same time. The Trust or the Distributor may
terminate or change the terms of the Automatic Withdrawal Plan at any time.
Because the Automatic Withdrawal Plan may involve invasion of capital,
investors should consider carefully with their own financial advisers whether
the plan and the specified amounts to be withdrawn are appropriate in their
circumstances. The Trust and the Distributor make no recommendations or
representations in this regard.
Redemptions In Kind
Each Trust agrees to redeem shares of its Funds solely in cash up to the
lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for
any one shareholder. In consideration of the best interests of the remaining
shareholders, each Trust reserves the right to pay any redemption proceeds
exceeding this amount in whole or in part by a distribution in kind of
securities held by a Fund in lieu of cash. Except for Funds with a tax-
efficient management strategy, it is highly unlikely that shares would ever be
redeemed in kind. When shares are redeemed in kind, the redeeming shareholder
should expect to incur transaction costs upon the disposition of the securities
received in the distribution.
SG-31
<PAGE>
PIMCO Funds
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, CT 06902-6896
1-800-426-0107
SG-32
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
The letter of each exhibit relates to the exhibit
designation in Form N-1A:
(a) Form of Second Amendment and Restated Agreement and
Declaration of Trust (2)
(b) (1) Form of Amended and Restated Bylaws (19)
(c) (1) Article III (Shares) and Article V (Shareholders' Voting
Powers and Meetings) of the Second Amended and Restated
Agreement and Declaration of Trust (2)
(2) Article 9 (Issuance of Shares Certificates) and Article 11
(Shareholders' Voting Powers and Meetings) of the Amended
and Restated Bylaws (19).
<PAGE>
(d) (1) (i) Form of Amended and Restated Investment Advisory
Agreement effective as of May 5, 2000 (19)
(ii) Form of Investment Advisory Agreement for PIMCO Select
Growth Fund for the period from March 31, 2000 to May
5, 2000 (19)
(iii) Form of Investment Advisory Agreement for PIMCO Global
Innovation Fund for the period from April 3, 2000 to
May 5, 2000 (19)
(iv) Form of Addendum to Investment Advisory Agreement to
add the Cadence Capital Appreciation and Cadence Mid-
Cap Growth Funds, to be filed by amendment.
(v) Form of Addendum to Investment Advisory Agreement to
decrease the advisory fee rate with respect to PIMCO
Growth & Income Fund (f/k/a PIMCO Mid-Cap Equity Fund)
and to add the PIMCO Healthcare Innovation, PIMCO
Internet Innovation, PIMCO Small-Cap Technology, PIMCO
Telecom Innovation, PIMCO Electronics Innovation,
PIMCO/Allianz New Asia, PIMCO/Allianz Europe Growth,
PIMCO/Allianz Select World and PIMCO/Allianz Emerging
Markets Funds (19)
(2) (i) Form of Portfolio Management Agreement with NFJ
Investment Group (19)
(ii) Form of Portfolio Management Agreement with Cadence
Capital Management (19)
(iii) Form of Portfolio Management Agreement with
Parametric Portfolio Associates (19)
-2-
<PAGE>
(iv) Form of Portfolio Management Agreement with
Blairlogie Capital Management (19).
(v) Form of Portfolio Management Agreement with the
Sub-Adviser to the PIMCO/Allianz New Asia,
PIMCO/Allianz Europe Growth, PIMCO/Allianz
Select World and PIMCO/Allianz Emerging Markets
Funds, to be filed by amendment.
(e) (1) Form of Distribution Contract (19).
(2) Form of Supplement to Distribution Contract to add
PIMCO Global Innovation Fund for the period from April
3, 2000 to May 5, 2000 (19).
(3) Form of Supplement to Distribution Contract to add the
Cadence Capital Appreciation and Cadence Mid-Cap Growth
Funds, to be filed by amendment.
(4) Form of Supplement to Distribution Contract to add the
PIMCO Growth & Income, PIMCO Healthcare Innovation,
PIMCO Internet Innovation, PIMCO Small-Cap Technology,
PIMCO Telecom Innovation, PIMCO Electronics Innovation,
PIMCO/Allianz New Asia, PIMCO/Allianz Europe Growth,
PIMCO/Allianz Select World and PIMCO/Allianz Emerging
Markets Funds (19).
(f) Not Applicable.
(g) (1) Form of Custody and Investment Accounting Agreement
dated January 1, 2000 with State Street Bank & Trust
Company (19).
(h) (1) Form of Amended and Restated Administration Agreement
between the Trust and PIMCO Advisors L.P. (19).
-3-
<PAGE>
(2) Form of Administration Agreement between PIMCO Advisors
L.P. and Pacific Investment Management Company (4)
(3) Form of Amendment to Administration Agreement (to
include Class D shares) between PIMCO Advisors L.P. and
Pacific Investment Management Company (11)
(4) Form of Agency Agreement and Addenda (1)
(5) Form of Addendum to Agency Agreement (4)
(6) Form of Assignment of Agency Agreement (4)
(7) Form of Addendum to Agency Agreement (6)
(8) (i) Form of Transfer Agency and Services Agreement with
National Financial Data Services, to be filed by
amendment.
(ii) Form of Transfer Agency and Services Agreement with
First Data Investor Services Group, Inc. dated
November 9, 1998, as amended July 20, 1999 (19).
(9) Form of Service Plan for Institutional Services Shares
(6)
(10) Form of Administrative Services Plan for Administrative
Class Shares (4)
(i) Opinion and Consent of Counsel (6)
(j) (1) Consents of PricewaterhouseCoopers LLP. (16),
(17) and (18)
(i) Letter dated October 26, 1999 from
PricewaterhouseCooopers LLP to the Securities and
Exchange Commission. (14)
(2) Consent and Opinion of Coopers & Lybrand LLP (6)
(k) Not Applicable
(l) Initial Capital Agreement (6)
(m) (1) Form of Distribution and Servicing Plan (Class A) (4)
(2) Form of Distribution and Servicing Plan (Class B) (4)
(3) Form of Distribution and Servicing Plan (Class C) (4)
(4) Form of Distribution Plan for Administrative Class
Shares (4)
-4-
<PAGE>
(5) Form of Distribution Plan for Class D Shares included as
part of the Form of Amended and Restated Administration
Agreement included in Exhibit 9(b)
(n) (a) Financial Data Schedules for the period ended
6/30/98 (11)
(b) Financial Data Schedules for the period ended
12/31/98 (12)
(o) Form of Amended and Restated Multi-Class Plan (7)
(p) (1) Code of Ethics of the Registrant (19)
(2) Code of Ethics of PIMCO Advisors L.P., Cadence Capital
Management, NFJ Investment Group and Parametric
Portfolio Associates (19)
(3) Code of Ethics of Blairlogie Capital Management (19)
(4) Code of Ethics of PIMCO Funds Distributors LLC (19)
(q) (1) Powers of Attorney and Certificate of Secretary (1)
(2) Power of Attorney for E. Philip Cannon, Donald P.
Carter, Gary A. Childress, William D. Cvengros, John P.
Hardaway, Joel Segall, W. Bryant Stooks, Gerald M.
Thorne, Richard L. Nelson, Lyman W. Porter and Alan
Richards (5)
(3) Power of Attorney for Kenneth M. Poovey (16)
--------------------
1 Included in Post-Effective Amendment No. 22 to the Trust's Registration
Statement on Form N-1A (File No. 33-36528), as filed on July 1, 1996.
2 Included in Definitive Proxy Statement of the Trust (File No. 811-06161),
as filed on November 7, 1996.
3 Included in Post-Effective Amendment No. 33 to the Trust's Registration
Statement on Form N-1A of PIMCO Advisors Funds (File No. 2-87203), as filed
on November 30, 1995.
4 Included in Post-Effective Amendment No. 25 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on January 13, 1997.
5 Included in Post-Effective Amendment No. 27 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 10, 1997.
6 Included in Post-Effective Amendment No.28 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 31, 1997.
7 Included in Post-Effective Amendment No. 30 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 13, 1998.
8 Included in Post-Effective Amendment No. 32 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on April 21, 1998.
9 Included in Post-Effective Amendment No. 33 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on June 30, 1998.
10. Included in Post-Effective Amendment No. 34 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on July 2, 1998.
11. Included in Post-Effective Amendment No. 36 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 30, 1998.
12. Included in Post-Effective Amendment No. 38 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 31, 1999.
13. Included in Post-Effective Amendment No. 39 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on May 25, 1999.
14. Included in Post-Effective Amendment No. 43 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 29, 1999.
15. Included in Post-Effective Amendment No. 44 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on December 14, 1999.
16. Included in Post-Effective Amendment No. 46 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 27, 2000.
17. Included in Post-Effective Amendment No. 47 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 31, 2000.
18. Included in Post-Effective Amendment No. 50 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on August 4, 2000.
19. Included in Post-Effective Amendment No. 51 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on August 17, 2000.
-5-
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. Indemnification
Reference is made to Article VIII, Section 1, of the Registrant's Second
Amended and Restated Agreement and Declaration of Trust, which is incorporated
by reference herein.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the Trust's
Second Amended and Restated Agreement and Declaration of Trust, its By-Laws or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers or controlling
persons of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustees, officers or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor and Portfolio
Managers.
Unless otherwise stated, the principal business address of each
organization listed in 800 Newport Center Drive, Newport Beach, CA 92660.
PIMCO Advisors L.P.
Name Position with Advisor Other Affiliations
Joachim Faber, Dr. Chief Executive Officer Member of the Board
and Member of the of Allianz AG
Executive Committee
Udo Frank Managing Director; Managing Director and Chief
Chief Investment Officer Investment Officer of Allianz
of U.S. Equity Division Asset Advisory and Management
and Member of the GmbH
Executive Committee
Robert M. Fitzgerald Executive Vice President Chief Financial Officer and
and Chief Treasurer, PIMCO Funds
Financial Officer Distributors LLC, Cadence
Capital Management, Inc., NFJ
Investment Group, NFJ
Management, Inc., Parametric
Portfolio Associates,
Parametric Management, Inc.,
Pacific Investment
Management Company LLC and
StocksPLUS Management, Inc.;
Chief Financial Officer,
Cadence Capital Management;
Executive Vice President
and Chief Financial Officer,
Value Advisors LLC; and Chief
Financial Officer PIMCO
Funds Advertising Agency.
Kenneth M. Poovey Managing Director; Chief Chief Executive Officer,
Executive Officer of U.S. Value Advisors LLC,
Equity Division of PIMCO Oppenheimer Capital; Trustee
Advisors and Member of of the Trust.
the Executive committee
Marcus Reiss Member of the To be provided.
Executive Committee
William S. Member of the Executive Chief Executive Officer and
Thompson, Jr. Committee & Chief Executive Managing Director, Pacific
Officer Investment Management Company
LLC; Member, President and
Chief Executive Officer,
PIMCO Partners LLC; Director
and President, StocksPlus
Management, Inc.; Vice
President, PIMCO Variable
Insurance Trust, PIMCO
Funds: Pacific Investment
Management Series and PIMCO
Commercial Mortgage
Securities Trust, Inc.
Stephen J. Treadway Managing Director Chairman, President, and
Chief Executive Officer,
PIMCO Funds Advertising
Agency, Inc., PIMCO Funds
Distributors LLC, and
Trustee, President and Chief
Executive Officer of the
Trust.
-6-
<PAGE>
James G. Ward Executive Vice President, Executive Vice President,
Human Resources Human Resources,
Value Advisors LLC.
Andrew Bocko Director of None.
Information Technology
Vinh T. Nguyen Controller Vice President and
Controller, Cadence Capital
Management, Inc., NFJ
Management, Inc., Parametric
Management, Inc., StocksPLUS
Management, Inc., PIMCO Funds
Advertising Agency, Inc.,
PIMCO Funds Distributors LLC,
and Value Advisors LLC;
Controller, Pacific
Investment Management
Company LLC.
Stewart A. Smith Secretary Secretary, NFJ Investment
Group, Parametric Portfolio
Associates; Assistant
Secretary, Cadence Capital
Management.
Cadence Capital Management
Exchange Place, 53 State Street
Boston, Massachusetts 02109
Name Position with Portfolio Other Affiliations
Manager
William B. Bannick Managing Director and Director and Managing
Executive Vice President Director, Cadence Capital
Management, Inc.
David B. Breed Managing Director and Director, Managing Director
and Chief Executive Officer,
Cadence Capital Management,
Inc.
Katherine A. Burdon Managing Director None.
Bart J. O'Connor Managing Director None.
Michael J. Skillman Managing Director None.
Wayne A. Wicker Managing Director None.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Assistant Treasurer
Barbara M. Green Treasurer None.
Mary Ellen Melendez Secretary None.
Stewart A. Smith Assistant Secretary See PIMCO Advisors L.P.
NFJ Investment Group
2121 San Jacinto, Suite 1440
Dallas, Texas 75201
Name Position with Portfolio Other Affiliations
Manager
Benno J. Fischer Managing Director Director, Managing
Director, and Co-Chairman,
NFJ Management, Inc.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Treasurer
John L. Johnson Managing Director Director, and Co-Chairman
Managing Director, NFJ
Management, Inc.
Jack C. Najork Managing Director Director, Managing
Director, Co-Chairman, NFJ
Management, Inc.
Stewart A. Smith Secretary See PIMCO Advisors L.P.
Vinh T. Nguyen Vice President and See PIMCO Advisors L.P.
Controller
-7-
<PAGE>
Parametric Portfolio Associates
7310 Columbia Center, 701 Fifth Avenue,
Seattle, Washington 98104-7090
Name Position with Portfolio Manager Other Affiliations
William E. Cornelius Managing Director Director, Managing
Chief Executive
Officer Parametric
Management, Inc.
David M. Stein Managing Director Director and
Managing Director,
Parametric
Management, Inc.
Brian Langstraat Managing Director None.
Robert M. Fitzgerald Chief Financial Officer and See PIMCO Advisors
Treasurer L.P.
Stewart A. Smith Secretary See PIMCO Advisors
L.P.
Vinh T. Nguyen Vice President and Controller See PIMCO Advisors
L.P.
Blairlogie Capital Management, Limited
4th Floor, 125 Princes Street
Edinburgh EH2 4AD, Scotland
Name Position with Portfolio Other Affiliations
Manager
Gavin R. Dobson Chief Executive Officer Director and Chief
and Managing Director Executive Officer,
Blairlogie Holdings
Limited (U.K.).
James G. S. Smith Chief Investment Officer Director and Chief
and Managing Director Investment Officer
Blairlogie Holdings
Limited (U.K.).
-8-
<PAGE>
Item 27. Principal Underwriters.
(a) PIMCO Funds Distributors LLC (the "Distributor") serves as
Distributor of shares for the Registrant and also of PIMCO Funds:
Pacific Investment Management Series. The Distributor is a wholly
owned subsidiary of PIMCO Advisors L.P., the Registrant's Adviser.
(b)
Positions and Positions
Name and Principal Offices with and Offices
Business Address* Underwriter with Registrant
Erik M. Aarts Vice President None
James D. Bosch Regional Vice President None
Deborah P. Brennan Vice President, None
Compliance Officer
Timothy R. Clark Executive Vice President None
Lesley Cotton Vice President None
Kelly Crean Regional Vice President None
Paul DeNicolo Regional Vice President None
Jonathan P. Fessel Regional Vice President None
Robert M. Fitzgerald Chief Financial Officer None
and Treasurer
Michael J. Gallagher Regional Vice President None
Joseph Gengo Regional Vice President None
Ronald H. Gray Regional Vice President None
Dan Hally Regional Vice President None
Ned Hammond Regional Vice President None
Charles Hano Regional Vice President None
Derek B. Hayes Vice President None
Christopher Horan Regional Vice President None
Kristina Hooper Vice President None
John B. Hussey Regional Vice President None
Brian Jacobs Senior Vice President None
Stephen R. Jobe Senior Vice President None
-9-
<PAGE>
William E. Lynch Senior Vice President None
Stephen Maginn Executive Vice President None
Wayne Meyer Regional Vice President None
Andrew J. Meyers Executive Vice President None
George Murphy Regional Vice President None
Kerry A. Murphy Vice President None
Fiora N. Moyer Regional Vice President None
Philip J. Neugebauer Senior Vice President None
Vinh T. Nguyen Vice President, Controller None
Joffrey H. Pearlman Regional Vice President None
Glynne P. Pisapia Regional Vice President None
Francis C. Poli Vice President, None
Compliance Officer
J. Scott Rose Regional Vice President None
Anne Marie Russo Vice President None
Keith Schlingheyde Regional Vice President None
Newton B. Schott, Jr. Executive Vice President, Vice President and
Chief Administrative Secretary
Officer, Chief Legal
Officer and Secretary
Elizabeth Ellsworth Vice President None
Eugene M. Smith Jr. Vice President None
Robert M. Smith Regional Vice President None
Zinovia Spezakis Vice President None
William H. Thomas, Jr. Senior Vice President None
Stephen J. Treadway Chairman, President and None
Chief Executive Officer
Paul H. Troyer Senior Vice President None
Theresa Vlachos Vice President None
Richard M. Weil Assistant Secretary None
Glen A. Zimmerman Vice President None
-----------------------
Principal business address for all individuals listed is 2187 Atlantic
Street, Stamford, CT 06902 or 800 Newport Center Drive, Newport Beach, CA 92660.
(c) The Registrant has no principal underwriter that is not an affiliated
person of the Registrant or an affiliated person of such an
affiliated person.
Item 28. Location of Accounts and Records.
The account books and other documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of State Street Bank &
Trust Co., 21 West 10th Street, Kansas City, Missouri 64105, National
Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, Missouri
64105, and/or PFPC Inc., PO Box 9688, Providence,
Rhode Island 02940.
Item 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
-10-
<PAGE>
NOTICE
------
A copy of the Agreement and Declaration of Trust of PIMCO Funds: Multi-
Manager Series (the "Trust"), together with all amendments thereto, is on file
with the Secretary of State of The Commonwealth of Massachusetts and notice is
hereby given that this instrument is executed on behalf of the Trust by an
officer of the Trust as an officer and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees of
the Trust or shareholders of any series of the Trust individually but are
binding only upon the assets and property of the Trust or the respective series.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Post-Effective Amendment 52 (the "Amendment") to its Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Stamford, and the State of Connecticut on the 30th day of August,
2000.
PIMCO FUNDS: MULTI-MANAGER SERIES
By: /s/ Stephen J. Treadway
______________________________
Stephen J. Treadway,
President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 51 has been signed below by the following persons in the
capacities and on the dates indicated.
Name Capacity Date
----- -------- ----
/s/ Stephen J. Treadway Trustee and President August 30, 2000
----------------------------
Stephen J. Treadway
* Treasurer and Principal
---------------------------- Financial and Accounting
John P. Hardaway Officer
* Trustee
----------------------------
Donald P. Carter
* Trustee
----------------------------
E. Philip Cannon
* Trustee
----------------------------
Gary A. Childress
* Trustee
----------------------------
Richard L. Nelson
* Trustee
----------------------------
Kenneth M. Poovey
* Trustee
----------------------------
Lyman W. Porter
* Trustee
----------------------------
Alan Richards
* Trustee
----------------------------
W. Bryant Stooks
* Trustee
----------------------------
Gerald M. Thorne
* By: /s/ Stephen J. Treadway
--------------------------
Stephen J. Treadway,
Attorney-In-Fact
Date: August 30, 2000
