<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated December 18, 2000
to the
Prospectus for Class A, Class B and Class C
Shares Dated November 1, 2000
Disclosure relating to PIMCO Global Innovation Fund
The section of the Prospectus entitled "How to Buy and Sell Shares" is
revised to add the following information about certain special purchase, sale
and exchange arrangements applicable to the Global Innovation Fund.
Effective December 27, 2000, Class A, Class B and Class C shares of the
Global Innovation Fund will be offered pursuant to special selling arrangements
(the "Special Offering") between PIMCO Funds Distributors LLC, the Fund's
distributor (the "Distributor"), and certain financial services firms. The
Special Offering will end when at least $400 million of the Global Innovation
Fund's shares (of all share classes in the aggregate) have been sold in the
Special Offering or, if earlier, January 31, 2001, although the Distributor may
extend the Special Offering in its discretion.
In order to facilitate the investment of the proceeds raised during the
Special Offering, for a period of at least ninety (90) days (the "Closed
Period") after the termination of the Special Offering, the Global Innovation
Fund will not sell shares to new investors. The Distributor may extend the
Closed Period in its discretion. During the Closed Period, existing Global
Innovation Fund shareholders, including existing shareholders that are benefit
plans (or participants therein), will be permitted to purchase shares of the
Fund to the extent described in the Prospectus under "How to Buy and Sell
Shares" and in the PIMCO Funds Shareholders' Guide for Class A, B and C Shares
(the "Guide"). The Distributor expects to recommence offering shares of the
Global Innovation Fund to the public following the Closed Period.
Additional information about the Special Offering is set forth in the
Guide. The size and terms of the Special Offering may be revised or the Special
Offering may be terminated at the discretion of the Distributor.
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated December 18, 2000
to the
Prospectus for Institutional and Administrative Class Shares
Dated November 1, 2000
Disclosure relating to PIMCO Global Innovation Fund
The section of the Prospectus entitled "Purchases, Redemptions and
Exchanges" is revised to add the following information about certain special
purchase, sale and exchange arrangements applicable to the Global Innovation
Fund.
Effective December 27, 2000, Class A, Class B and Class C shares of the
Global Innovation Fund will be offered pursuant to special selling arrangements
(the "Special Offering") between PIMCO Funds Distributors LLC, the Fund's
distributor (the "Distributor"), and certain financial services firms. The
Special Offering will end when at least $400 million of the Global Innovation
Fund's shares (of all share classes in the aggregate) have been sold in the
Special Offering or, if earlier, January 31, 2001, although the Distributor may
extend the Special Offering in its discretion.
In order to facilitate the investment of the proceeds raised during the
Special Offering, for a period of at least ninety (90) days (the "Closed
Period") after the termination of the Special Offering, the Global Innovation
Fund will not sell shares to new investors. The Distributor may extend the
Closed Period in its discretion. During the Closed Period, existing Global
Innovation Fund shareholders, including existing shareholders that are benefit
plans (or participants therein), will be permitted to purchase shares of the
Fund to the extent described in the Prospectus under "Purchases, Redemptions and
Exchanges." The Distributor expects to recommence offering shares of the
Global Innovation Fund to the public following the Closed Period.
The size and terms of the Special Offering may be revised or the Special
Offering may be terminated at the discretion of the Distributor.
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated December 18, 2000
to the
Prospectus for Class D Shares
Dated November 1, 2000
Disclosure relating to PIMCO Global Innovation Fund
The section of the Prospectus entitled "How to Buy and Sell Shares" is
revised to add the following information about certain special purchase, sale
and exchange arrangements applicable to the Global Innovation Fund.
Effective December 27, 2000, Class A, Class B and Class C shares of the
Global Innovation Fund will be offered pursuant to special selling arrangements
(the "Special Offering") between PIMCO Funds Distributors LLC, the Fund's
distributor (the "Distributor"), and certain financial services firms. The
Special Offering will end when at least $400 million of the Global Innovation
Fund's shares (of all share classes in the aggregate) have been sold in the
Special Offering or, if earlier, January 31, 2001, although the Distributor may
extend the Special Offering in its discretion.
In order to facilitate the investment of the proceeds raised during the
Special Offering, for a period of at least ninety (90) days (the "Closed
Period") after the termination of the Special Offering, the Global Innovation
Fund will not sell shares to new investors. The Distributor may extend the
Closed Period in its discretion. During the Closed Period, existing Global
Innovation Fund shareholders, including existing shareholders that are benefit
plans (or participants therein), will be permitted to purchase shares of the
Fund to the extent described in the Prospectus under "How to Buy and Sell
Shares." The Distributor expects to recommence offering shares of the Global
Innovation Fund to the public following the Closed Period.
The size and terms of the Special Offering may be revised or the Special
Offering may be terminated at the discretion of the Distributor.
<PAGE>
PIMCO Funds Shareholders' Guide
for Class A, B and C Shares
December 18, 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 as from time to time revised or
supplemented, 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-25
How to Redeem....................................................... SG-27
</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 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.
SG-3
<PAGE>
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, tax-qualified and wrap programs referred to below under "Tax-Qualified
Retirement Plans" and Alternative Purchase Arrangements--Sales at Net Asset
Value," and purchases by certain registered representatives as described below
under "Registered Representatives' Investments," 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:
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
SG-4
<PAGE>
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 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.
SG-5
<PAGE>
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.
Registered Representatives' Investments
Current registered representatives and other full-time employees of
participating brokers or such persons' spouses or trusts or custodial accounts
for their minor children may purchase Class A shares at net asset value without
a sales charge. The minimum initial investment in each case is $500 per Fund and
the minimum subsequent investment is $50.
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 Link to make subsequent purchases of
shares in any amount greater than $50. To initiate such purchases, call 1-800-
426-0107. All such calls will be recorded. Fund Link is normally established
within 45
SG-6
<PAGE>
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 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.
SG-7
<PAGE>
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.
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.
SG-8
<PAGE>
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 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
SG-9
<PAGE>
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 "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
SG-10
<PAGE>
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 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
SG-11
<PAGE>
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, Global Innovation and Select
International Funds, and PIMCO Funds Asset Allocation Series -- 90/10 and 60/40
Portfolios
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Discount or Commission to
Amount Invested Public 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>
PIMCO Funds Asset Allocation Series -- 30/70 Portfolio
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Amount of Purchase Sales Charge as % of Net Sales Charge as % of Discount or Commission to
Amount Invested Public 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, Total Return Mortgage, 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 Discount or Commission to
Amount Invested Public 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 Discount or Commission to
Amount Invested Public 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 Discount or Commission to
Amount Invested Public 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 Discount or Commission to
Amount Invested Public 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>
* These discounts and commissions may be increased pursuant to special
arrangements between the Distributor and certain participating brokers, as
discussed below.
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
SG-15
<PAGE>
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 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.
These discounts and commissions may be increased pursuant to special
arrangements between the Distributor and certain participating brokers, as
discussed below.
SG-16
<PAGE>
SPECIAL ARRANGEMENTS RELATING TO THE GLOBAL INNOVATION FUND Beginning on
December 27, 2000, the Global Innovation Fund will be sold pursuant to special
offering arrangements described in the Fund's Retail Prospectus (the "Special
Offering"). In addition to the amounts paid to brokers discussed above, during
the Special Offering the following additional compensation will be paid by the
Distributor to brokers that, before the commencement of the Special Offering,
have agreed with the Distributor to both (i) grant preferential status to the
Fund within the broker's sales efforts (including granting employees of the
Distributor special access to the broker's sales force) and (ii) set certain
minimum sales targets (not including exchanges) for Fund shares during the
Special Offering. The rate of additional compensation to be paid to any broker
will depend on the broker's minimum sales target. Unless otherwise agreed, no
compensation will be paid if the broker does not sell at least the minimum sales
target agreed to with the Distributor. The special compensation arrangements
described in this subsection will not apply to exchanges from another Fund into
the Global Innovation Fund.
Minimum Sales of $75,000,000
-----------------------------------------------------------------------
Additional Discount or
Global Innovation Fund Sales Commission to dealers as % of
by Broker During Special Total Sales of Global
Offering/*/ Innovation Fund by Broker
During Special Offering Period
-----------------------------------------------------------------------
$0 - $74,999,999 0.00%
-----------------------------------------------------------------------
$75,000,000 - $99,999,999 0.75%
-----------------------------------------------------------------------
$100,000,000+ 1.00%
-----------------------------------------------------------------------
Minimum Sales of $50,000,000
-----------------------------------------------------------------------
Additional Discount or
Global Innovation Fund Sales Commission to dealers as % of
by Broker During Special Total Sales of Global
Offering/*/ Innovation Fund by Broker
During Special Offering Period
-----------------------------------------------------------------------
$0 - $9,999,999 0.00%
-----------------------------------------------------------------------
$10,000,000 - $49,999,999 0.25%
-----------------------------------------------------------------------
$50,000,000 - $74,999,999 0.50%
-----------------------------------------------------------------------
$75,000,000+ 0.75%
-----------------------------------------------------------------------
/*/ For these purposes, only sales of Global Innovation Fund shares that settle
during January 2001 (and, if earlier, prior to the termination of the Special
Offering) will be deemed to have been made during the Special Offering. In
addition, sales of Global Innovation Fund shares made through exchanges from
other Funds will not be counted as Global Innovation Fund sales for purposes of
the Special Offering.
In addition, brokers will be entitled to the reallowance of the entire
sales charge on Class A shares described above under "Initial Sales Charge
Alternative--Class A Shares" to the extent they entered into an agreement with
the Distributor regarding this increased reallowance prior to the commencement
of the Special Offering.
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;
SG-17
<PAGE>
(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
(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
SG-18
<PAGE>
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, Municipal Bond, California 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.
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
SG-19
<PAGE>
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 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 and only if such investment is
made within 60 days of such redemption. As described above, the Distributor will
only pay service fees and will 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
SG-20
<PAGE>
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.
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.
SG-21
<PAGE>
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:
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.
SG-22
<PAGE>
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 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).
SG-23
<PAGE>
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 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, 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-24
<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
SG-25
<PAGE>
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 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.
SG-26
<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
SG-27
<PAGE>
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 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.
SG-28
<PAGE>
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 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.
SG-29
<PAGE>
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 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 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.
SG-30
<PAGE>
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 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.
SG-31
<PAGE>
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, 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.
SG-32
<PAGE>
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.
PIMCO Funds
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, CT 06902-6896
1-800-426-0107
SG-33
