<PAGE>
As filed with the Securities and Exchange Commission on June 7, 2000
Registration Nos. 33-36528;
811-6161
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
---
Pre-Effective Amendment No. ___ [ ]
---
Post-Effective Amendment No. 49 [X]
---
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
---
Amendment No. 52 [X]
---
PIMCO FUNDS: MULTI-MANAGER SERIES
(Exact Name of Registrant as Specified in Charter)
840 Newport Center Drive, Newport Beach, CA 92660
(Address of principal executive offices) (Zip code)
(800) 427-4648
(Registrant's telephone number, including area code)
Name and address
of agent for service: Copies to:
--------------------- ----------
Stephen J. Treadway Newton B. Schott, Jr., Joseph B. Kittredge, Esq.
c/o PIMCO Funds Esq. Ropes & Gray
Distributors LLC c/o PIMCO Funds One International Place
2187 Atlantic Street Distributors LLC Boston, Massachusetts
Stamford, Connecticut 2187 Atlantic Street 02110
06902 Stamford, Connecticut
06902
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
---
[ ] On [DATE] pursuant to paragraph (b)
---
[ ] 60 days after filing pursuant to paragraph (a)(1)
---
[ ] On [DATE], pursuant to paragraph (a)(1)
---
[X] 75 days after filing pursuant to paragraph (a)(2)
---
[ ] On [date] pursuant to paragraph (a)(2) of rule 485
---
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
--- previously filed post-effective amendment.
This Post-Effective Amendment relates only to PIMCO Healthcare Innovation,
PIMCO Internet Innovation, PIMCO Small-Cap Technology, PIMCO Telecom Innovation,
PIMCO Electronics Innovation, PIMCO/Allianz New Asia, PIMCO/Allianz Europe
Growth, PIMCO/Allianz Select World and PIMCO/Allianz Emerging Markets Funds,
new series of the Registrant. No information relating to any other series of the
Registrant is amended or superseded hereby.
<PAGE>
PIMCO Funds Prospectus
PIMCO Funds:
Multi-Manager Series
[ ], 2000
Share Classes A, B and C
This Prospectus describes 9 mutual funds offered by PIMCO Funds: Multi-Manager
Series. The Funds provide access to the professional investment advisory
services offered by PIMCO Advisors L.P. and its investment management
affiliates. As of March 31, 2000, PIMCO Advisors and its affiliates managed
approximately $264 billion, including assets for ___ of the ___ largest U.S.
corporations.
The Prospectus explains what you should know about the Funds before you invest.
Please read it carefully.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
1
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information 3
Fund Summaries
Healthcare Innovation Fund 5
Internet Innovation Fund 8
Small-Cap Technology Fund 11
Telecom Innovation Fund 14
Electronics Innovation Fund 17
New Asia Fund 20
Europe Growth Fund 23
Select World Fund 26
Emerging Markets Fund 29
Summary of Principal Risks 32
Management of the Funds 36
Investment Options - Class A, B and C Shares 39
How Fund Shares Are Priced 44
How to Buy and Sell Shares 45
Fund Distributions 50
Tax Consequences 51
Characteristics and Risks of Securities and Investment Techniques 52
</TABLE>
2
<PAGE>
Summary Information
The table below lists the investment objectives and compares certain investment
characteristics of the Funds. Other important characteristics are described in
the individual Fund Summaries beginning on page 5.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Approximate Approximate
PIMCO Investment Main Number of Capitalization
Fund Objective Investments Holdings Range
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sector-Related Healthcare Capital appreciation; no Common stocks of health 30-60 More than $200
Stock Funds Innovation consideration is given to care-related companies with million
income market capitalizations of
more than $200 million
-----------------------------------------------------------------------------------------------------------------------------------
Internet Innovation Capital appreciation; no Common stocks of Internet 20-60 More than $200
consideration is given to and Internet-related companies million
income with market capitalizations
of more than $200 million
-----------------------------------------------------------------------------------------------------------------------------------
Small-Cap Technology Capital appreciation; no Common stocks of 30-60 Between $100
consideration is given to technology-related companies million and
income with market capitalizations of $2 billion
between $100 million and
$2 billion
-----------------------------------------------------------------------------------------------------------------------------------
Telecom Innovation Capital appreciation; no Common stocks of 20-60 More than $200
consideration is given to telecommunications-related million
income companies with market
capitalizations of more than
$200 million
-----------------------------------------------------------------------------------------------------------------------------------
Electronics Capital appreciation; no Common stocks of companies 20-60 More than $200
Innovation consideration is given to in the electronics industry million
income with market capitalizations of
more than $200 million
-----------------------------------------------------------------------------------------------------------------------------------
International PIMCO/Allianz Capital appreciation through Common stocks of companies 80 More than $250
Stock Funds New Asia investment in an located in Asia with market million
international portfolio capitalizations of more than
$250 million
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of European 80 More than
Europe Growth investment in an companies with market $1 billion
international portfolio capitalizations of more
than $1 billion
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of companies 50-60 More than
Select World investment in a global located both within and $1 billion
portfolio outside of the United States
with market capitalizations
of more than $1 billion
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of companies 80 More than $250
Emerging Markets investment in an located in emerging market million
international portfolio countries within Europe, Asia,
Latin America and Africa with
market capitalizations of more
than $250 million
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Summary Information (continued)
Fund Descriptions,
Performance and
Fees
The Funds provide a broad range of investment choices. The following Fund
Summaries identify each Fund's investment objective, principal investments and
strategies, principal risks, performance information and fees and expenses. A
more detailed "Summary of Principal Risks" describing principal risks of
investing in the Funds begins after the Fund Summaries.
It is possible to lose money on investments in the Funds. An investment in a
Fund is not a deposit of a bank and is not guaranteed or insured by the Federal
Deposit Insurance Corporation or any other government agency.
4
<PAGE>
PIMCO Healthcare Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of health care-related Range
consideration is given to income companies More than $200 million
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 30-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in securities of companies principally engaged in the
design, manufacture or sale of new, creative or different, or "innovative,"
products or services used for or in connection with health care or medicine.
These companies may include, for example, pharmaceutical companies, companies
involved in biotechnology, medical diagnostic, biochemical or other health care
research and development, companies involved in the operation of health care
facilities, and other companies involved in the design, manufacture or sale of
health care-related products or services such as medical, dental and optical
products, hardware or services. Although the Fund emphasizes companies which
utilize health care technologies, it is not required to invest exclusively in a
particular business sector or industry, and at any time may not be invested in
any of the industry sectors listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify health care-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
.Market Risk .Foreign Investment Risk .Management
.Issuer Risk .Currency Risk Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
5
<PAGE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
---------------------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
---------------------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.70% 0.25% [0.54] [1.49%] [0.04%] 1.45%
------------------------------------------------------------------------------------------------------------------------------
Class B 0.70 1.00 [0.54] [2.24] [0.04 ] 2.20
------------------------------------------------------------------------------------------------------------------------------
Class C 0.70 1.00 [0.54] [2.24] [0.04 ] 2.20
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held, pay
more than the economic equivalent of the maximum front-end
sales charges permitted by relevant rules of the National
Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.50% Administrative Fee paid by
the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational
Expenses will all be accounted for in the Fund's initial
fiscal year, the Fund's reasonable expectation is that the
relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
6
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Example: Assuming you redeem your shares at Example: Assuming you do not redeem your
the end of each period shares
-----------------------------------------------------------------------------------------------------------------------------------
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [_] [_] [_] [_] [_] [_] [_] [_]
-----------------------------------------------------------------------------------------------------------------------------------
Class B [_] [_] [_] [_] [_] [_] [_] [_]
-----------------------------------------------------------------------------------------------------------------------------------
Class C [_] [_] [_] [_] [_] [_] [_] [_]
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the preceding table.
7
<PAGE>
PIMCO Internet Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation; no Common stocks of Internet-related Range
consideration is given to income companies More than $200 million
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies that derive at least 50%
of their revenues, expenses or profits from the research, design, development,
manufacturing or distribution of new, creative or different, or "innovative,"
products, processes or services for use with Internet- or Internet-related
businesses. Some examples of these companies may include, for example, providers
of broad-band Internet access, web site content, Internet software and
electronic commerce. Although the Fund emphasizes Internet-related companies, it
is not required to invest exclusively in a particular business sector or
industry, and at any time may not be invested in any of the industry sectors
listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify Internet-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
8
<PAGE>
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
----------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
----------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.80% 0.25% [0.54%] [1.59%] [0.04%] 1.55%
----------------------------------------------------------------------------------------------------------------------------
Class B 0.80 1.00 [0.54] [2.34] [0.04 ] 2.30
----------------------------------------------------------------------------------------------------------------------------
Class C 0.80 1.00 [0.54] [2.34] [0.04 ] 2.30
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held, pay
more than the economic equivalent of the maximum front-end
sales charges permitted by relevant rules of the National
Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.50% Administrative Fee paid by
the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational
Expenses will all be accounted for in the Fund's initial
fiscal year, the Fund's reasonable expectation is that the
relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
9
<PAGE>
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at Example: Assuming you do not redeem your
the end of each period shares
------------------------------------------------------------------------------------------------------------
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [_] [_] [_] [_] [_] [_] [_] [_]
------------------------------------------------------------------------------------------------------------
Class B [_] [_] [_] [_] [_] [_] [_] [_]
------------------------------------------------------------------------------------------------------------
Class C [_] [_] [_] [_] [_] [_] [_] [_]
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the preceding table.
10
<PAGE>
PIMCO Small-Cap Technology Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization Range
Strategies Seeks capital appreciation; no Common stocks of technology-related Between $100 million and $2
consideration is given to income companies with smaller billion
market capitalizations
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 30-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of technology and technology-related
companies with market capitalizations of between $100 million and $2 billion at
the time of investment. The Fund identifies its investment universe of
technology-related companies primarily by reference to classifications made by
independent firms, such as Standard & Poor's (for example, companies classified
as "Information Technology" companies), and by identifying companies that
derive a substantial portion of their revenues from the manufacture, sale and/or
service of technological products. Although the Fund emphasizes companies which
utilize technologies, it is not required to invest exclusively in a particular
business sector or industry.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify companies with well-defined "wealth
creating" characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental research, the
portfolio manager seeks to identify companies that are gaining market share,
have superior management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution systems. The Fund
looks to sell a stock when the portfolio manager believes that earnings or
market sentiment are disappointing, if the company does not meet or exceed
consensus estimates on revenues and/or earnings or if an alternative investment
is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
11
<PAGE>
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)/1/
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
------------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
------------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.80% 0.25% [0.54%] [1.59%] [0.04%] 1.55%
------------------------------------------------------------------------------------------------------------------
Class B 0.80 1.00 [0.54] [2.34] [0.04] 2.30
------------------------------------------------------------------------------------------------------------------
Class C 0.80 1.00 [0.54] [2.34] [0.04] 2.30
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held, pay
more than the economic equivalent of the maximum front-end
sales charges permitted by relevant rules of the National
Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.50% Administrative Fee paid by
the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational
Expenses will all be accounted for in the Fund's initial
fiscal year, the Fund's reasonable expectation is that the
relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
12
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Example: Assuming you redeem your shares at Example: Assuming you do not redeem your
the end of each period shares
----------------------------------------------------------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----------------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----------------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
13
<PAGE>
PIMCO Telecom Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation; no Common stocks of Range
consideration is given to income telecommunications-related More than $200 million
companies
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies principally engaged in the
development, manufacture or sale of new, creative or different, or "innovative,"
communications services or communications equipment. These companies may
include, for example, companies that provide traditional local and long-distance
telephone service or equipment, companies that provide cellular, paging, local
and wide area product networks or equipment, companies that provide satellite,
microwave and cable television or equipment, and companies involved in new
technologies such as fiber optics, semiconductors and data transmission.
Although the Fund emphasizes telecommunications-related companies, it is not
required to invest exclusively in a particular business sector or industry, and
at any time may not be invested in any of the industry sectors listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify telecommunications-related companies
with well-defined "wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market as a whole),
high profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Leveraging Risk
.Smaller Company Risk .Credit Risk
.Liquidity Risk .Focused Investment Risk
</TABLE>
14
<PAGE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
------------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
------------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.70% 0.25% [0.54%] [1.49%] [0.04%] 1.45%
------------------------------------------------------------------------------------------------------------------
Class B 0.70 1.00 [0.54] [2.24] [0.04] 2.20
------------------------------------------------------------------------------------------------------------------
Class C 0.70 1.00 [0.54] [2.24] [0.04] 2.20
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held,
pay more than the economic equivalent of the maximum
front-end sales charges permitted by relevant rules of
the National Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.50% Administrative Fee paid
by the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational
Expenses attributed to the class. Because the
Organizational Expenses will all be accounted for in the
Fund's initial fiscal year, the Fund's reasonable
expectation is that the relevant conditions will not
continue after the Fund's fiscal year ending June 30,
2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
15
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Example: Assuming you redeem your shares at Example: Assuming you do not redeem your
the end of each period shares
---------------------------------------------------------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
---------------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
---------------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
16
<PAGE>
PIMCO Electronics Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization Range
Strategies Seeks capital appreciation; no Common stocks of companies in the More than $200 million
consideration is given to income electronics industry
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies principally engaged in the
development, manufacture or sale of new, creative or different, or "innovative,"
electronics products and services. These companies may include, for example,
companies engaged in the development, manufacture, sale or service of electronic
components, equipment vendors to electronics manufacturers, electronic component
distributors, electronic instruments and systems vendors, and companies that
provide electronics-related services. Although the Fund emphasizes companies in
the electronics industry, it is not required to invest exclusively in a
particular business sector or industry, and at any time may not be invested in
any of the types of companies listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify electronics-related companies with
well-defined "wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market as a whole),
high profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive .
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
.Market Risk .Foreign Investment Risk .Management
.Issuer Risk .Currency Risk Risk
.Growth Securities Risk .Leveraging Risk
.Smaller Company Risk .Credit Risk
.Liquidity Risk .Focused Investment Risk
17
<PAGE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet
Information have a full calendar year of performance. Thus, no bar chart
or Average Annual Total Returns table is included for the
Fund.
Fees and Expenses
the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
----------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
----------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A
shares are purchased without a front-end sales charge
at the time of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the
CDSC declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--
Contingent Deferred Sales Charges (CDSCs)--Class B
Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.80% 0.25% [0.54%] [1.59%] [0.04%] 1.55%
---------------------------------------------------------------------------------------------------------------
Class B 0.80 1.00 [0.54] [2.34] [0.04] 2.30
----------------------------------------------------------------------------------------------------------------
Class C 0.80 1.00 [0.54] [2.34] [0.04] 2.30
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B
and Class C shares, a Class B or Class C shareholders
may, depending upon the length of time the shares are
held, pay more than the economic equivalent of the
maximum front-end sales charges permitted by relevant
rules of the National Association of Securities
Dealers, Inc.
(2) Other Expenses reflects a 0.50% Administrative Fee paid
by the class, which is subject to a reduction of 0.05%
on average daily net assets attributable in the
aggregate to the Fund's Class A, B and C shares in
excess of $2.5 billion, and [0.04%] representing the
Fund's organizational expenses as attributed to the
class ("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fee for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
18
<PAGE>
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at the end of Example: Assuming you do not redeem your
each period shares
-------------------------------------------------------------------------------------------------------------------
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
19
<PAGE>
PIMCO/Allianz New Asia Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization Range
Strategies Seeks capital appreciation through Common stocks of foreign More than $250 million
investment in an international (non-U.S.) issuers
portfolio Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of companies located in Asia. The Fund will primarily invest
in securities of companies located in the Far East, including Australia, China,
Hong Kong, Japan, Indonesia, India, Malaysia, New Zealand, the Philippines,
Singapore, South Korea, Taiwan and Thailand, although the Fund will not
necessarily be invested in all of these countries at any time. The Fund may
also invest in securities of foreign issuers traded on U.S. securities markets,
but will normally not invest in U.S. issuers. However, the Fund has no
prescribed limits on geographic asset distribution and may invest in any foreign
securities market in the world. The Fund invests most of its assets in foreign
securities which trade in currencies other than the U.S. dollar and may invest
directly in foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Value Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Growth Securities Risk .Leveraging Risk
.Currency Risk .Smaller Companies Risk .Credit Risk
.Market Risk .Liquidity Risk .Management Risk
.Issuer Risk .Derivatives Risk
</TABLE>
20
<PAGE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
----------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
----------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A
shares are purchased without a front-end sales charge
at the time of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the
CDSC declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--
Contingent Deferred Sales Charges (CDSCs)--Class B
Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 1.00% 0.25% [0.74%] [1.99%] [0.04%] 1.95%
---------------------------------------------------------------------------------------------------------------
Class B 1.00 1.00 [0.74] [2.74] [0.04] 2.70
----------------------------------------------------------------------------------------------------------------
Class C 1.00 1.00 [0.74] [2.74] [0.04] 2.70
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B
and Class C shares, a Class B or Class C shareholders
may, depending upon the length of time the shares are
held, pay more than the economic equivalent of the
maximum front-end sales charges permitted by relevant
rules of the National Association of Securities
Dealers, Inc.
(2) Other Expenses reflects a 0.70% Administrative Fee paid
by the class, which is subject to a reduction of 0.05%
on average daily net assets attributable in the
aggregate to the Fund's Class A, B and C shares in
excess of $2.5 billion, and [0.04%] representing the
Fund's organizational expenses as attributed to the
class ("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fee for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
21
<PAGE>
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at the end of Example: Assuming you do not redeem your
each period shares
-------------------------------------------------------------------------------------------------------------------
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
22
<PAGE>
PIMCO/Allianz Europe Growth Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation through Common stocks of foreign Range
investment in an international (non-U.S.) issuers More than $1 billion
portfolio
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of European companies with medium and large market
capitalizations. The Fund may also invest in securities of foreign issuers
traded on U.S. securities markets, but will normally not invest in U.S. issuers.
However, the Fund has no prescribed limits on geographic asset distribution and
may invest in any foreign securities market in the world. The Fund invests most
of its assets in foreign securities which trade in currencies other than the
U.S. dollar (e.g., the euro) and may invest directly in foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP
style uses a research-driven "bottom-up" approach that seeks to identify
companies with above-average long-term growth prospects and attractive
valuations and that possess a sustainable competitive advantage, such as
superior or innovative products, personnel and distribution systems. In
selecting stocks, the portfolio manager analyzes a broad range of company
fundamentals, such as long-term growth prospects, price-to-earnings ratios and
other valuation measures, dividend and profit growth, balance sheet strength and
return on assets. A stock's liquidity and volatility are also considered. The
portfolio manager sells stocks in order to adjust or rebalance the Fund's
portfolio and to replace companies with weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<S> <C> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Currency Risk .Smaller Companies Risk .Leveraging Risk
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Derivatives Risk .Management Risk
.Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
23
<PAGE>
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
------------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
------------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1) Expenses/(2) Expenses Fee Waiver/(3) Net Expenses/(3)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.75% 0.25% [0.74%] [1.74%] [0.04%] 1.70%
-----------------------------------------------------------------------------------------------------------------
Class B 0.75 1.00 [0.74] [2.49] [0.04 ] 2.45
-----------------------------------------------------------------------------------------------------------------
Class C 0.75 1.00 [0.74] [2.49] [0.04 ] 2.45
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held, pay
more than the economic equivalent of the maximum front-end
sales charges permitted by relevant rules of the National
Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.70% Administrative Fee paid by
the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational
Expenses will all be accounted for in the Fund's initial
fiscal year, the Fund's reasonable expectation is that the
relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)
24
<PAGE>
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at Example: Assuming you do not redeem your
the end of each period shares
----------------------------------------------------------------------------------------------------------------
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----------------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----------------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
25
<PAGE>
PIMCO/Allianz Select World Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation through Common stocks of foreign Range
investment in a global portfolio (non-U.S.) issuers More than $1 billion
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 50-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of companies located throughout the world. Although the Fund
normally invests in issuers from at least five different countries, including
the United States, it may at times invest in fewer than five countries, or even
a single country. The Fund typically invests in approximately 50 to 60 stocks,
with each stock usually constituting from 1.25% to 2.5% of the Fund's portfolio.
The Fund may invest in both developed and developing, or "emerging," markets.
The Fund has no prescribed limits on geographic asset distribution and may
invest in any foreign securities market in the world. The Fund invests most of
its assets in foreign securities which trade in currencies other than the U.S.
dollar and may invest directly in foreign currencies
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Best Research" investment style. The Best Research style uses a
research-driven "bottom-up" approach that seeks to utilize the Sub-Adviser's
global research capabilities to identify companies with above-average long-term
growth prospects and attractive valuations and that possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The portfolio manager seeks to select those stocks with
the best long-term performance expectations, using a broad range of company
fundamentals, such as long-term growth prospects, price-to-earnings ratios and
other valuation measures, dividend and profit growth, balance sheet strength and
return on assets. The portfolio managers sell stocks in order to adjust or
rebalance the Fund's portfolio and to replace companies with weakening
fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Foreign Investment Risk .Value Securities Risk .Focused Investment Risk
.Emerging Market Risk .Growth Securities Risk .Leveraging Risk
.Currency Risk .Smaller Companies Risk .Credit Risk
.Market Risk .Liquidity Risk .Management Risk
.Issuer Risk .Derivatives Risk
</TABLE>
26
<PAGE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
---------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
---------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 0.75% 0.25% [0.74%] [1.74%] [0.04%] 1.70%
------------------------------------------------------------------------------------------------------------------
Class B 0.75 1.00 [0.74] [2.49] [0.04 ] 2.45
------------------------------------------------------------------------------------------------------------------
Class C 0.75 1.00 [0.74] [2.49] [0.04 ] 2.45
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held, pay
more than the economic equivalent of the maximum front-end
sales charges permitted by relevant rules of the National
Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.70% Administrative Fee paid by
the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational
Expenses will all be accounted for in the Fund's initial
fiscal year, the Fund's reasonable expectation is that the
relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
27
<PAGE>
<TABLE>
<CAPTION>
Example: Assuming you redeem your shares at Example: Assuming you do not redeem your
the end of each period shares
--------------------------------------------------------------------------------------------------------------
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
--------------------------------------------------------------------------------------------------------------
Class B [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
--------------------------------------------------------------------------------------------------------------
Class C [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
28
<PAGE>
PIMCO/Allianz Emerging Markets Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in an international U.S.) issuers More than $250 million
portfolio
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of companies located in emerging market countries within
Europe, Asia, Latin America and Africa. The Fund may also invest in securities
of foreign issuers traded on U.S. securities markets, but will normally not
invest in U.S. issuers. However, the Fund has no prescribed limits on
geographic asset distribution and may invest in any foreign securities market in
the world. The Fund invests most of its assets in foreign securities which
trade in currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP
style uses a research-driven "bottom-up" approach that seeks to identify
companies with above-average long-term growth prospects and attractive
valuations and that possess a sustainable competitive advantage, such as
superior or innovative products, personnel and distribution systems. In
selecting stocks, the portfolio manager analyzes a broad range of company
fundamentals, such as long-term growth prospects, price-to-earnings ratios and
other valuation measures, dividend and profit growth, balance sheet strength and
return on assets. A stock's liquidity and volatility are also considered. The
portfolio manager sells stocks in order to adjust or rebalance the Fund's
portfolio and to replace companies with weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C> <C>
.Foreign Investment Risk .Value Securities Risk .Emerging Markets Risk
.Emerging Markets Risk .Growth Securities Risk .Focused Investment Risk
.Currency Risk .Smaller Companies Risk .Leveraging Risk
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Derivatives Risk .Management Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
29
<PAGE>
Performance The Fund recently commenced operations and does not yet have a
full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Class A, B or C shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Maximum Sales Charge (Load) Imposed Maximum Contingent Deferred Sales Charge (Load)
on Purchases (as a percentage of offering price) (as a percentage of original purchase price)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.50% 1%/(1)/
-----------------------------------------------------------------------------------------------------------------
Class B None 5%/(2)/
-----------------------------------------------------------------------------------------------------------------
Class C None 1%/(3)/
</TABLE>
(1) Imposed only in certain circumstances where Class A shares
are purchased without a front-end sales charge at the time
of purchase.
(2) The maximum CDSC is imposed on shares redeemed in the
first year. For shares held longer than one year, the CDSC
declines according to the schedule set forth under
"Investment Options--Class A, B and C Shares--Contingent
Deferred Sales Charges (CDSCs)--Class B Shares."
(3) The CDSC on Class C shares is imposed only on shares
redeemed in the first year.
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory And/or Service Other Fund Operating
Share Class Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Fee Waiver/(3)/ Net Expenses/(3)/
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A 1.00% 0.25% [0.74%] [1.99%] [0.04%] 1.95%
------------------------------------------------------------------------------------------------------------------
Class B 1.00 1.00 [0.74] [2.74] [0.04 ] 2.70
------------------------------------------------------------------------------------------------------------------
Class C 1.00 1.00 [0.74] [2.74] [0.04 ] 2.70
</TABLE>
(1) Due to the 12b-1 distribution fee imposed on Class B and
Class C shares, a Class B or Class C shareholders may,
depending upon the length of time the shares are held, pay
more than the economic equivalent of the maximum front-end
sales charges permitted by relevant rules of the National
Association of Securities Dealers, Inc.
(2) Other Expenses reflects a 0.70% Administrative Fee paid by
the class, which is subject to a reduction of 0.05% on
average daily net assets attributable in the aggregate to
the Fund's Class A, B and C shares in excess of $2.5
billion, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflects the effects of a contractual
agreement by PIMCO Advisors to waive, reduce or reimburse
its Administrative Fee for each class in an amount that,
in essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational
Expenses will all be accounted for in the Fund's initial
fiscal year, the Fund's reasonable expectation is that the
relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples are intended to help you compare the
cost of investing in Class A, B or C shares of the Fund with
the costs of investing in other mutual funds. The Examples
assume that you invest $10,000 in the noted class of shares
for the time periods indicated, your investment has a 5%
return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, the
Examples show what your costs would be based on these
assumptions./(1)/
30
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Example: Assuming you redeem your shares at Example: Assuming you do not redeem
the end of each period your shares
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year 10
Class A [_] [_] [_] [_] [_] [_] [_] [_]
------------------------------------------------------------------------------------------------------------------
Class B [_] [_] [_] [_] [_] [_] [_] [_]
------------------------------------------------------------------------------------------------------------------
Class C [_] [_] [_] [_] [_] [_] [_] [_]
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
31
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of that Fund's
investments. Many factors can affect those values. The factors that are most
likely to have a material effect on a particular Fund's portfolio as a whole are
called "principal risks." The principal risks of each Fund are identified in
the Fund Summaries and are summarized in this section. Each Fund may be subject
to additional principal risks and risks other than those described below because
the types of investments made by a Fund can change over time. Securities and
investment techniques mentioned in this summary and described in greater detail
under "Characteristics and Risks of Securities and Investment Techniques"
appear in bold type. That section and "Investment Objectives and Policies" in
the Statement of Additional Information also include more information about the
Funds, their investments and the related risks. There is no guarantee that a
Fund will be able to achieve its investment objective.
Market Risk
The market price of securities owned by a Fund may go up or down, sometimes
rapidly or unpredictably. Each of the Funds normally invests most of its assets
in common stocks and/or other equity securities. A principal risk of investing
in each Fund is that the equity securities in its portfolio will decline in
value due to factors affecting equity securities markets generally or particular
industries represented in those markets. The values of equity securities may
decline due to general market conditions which are not specifically related to a
particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may also decline
due to factors which affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. Equity securities generally have greater price volatility than fixed
income securities.
Issuer Risk
The value of a security may also decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer's goods or services.
Growth Securities Risk
Each Fund emphasizes investments in equity securities of companies that its
portfolio manager believes will experience relatively rapid earnings growth. The
Funds place particular emphasis on growth securities. Growth securities
typically trade at higher multiples of current earnings than other securities.
Therefore, the values of growth securities may be more sensitive to changes in
current or expected earnings than the values of other securities.
Value Securities Risk
The Funds may invest in companies that may not be expected to experience
significant earnings growth, but whose securities its portfolio manager believes
are selling at a price lower than their true value. The New Asia, Europe Growth
and Emerging Markets Funds place particular emphasis on value securities.
Companies that issue value securities may have experienced adverse business
developments or may be subject to special risks that have caused their
securities to be out of favor. If a portfolio manager's assessment of a
company's prospects is wrong, or if the market does not recognize the value of
the company, the price of its securities may decline or may not approach the
value that the portfolio manager anticipates.
32
<PAGE>
Smaller Company Risk
The general risks associated with equity securities and liquidity risk are
particularly pronounced for securities of companies with smaller market
capitalizations. These companies may have limited product lines, markets or
financial resources or they may depend on a few key employees. Securities of
smaller companies may trade less frequently and in lesser volume than more
widely held securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. The Small-Cap Technology
Fund has substantial exposure to this risk because it invests primarily in the
securities of companies with market capitalizations below $200 million. The
Healthcare Innovation, Internet Innovation, Telecom Innovation, Electronics
Innovation, New Asia, Europe Growth, Select World and Emerging Markets Funds
also have significant exposure to this risk.
Liquidity Risk
All of the Funds are subject to liquidity risk. Liquidity risk exists when
particular investments are difficult to purchase or sell, possibly preventing a
Fund from selling such illiquid securities at an advantageous time or price.
Funds with principal investment strategies that involve securities of companies
with smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have the greatest
exposure to liquidity risk.
Derivatives Risk
All of the Funds may use derivatives, which are financial contracts whose value
depends on, or is derived from, the value of an underlying asset, reference rate
or index. The various derivative instruments that the Funds may use are
referenced under "Characteristics and Risks of Securities and Investment
Techniques--Derivatives" in this Prospectus and described in more detail under
"Investment Objectives and Policies" in the Statement of Additional
Information. The Funds may sometimes use derivatives as part of a strategy
designed to reduce exposure to other risks, such as interest rate or currency
risk. The Funds may also use derivatives for leverage, which increases
opportunities for gain but also involves greater risk of loss due to leveraging
risk. A Fund's use of derivative instruments involves risks different from, or
possibly greater than, the risks associated with investing directly in
securities and other traditional investments. Derivatives are subject to a
number of risks described elsewhere in this section, such as liquidity risk,
market risk, credit risk and management risk. They also involve the risk of
mispricing or improper valuation and the risk that changes in the value of the
derivative may not correlate perfectly with the underlying asset, rate or index.
In addition, a Fund's use of derivatives may increase or accelerate the amount
of taxes payable by shareholders. A Fund investing in a derivative instrument
could lose more than the principal amount invested. Also, suitable derivative
transactions may not be available in all circumstances and there can be no
assurance that a Fund will engage in these transactions to reduce exposure to
other risks when that would be beneficial.
Foreign (non-U.S.) Investment Risk
A Fund that invests in foreign securities, and particularly the New Asia, Europe
Growth, Select World and Emerging Markets Funds, may experience more rapid and
extreme changes in value than Funds that invest exclusively in securities of
U.S. issuers or securities that trade exclusively in U.S. markets. The
securities markets of many foreign countries are relatively small, with a
limited number of companies representing a small number of industries.
Additionally, issuers of foreign securities are usually not subject to the same
degree of regulation as U.S. issuers. Reporting, accounting and auditing
standards of foreign countries differ, in some cases significantly, from U.S.
standards. Also, nationalization, expropriation or confiscatory taxation,
33
<PAGE>
currency blockage, political changes or diplomatic developments could adversely
affect a Fund's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Fund could lose its
entire investment in foreign securities. To the extent that a Fund, such as the
New Asia, Europe Growth, Select World and Emerging Markets Funds, invests a
significant portion of its assets in a narrowly defined area such as Europe,
Asia or South America, the Fund will generally have more exposure to regional
economic risks associated with foreign investments. Adverse conditions in
certain regions (such as Southeast Asia) can also adversely affect securities of
other countries whose economies appear to be unrelated. In addition, special
U.S. tax considerations may apply to a Fund's investment in foreign securities.
Emerging Markets Risk
Foreign investment risk may be particularly high to the extent that a Fund
invests in emerging market securities of issuers based in countries with
developing economies. These securities may present market, credit, currency,
liquidity, legal, political and other risks different from, or greater than, the
risks of investing in developed foreign countries. The Emerging Markets Fund is
particularly susceptible to these risks because it invests principally in
companies located in emerging markets countries. The New Asia and Select World
Funds also have substantial exposure to these risks because these Funds may
invest significant portions of their assets in emerging market securities. In
addition, the risks associated with investing in a narrowly defined geographic
area (discussed above under "Foreign (non-U.S.) Investment Risk") are more
pronounced for the Funds that invest in emerging market countries.
Currency Risk
Funds that invest directly in foreign currencies or in securities that trade in,
and receive revenues in, foreign currencies are subject to the risk that those
currencies will decline in value relative to the U.S. Dollar, or, in the case of
hedging positions, that the U.S. Dollar will decline in value relative to the
currency being hedged. The New Asia, Europe Growth, Select World and Emerging
Markets Funds are particularly sensitive to currency risk. Currency rates in
foreign countries may fluctuate significantly over short periods of time for a
number of reasons, including changes in interest rates, intervention (or the
failure to intervene) by U.S. or foreign governments, central banks or
supranational entities such as the International Monetary Fund, or by the
imposition of currency controls or other political developments in the U.S. or
abroad.
Focused
Investment Risk
Focusing Fund investments in a small number of issuers, industries or foreign
currencies increases risk. Funds, such as the Select World Fund, that invest in
a relatively small number of issuers may have more risk because changes in the
value of a single security or the impact of a single economic, political or
regulatory occurrence may have a greater adverse impact on the Fund's net asset
value. Some of those issuers also may present substantial credit or other risks.
The New Asia, Europe Growth, Select World and Emerging Markets Funds may be
subject to increased risk to the extent that they focus their investments in
securities denominated in a particular foreign currency or in a narrowly defined
geographic area outside the U.S. The Internet Innovation, Electronics Innovation
and Small-Cap Technology Funds are subject to risks prevalent in the Internet,
electronics and technology sectors, respectively, such as the risks of rapid
obsolescence of products and services, significant losses, increased volatility
of these companies' securities and limited operating histories, because they
"concentrate" their investments in these sectors. Similarly, the Telecom
Innovation and Healthcare Innovation Funds "concentrate" their investments in
the telecommunications and health care industries, respectively, and therefore
are subject to the risks particular to those industries, such as the risks
associated with additional government regulation of the telecommunications and
health care industries and changes to existing regulations and government
subsidy levels. Also, the Funds may from time to time have
34
<PAGE>
greater risk to the extent they invest a substantial portion of their assets in
related industries such as "technology" or "financial and business
services," which may share common characteristics and react similarly to market
developments.
Leveraging Risk
The Funds may engage in transactions or purchase instruments that give rise to
forms of leverage. Such transactions and instruments may include, among others,
the use of reverse repurchase agreements and other borrowings, the investment of
collateral from loans of portfolio securities, or the use of when-issued,
delayed-delivery or forward commitment transactions. The use of derivatives may
also involve leverage. Leverage, including borrowing, will cause the value of a
Fund's shares to be more volatile than if the Fund did not use leverage. This is
because leverage tends to exaggerate the effect of any increase or decrease in
the value of a Fund's portfolio securities. The use of leverage may also cause a
Fund to liquidate portfolio positions when it would not be advantageous to do so
in order to satisfy its obligations or to meet segregation requirements.
Interest Rate Risk
To the extent that Funds purchase fixed income securities for investment or
defensive purposes, they will be subject to interest rate risk, a market risk
relating to investments in fixed income securities such as bonds and notes. As
interest rates rise, the value of fixed income securities in a Fund's portfolio
are likely to decrease. Securities with longer "durations" (defined below) tend
to be more sensitive to changes in interest rates, usually making them more
volatile than securities with shorter durations. Duration is a measure of the
expected life of a fixed income security that is used to determine the
sensitivity of a security's price to changes in interest rates. A Fund with a
longer average portfolio duration will be more sensitive to changes in interest
rates than a Fund with a shorter average portfolio duration.
Credit Risk
All of the Funds are subject to credit risk. This is the risk that the issuer or
the guarantor of a fixed income security, or the counterparty to a derivatives
contract, repurchase agreement or a loan of portfolio securities, is unable or
unwilling to make timely principal and/or interest payments, or to otherwise
honor its obligations. Securities are subject to varying degrees of credit risk,
which are often reflected in their credit ratings.
Management Risk
Each Fund is subject to management risk because it is an actively managed
investment portfolio. PIMCO Advisors, the Sub-Advisers and each individual
portfolio manager will apply investment techniques and risk analyses in making
investment decisions for the Funds, but there can be no guarantee that these
will produce the desired results.
35
<PAGE>
Management of the Funds
Investment Adviser and Administrator
PIMCO Advisors serves as the investment adviser and the administrator (serving
in its capacity as administrator, the "Administrator") for the Funds. Subject
to the supervision of the Board of Trustees, PIMCO Advisors is responsible for
managing, either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other administrative
matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport Beach, California
92660. Organized in 1987, PIMCO Advisors provides investment management and
advisory services to private accounts of institutional and individual clients
and to mutual funds. As of March 31, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $264 billion in assets under management.
PIMCO Advisors has retained its subsidiary PIMCO/Allianz International Advisors
LLC to manage the investments of the New Asia, Europe Growth, Select World and
Emerging Markets Funds. The PIMCO Equity Advisors division of PIMCO Advisors
manages the investments of the Healthcare Innovation, Internet Innovation,
Small-Cap Technology, Telecom Innovation and Electronics Innovation Funds (PIMCO
Equity Advisors and PIMCO/Allianz International Advisors LLC are each referred
to as a "Sub-Adviser" in this prospectus). See "Sub-Advisers" below.
PIMCO Advisors has retained its affiliate, Pacific Investment Management
Company, to provide various administrative and other services required by the
Funds in its capacity as sub-administrator. PIMCO Advisors and the sub-
administrator may retain other affiliates to provide certain of these services.
Advisory Fees
Each Fund pays PIMCO Advisors fees in return for providing or arranging for the
provision of investment advisory services. In the case of Funds for which PIMCO
Advisors has retained PIMCO/Allianz International Advisors LLC, PIMCO Advisors
(and not the Fund) pays a portion of the advisory fees it receives to the Sub-
Adviser in return for its services.
The Funds will pay monthly advisory fees to PIMCO Advisors at the following
annual rates (stated as a percentage of the average daily net assets of each
Fund taken separately):
Fund Advisory Fees
Healthcare Innovation and Telecom Innovation Funds 0.70%
Europe Growth and Select World Funds 0.75%
Internet Innovation, Small-Cap Technology and 0.80%
Electronics Innovation Funds
New Asia and Emerging Markets Funds 1.00%
36
<PAGE>
Administrative Fees
Each Fund pays for the administrative services it requires under a fee structure
which is essentially fixed. Class A, Class B and Class C shareholders of each
Fund pay an administrative fee to PIMCO Advisors, computed as a percentage of
the Fund's assets attributable in the aggregate to those classes of shares.
PIMCO Advisors, in turn, provides or procures administrative services for Class
A, Class B and Class C shareholders and also bears the costs of various third-
party services required by the Funds, including audit, custodial, portfolio
accounting, legal, transfer agency and printing costs. The result of this fee
structure is an expense level for Class A, Class B and Class C shareholders of
each Fund that, with limited exceptions, is precise and predictable under
ordinary circumstances.
Class A, B and C shareholders of the Funds will pay PIMCO Advisors monthly
administrative fees at the following annual rates (stated as a percentage of the
average daily net assets attributable in the aggregate to the Fund's Class A,
Class B and Class C shares):
<TABLE>
<CAPTION>
Fund Administrative Fees*
<S> <C>
Healthcare Innovation, Internet Innovation, Small-Cap 0.50%
Technology, Telecom Innovation and Electronics
Innovation Funds
New Asia, Europe Growth, Select World and Emerging 0.70%
Markets Funds
</TABLE>
*The Administrative Fee rate for each Fund is subject to a reduction of 0.05%
per year on average daily net assets attributable in the aggregate to the
Fund's Class A, B and C shares in excess of $2.5 billion.
Sub-Advisers
Each Sub-Adviser has full investment discretion and makes all determinations
with respect to the investment of a Fund's assets. The following provides
summary information about each Sub-Adviser, including the Fund(s) it manages.
<TABLE>
<CAPTION>
Sub-Adviser* Funds
<S> <C>
PIMCO Equity Advisors Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
1345 Avenue of the Americas, 50th Floor Innovation and Electronics Innovation Funds
New York, NY 10105
PIMCO/Allianz International Advisors LLC New Asia, Europe Growth, Select World and Emerging Market Funds
1345 Avenue of the Americas, 50th Floor
New York, NY 10105
</TABLE>
* PIMCO Equity Advisors is a division of PIMCO Advisors. PIMCO/Allianz
International Advisors LLC is a wholly-owned subsidiary of PIMCO Advisors.
The following provides additional information about each Sub-Adviser and the
individual portfolio managers who have or share primary responsibility for
managing the Funds' investments.
PIMCO Equity Advisors
A division of PIMCO Advisors, PIMCO Equity Advisors provides equity-related
advisory services to mutual funds and institutional accounts. See "Investment
Adviser and Administrator" above for additional information about PIMCO
Advisors.
37
<PAGE>
The following individuals at PIMCO Equity Advisors have primary responsibility
for the noted Funds.
<TABLE>
<CAPTION>
Fund Portfolio Managers Since Recent Professional Experience
<S> <C> <C> <C>
Healthcare Innovation Dennis P. McKechnie 2000 (Inception) Portfolio Manager of PIMCO Equity Advisors. Prior to joining
PIMCO Advisors, he was with Columbus Circle Investors from
1991 to 1999, where he managed equity accounts and served in
various capacities including as Portfolio Manager for the
Innovation Fund.
Jiyoung Kim 2000 (Inception) Senior Research Analyst for PIMCO Innovation Fund, where she
covers biotechnology, telecommunications equipment,
semiconductors and networking. Prior to joining PIMCO
Equity Advisors in [ ], she worked as a Senior Research
Analyst at Fred Alger Management from [ ] to [ ]. Prior
to that, she worked as a Senior Research Technician at
Repligen.
Internet Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
Small-Cap Technology Thomas Keyes 2000 (Inception) Senior Research Analyst for PIMCO Equity Advisors. Prior to
joining PIMCO Equity Advisors, he was a research analyst at
Alliance Capital in its Small-Cap Program from 1997 to 1999,
where he focused on small-cap technology stocks. He was a
Vice President at Bankers Trust from 1994 to 1997, where he
focused on equity research of technology stocks.
Telecom Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
Electronics Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above
</TABLE>
PIMCO/Allianz International Advisors LLC
"PIMCO/Allianz International Advisors LLC" is a wholly-owned subsidiary of
PIMCO Advisors. Additional information about PIMCO/Allianz International
Advisors LLC will be provided in a subsequent filing.
The following individuals at PIMCO/Allianz International Advisors LLC share
primary responsibility for each of the noted Funds.
38
<PAGE>
<TABLE>
<CAPTION>
Portfolio
Fund Managers Since Recent Professional Experience
<S> <C> <C> <C>
New Asia Ian Lui 2000 (Inception) Chief Investment Officer of Allianz Asset Management (HK)
Limited. From 1997 to 1999, he served as a Managing
Director with Indocam Singapore Limited. From 1994 to 1997
he served in various capacities with Dresdner RCM Hong Kong,
Dresdner (SEA) Thornton Asset Management Singapore, CMS
Dresdner Thornton Asset Management Malaysia and Dresdner RCM
Global Investors.
Europe Growth Wolfram Gerdes 2000 (Inception) Managing director of Equity Portfolio Management at Allianz
Advisory and Management GmbH ("Allianz AAM") since 1998.
Prior to joining Allianz, AAM he held various positions,
including head of Portfolio Management, with Allianz
Lebensversicherungs AG from 1992 to 1998.
Select World Udo Frank 2000 (Inception) Managing Director and Chief Investment Officer of Allianz Asset
Advisory and Management GmbH, responsible for the entire
investment area (since 1997). Previously, Mr. Frank served as
the Chief Investment Officer of Allianz KAG (since 1994).
Gerd Wolfgana Hintz 2000 (Inception) Managing Director of the Equity Research Department at
Allianz AAM since 1998. In addition, Mr. Hintz has been
responsible for Allianz AAM's trading department since
January 2000. Previously, he was the head of Research and
Investor Relations of Allianz Lebensversicherungs AG.
Emerging Markets Norbert Kaldun 2000 (Inception) Portfolio Manager for Allianz AAM, where he has been
responsible for Eastern European equity research and
management. From 1997 to 1998, he served as a Portfolio
Manager with Allianz Lebensverischerungs AG.
</TABLE>
Distributor The Trust's Distributor is PIMCO Funds Distributors
LLC, a wholly owned subsidiary of PIMCO Advisors. The
Distributor, located at 2187 Atlantic Street,
Stamford, Connecticut 06902, is a broker-dealer
registered with the Securities and Exchange
Commission.
Investment Options -- Class A, B and C Shares
The Trust offers investors Class A, Class B and Class C shares of each Fund in
this Prospectus. Each class of shares is subject to different types and levels
of sales charges than the other classes and bears a different level of expenses.
The class of shares that is best for you depends upon a number of factors,
including the amount and the intended length of your investment. The following
summarizes key information about each class to help you make your investment
decision, including the various expenses associated with each class. More
extensive information about the Trust's multi-class arrangements is included in
the PIMCO Funds Shareholders' Guide for Class A, B and C Shares (the "Guide"),
which is included as part of the Statement of Additional Information and can be
obtained free of charge from the Distributor. See "How to Buy and Sell Shares--
PIMCO Funds Shareholders' Guide" below.
Class A Shares
. You pay an initial sales charge of up to 5.50% when you buy Class A shares.
The sales charge is deducted from your investment so that not all of your
purchase payment is invested.
39
<PAGE>
. You may be eligible for a reduction or a complete waiver of the initial
sales charge under a number of circumstances. For example, you normally pay no
sales charge if you purchase $1,000,000 or more of Class A shares. Please see
the Guide for details.
. Class A shares are subject to lower 12b-1 fees than Class B or Class C
shares. Therefore, Class A shareholders generally pay lower annual expenses and
receive higher dividends than Class B or Class C shareholders.
. You normally pay no contingent deferred sales charge ("CDSC") when you
redeem Class A shares, although you may pay a 1% CDSC if you purchase $1,000,000
or more of Class A shares (and therefore pay no initial sales charge) and then
redeem the shares during the first 18 months after your initial purchase. The
Class A CDSC is waived for certain categories of investors and does not apply if
you are otherwise eligible to purchase Class A shares without a sales charge.
Please see the Guide for details.
Class B Shares
. You do not pay an initial sales charge when you buy Class B shares. The full
amount of your purchase payment is invested initially.
. You normally pay a CDSC of up to 5% if you redeem Class B shares during the
first six years after your initial purchase. The amount of the CDSC declines the
longer you hold your Class B shares. You pay no CDSC if you redeem during the
seventh year and thereafter. The Class B CDSC is waived for certain categories
of investors. Please see the Guide for details.
. Class B shares are subject to higher 12b-1 fees than Class A shares for the
first seven years they are held. During this time, Class B shareholders normally
pay higher annual expenses and receive lower dividends than Class A
shareholders.
. Class B shares automatically convert into Class A shares after they have
been held for seven years. After the conversion takes place, the shares are
subject to the lower 12b-1 fees paid by Class A shares.
Class C Shares
. You do not pay an initial sales charge when you buy Class C shares. The full
amount of your purchase payment is invested initially.
. You normally pay a CDSC of 1% if you redeem Class C shares during the first
year after your initial purchase. The Class C CDSC is waived for certain
categories of investors. Please see the Guide for details.
. Class C shares are subject to higher 12b-1 fees than Class A shares.
Therefore, Class C shareholders normally pay higher annual expenses and receive
lower dividends than Class A shareholders.
. Class C shares do not convert into any other class of shares. Because Class
B shares convert into Class A shares after seven years, Class C shares will
normally be subject to higher expenses and will pay lower dividends than Class B
shares if the shares are held for more than seven years.
The following provides additional information about the sales charges and other
expenses associated with Class A, Class B and Class C shares.
40
<PAGE>
Initial Sales Charges-- Class A Shares
Unless you are eligible for a waiver, the public offering price you pay when you
buy Class A shares of the Funds is the net asset value ("NAV") of the shares
plus an initial sales charge. The initial sales charge varies depending upon the
size of your purchase, as set forth below. No sales charge is imposed where
Class A shares are issued to you pursuant to the automatic reinvestment of
income dividends or capital gains distributions.
41
<PAGE>
All Funds
---------
<TABLE>
<CAPTION>
Initial Sales Charge Initial Sales Charge
Amount of as % of Net as % of Public
Purchase Amount Invested Offering Price
<S> <C> <C>
$0-$49,999 5.82% 5.50%
--------------------------------------------------------------------------------------------
$50,000-$99,999 4.71% 4.50%
--------------------------------------------------------------------------------------------
$100,000-$249,999 3.63% 3.50%
--------------------------------------------------------------------------------------------
$250,000-$499,999 2.56% 2.50%
--------------------------------------------------------------------------------------------
$500,000-$999,999 2.04% 2.00%
--------------------------------------------------------------------------------------------
$1,000,000 + 0.00%* 0.00%*
</TABLE>
*As shown, investors that purchase $1,000,000 or more of any Fund's Class A
shares will not pay any initial sales charge on the purchase. However,
purchasers of $1,000,000 or more of Class A shares may be subject to a CDSC of
1% if the shares are redeemed during the first 18 months after their purchase.
See "CDSCs on Class A Shares" below.
<TABLE>
<S> <C>
Contingent Deferred Unless you are eligible for a waiver, if you sell (redeem) your Class B
Sales Charges (CDSCs) - or Class C shares within the time periods specified below, you will
Class B and Class C Shares pay a CDSC according to the following schedules.
</TABLE>
Class B Shares
<TABLE>
<CAPTION>
Years Since Purchase Percentage Contingent Deferred
Payment was Made Sales Charge
-------------------------------------------------------------------------------------------------------------
<S> <C>
First 5
-------------------------------------------------------------------------------------------------------------
Second 4
-------------------------------------------------------------------------------------------------------------
Third 3
-------------------------------------------------------------------------------------------------------------
Fourth 3
-------------------------------------------------------------------------------------------------------------
Fifth 2
-------------------------------------------------------------------------------------------------------------
Sixth 1
-------------------------------------------------------------------------------------------------------------
Seventh 0*
</TABLE>
*After the seventh year, Class B shares convert into Class A shares.
Class C Shares
<TABLE>
<CAPTION>
Years Since Purchase Percentage Contingent
Payment Was Made Deferred Sales Charge
-------------------------------------------------------------------------------------------------------------
<S> <C>
First 1
-------------------------------------------------------------------------------------------------------------
Thereafter 0
</TABLE>
CDSCs on Class A Shares
Unless a waiver applies, investors who purchase $1,000,000 or more of Class A
shares (and, thus, pay no initial sales charge) will be subject to a 1% CDSC if
the shares are redeemed within 18 months of their purchase. The Class A CDSC
does not apply if you are otherwise eligible to purchase Class A shares without
an initial sales charge or if you are eligible for a waiver of the CDSC. See
"Reductions and Waivers of Initial Sales Charges and CDSCs" below.
How CDSCs are Calculated
A CDSC is imposed on redemptions of Class B and Class C shares (and where
applicable, Class A shares) on the amount of the redemption which causes the
current value of your account for the particular class of shares of a Fund to
fall below the total dollar amount of your purchase payments subject to the
CDSC. However, no CDSC is imposed if the shares redeemed have been acquired
through the reinvestment of dividends or capital gains distributions or if the
amount redeemed is derived from increases in the value of your account above the
42
<PAGE>
amount of the purchase payments subject to the CDSC. CDSCs are deducted from the
proceeds of your redemption, not from amounts remaining in your account. In
determining whether a CDSC is payable, it is assumed that the purchase payment
from which the redemption is made is the earliest purchase payment for the
particular class of shares in your account (from which a redemption or exchange
has not already been effected).
For instance, the following example illustrates the operation of the Class B
CDSC:
Assume that an individual opens an account and makes a purchase payment of
$10,000 for Class B shares of a Fund and that six months later the value of the
investor's account for that Fund has grown through investment performance and
reinvestment of distributions to $11,000. The investor then may redeem up to
$1,000 from that Fund ($11,000 minus $10,000) without incurring a CDSC. If the
investor should redeem $3,000, a CDSC would be imposed on $2,000 of the
redemption (the amount by which the investor's account for the Fund was reduced
below the amount of the purchase payment). At the rate of 5%, the Class B CDSC
would be $100.
In determining whether an amount is available for redemption without incurring a
CDSC, the purchase payments made for all shares of a particular class of a Fund
in the shareholder's account are aggregated, and the current value of all such
shares is aggregated.
Reductions and Waivers of Initial Sales Charges and CDSCs
The initial sales charges on Class A shares and the CDSCs on Class A, Class B
and Class C shares may be reduced or waived under certain purchase arrangements
and for certain categories of investors. Please see the Guide for details. The
Guide is available free of charge from the Distributor. See "How to Buy and
Sell Shares--PIMCO Funds Shareholders' Guide" below.
Distribution and Servicing (12b-1) Plans
The Funds pay fees to the Distributor on an ongoing basis as compensation for
the services the Distributor renders and the expenses it bears in connection
with the sale and distribution of Fund shares ("distribution fees") and/or in
connection with personal services rendered to Fund shareholders and the
maintenance of shareholder accounts ("servicing fees"). These payments are
made pursuant to Distribution and Servicing Plans ("12b-1 Plans") adopted by
each Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940.
There is a separate 12b-1 Plan for each class of shares offered in this
Prospectus. Class A shares pay only servicing fees. Class B and Class C shares
pay both distribution and servicing fees. The following lists the maximum annual
rates at which the distribution and/or servicing fees may be paid under each
12b-1 Plan (calculated as a percentage of each Fund's average daily net assets
attributable to the particular class of shares):
Servicing Distribution
All Funds Fee Fee
Class A 0.25% None
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Because 12b-1 fees are paid out of a Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than sales charges which are deducted at the time of
43
<PAGE>
investment. Therefore, although Class B and Class C shares do not pay initial
sales charges, the distribution fees payable on Class B and Class C shares may,
over time, cost you more than the initial sales charge imposed on Class A
shares. Also, because Class B shares convert into Class A shares after they have
been held for seven years and are not subject to distribution fees after the
conversion, an investment in Class C shares may cost you more over time than an
investment in Class B shares.
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Class A, Class B and Class C shares is
determined by dividing the total value of a Fund's portfolio investments and
other assets attributable to that class, less any liabilities, by the total
number of shares outstanding of that class.
For purposes of calculating the NAV, portfolio securities and other assets for
which market quotes are available are stated at market value. Market value is
generally determined on the basis of last reported sales prices, or if no sales
are reported, based on quotes obtained from a quotation reporting system,
established market makers or pricing services. Certain securities or investments
for which daily market quotes are not readily available may be valued, pursuant
to guidelines established by the Board of Trustees, with reference to other
securities or indices. Short-term investments having a maturity of 60 days or
less are generally valued at amortized cost. Exchange traded options, futures
and options on futures are valued at the settlement price determined by the
exchange. Other securities for which market quotes are not readily available are
valued at fair value as determined in good faith by the Board of Trustees or
persons acting at their direction.
Investments initially valued in currencies other than the U.S. dollar are
converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of a Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of securities traded in
markets outside the United States or denominated in currencies other than the
U.S. dollar may be affected significantly on a day that the New York Stock
Exchange is closed and an investor is not able to purchase, redeem or exchange
shares. In particular, calculation of the NAV of the New Asia, Europe Growth,
Select World and Emerging Markets Funds may not take place contemporaneously
with the determination of the prices of foreign securities used in NAV
calculations.
Fund shares are valued at the close of regular trading (normally 4:00 p.m.,
Eastern time) (the "NYSE Close") on each day that the New York Stock Exchange
is open. For purposes of calculating the NAV, the Funds normally use pricing
data for domestic equity securities received shortly after the NYSE Close and do
not normally take into account trading, clearances or settlements that take
place after the NYSE Close. Domestic fixed income and foreign securities are
normally priced using data reflecting the earlier closing of the principal
markets for those securities. Information that becomes known to the Funds or
their agents after the NAV has been calculated on a particular day will not
generally be used to retroactively adjust the price of a security or the NAV
determined earlier that day.
In unusual circumstances, instead of valuing securities in the usual manner, the
Funds may value securities at fair value or estimate their value as determined
in good faith by the Board of Trustees pursuant to procedures approved by the
Board of Trustees. Fair valuation may also be used by the Board of Trustees if
extraordinary events occur after the close of the relevant market but prior to
the NYSE Close.
44
<PAGE>
How to Buy and Sell Shares
The following section provides basic information about how to buy, sell (redeem)
and exchange shares of the Funds.
PIMCO Funds Shareholders' Guide
More detailed information about the Trust's purchase, sale and exchange
arrangements for Fund shares is provided in the PIMCO Funds Shareholders' Guide,
which is included in the Statement of Additional Information and can be obtained
free of charge from the Distributor by written request or by calling 1-800-426-
0107. The Guide provides technical information about the basic arrangements
described below and also describes special purchase, sale and exchange features
and programs offered by the Trust, including:
. Automated telephone and wire transfer procedures
. Automatic purchase, exchange and withdrawal programs
. Programs that establish a link from your Fund account to your bank account
. Special arrangements for tax-qualified retirement plans
. Investment programs which allow you to reduce or eliminate the initial sales
charges on Class A shares
. Categories of investors that are eligible for waivers or reductions of
initial sales charges and CDSCs
Calculation of Share Price and Redemption Payments
When you buy shares of the Funds, you pay a price equal to the NAV of the
shares, plus any applicable sales charge. When you sell (redeem) shares, you
receive an amount equal to the NAV of the shares, minus any applicable CDSC.
NAVs are determined at the close of regular trading (normally, 4:00 p.m.,
Eastern time) on the New York Stock Exchange on each day the New York Stock
Exchange is open. See "How Fund Shares Are Priced" above for details.
Generally, purchase and redemption orders for Fund shares are processed at the
NAV next calculated after your order is received by the Distributor. There are
certain exceptions where an order is received by a broker or dealer prior to the
close of regular trading on the New York Stock Exchange and then transmitted to
the Distributor after the NAV has been calculated for that day (in which case
the order may be processed at that day's NAV). Please see the Guide for details.
The Trust does not calculate NAVs or process orders on days when the New York
Stock Exchange is closed. If your purchase or redemption order is received by
the Distributor on a day when the New York Stock Exchange is closed, it will be
processed on the next succeeding day when the New York Stock Exchange is open
(at the succeeding day's NAV).
Buying Shares
You can buy Class A, Class B or Class C shares of the Funds in the following
ways:
45
<PAGE>
. Through your broker, dealer or other financial intermediary. Your broker,
dealer or other intermediary may establish higher minimum investment
requirements than the Trust and may also independently charge you transaction
fees and additional amounts (which may vary) in return for its services, which
will reduce your return. Shares you purchase through your broker, dealer or
other intermediary will normally be held in your account with that firm.
. Directly from the Trust. To make direct investments, you must open an
account with the Distributor and send payment for your shares either by mail or
through a variety of other purchase options and plans offered by the Trust.
If you wish to invest directly by mail, please send a check payable to PIMCO
Funds Distributors LLC, along with a completed application form to:
PIMCO Funds Distributors LLC
P.O. Box 9688
Providence, RI 02940-0926
The Trust accepts all purchases by mail subject to collection of checks at full
value and conversion into federal funds. You may make subsequent purchases by
mailing a check to the address above with a letter describing the investment or
with the additional investment portion of a confirmation statement. Checks for
subsequent purchases should be payable to PIMCO Funds Distributors LLC and
should clearly indicate your account number. Please call the Distributor at 1-
800-426-0107 if you have any questions regarding purchases by mail.
The Guide describes a number of additional ways you can make direct investments,
including through the PIMCO Funds Auto-Invest and PIMCO Funds Fund Link
programs. You can obtain a Guide free of charge from the Distributor by written
request or by calling 1-800-426-0107. See "PIMCO Funds Shareholders' Guide"
above.
The Distributor, in its sole discretion, may accept or reject any order for
purchase of Fund shares. No share certificates will be issued unless
specifically requested in writing.
Investment Minimums
The following investment minimums apply for purchases of Class A, Class B and
Class C shares.
Initial Investment Subsequent Investments
------------------ ----------------------
$2,500 per Fund $100 per Fund
Lower minimums may apply for certain categories of investors, including certain
tax-qualified retirement plans, and for special investment programs and plans
offered by the Trust, such as the PIMCO Funds Auto-Invest and PIMCO Funds Fund
Link programs. Please see the Guide for details.
Small Account Fee
Because of the disproportionately high costs of servicing accounts with low
balances, if you have a direct account with the Distributor, you will be charged
a fee at the annual rate of $16 if your account balance for any Fund falls below
a minimum level of $2,500, except for Uniform Gift to Minors, IRA, Roth IRA and
46
<PAGE>
Auto-Invest accounts for which the limit is $1,000. The fee also applies to
employer-sponsored retirement plan accounts, Money Purchase and/or Profit
Sharing plans, 401(k) plans, 403(b)(7) custodial accounts, SIMPLE IRAs, SEPs and
SAR/SEPs. (A separate custodial fee may apply to IRAs, Roth IRAs and other
retirement accounts.) However, you will not be charged this fee if the aggregate
value of all of your PIMCO Funds accounts is at least $50,000. Any applicable
small account fee will be deducted automatically from your below-minimum Fund
account in quarterly installments and paid to the Administrator. Each Fund
account will normally be valued, and any deduction taken, during the last five
business days of each calendar quarter. Lower minimum balance requirements and
waivers of the small account fee apply for certain categories of investors.
Please see the Guide for details.
Minimum Account Size
Due to the relatively high cost to the Funds of maintaining small accounts, you
are asked to maintain an account balance in each Fund in which you invest of at
least the minimum investment necessary to open the particular type of account.
If your balance for any Fund remains below the minimum for three months or
longer, the Administrator has the right (except in the case of employer-
sponsored retirement accounts) to redeem your remaining shares and close that
Fund account after giving you 60 days to increase your balance. Your Fund
account will not be liquidated if the reduction in size is due solely to a
decline in market value of your Fund shares or if the aggregate value of all
your PIMCO Funds accounts exceeds $50,000.
Exchanging Shares
Except as provided below and/or in the applicable Funds' or series'
prospectus(es), you may exchange your Class A, Class B or Class C shares of any
Fund for the same Class of shares of any other Fund or of another series of the
Trust or PIMCO Funds: Pacific Investment Management Series. Shares are exchanged
on the basis of their respective NAVs next calculated after your exchange order
is received by the Distributor. Currently, the Trust does not charge any
exchange fees or charges. Exchanges are subject to the $2,500 minimum initial
purchase requirements for each Fund, except with respect to tax-qualified
programs and exchanges effected through the PIMCO Funds Auto-Exchange plan. In
addition, an exchange is generally a taxable event which will generate capital
gains or losses, and special rules may apply in computing tax basis when
determining gain or loss. If you maintain your account with the Distributor, you
may exchange shares by completing a written exchange request and sending it to
PIMCO Funds Distributors LLC, P.O. Box 9688, Providence, RI 02940-0926. You can
get an exchange form by calling the Distributor at 1-800-426-0107.
The Trust reserves the right to refuse exchange purchases if, in the judgment of
PIMCO Advisors, the purchase would adversely affect a Fund and its shareholders.
In particular, a pattern of exchanges characteristic of "market-timing"
strategies may be deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. Currently, the Trust limits the number of "round trip"
exchanges an investor may make. An investor makes a "round trip" exchange when
the investor purchases shares of a particular Fund, subsequently exchanges those
shares for shares of a different PIMCO Fund and then exchanges back into the
originally purchased Fund. The Trust has the right to refuse any exchange for
any investor who completes (by making the exchange back into the shares of the
originally purchased Fund) more than six round trip exchanges in any twelve-
month period. Although the Trust has no current intention of terminating or
modifying the exchange privilege other than as set forth in the preceding
sentence, it reserves the right to do so at any time. Except as otherwise
permitted by the Securities and Exchange Commission, the Trust will give you 60
days' advance notice if it exercises its right to terminate or materially modify
the exchange privilege with respect to Class A, B and C shares.
47
<PAGE>
The Guide provides more detailed information about the exchange privilege,
including the procedures you must follow and additional exchange options. You
can obtain a Guide free of charge from the Distributor by written request or by
calling 1-800-426-0107. See "PIMCO Funds Shareholders' Guide" above.
Selling Shares
You can sell (redeem) Class A, Class B or Class C shares of the Funds in the
following ways:
.Through your broker, dealer or other financial intermediary. Your broker,
dealer or other intermediary may independently charge you transaction fees and
additional amounts (which may vary) in return for its services, which will
reduce your return.
.Directly from the Trust by Written Request. To redeem shares directly from the
Trust by written request (whether or not the shares are represented by
certificates), you must send the following items to the Trust's Transfer Agent,
PFPC, Inc., P.O. Box 9688, Providence, RI 02940-0926:
(1) a written request for redemption signed by all registered owners exactly as
the account is registered on the Transfer Agent's records, including fiduciary
titles, if any, and specifying the account number and the dollar amount or
number of shares to be redeemed;
(2) for certain redemptions described below, a guarantee of all signatures on
the written request or on the share certificate or accompanying stock power, if
required, as described under "Signature Guarantee" below;
(3) any share certificates issued for any of the shares to be redeemed (see
"Certificated Shares" below); and
(4) any additional documents which may be required by the Transfer Agent for
redemption by corporations, partnerships or other organizations, executors,
administrators, trustees, custodians or guardians, or if the redemption is
requested by anyone other than the shareholder(s) of record. Transfers of shares
are subject to the same requirements.
A signature guarantee is not required for redemptions requested by and payable
to all shareholders of record for the account, and to be sent to the address of
record for that account. To avoid delay in redemption or transfer, if you have
any questions about these requirements you should contact the Transfer Agent in
writing or call 1-800-426-0107 before submitting a request. Written redemption
or transfer requests will not be honored until all required documents in the
proper form have been received by the Transfer Agent. You can not redeem your
shares by written request to the Trust if they are held in broker "street
name" accounts--you must redeem through your broker.
If the proceeds of your redemption (i) are to be paid to a person other than the
record owner, (ii) are to be sent to an address other than the address of the
account on the Transfer Agent's records, and/or (iii) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power must be guaranteed as
described under "Signature Guarantee" below. The Distributor may, however,
waive the signature guarantee requirement for redemptions up to $2,500 by a
trustee of a qualified retirement plan, the administrator for which has an
agreement with the Distributor.
The Guide describes a number of additional ways you can redeem your shares,
including:
. telephone requests to the Transfer Agent
. PIMCO Funds Automated Telephone System (ATS)
48
<PAGE>
. expedited wire transfers
. automatic Withdrawal Plan
. PIMCO Funds Fund Link
Unless you specifically elect otherwise, your initial account application
permits you to redeem shares by telephone subject to certain requirements. To be
eligible for ATS, expedited wire transfer, Automatic Withdrawal Plan and Fund
Link privileges, you must specifically elect the particular option on your
account application and satisfy certain other requirements. The Guide describes
each of these options and provides additional information about selling shares.
You can obtain a Guide free of charge from the Distributor by written request or
by calling 1-800-426-0107.
Other than an applicable CDSC, you will not pay any special fees or charges to
the Trust or the Distributor when you sell your shares. However, if you sell
your shares through your broker, dealer or other financial intermediary, that
firm may charge you a commission or other fee for processing your redemption
request.
Redemptions of Fund shares may be suspended when trading on the New York Stock
Exchange is restricted or during an emergency which makes it impracticable for
the Funds to dispose of their securities or to determine fairly the value of
their net assets, or during any other period as permitted by the Securities and
Exchange Commission for the protection of investors. Under these and other
unusual circumstances, the Trust may suspend redemptions or postpone payments
for more than seven days, as permitted by law.
Timing of Redemption Payments
Redemption proceeds will normally be mailed to the redeeming shareholder within
seven calendar days or, in the case of wire transfer or Fund Link redemptions,
sent to the designated bank account within one business day. Fund Link
redemptions may be received by the bank on the second or third business day. In
cases where shares have recently been purchased by personal check, redemption
proceeds may be withheld until the check has been collected, which may take up
to 15 days. To avoid such withholding, investors should purchase shares by
certified or bank check or by wire transfer. Under unusual circumstances, the
Trust may delay your redemption payments for more than seven days, as permitted
by law.
Redemptions In Kind
The Trust had agreed to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for
any one shareholder. In consideration of the best interests of the remaining
shareholders, the Trust may pay any redemption proceeds exceeding this amount in
whole or in part by a distribution in kind of securities held by a Fund in lieu
of cash. It is highly unlikely that your shares would ever be redeemed in kind.
If your shares are redeemed in kind, you should expect to incur transaction
costs upon the disposition of the securities received in the distribution.
Certificated Shares
If you are redeeming shares for which certificates have been issued, the
certificates must be mailed to or deposited with the Trust, duly endorsed or
accompanied by a duly endorsed stock power or by a written request for
redemption. Signatures must be guaranteed as described under "Signature
Guarantee" below. The Trust may request further documentation from institutions
or fiduciary accounts, such as corporations, custodians (e.g., under the Uniform
Gifts to Minors Act), executors, administrators, trustees or guardians. Your
redemption request and stock power must be signed exactly as the account is
registered, including indication of any special capacity of the registered
owner.
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Signature Guarantee
When a signature guarantee is called for, you should have "Signature
Guaranteed" stamped under your signature and guaranteed by any of the following
entities: U.S. banks, foreign banks having a U.S. correspondent bank, credit
unions, savings associations, U.S. registered dealers and brokers, municipal
securities dealers and brokers, government securities dealers and brokers,
national securities exchanges, registered securities associations and clearing
agencies (each an "Eligible Guarantor Institution"). The Distributor reserves
the right to reject any signature guarantee pursuant to its written signature
guarantee standards or procedures, which may be revised in the future to permit
it to reject signature guarantees from Eligible Guarantor Institutions that do
not, based on credit guidelines, satisfy such written standards or procedures.
The Trust may change the signature guarantee requirements from time to time upon
notice to shareholders, which may be given by means of a new or supplemented
Prospectus.
Fund Distributions
Each Fund distributes substantially all of its net investment income to
shareholders in the form of dividends. You begin earning dividends on Fund
shares the day after the Trust receives your purchase payment. Dividends paid by
each Fund with respect to each class of shares are calculated in the same manner
and at the same time, but dividends on Class B and Class C shares are expected
to be lower than dividends on Class A shares as a result of the distribution
fees applicable to Class B and Class C shares. The following shows when each
Fund intends to declare and distribute income dividends to shareholders of
record.
<TABLE>
<CAPTION>
Fund At Least Annually Quarterly
<S> <C> <C>
Healthcare Innovation, Internet Innovation, Small-Cap *
Technology, Telecom Innovation and Electronic Innovation
Funds
New Asia, Europe Growth, Select World and Emerging Markets *
Funds
</TABLE>
In addition, each Fund distributes any net capital gains it earns from the sale
of portfolio securities to shareholders no less frequently than annually. Net
short-term capital gains may be paid more frequently.
You can choose from the following distribution options:
. Reinvest all distributions in additional shares of the same class of your
Fund at NAV. This will be done unless you elect another option.
. Invest all distributions in shares of the same class of any other Fund or
another series of the Trust or PIMCO Funds: Pacific Investment Management Series
which offers that class at NAV. You must have an account existing in the Fund or
series selected for investment with the identical registered name. You must
elect this option on your account application or by a telephone request to the
Transfer Agent at 1-800-426-0107.
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. Receive all distributions in cash (either paid directly to you or credited
to your account with your broker or other financial intermediary). You must
elect this option on your account application or by a telephone request to the
Transfer Agent at 1-800-426-0107.
You do not pay any sales charges on shares you receive through the reinvestment
of Fund distributions.
If you elect to receive Fund distributions in cash and the postal or other
delivery service is unable to deliver checks to your address of record, the
Trust's Transfer Agent will hold the returned checks for your benefit in a non-
interest bearing account.
For further information on distribution options, please contact your broker or
call the Distributor at 1-800-426-0107.
Tax Consequences
. Taxes on Fund distributions. If you are subject to U.S. federal income tax,
you will be subject to tax on Fund distributions whether you received them in
cash or reinvested them in additional shares of the Funds. For federal income
tax purposes, Fund distributions will be taxable to you as either ordinary
income or capital gains.
Fund dividends (i.e., distributions of investment income) are taxable to you as
ordinary income. Federal taxes on Fund distributions of gains are determined by
how long the Fund owned the investments that generated the gains, rather than
how long you have owned your shares. Distributions of gains from investments
that a Fund owned for more than 12 months will generally be taxable to you as
capital gains. Distributions of gains from investments that the Fund owned for
12 months or less will generally be taxable to you as ordinary income.
Fund distributions are taxable to you even if they are paid from income or gains
earned by a Fund prior to your investment and thus were included in the price
you paid for your shares. For example, if you purchase shares on or just before
the record date of a Fund distribution, you will pay full price for the shares
and may receive a portion of your investment back as a taxable distribution.
. Taxes when you sell (redeem) or exchange your shares. Any gain resulting
from the sale of Fund shares will generally be subject to federal income tax.
When you exchange shares of a Fund for shares of another series, the transaction
generally will be treated as a sale of the Fund shares for these purposes, and
any gain on those shares will generally be subject to federal income tax.
. A Note on Foreign Investments. A Fund's investment in foreign securities
may be subject to foreign withholding taxes. In that case, the Fund's yield on
those securities would be decreased. In addition, a Fund's investments in
foreign securities or foreign currencies may increase or accelerate the Fund's
recognition of ordinary income and may affect the timing or amount of the Fund's
distributions. Shareholders of the New Asia, Europe Growth, Select World and
Emerging Markets Funds may be entitled to claim a credit or deduction with
respect to foreign taxes.
This section relates only to federal income tax consequences of investing in the
Funds; the consequences under other tax laws may differ. You should consult your
tax advisor as to the possible application of foreign, state and local income
tax laws to Fund dividends and capital distributions. Please see the Statement
of Additional Information for additional information regarding the tax aspects
of investing in the Funds.
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Characteristics and Risks of Securities
and Investment Techniques
This section provides additional information about some of the principal
investments and related risks of the Funds identified under "Summary
Information" above. It also describes characteristics and risks of additional
securities and investment techniques that are not necessarily principal
investments or strategies but may be used by the Funds from time to time. Most
of these securities and investment techniques are discretionary, which means
that the portfolio managers can decide whether to use them or not. This
Prospectus does not attempt to disclose all of the various types of securities
and investment techniques that may be used by the Funds. As with any mutual
fund, investors in the Funds must rely on the professional investment judgment
and skill of PIMCO Advisors, the Sub-Advisers and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the Statement of
Additional Information for more detailed information about the securities and
investment techniques described in this section and about other strategies and
techniques that may be used by the Funds.
Fixed Income Securities and Defensive Strategies
Fixed income securities are obligations of the issuer to make payments of
principal and/or interest on future dates, and include corporate and government
bonds, notes, certificates of deposit, commercial paper, convertible securities
and mortgage-backed and other asset-backed securities.
The Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
Innovation, Electronics Innovation, New Asia, Europe Growth, Select World and
Emerging Markets Funds will each invest primarily in common stocks, and may also
invest in other kinds of equity securities, including preferred stocks and
securities (including fixed income securities and warrants) convertible into or
exercisable for common stocks. Each of these Funds may invest a portion of its
assets in fixed income securities. The Funds may temporarily hold up to 100% of
their assets in short-term U.S. Government securities and other money market
instruments for defensive purposes in response to unfavorable market and other
conditions. The New Asia, Europe Growth, Select World and Emerging Markets Funds
may also hold up to 100% of their assets in other domestic fixed income, foreign
fixed income and equity securities principally traded in the U.S., including
obligations issued or guaranteed by a foreign government or its agencies,
authorities or instrumentalities, corporate bonds and American Depository
Receipts, for temporary defensive purposes.
The temporary defensive strategies described in this section would be
inconsistent with the investment objective and principal investment strategies
of each of the noted Funds and may adversely affect the Fund's ability to
achieve its investment objective.
Companies With Smaller Market Capitalizations
Each of the Funds may invest in securities of companies with market
capitalizations that are small compared to other publicly traded companies. The
Small-Cap Technology Fund invests primarily in smaller companies and is
especially sensitive to the risks described below. In addition, the Healthcare
Innovation, Internet Innovation, Telecom Innovation, Electronics Innovation, New
Asia, Europe Growth, Select World and Emerging Markets Funds generally have
significant exposure to these risks.
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Companies which are smaller and less well-known or seasoned than larger, more
widely held companies may offer greater opportunities for capital appreciation,
but may also involve risks different from, or greater than, risks normally
associated with larger companies. Larger companies generally have greater
financial resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater depth of
management and technical personnel than smaller companies. Smaller companies may
have limited product lines, markets or financial resources or may depend on a
small, inexperienced management group. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held securities and their
values may fluctuate more abruptly or erratically than securities of larger
companies. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. These securities may
therefore be more vulnerable to adverse market developments than securities of
larger companies. Also, there may be less publicly available information about
smaller companies or less market interest in their securities as compared to
larger companies, and it may take longer for the prices of the securities to
reflect the full value of a company's earnings potential or assets.
Because securities of smaller companies may have limited liquidity, a Fund may
have difficulty establishing or closing out its positions in smaller companies
at prevailing market prices. As a result of owning large positions in this type
of security, a Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if redemptions require
the Fund to liquidate its securities positions. For these reasons, it may be
prudent for a Fund with a relatively large asset size to limit the number of
relatively small positions it holds in securities having limited liquidity in
order to minimize its exposure to such risks, to minimize transaction costs, and
to maximize the benefits of research. As a consequence, as a Fund's asset size
increases, the Fund may reduce its exposure to illiquid smaller capitalization
securities, which could adversely affect performance.
The Funds may purchase securities in initial public offerings (IPOs). These
securities are subject to many of the same risks of investing in companies with
smaller market capitalizations. Securities issued in IPOs have no trading
history, and information about the companies may be available for very limited
periods. In addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in IPOs to the
extent desired because, for example, only a small portion of the securities
being offered in an IPO may be made available to the Fund or because under
certain market conditions few companies may issue securities in IPOs.
Foreign Securities
The New Asia, Europe Growth, Select World and Emerging Markets Funds normally
invest principally in securities of foreign issuers, securities traded
principally in securities markets outside the United States and/or securities
denominated in foreign currencies (together, "foreign securities"). The
Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
Innovation and Electronics Innovation Funds may invest up to 15% of their
respective assets in foreign securities.
All of the Funds may invest in American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs"). ADRs are
dollar-denominated receipts issued generally by domestic banks and representing
the deposit with the bank of a security of a foreign issuer, and are publicly
traded on exchanges or over-the-counter in the United States. EDRs are receipts
similar to ADRs and are issued and traded in Europe. GDRs may be offered
privately in the United States and also traded in public or private markets in
other countries.
Investing in foreign securities involves special risks and considerations not
typically associated with investing in U.S. securities and shareholders should
consider carefully the substantial risks involved for Funds that
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<PAGE>
invest in these securities. These risks include: differences in accounting,
auditing and financial reporting standards; generally higher commission rates on
foreign portfolio transactions; the possibility of nationalization,
expropriation or confiscatory taxation; adverse changes in investment or
exchange control regulations; and political instability. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, capital
reinvestment, resources, self-sufficiency and balance of payments position. The
securities markets, values of securities, yields and risks associated with
foreign securities markets may change independently of each other. Also, foreign
securities and dividends and interest payable on those securities may be subject
to foreign taxes, including taxes withheld from payments on those securities.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Investments in
foreign securities may also involve higher custodial costs than domestic
investments and additional transaction costs with respect to foreign currency
conversions. Changes in foreign exchange rates also will affect the value of
securities denominated or quoted in foreign currencies.
Emerging Market Securities
Each Fund may invest in securities of issuers based in or that trade principally
in countries with developing (or "emerging market") economies. The Emerging
Markets Fund is particularly susceptible to these risks because it invests
principally in companies located in emerging markets countries. The New Asia
and Select World Funds also have substantial exposure to these risks because
these Funds may invest significant portions of their assets in emerging market
securities. Investing in emerging market securities imposes risks different
from, or greater than, risks of investing in domestic securities or in foreign,
developed countries. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative illiquidity;
significant price volatility; restrictions on foreign investment; and possible
repatriation of investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales, and future economic or
political crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or the creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. dollar, and devaluation may occur
subsequent to investments in these currencies by a Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.
Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause a
Fund to miss attractive investment opportunities, hold a portion of its assets
in cash pending investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of the security.
Special Risks of Investing in Russian and Other Eastern European Securities.
The Select World and Emerging Markets Funds may invest a portion of their assets
in securities of issuers located in Russia and in other Eastern European
countries. While investments in securities of such issuers are subject generally
to the same risks associated with investments in other emerging market countries
described above, the political, legal and operational risks of investing in
Russian and other Eastern European issuers, and of having assets custodied
within these countries, may be particularly acute. A risk of particular note
with respect to direct investment in Russian securities is the way in which
ownership of shares of companies is normally recorded.
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<PAGE>
When a Fund invests in a Russian issuer, it will normally receive a "share
extract," but that extract is not legally determinative of ownership. The
official record of ownership of a company's share is maintained by the company's
share registrar. Such share registrars are completely under the control of the
issuer, and investors are provided with few legal rights against such
registrars.
Foreign Currencies
A Fund that invests directly in foreign currencies or in securities that trade
in, and receive revenues in, foreign currencies will be subject to currency
risk. The New Asia, Europe Growth, Select World and Emerging Markets Funds are
particularly sensitive to this risk.
Foreign currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by supply and demand and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors. Currency exchange rates also can be
affected unpredictably by intervention (or the failure to intervene) by U.S. or
foreign governments or central banks, or by currency controls or political
developments. For example, significant uncertainty surrounds the recent
introduction of the euro (a common currency unit for the European Union) in
January 1999 and the effect it may have on the value of securities denominated
in local European currencies. The Europe Growth Fund is especially susceptible
to risks associated with the introduction of the euro because it invests
principally in European companies, many of which are located in European
Monetary Union countries. The euro and other currencies in which the Funds'
assets are denominated may be devalued against the U.S. dollar, resulting in a
loss to the Funds.
Foreign Currency Transactions. The Funds may enter into forward foreign
currency exchange contracts to reduce the risks of adverse changes in foreign
exchange rates. In addition, the Funds may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency futures. A
forward foreign currency exchange contract, which involves an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract, reduces a Fund's exposure to changes in the value of the
currency it will deliver and increases its exposure to changes in the value of
the currency it will receive for the duration of the contract. The effect on the
value of a Fund is similar to selling securities denominated in one currency and
purchasing securities denominated in another currency. Contracts to sell foreign
currency would limit any potential gain which might be realized by a Fund if the
value of the hedged currency increases. A Fund may enter into these contracts to
hedge against foreign exchange risk arising from the Fund's investment or
anticipated investment in securities denominated in foreign currencies. Suitable
hedging transactions may not be available in all circumstances and there can be
no assurance that a Fund will engage in such transactions at any given time or
from time to time. Also, such transactions may not be successful and may
eliminate any chance for a Fund to benefit from favorable fluctuations in
relevant foreign currencies.
The New Asia, Europe Growth, Select World and Emerging Markets Funds may also
enter into these contracts for purposes of increasing exposure to a foreign
currency or to shift exposure to foreign currency fluctuations from one currency
to another. To the extent that it does so, a Fund will be subject to the
additional risk that the relative value of currencies will be different than
anticipated by the Fund's portfolio manager. The Funds may use one currency (or
a basket of currencies) to hedge against adverse changes in the value of another
currency (or a basket of currencies) when exchange rates between the two
currencies are positively correlated. Each Fund will segregate assets determined
to be liquid by PIMCO Advisors or the Fund's Sub-Adviser in accordance with
procedures established by the Board of Trustees to cover its obligations under
forward foreign currency exchange contracts entered into for non-hedging
purposes.
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Corporate Debt Securities
Corporate debt securities are subject to the risk of the issuer's inability to
meet principal and interest payments on the obligation and may also be subject
to price volatility due to such factors as interest rate sensitivity, market
perception of the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities can be expected
to decline. Debt securities with longer durations tend to be more sensitive to
interest rate movements than those with shorter durations.
Convertible Securities
Each Fund may invest in convertible securities. Convertible securities are
generally preferred stocks and other securities, including fixed income
securities and warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a convertible
security will normally vary in some proportion to changes in the price of the
underlying common stock because of this conversion or exercise feature. However,
the value of a convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally also provide
income and is subject to interest rate risk. While convertible securities
generally offer lower interest or dividend yields than non-convertible fixed
income securities of similar quality, their value tends to increase as the
market value of the underlying stock increases and to decrease when the value of
the underlying stock decreases. Also, a Fund may be forced to convert a security
before it would otherwise choose, which may have an adverse effect on the Fund's
ability to achieve its investment objective.
Derivatives
Each Fund may, but is not required to, use a number of derivative instruments
for risk management purposes or as part of its investment strategies. Generally,
derivatives are financial contracts whose value depends upon, or is derived
from, the value of an underlying asset, reference rate or index, and may relate
to stocks, bonds, interest rates, currencies or currency exchange rates,
commodities and related indexes. A portfolio manager may decide not to employ
any of these strategies and there is no assurance that any derivatives strategy
used by a Fund will succeed.
Examples of derivative instruments include options contracts, futures contracts,
options on futures contracts and swap agreements. The Funds may purchase and
sell (write) call and put options on securities, securities indexes and foreign
currencies. Each Fund may purchase and sell futures contracts and options
thereon with respect to securities, securities indexes and foreign currencies.
A description of these and other derivative instruments that the Funds may use
are described under "Investment Objectives and Policies" in the Statement of
Additional Information.
A Fund's use of derivative instruments involves risks different from, or
greater than, the risks associated with investing directly in securities and
other more traditional investments. A description of various risks associated
with particular derivative instruments is included in "Investment Objectives
and Policies" in the Statement of Additional Information. The following
provides a more general discussion of important risk factors relating to all
derivative instruments that may be used by the Funds.
Management Risk Derivative products are highly specialized instruments that
require investment techniques and risk analyses different from those associated
with stocks and bonds. The use of a derivative requires an understanding not
only of the underlying instrument but also of the derivative itself, without the
benefit of observing the performance of the derivative under all possible market
conditions.
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Credit Risk The use of a derivative instrument involves the risk that a loss
may be sustained as a result of the failure of another party to the contract
(usually referred to as a "counterparty") to make required payments or
otherwise comply with the contract's terms.
Liquidity Risk Liquidity risk exists when a particular derivative instrument
is difficult to purchase or sell. If a derivative transaction is particularly
large or if the relevant market is illiquid (as is the case with many privately
negotiated derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage component, adverse
changes in the value or level of the underlying asset, reference rate or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. When a Fund uses derivatives
for leverage, investments in that Fund will tend to be more volatile, resulting
in larger gains or losses in response to market changes. To limit leverage risk,
each Fund will segregate assets determined to be liquid by PIMCO Advisors or a
Sub-Adviser in accordance with procedures established by the Board of Trustees
(or, as permitted by applicable regulation, enter into certain offsetting
positions) to cover its obligations under derivative instruments.
Lack of Availability Because the markets for certain derivative instruments
(including markets located in foreign countries) are relatively new and still
developing, suitable derivatives transactions may not be available in all
circumstances for risk management or other purposes. There is no assurance that
a Fund will engage in derivatives transactions at any time or from time to time.
A Fund's ability to use derivatives may also be limited by certain regulatory
and tax considerations.
Market and Other Risks Like most other investments, derivative instruments are
subject to the risk that the market value of the instrument will change in a way
detrimental to a Fund's interest. If a portfolio manager incorrectly forecasts
the values of securities, currencies or interest rates or other economic factors
in using derivatives for a Fund, the Fund might have been in a better position
if it had not entered into the transaction at all. While some strategies
involving derivative instruments can reduce the risk of loss, they can also
reduce the opportunity for gain or even result in losses by offsetting favorable
price movements in other Fund investments. A Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is legally required
to maintain offsetting positions or asset coverage in connection with certain
derivatives transactions.
Other risks in using derivatives include the risk of mispricing or improper
valuation of derivatives and the inability of derivatives to correlate perfectly
with underlying assets, rates and indexes. Many derivatives, in particular
privately negotiated derivatives, are complex and often valued subjectively.
Improper valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Fund. Also, the value of derivatives may
not correlate perfectly, or at all, with the value of the assets, reference
rates or indexes they are designed to closely track. In addition, a Fund's use
of derivatives may cause the Fund to realize higher amounts of short-term
capital gains (taxed at ordinary income tax rates when distributed to
shareholders who are individuals) than if the Fund had not used such
instruments.
Equity-Linked Securities
The Funds may invest in equity-linked securities. Equity-linked securities are
privately issued securities whose investment results are designed to correspond
generally to the performance of a specified stock index or "basket" of stocks,
or sometimes a single stock. To the extent that the Funds invest in equity-
linked securities whose return corresponds to the performance of a foreign
securities index or one or more of foreign stocks,
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investing in equity-linked securities will involve risks similar to the risks of
investing in foreign equity securities. See "Foreign Securities" above. In
addition, the Funds bear the risk that the issuer of an equity-linked security
may default on its obligations under the security. Equity-linked securities may
be considered illiquid and thus subject to each Fund's restrictions on
investments in illiquid securities.
Credit Ratings and Unrated Securities
The Funds may invest in securities based on their credit ratings assigned by
rating agencies such as Moody's Investors Service, Inc. ("Moody's") and
Standard and Poor's Ratings Services ("S&P"). Moody's, S&P and other rating
agencies are private services that provide ratings of the credit quality of
fixed income securities, including convertible securities. The Appendix to the
Statement of Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a rating agency
are not absolute standards of credit quality and do not evaluate market risk.
Rating agencies may fail to make timely changes in credit ratings and an
issuer's current financial condition may be better or worse than a rating
indicates. A Fund will not necessarily sell a security when its rating is
reduced below its rating at the time of purchase. PIMCO Advisors and the Sub-
Advisers do not rely solely on credit ratings, and develop their own analysis of
issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a rating agency)
if its portfolio manager determines that the security is of comparable quality
to a rated security that the Fund may purchase. Unrated securities may be less
liquid than comparable rated securities and involve the risk that the portfolio
manager may not accurately evaluate the security's comparative credit rating.
High Yield Securities
Securities rated lower than Baa by Moody's or lower than BBB by S&P are
sometimes referred to as "high yield" or "junk" bonds. The Funds may invest in
high yield securities. Investing in high yield securities involves special
risks in addition to the risks associated with investments in higher-rated fixed
income securities. While offering a greater potential opportunity for capital
appreciation and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-rated securities.
High yield securities may be regarded as predominantly speculative with respect
to the issuer's continuing ability to meet principal and interest payments.
They may also be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities.
Loans of Portfolio Securities
For the purpose of achieving income, each Fund may lend its portfolio securities
to brokers, dealers and other financial institutions provided a number of
conditions are satisfied, including that the loan is fully collateralized.
Please see "Investment Objectives and Policies" in the Statement of Additional
Information for details. When a Fund lends portfolio securities, its investment
performance will continue to reflect changes in the value of the securities
loaned, and the Fund will also receive a fee or interest on the collateral.
Securities lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to return the security
loaned or becomes insolvent. A Fund may pay lending fees to the party arranging
the loan.
Short Sales
Each Fund may make short sales as part of its overall portfolio management
strategies or to offset a potential decline in the value of a security. A short
sale involves the sale of a security that is borrowed from a broker or other
institution to complete the sale. A Fund may only enter into short selling
transactions if the security sold short is held in the Fund's portfolio or if
the Fund has the right to acquire the security without the payment of
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further consideration. For these purposes, a Fund may also hold or have the
right to acquire securities which, without the payment of any further
consideration, are convertible into or exchangeable for the securities sold
short. Short sales expose a Fund to the risk that it will be required to
acquire, convert or exchange securities to replace the borrowed securities (also
known as "covering" the short position) at a time when the securities sold
short have appreciated in value, thus resulting in a loss to the Fund.
When-Issued, Delayed Delivery and Forward Commitment Transactions
Each Fund may purchase securities which it is eligible to purchase on a when-
issued basis, may purchase and sell such securities for delayed delivery and may
make contracts to purchase such securities for a fixed price at a future date
beyond normal settlement time (forward commitments). When-issued transactions,
delayed delivery purchases and forward commitments involve a risk of loss if the
value of the securities declines prior to the settlement date. This risk is in
addition to the risk that the Fund's other assets will decline in value.
Therefore, these transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues on securities a
Fund has committed to purchase prior to the time delivery of the securities is
made, although a Fund may earn income on securities it has segregated to cover
these positions.
Repurchase Agreements
Each Fund may enter into repurchase agreements, in which the Fund purchases a
security from a bank or broker-dealer that agrees to repurchase the security at
the Fund's cost plus interest within a specified time. If the party agreeing to
repurchase should default, the Fund will seek to sell the securities which it
holds. This could involve procedural costs or delays in addition to a loss on
the securities if their value should fall below their repurchase price. Those
Funds whose investment objectives do not include the earning of income will
invest in repurchase agreements only as a cash management technique with respect
to that portion of its portfolio maintained in cash. Repurchase agreements
maturing in more than seven days are considered illiquid securities.
Reverse Repurchase Agreements And Other Borrowings
Each Fund may enter into reverse repurchase agreements, subject to the Fund's
limitations on borrowings. A reverse repurchase agreement involves the sale of a
security by a Fund and its agreement to repurchase the instrument at a specified
time and price, and may be considered a form of borrowing for some purposes. A
Fund will segregate assets determined to be liquid by PIMCO Advisors or a Sub-
Adviser in accordance with procedures established by the Board of Trustees to
cover its obligations under reverse repurchase agreements. A Fund also may
borrow money for investment purposes subject to any policies of the Fund
currently described in this Prospectus or in the Statement of Additional
Information. Reverse repurchase agreements and other forms of borrowings may
create leveraging risk for a Fund.
Illiquid Securities
Each Fund may invest in securities that are illiquid so long as not more than
15% of the value of the Fund's net assets (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by a Fund, and
transactions in illiquid securities may entail registration expenses and other
transaction costs that are higher than those for transactions in liquid
securities. The term "illiquid securities" for this purpose means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which a Fund has valued the securities. Please
see "Investment Objectives and Policies" in the Statement of Additional
Information for a listing of various securities that are generally considered to
be
59
<PAGE>
illiquid for these purposes. Restricted securities, i.e., securities subject to
legal or contractual restrictions on resale, may be illiquid. However, some
restricted securities (such as securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper) may be treated as liquid,
although they may be less liquid than registered securities traded on
established secondary markets.
Investment in Other Investment Companies
The New Asia, Europe Growth, Select World and Emerging Markets Funds may invest
up to [10%] of their assets in securities of other investment companies, such as
closed-end management investment companies, or in pooled accounts or other
investment vehicles which invest in foreign markets. The Healthcare Innovation,
Internet Innovation, Small-Cap Technology, Telecom Innovation and Electronics
Innovation Funds may invest up to 5% of their assets in such securities. As a
shareholder of an investment company, a Fund may indirectly bear service and
other fees which are in addition to the fees the Fund pays its service
providers.
Portfolio Turnover
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities held by a Fund
is known as "portfolio turnover." Each Fund may engage in active and frequent
trading of portfolio securities to achieve its investment objective and
principal investment strategies, particularly during periods of volatile market
movements. High portfolio turnover (e.g., over 100%) involves correspondingly
greater expenses to a Fund, including brokerage commissions or dealer mark-ups
and other transaction costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable capital gains,
including short-term capital gains (which are taxed at ordinary income tax rates
when distributed to shareholders who are individuals). The trading costs and tax
effects associated with portfolio turnover may adversely affect a Fund's
performance.
Changes in Investment Objectives and Policies
The investment objective of each Fund described in this Prospectus may be
changed by the Board of Trustees without shareholder approval. Unless otherwise
stated in the Statement of Additional Information, all investment policies of
the Funds may be changed by the Board of Trustees without shareholder approval.
If there is a change in a Fund's investment objective or policies, including a
change approved by shareholder vote, shareholders should consider whether the
Fund remains an appropriate investment in light of their then current financial
position and needs.
New Funds
In addition to the risks described under "Summary of Principal Risks" above
and in this section, the Funds are newly formed and therefore have no history
upon which investors can evaluate their likely performance. Accordingly, there
can be no assurance that the Funds will achieve their investment objective.
Also, it is possible that the Funds may invest in securities offered in initial
public offerings and other similar transactions which, because of each Fund's
size, have a disproportionate impact on each Fund's performance results. The
Funds would not necessarily have achieved the same performance results if their
aggregate net assets had been greater.
Percentage Investment Limitations
60
<PAGE>
Unless otherwise stated, all percentage limitations on Fund investments listed
in this Prospectus will apply at the time of investment. A Fund would not
violate these limitations unless an excess or deficiency occurs or exists
immediately after and as a result of an investment.
Other Investments and Techniques
The Funds may invest in other types of securities and use a variety of
investment techniques and strategies which are not described in this Prospectus.
These securities and techniques may subject the Funds to additional risks.
Please see the Statement of Additional Information for additional information
about the securities and investment techniques described in this Prospectus and
about additional securities and techniques that may be used by the Funds.
61
<PAGE>
PIMCO Funds: Multi-Manager Series
The Trust's Statement of Additional Information ("SAI") and annual and semi-
annual reports to shareholders include additional information about the Funds.
The SAI and the financial statements included in the Funds' most recent annual
report to shareholders are incorporated by reference into this Prospectus, which
means they are part of this Prospectus for legal purposes. The Funds' annual
report discusses the market conditions and investment strategies that
significantly affected each Fund's performance during its last fiscal year.
The SAI includes the PIMCO Funds Shareholders' Guide for Class A, B and C
Shares, a separate booklet which contains more detailed information about Fund
purchase, redemption and exchange options and procedures and other information
about the Funds. You can get a free copy of the Guide together with or
separately from the rest of the SAI.
You may get free copies of any of these materials, request other information
about a Fund, or make shareholder inquiries by calling 1-800-426-0107, or by
writing to:
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, Connecticut 06902
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust on the EDGAR database on the Commission's Web site
at www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by electronic request at the following e-mail address:
[email protected], or by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009. You may need to refer to the Trust's
file number under the Investment Company Act, which is 811-6161.
You can also visit our Web site at www.pimcofunds.com for additional information
about the Funds.
LOGO
62
<PAGE>
PIMCO Funds:
Multi-Manager Series
INVESTMENT ADVISOR AND ADMINISTRATOR
PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA 92660
PORTFOLIO MANAGERS
PIMCO Equity Advisors division of PIMCO Advisors L.P., PIMCO/Allianz
International Advisors LLC
DISTRIBUTOR
PIMCO Funds Distributors LLC, 2187 Atlantic Street, Stamford, CT 06902
CUSTODIAN
State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
PFPC, Inc., Box 9688, Providence, RI 02940
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
For further information about the PIMCO Funds, call 1-800-426-0107 or visit our
Web site at www.pimcofunds.com.
------------------
Not part of the Prospectus
63
<PAGE>
PIMCO Funds Prospectus
PIMCO Funds:
Multi-Manager Series
[ ] 2000
Share Classes Institutional and Administrative
This Prospectus describes 9 mutual funds offered by PIMCO Funds: Multi-Manager
Series. The Funds provide access to the professional investment advisory
services offered by PIMCO Advisors L.P. and its investment management
affiliates. As of March 31, 2000, PIMCO Advisors and its affiliates managed
approximately $264 billion in assets. PIMCO Advisors' institutional heritage is
reflected in the PIMCO Funds offered in this Prospectus.
This Prospectus explains what you should know about the Funds before you invest.
Please read it carefully.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
1
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information 3
Fund Summaries
Healthcare Innovation Fund 5
Internet Innovation Fund 7
Small-Cap Technology Fund 9
Telecom Innovation Fund 11
Electronics Innovation Fund 13
New Asia Fund 15
Europe Growth Fund 17
Select World Fund 19
Emerging Markets Fund 21
Summary of Principal Risks 23
Management of the Funds 26
Investment Options -- Institutional Class and Administrative Class Shares 30
Purchases, Redemptions and Exchanges 31
How Fund Shares Are Priced 35
Fund Distributions 35
Tax Consequences 36
Characteristics and Risks of Securities and Investment Techniques 37
</TABLE>
2
<PAGE>
Summary Information
The table below lists the investment objectives and certain investment
characteristics of the Funds. Other important characteristics are described in
the individual Fund Summaries beginning on page 5.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Approxiamate
PIMCO Investment Main Number of Capitalization
Fund Objective Investments Holdings Range
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sector-Related Healthcare Capital appreciation; no Common stocks of health 30-60 More than $200
Stock Funds Innovation consideration is given to care-related companies with market million
income capitalizations of more than $200
million
------------------------------------------------------------------------------------------------------------------------------------
Internet Innovation Capital appreciation; no Common stocks of Internet and 20-60 More than $200
consideration is given to Internet-related companies with million
income market capitalizations of more than
$200 million
------------------------------------------------------------------------------------------------------------------------------------
Small-Cap Technology Capital appreciation; no Common stocks of technology-related 30-60 Between $100
consideration is given to companies with market million and
income capitalizations of between $100 $2 billion
million and $2 billion.
------------------------------------------------------------------------------------------------------------------------------------
Telecom Innovation Capital appreciation; no Common stocks of 20-60 More than $200
consideration is given to telecommunications-related million
income companies with market
capitalizations of more than $200
million
------------------------------------------------------------------------------------------------------------------------------------
Electronics Capital appreciation; no Common stocks of companies in the 20-60 More than $200
Innovation consideration is given to electronics industry with market million
income capitalizations of more than $200
million
------------------------------------------------------------------------------------------------------------------------------------
International PIMCO/Allianz Capital appreciation through Common stocks of companies located 80 More than $250
Stock Funds New Asia investment in an in Asia with market capitalizations million
international portfolio of more than $250 million
------------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of European companies 80 More than $1
Europe Growth investment in an with market capitalizations of more billion
international portfolio than $1 billion
------------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of companies located 50-60 More than $1
Select World investment in a global both within and outside of the billion
portfolio United States with market
capitalizations of more than $1
billion
------------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of companies located 80 More than $250
Emerging Markets investment in an in emerging market countries within million
international portfolio Europe, Asia, Latin America and
Africa with market capitalizations
of more than $250 million
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Summary Information (continued)
Fund Descriptions, Performance and Fees
The Funds provide a broad range of investment choices. The following Fund
Summaries identify each Fund's investment objective, principal investments and
strategies, principal risks, performance information and fees and expenses. A
more detailed ''Summary of Principal Risks'' describing principal risks of
investing in the Funds begins after the Fund Summaries.
It is possible to lose money on investments in the Funds. An investment in a
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
4
<PAGE>
PIMCO Healthcare Innovation Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of health care- Range More than $200 million
consideration is given to income related companies
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 30-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in securities of companies principally engaged in the
design, manufacture or sale of new, creative or different, or "innovative,"
products or services used for or in connection with health care or medicine.
These companies may include, for example, pharmaceutical companies, companies
involved in biotechnology, medical diagnostic, biochemical or other health care
research and development, companies involved in the operation of health care
facilities, and other companies involved in the design, manufacture or sale of
health care-related products or services such as medical, dental and optical
products, hardware or services. Although the Fund emphasizes companies which
utilize health care technologies, it is not required to invest exclusively in a
particular business sector or industry, and at any time may not be invested in
any of the industry sectors listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify health care-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Among the principal risks of investing in the Fund, which
Risks could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
5
<PAGE>
Fees and
Expenses
of the
Fund
These tables describe the fees and expenses you may pay if you buy
and hold Institutional Class or Administrative Class shares of the
Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from Fund
assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.70% None [0.29%] [0.99%] [0.04%] 0.95%
-------------------------------------------------------------------------------------------------------------------
Administrative 0.70 0.25% [0.29] [1.24] [0.04] 1.20
</TABLE>
(1) Other Expenses, which are based on estimated amounts for the
Fund's initial fiscal year, reflect a 0.25% Administrative Fee
paid by the class and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual agreement by
PIMCO Advisors to waive, reduce or reimburse its Administrative
Fees for each class in an amount that, in essence, is equal to
the Fund's Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be accounted for in
the Fund's initial fiscal year, the Fund's reasonable
expectation is that the relevant conditions will not continue
after the Fund's fiscal year ending June 30, 2001.
Examples. The Examples below are intended to help you compare the cost
of investing in Institutional Class or Administrative Class shares of
the Fund with the costs of investing in other mutual funds. The
Examples assume that you invest $10,000 in the noted class of shares
for the time periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your investment
has a 5% return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the Examples show
what your costs would be based on these assumptions./(1)/
-------------------------------------------------
Share Class Year1 Year 3 Year 5 Year 10
-------------------------------------------------
Institutional [ ] [ ] [ ] [ ]
-------------------------------------------------
Administrative [ ] [ ] [ ] [ ]
-------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the preceding
table.
6
<PAGE>
PIMCO Internet Innovation Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Investments and Investment Objective Funds Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of Internet-related Range More than $200 million
consideration is given to income companies
Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies that derive at least 50%
of their revenues, expenses or profits from the research, design, development,
manufacturing or distribution of new, creative or different, or "innovative,"
products, processes or services for use with Internet- or Internet-related
businesses. Some examples of these companies may include, for example,
providers of broad-band Internet access, web site content, Internet software and
electronic commerce. Although the Fund emphasizes Internet-related companies,
it is not required to invest exclusively in a particular business sector or
industry, and at any time may not be invested in any of the industry sectors
listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify Internet-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
7
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you buy
and hold Institutional Class or Administrative Class shares of the
Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from Fund
assets)
<TABLE>
<CAPTION>
Distribution Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.80% None [0.29%] [1.09%] [0.04%] 1.55%
----------------------------------------------------------------------------------------------------------------
Administrative 0.80 0.25% [0.29] [1.34] [0.04] 1.30
</TABLE>
(1) Other Expenses, which are based on estimated amounts for the
Fund's initial fiscal year, reflect a 0.25% Administrative Fee
paid by the class and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual agreement by
PIMCO Advisors to waive, reduce or reimburse its Administrative
Fees for each class in an amount that, in essence, is equal to the
Fund's Organizational Expenses attributed to the class. Because
the Organizational Expenses will all be accounted for in the
Fund's initial fiscal year, the Fund's reasonable expectation is
that the relevant conditions will not continue after the Fund's
fiscal year ending June 30, 2001.
Examples. The Examples below are intended to help you compare the cost
of investing in Institutional Class or Administrative Class shares of
the Fund with the costs of investing in other mutual funds. The
Examples assume that you invest $10,000 in the noted class of shares
for the time periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your investment
has a 5% return each year, the reinvestment of all dividends and
distributions, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the Examples show
what your costs would be based on these assumptions./(1)/
-----------------------------------------------------------
Share Class Year1 Year 3 Year 5 Year 10
-----------------------------------------------------------
Institutional [ ] [ ] [ ] [ ]
----------------------------------------------------------
Administrative [ ] [ ] [ ] [ ]
----------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the preceding
table.
8
<PAGE>
PIMCO Small-Cap Technology Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization Range
Strategies Seeks capital appreciation; no Common stocks of technology- Between $100 million and $2 billion
consideration is given to income related companies with smaller
market capitalizations Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 30-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of technology and technology-related
companies with market capitalizations of between $100 million and $2 billion at
the time of investment. The Fund identifies its investment universe of
technology-related companies primarily by reference to classifications made by
independent firms, such as Standard & Poor's (for example, companies classified
as "Information Technology" companies), and by identifying companies that
derive a substantial portion of their revenues from the manufacture, sale and/or
service of technological products. Although the Fund emphasizes companies which
utilize technologies, it is not required to invest exclusively in a particular
business sector or industry.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify companies with well-defined "wealth
creating" characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental research, the
portfolio manager seeks to identify companies that are gaining market share,
have superior management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution systems. The Fund
looks to sell a stock when the portfolio manager believes that earnings or
market sentiment are disappointing, if the company does not meet or exceed
consensus estimates on revenues and/or earnings or if an alternative investment
is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
9
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your
investment) None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.80% None [0.29%] [1.09%] [0.04%] 1.05%
-----------------------------------------------------------------------------------------------------------------------
Administrative 0.80 0.25% [0.29] [1.34] [0.04] 1.30
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.25%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
------------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------
Institutional [_] [_] [_] [_]
------------------------------------------------------------
Administrative [_] [_] [_] [_]
------------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
10
<PAGE>
PIMCO Telecom Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation; no Common stocks of Range
consideration is given to income telecommunications-related More than $200 million
companies
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies principally engaged in the
development, manufacture or sale of new, creative or different, or "innovative,"
communications services or communications equipment. These companies may
include, for example, companies that provide traditional local and long-distance
telephone service or equipment, companies that provide cellular, paging, local
and wide area product networks or equipment, companies that provide satellite,
microwave and cable television or equipment, and companies involved in new
technologies such as fiber optics, semiconductors and data transmission.
Although the Fund emphasizes telecommunications-related companies, it is not
required to invest exclusively in a particular business sector or industry, and
at any time may not be invested in any of the sectors listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
with well-defined "wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market as a whole),
high profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Leveraging Risk
.Smaller Company Risk .Credit Risk
.Liquidity Risk .Focused Investment Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
11
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.70% None [0.29%] [0.99%] [0.04%] 0.95%
----------------------------------------------------------------------------------------------------------------
Administrative 0.70 0.25% [0.29] [1.24] [0.04] 1.20
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.25%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
----------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
----------------------------------------------------------
Institutional [_] [_] [_] [_]
----------------------------------------------------------
Administrative [_] [_] [_] [_]
----------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
12
<PAGE>
PIMCO Electronics Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of companies in the Range
consideration is given to income electronics industry More than $200 million
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies principally engaged in the
development, manufacture or sale of new, creative or different, or "innovative,"
electronics products and services. These companies may include, for example,
companies engaged in the development, manufacture, sale or service of electronic
components, equipment vendors to electronics manufacturers, electronic component
distributors, electronic instruments and systems vendors, and companies that
provide electronics-related services. Although the Fund emphasizes companies in
the electronics industry, it is not required to invest exclusively in a
particular business sector or industry, and at any time may not be invested in
any of the types of companies listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify electronics-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Leveraging Risk
.Smaller Company Risk .Credit Risk
.Liquidity Risk .Focused Investment Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
13
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your
investment) None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.80% None [0.29%] [1.09%] [0.04%] 1.05%
--------------------------------------------------------------------------------------------------------------
Administrative 0.80 0.25% [0.29] [1.34] [0.04] 1.30
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.25%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
------------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
------------------------------------------------------------
Institutional [_] [_] [_] [_]
------------------------------------------------------------
Administrative [_] [_] [_] [_]
(1) The Examples are based on the Net Expenses shown in the
preceding table.
14
<PAGE>
PIMCO/Allianz New Asia Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in an international U.S.) issuers More than $250 million
portfolio
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of companies located in Asia. The Fund will primarily invest
in securities of companies located in the Far East, including Australia, China,
Hong Kong, Japan, Indonesia, India, Malaysia, New Zealand, the Philippines,
Singapore, South Korea, Taiwan and Thailand, although the Fund will not
necessarily be invested in all of these countries at any time. The Fund may also
invest in securities of foreign issuers traded on U.S. securities markets, but
will normally not invest in U.S. issuers. However, the Fund has no prescribed
limits on geographic asset distribution and may invest in any foreign securities
market in the world. The Fund invests most of its assets in foreign securities
which trade in currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its
net asset value, yield and total return, are:
<S> <C> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Smaller Companies Risk .Leveraging Risk
.Currency Risk .Liquidity Risk .Credit Risk
.Market Risk .Derivatives Risk .Management Risk
.Issuer Risk .Value Securities Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a full calendar year of
Information performance. Thus, no bar chart or Average Annual Total Returns table is included
for the Fund.
</TABLE>
15
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 1.00% None [0.54%] [1.54%] [0.04%] 1.50%
----------------------------------------------------------------------------------------------------------------
Administrative 1.00 0.25% [0.54] [1.79] [0.04] 1.75
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.50%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
Administrative [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
16
<PAGE>
PIMCO/Allianz Europe Growth Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in an international U.S.) issuers More than $1 billion
portfolio
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio of common
stocks and other equity securities of European companies with medium and large
market capitalizations. The Fund may also invest in securities of foreign
issuers traded on U.S. securities markets, but will normally not invest in U.S.
issuers. However, the Fund has no prescribed limits on geographic asset
distribution and may invest in any foreign securities market in the world. The
Fund invests most of its assets in foreign securities which trade in currencies
other than the U.S. dollar (e.g., the Euro) and may invest directly in foreign
currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts) primarily for
portfolio management and hedging purposes. The Fund may also invest in equity
securities other than common stocks (such as equity-linked securities, preferred
stocks and convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all of its assets
in foreign and domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund,
which could adversely affect its net asset value, yield
and total return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Currency Risk .Smaller Companies Risk .Leveraging Risk
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Derivatives Risk .Management Risk
.Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the
Fund Summaries for a description of these and other
risks of investing in the Fund.
Performance The Fund recently commenced operations and does not yet
Information have a full calendar year of performance. Thus, no bar
chart or Average Annual Total Returns table is included
for the Fund.
17
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.75% None [0.54%] [1.29%] [0.04%] 1.25%
--------------------------------------------------------------------------------------------------------------
Administrative 0.75 0.25% [0.54] [1.54] [0.04] 1.50
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.50%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
Institutional [ ] [ ] [ ] [ ]
--------------------------------------------------------------------------------------
Administrative [ ] [ ] [ ] [ ]
--------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
18
<PAGE>
PIMCO/Allianz Select World Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in a global portfolio U.S.) issuers More than $1 billion
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 50-60
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio of common
stocks and other equity securities of companies located throughout the world.
Although the Fund normally invests in issuers from at least five different
countries, including the United States, it may at times invest in fewer than
five countries, or even a single country. The Fund typically invests in
approximately 50 to 60 stocks, with each stock usually constituting from 1.25%
to 2.5% of the Fund's portfolio. The Fund may invest in both developed and
developing, or "emerging," markets. The Fund has no prescribed limits on
geographic asset distribution and may invest in any foreign securities market in
the world. The Fund invests most of its assets in foreign securities which trade
in currencies other than the U.S. dollar and may invest directly in foreign
currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Best Research" investment style. The Best Research style uses a
research-driven "bottom-up" approach that seeks to utilize the Sub-Adviser's
global research capabilities to identify companies with above-average long-term
growth prospects and attractive valuations and that possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The portfolio manager seeks to select those stocks with
the best long-term performance expectations, using a broad range of company
fundamentals, such as long-term growth prospects, price-to-earnings ratios and
other valuation measures, dividend and profit growth, balance sheet strength and
return on assets. The portfolio managers sell stocks in order to adjust or
rebalance the Fund's portfolio and to replace companies with weakening
fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts) primarily for
portfolio management and hedging purposes. The Fund may also invest in equity
securities other than common stocks (such as equity-linked securities, preferred
stocks and convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all of its assets
in foreign and domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund,
which could adversely affect its net asset value, yield
and total return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Smaller Companies Risk .Leveraging Risk
.Currency Risk .Liquidity Risk .Credit Risk
.Market Risk .Derivatives Risk .Management Risk
.Issuer Risk .Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the
Fund Summaries for a description of these and other
risks of investing in the Fund.
Performance The Fund recently commenced operations and does not yet
Information have a full calendar year of performance. Thus, no bar
chart or Average Annual Total Returns table is included
for the Fund.
19
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 0.75% None [0.54%] [1.29%] [0.04%] 1.25%
--------------------------------------------------------------------------------------------------------------
Administrative 0.75 0.25% [0.54] [1.54] [0.04] 1.50
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.50%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Institutional [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
Administrative [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
20
<PAGE>
PIMCO/Allianz Emerging Markets Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in an international U.S.) issuers More than $250 million
portfolio
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio of common
stocks and other equity securities of companies located in emerging market
countries within Europe, Asia, Latin America and Africa. The Fund may also
invest in securities of foreign issuers traded on U.S. securities markets, but
will normally not invest in U.S. issuers. However, the Fund has no prescribed
limits on geographic asset distribution and may invest in any foreign securities
market in the world. The Fund invests most of its assets in foreign securities
which trade in currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts) primarily for
portfolio management and hedging purposes. The Fund may also invest in equity
securities other than common stocks (such as equity-linked securities, preferred
stocks and convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all of its assets
in foreign and domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund?s investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Smaller Companies Risk .Leveraging Risk
.Currency Risk .Liquidity Risk .Credit Risk
.Market Risk .Derivatives Risk .Management Risk
.Issuer Risk .Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
21
<PAGE>
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Share Class Fees (12b-1) Fees Expenses/(1)/ Expenses Waiver/(2)/ Expenses/(2)/
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional 1.00% None [0.54%] [1.54%] [0.04%] 1.50%
--------------------------------------------------------------------------------------------------------------
Administrative 1.00 0.25% [0.54] [1.79] [0.04] 1.75
</TABLE>
(1) Other Expenses, which are based on estimated amounts
for the Fund's initial fiscal year, reflect a 0.50%
Administrative Fee paid by the class and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(2) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fees for each class in an
amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions./(1)/
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Share Class Year 1 Year 3 Year 5 Year 10
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional [ ] [ ] [ ] [ ]
---------------------------------------------------------------------------------------
Administrative [ ] [ ] [ ] [ ]
---------------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
22
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of that Fund's
investments. Many factors can affect those values. The factors that are most
likely to have a material effect on a particular Fund's portfolio as a whole are
called "principal risks." The principal risks of each Fund are identified in
the Fund Summaries and are summarized in this section. Each Fund may be subject
to additional principal risks and risks other than those described below because
the types of investments made by each Fund can change over time. Securities and
investment techniques mentioned in this summary and described in greater detail
under "Characteristics and Risks of Securities and Investment Techniques"
appear in bold type. That section and "Investment Objectives and Policies" in
the Statement of Additional Information also include more information about the
Funds, their investments and the related risks. There is no guarantee that a
Fund will be able to achieve its investment objective.
Market Risk
The market price of securities owned by a Fund may go up or down, sometimes
rapidly or unpredictably. Each of the Funds normally invests most of its assets
in common stocks and/or other equity securities. A principal risk of investing
in each Fund is that the equity securities in its portfolio will decline in
value due to factors affecting equity securities markets generally or particular
industries represented in those markets. The values of equity securities may
decline due to general market conditions which are not specifically related to a
particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may also decline
due to factors which affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. Equity securities generally have greater price volatility than fixed
income securities.
Issuer Risk
The value of a security may also decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer's goods or services.
Growth Securities Risk
Each Fund emphasizes investments in equity securities of companies that its
portfolio manager believes will experience relatively rapid earnings growth. The
Funds place particular emphasis on growth securities. Growth securities
typically trade at higher multiples of current earnings than other securities.
Therefore, the values of growth securities may be more sensitive to changes in
current or expected earnings than the values of other securities.
Value Securities Risk
The Funds may invest in companies that may not be expected to experience
significant earnings growth, but whose securities its portfolio manager believes
are selling at a price lower than their true value. The New Asia, Europe Growth
and Emerging Markets Funds place particular emphasis on value securities.
Companies that issue value securities may have experienced adverse business
developments or may be subject to special risks that have caused their
securities to be out of favor. If a portfolio manager's assessment of a
company's prospects is wrong, or if the market does not recognize the value of
the company, the price of its securities may decline or may not approach the
value that the portfolio manager anticipates.
Smaller Company Risk
The general risks associated with equity securities and liquidity risk are
particularly pronounced for securities of companies with smaller market
capitalizations. These companies may have limited product lines, markets or
financial resources or they may depend on a few key employees. Securities of
smaller companies may trade less frequently and in lesser volume than more
widely held securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. The Small-Cap Technology Fund
has substantial exposure to this risk because it invests primarily in the
securities of companies with market capitalizations below $200 million. The
Healthcare Innovation, Internet Innovation, Telecom Innovation, Electronics
Innovation, New Asia, Europe Growth, Select World and Emerging Markets Funds
also have significant exposure to this risk
23
<PAGE>
because they invest substantial assets in companies with medium-sized market
capitalizations, which are smaller and generally less-seasoned than the largest
companies.
Liquidity Risk
All of the Funds are subject to liquidity risk. Liquidity risk exists when
particular investments are difficult to purchase or sell, possibly preventing a
Fund from selling such illiquid securities at an advantageous time or price.
Funds with principal investment strategies that involve securities of companies
with smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have the greatest
exposure to liquidity risk.
Derivatives Risk
All of the Funds may use derivatives, which are financial contracts whose value
depends on, or is derived from, the value of an underlying asset, reference rate
or index. The various derivative instruments that the Funds may use are
referenced under "Characteristics and Risks of Securities and Investment
Techniques--Derivatives" in this Prospectus and described in more detail under
"Investment Objectives and Policies" in the Statement of Additional Information.
The Funds may sometimes use derivatives as part of a strategy designed to reduce
exposure to other risks, such as interest rate or currency risk. The Funds may
also use derivatives for leverage, which increases opportunities for gain but
also involves greater risk of loss due to leveraging risk. A Fund's use of
derivative instruments involves risks different from, or possibly greater than,
the risks associated with investing directly in securities and other traditional
investments. Derivatives are subject to a number of risks described elsewhere in
this section, such as liquidity risk, market risk, credit risk and management
risk. They also involve the risk of mispricing or improper valuation and the
risk that changes in the value of the derivative may not correlate perfectly
with the underlying asset, rate or index. In addition, a Fund's use of
derivatives may increase or accelerate the amount of taxes payable by
shareholders. A Fund investing in a derivative instrument could lose more than
the principal amount invested. Also, suitable derivative transactions may not be
available in all circumstances and there can be no assurance that a Fund will
engage in these transactions to reduce exposure to other risks when that would
be beneficial.
Foreign (non-U.S.) Investment Risk
A Fund that invests in foreign securities, and particularly the New Asia, Europe
Growth, Select World and Emerging Markets Funds, may experience more rapid and
extreme changes in value than Funds that invest exclusively in securities of
U.S. issuers or securities that trade exclusively in U.S. markets. The
securities markets of many foreign countries are relatively small, with a
limited number of companies representing a small number of industries.
Additionally, issuers of foreign securities are usually not subject to the same
degree of regulation as U.S. issuers. Reporting, accounting and auditing
standards of foreign countries differ, in some cases significantly, from U.S.
standards. Also, nationalization, expropriation or confiscatory taxation,
currency blockage, political changes or diplomatic developments could adversely
affect a Fund's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Fund could lose its
entire investment in foreign securities. To the extent that a Fund, such as New
Asia, Europe Growth, Select World and Emerging Markets Funds, invests a
significant portion of its assets in a narrowly defined geographic area such as
Europe, Asia or South America, the Fund will generally have more exposure to
regional economic risks associated with foreign investments. Adverse conditions
in certain regions (such as Southeast Asia) can also adversely affect securities
of other countries whose economies appear to be unrelated. In addition, special
U.S. tax considerations may apply to a Fund's investment in foreign securities.
Emerging Markets Risk
Foreign investment risk may be particularly high to the extent that a Fund
invests in emerging market securities of issuers based in countries with
developing economies. These securities may present market, credit, currency,
liquidity, legal, political and other risks different from, or greater than, the
risks of investing in developed foreign countries. The Emerging Markets Fund is
particularly susceptible to these risks because it invests principally in
companies located in emerging markets countries. The New Asia and Select World
Funds also have substantial exposure to these risks because these Funds may
invest a significant portion of their assets in emerging market securities. In
addition, risks associated with investing in a narrowly defined geographic area
(discussed above under "Foreign (non-U.S.) Investment Risk") are more pronounced
for the Funds that invest in emerging markets.
Currency Risk
Funds that invest directly in foreign currencies or in securities that trade in,
and receive revenues in, foreign currencies are subject to the risk that those
currencies will decline in value relative to the U.S. Dollar, or, in the case of
hedging positions,
24
<PAGE>
that the U.S. Dollar will decline in value relative to the currency being
hedged. The New Asia, Europe Growth, Select World and Emerging Markets Funds are
particularly sensitive to currency risk. Currency rates in foreign countries may
fluctuate significantly over short periods of time for a number of reasons,
including changes in interest rates, intervention (or the failure to intervene)
by U.S. or foreign governments, central banks or supranational entities such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in the U.S. or abroad.
Focused Investment Risk
Focusing Fund investments in a small number of issuers, industries or foreign
currencies increases risk. Funds, such as the Select World Fund, that invest in
a relatively small number of issuers may have more risk because changes in the
value of a single security or the impact of a single economic, political or
regulatory occurrence may have a greater adverse impact on the Fund's net asset
value. Some of those issuers also may present substantial credit or other risks.
The New Asia, Europe Growth, Select World and Emerging Markets Funds may be
subject to increased risk to the extent that they focus their investments in
securities denominated in a particular foreign currency or in a narrowly defined
geographic area outside the U.S. The Internet Innovation, Electronics Innovation
and Small-Cap Technology Funds are subject to risks prevalent in the Internet,
electronics and technology sectors, respectively, such as the risks of rapid
obsolescence of products and services, significant losses, increased volatility
of these companies' securities and limited operating histories, because they
"concentrate" their investments in those sectors. Similarly, the Telecom
Innovation and Healthcare Innovation Funds "concentrate" their investments in
the telecommunications and health care industries, respectively, and therefore
are subject to the risks particular to those industries, such as the risks
associated with additional government regulation of the telecommunications and
health care industries or changes to existing regulations and government subsidy
levels. Also, the Funds may from time to time have greater risk to the extent
they invest a substantial portion of their assets in related industries such as
"technology" or "financial and business services," which may share common
characteristics and react similarly to market developments.
Leveraging Risk
The Funds may engage in transactions or purchase instruments that give rise to
forms of leverage. Such transactions and instruments may include, among others,
the use of reverse repurchase agreements and other borrowings, the investment of
collateral from loans of portfolio securities, or the use of when-issued,
delayed-delivery or forward commitment transactions. The use of derivatives may
also involve leverage. Leverage, including borrowing, will cause the value of a
Fund's shares to be more volatile than if the Fund did not use leverage. This is
because leverage tends to exaggerate the effect of any increase or decrease in
the value of a Fund's portfolio securities. The use of leverage may also cause a
Fund to liquidate portfolio positions when it would not be advantageous to do so
in order to satisfy its obligations or to meet segregation requirements.
Interest Rate Risk
To the extent that Funds purchase fixed income securities for investment or
defensive purposes, they will be subject to interest rate risk, a market risk
relating to investments in fixed income securities such as bonds and notes. As
interest rates rise, the value of fixed income securities in a Fund's portfolio
are likely to decrease. Securities with longer "durations" (defined below) tend
to be more sensitive to changes in interest rates, usually making them more
volatile than securities with shorter durations. Duration is a measure of the
expected life of a fixed income security that is used to determine the
sensitivity of a security's price to changes in interest rates. A Fund with a
longer average portfolio duration will be more sensitive to changes in interest
rates than a Fund with a shorter average portfolio duration.
Credit Risk
All of the Funds are subject to credit risk. This is the risk that the issuer or
the guarantor of a fixed income security, or the counterparty to a derivatives
contract, repurchase agreement or a loan of portfolio securities, is unable or
unwilling to make timely principal and/or interest payments, or to otherwise
honor its obligations. Securities are subject to varying degrees of credit risk,
which are often reflected in their credit ratings.
Management Risk
Each Fund is subject to management risk because it is an actively managed
investment portfolio. PIMCO Advisors, the Sub-Advisers and each individual
portfolio manager will apply investment techniques and risk analyses in making
investment decisions for the Funds, but there can be no guarantee that these
will produce the desired results.
25
<PAGE>
Management of the Funds
Investment Adviser and Administrator
PIMCO Advisors serves as the investment adviser and the administrator (serving
in its capacity as administrator, the "Administrator") for the Funds. Subject
to the supervision of the Board of Trustees, PIMCO Advisors is responsible for
managing, either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other administrative
matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport Beach, California
92660. Organized in 1987, PIMCO Advisors provides investment management and
advisory services to private accounts of institutional and individual clients
and to mutual funds. As of March 31, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $264 billion in assets under management.
PIMCO Advisors has retained its subsidiary PIMCO/Allianz International Advisors
LLC to manage the investments of the New Asia, Europe Growth, Select World and
Emerging Markets Funds The PIMCO Equity Advisors division of PIMCO Advisors
manages the investments of the Healthcare Innovation, Internet Innovation,
Small-Cap Technology, Telecom Innovation and Electronics Innovation Funds (PIMCO
Equity Advisors and PIMCO/Allianz International Advisors LLC are each referred
to as a "Sub-Adviser" in this prospectus). See "Sub-Advisers" below.
PIMCO Advisors has retained its affiliate, Pacific Investment Management
Company, to provide various administrative and other services required by the
Funds in its capacity as sub-administrator. PIMCO Advisors and the sub-
administrator may retain other affiliates to provide certain of these services.
Advisory Fees
Each Fund pays PIMCO Advisors fees in return for providing or arranging for the
provision of investment advisory services. In the case of Funds for which PIMCO
Advisors has retained PIMCO/Allianz International Advisors LLC, PIMCO Advisors
(and not the Fund) pays a portion of the advisory fees it receives to the Sub-
Adviser in return for its services.
The Funds will pay monthly advisory fees to PIMCO Advisors at the following
annual rates (stated as a percentage of the average daily net assets of each
Fund taken separately):
<TABLE>
<CAPTION>
Fund Advisory Fees
<S> <C>
Healthcare Innovation and Telecom Innovation Funds 0.70%
Europe Growth and Select World Funds 0.75%
Internet Innovation, Small-Cap Technology and 0.80%
Electronic Innovation Funds
New Asia and Emerging Markets Funds 1.00%
</TABLE>
Administrative Fees
Each Fund pays for the administrative services it requires under a fee structure
which is essentially fixed. Institutional and Administrative Class shareholders
of each Fund pay an administrative fee to PIMCO Advisors, computed as a
percentage of the Fund's assets attributable in the aggregate to those classes
of shares. PIMCO Advisors, in turn, provides or procures administrative
services for Institutional and Administrative Class shareholders and also bears
the costs of various third-party services required by the Funds, including
audit, custodial, portfolio accounting, legal, transfer agency and printing
costs. The result of this fee structure is an expense level for Institutional
and
26
<PAGE>
Administrative Class shareholders of each Fund that, with limited exceptions, is
precise and predictable under ordinary circumstances.
Institutional and Administrative Class shareholders of the Funds will pay PIMCO
Advisors monthly administrative fees at the following annual rates (stated as a
percentage of the average daily net assets attributable in the aggregate to the
Fund's Institutional and Administrative Class shares):
<TABLE>
<CAPTION>
Fund Administrative Fees
<S> <C>
Healthcare Innovation, Internet Innovation, Small-Cap 0.25%
Technology, Telecom Innovation and Electronics
Innovation Funds
New Asia, Europe Growth, Select World and 0.50%
Emerging Markets Funds
</TABLE>
Sub-Advisers
Each Sub-Adviser has full investment discretion and makes all determinations
with respect to the investment of a Fund's assets. The following provides
summary information about each Sub-Adviser, including the Fund(s) it manages.
<TABLE>
<CAPTION>
Sub-Adviser* Funds
<S> <C>
PIMCO Equity Advisors Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
1345 Avenue of the Americas, 50th Floor Innovation and Electronics Innovation Funds
New York, NY 10105
PIMCO/Allianz International Advisors LLC New Asia, Europe Growth, Select World and Emerging Markets Funds
1345 Avenue of the Americas, 50th Floor
New York, NY 10105
</TABLE>
* PIMCO Equity Advisors is a division of PIMCO Advisors. PIMCO/Allianz
International Advisors LLC is a wholly-owned subsidiary of PIMCO Advisors.
The following provides additional information about each Sub-Adviser and the
individual portfolio managers who have or share primary responsibility for
managing the Funds' investments.
PIMCO Equity Advisors
A division of PIMCO Advisors, PIMCO Equity Advisors provides equity-related
advisory services to mutual funds and institutional accounts. See "Investment
Adviser and Administrator" above for additional information about PIMCO
Advisors.
The following individuals at PIMCO Equity Advisors have primary responsibility
for the noted Funds.
<TABLE>
<CAPTION>
Fund Portfolio Managers Since Recent Professional Experience
<S> <C> <C> <C>
Healthcare Innovation Dennis P. McKechnie 2000 (Inception) Portfolio Manager of PIMCO Equity Advisors. Prior to joining
PIMCO Advisors, he was with Columbus Circle Investors from
1991 to 1999, where he managed equity accounts and served in
various capacities including as Portfolio Manager for the
Innovation Fund.
</TABLE>
27
<PAGE>
<TABLE>
<S> <C> <C> <C>
Jiyoung Kim 2000 (Inception) Senior Research Analyst for PIMCO Innovation Fund, where she
covers biotechnology, telecommunications equipment,
semiconductors and networking. Prior to joining PIMCO
Equity Advisors in [ ], she worked as a Senior Research
Analyst at Fred Alger Management from [ ] to [ ]. Prior
to that, she worked as a Senior Research Technician at
Repligen.
Internet Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
Small-Cap Technology Thomas Keyes 2000 (Inception) Senior Research Analyst for PIMCO Equity Advisors. Prior to
joining PIMCO Equity Advisors, he was a research analyst at
Alliance Capital in its Small-Cap Program from 1997 to 1999,
where he focused on small-cap technology stocks. He was a
Vice President at Bankers Trust from 1994 to 1997, where he
focused on equity research of technology stocks.
Telecom Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
Electronics Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
</TABLE>
PIMCO/Allianz International Advisors LLC
"PIMCO/Allianz International Advisors LLC" is a wholly-owned subsidiary of PIMCO
Advisors. Additional information about PIMCO/Allianz International Advisors LLC
will be provided in a subsequent filing.
The following individuals at PIMCO/Allianz International Advisors LLC share
primary responsibility for each of the noted Funds.
<TABLE>
<CAPTION>
Portfolio
Fund Managers Since Recent Professional Experience
<S> <C> <C> <C>
New Asia Ian Lui 2000 (Inception) Chief Investment Officer of Allianz Asset Management (HK)
Limited. From 1997 to 1999, he served as a Managing
Director with Indocam Singapore Limited. From 1994 to 1997
he served in various capacities with Dresdner RCM Hong Kong,
Dresdner (SEA) Thornton Asset Management Singapore, CMS
Dresdner Thornton Asset Management Malaysia and Dresdner RCM
Global Investors.
Europe Growth Wolfram Gerdes 2000 (Inception) Managing director of Equity Portfolio Management at Allianz
Asset Advisory and Management GmbH ("Allianz AAM") since
1998. Prior to joining Allianz AAM, he held various
positions, including head of Portfolio Management, with
Allianz Lebensversicherungs AG from 1992 to 1998.
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C>
Select World Udo Frank 2000 (Inception) Managing Director and Chief Investment Officer of Allianz Asset
Advisory and Management GmbH, responsible for the entire
investment area (since 1997). Previously, Mr. Frank served as the
Chief Investment Officer Of Allianz KAG (since 1994).
Gerd Wolfgang Hintz 2000 (Inception) Managing Director of the Equity Research Department at
Allianz AAM since 1998. In addition, Mr. Hintz has been
responsible for Allianz AAM's trading department since
January 2000. Previously, he was the head of Research and
Investor Relations of Allianz Lebensversicherungs AG.
Emerging Markets Norbert Kaldun 2000 (Inception) Portfolio Manager for Allianz AAM, where he has been
responsible for Eastern European equity research and
management. From 1997 to 1998, he served as a Portfolio
Manager with Allianz Lebensverischerungs AG.
Distributor The Trust's Distributor is PIMCO Funds Distributors LLC, a wholly owned subsidiary of PIMCO
Advisors. The Distributor, located at 2187 Atlantic Street, Stamford, Connecticut 06902, is a
broker-dealer registered with the Securities and Exchange Commission.
</TABLE>
29
<PAGE>
Investment Options -
Institutional Class and Administrative Class Shares
The Trust offers investors Institutional Class and Administrative Class shares
of the Funds in this Prospectus.
The Trust does not charge any sales charges (loads) or other fees in connection
with purchases, sales (redemptions) or exchanges of Institutional Class or
Administrative Class shares.
Administrative Class shares are generally subject to a higher level of operating
expenses than Institutional Class shares due to the additional service and/or
distribution fees paid by Administrative Class shares as described below.
Therefore, Institutional Class shares will generally pay higher dividends and
have a more favorable investment return than Administrative Class shares.
Service and Distribution (12b-1) Fees--Administrative Class Shares. The Trust
has adopted an Administrative Services Plan for the Administrative Class shares
of each Fund. It has also adopted a Distribution Plan for the Administrative
Class shares of each Fund. Each Plan has been adopted in accordance with the
requirements of Rule 12b-1 under the Investment Company Act of 1940 and is
administered in accordance with that rule. However, shareholders do not have the
voting rights set forth in Rule 12b-1 with respect to the Administrative
Services Plan.
Each Plan allows the Funds to use its Administrative Class assets to reimburse
financial intermediaries that provide services relating to Administrative Class
shares. The Distribution Plan permits reimbursement for expenses in connection
with the distribution and marketing of Administrative Class shares and/or the
provision of shareholder services to Administrative Class shareholders. The
Administrative Services Plan permits reimbursement for services in connection
with the administration of plans or programs that use Administrative Class
shares of the Funds as their funding medium and for related expenses.
In combination, the Plans permit a Fund to make total reimbursements at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to its Administrative Class shares. The same entity may not receive both
distribution and administrative services fees with respect to the same
Administrative Class assets, but may receive fees under each Plan with respect
to separate assets. Because these fees are paid out of a Fund's Administrative
Class assets on an ongoing basis, over time they will increase the cost of an
investment in Administrative Class shares and may cost an investor more than
other types of sales charges.
Arrangements with Service Agents. Institutional Class and Administrative Class
shares of the Funds may be offered through certain brokers and financial
intermediaries ("service agents") that have established a shareholder
servicing relationship with the Trust on behalf of their customers. The Trust
pays no compensation to such entities other than service and/or distribution
fees paid with respect to Administrative Class shares. Service agents may impose
additional or different conditions than the Trust on purchases, redemptions or
exchanges of Fund shares by their customers. Service agents may also
independently establish and charge their customers transaction fees, account
fees and other amounts in connection with purchases, sales and redemptions of
Fund shares in addition to any fees charged by the Trust. These additional fees
may vary over time and would increase the cost of the customer's investment and
lower investment returns. Each service agent is responsible for transmitting to
its customers a schedule of any such fees and information regarding any
additional or different conditions regarding purchases, redemptions and
exchanges. Shareholders who are customers of service agents should consult their
service agents for information regarding these fees and conditions.
30
<PAGE>
Purchases, Redemptions and Exchanges
Purchasing Shares
Investors may purchase Institutional Class and Administrative Class shares of
the Funds at the relevant net asset value ("NAV") of that class without a
sales charge or other fee.
Institutional Class shares are offered primarily for direct investment by
investors such as pension and profit sharing plans, employee benefit trusts,
endowments, foundations, corporations and high net worth individuals.
Institutional Class shares may also be offered through certain financial
intermediaries that charge their customers transaction or other fees with
respect to their customers' investments in the Funds.
Administrative Class shares are offered primarily through employee benefit plan
alliances, broker-dealers and other intermediaries, and each Fund pays service
and/or distribution fees to these entities for services they provide to
Administrative Class shareholders.
Pension and profit-sharing plans, employee benefit trusts and employee benefit
plan alliances and "wrap account" programs established with broker-dealers or
financial intermediaries may purchase shares of either class only if the plan or
program for which the shares are being acquired will maintain an omnibus or
pooled account for each Fund and will not require a Fund to pay any type of
administrative payment per participant account to any third party.
Investment Minimums. The minimum initial investment for shares of either class
is $5 million, except that the minimum initial investment for a registered
investment adviser purchasing Institutional Class shares for its clients through
omnibus accounts is $250,000 per Fund. At the discretion of PIMCO Advisors, the
minimum initial investment may be waived for Institutional or Administrative
Class shares offered to clients of PIMCO Equity Advisors and [Allianz Sub], and
their affiliates, and to the benefit plans of PIMCO Advisors and its affiliates.
In addition, the minimum initial investment does not apply to Institutional
Class shares offered through fee-based programs sponsored and maintained by a
registered broker-dealer and approved by the Distributor in which each investor
pays an asset based fee at an annual rate of at least 0.50% of the assets in the
account to a financial intermediary for investment advisory and/or
administrative services.
The Trust and the Distributor may waive the minimum initial investment for other
categories of investors at their discretion.
The investment minimums discussed in this section and the limitations set forth
in "Investment Limitations" below do not apply to participants in PIMCO
Advisors Portfolio Strategies, a managed product sponsored by PIMCO Advisors.
Timing of Purchase Orders and Share Price Calculations. A purchase order
received by the Trust's transfer agent, National Financial Data Services (the
"Transfer Agent"), prior to the close of regular trading (normally 4:00 p.m.,
Eastern time) on the New York Stock Exchange, on a day the Trust is open for
business, together with payment made in one of the ways described below, will be
effected at that day's net asset value ("NAV"). An order received after the
close of regular trading on the New York Stock Exchange will be effected at the
NAV determined on the next business day. However, orders received by certain
retirement plans and other financial intermediaries on a business day prior to
the close of regular trading on the New York Stock Exchange and communicated to
the Transfer Agent prior to 9:00 a.m., Eastern time, on the following business
day will be effected at the NAV determined on the prior business day. The Trust
is "open for business" on each day the New York Stock Exchange is open for
trading, which excludes the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. Purchase orders will be accepted
only on days on which the Trust is open for business.
Initial Investment. Investors may open an account by completing and signing a
Client Registration Application and mailing it to PIMCO Funds at 840 Newport
Center Drive, Suite 300, Newport Beach, California 92660. A Client Registration
Application may be obtained by calling 1-800-927-4648.
Except as described below, an investor may purchase Institutional Class and
Administrative Class shares only by wiring federal funds to the Transfer Agent,
National Financial Data Services, 330 West 9th Street, 4th Floor, Kansas City,
Missouri
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64105. Before wiring federal funds, the investor must telephone the Trust at 1-
800-927-4648 to receive instructions for wire transfer and must provide the
following information: name of authorized person, shareholder name, shareholder
account number, name of Fund and share class, amount being wired, and wiring
bank name.
An investor may purchase shares without first wiring federal funds if the
proceeds of the investment are derived from an advisory account the investor
maintains with PIMCO Advisors or one of its affiliates, from surrender or other
payment from an annuity, insurance, or other contract held by Pacific Life
Insurance Company, or from an investment by broker-dealers, institutional
clients or other financial intermediaries which have established a shareholder
servicing relationship with the Trust on behalf of their customers.
Additional Investments. An investor may purchase additional Institutional Class
and Administrative Class shares of the Funds at any time by calling the Trust
and wiring federal funds to the Transfer Agent as outlined above.
Other Purchase Information. Purchases of a Fund's Institutional Class and
Administrative Class shares will be made in full and fractional shares. In the
interest of economy and convenience, certificates for shares will not be issued.
The Trust and the Distributor each reserves the right, in its sole discretion,
to suspend the offering of shares of the Funds or to reject any purchase order,
in whole or in part, when, in the judgment of management, such suspension or
rejection is in the best interests of the Trust.
An investor should invest in the Funds for long-term investment purposes only.
The Trust and PIMCO Advisors each reserves the right to restrict purchases of
Fund shares (including exchanges) when a pattern of frequent purchases and sales
made in response to short-term fluctuations in share price appears evident.
Notice of any such restrictions, if any, will vary according to the particular
circumstances.
Institutional Class and Administrative Class shares of the Trust are not
qualified or registered for sale in all states. Investors should inquire as to
whether shares of a particular Fund are available for offer and sale in the
investor's state of residence. Shares of the Trust may not be offered or sold in
any state unless registered or qualified in that jurisdiction or unless an
exemption from registration or qualification is available.
Subject to the approval of the Trust, an investor may purchase shares of a Fund
with liquid securities that are eligible for purchase by the Fund (consistent
with the Fund's investment policies and restrictions) and that have a value that
is readily ascertainable in accordance with the Trust's valuation policies.
These transactions will be effected only if PIMCO Advisors or a Sub-Adviser
intends to retain the security in the Fund as an investment. Assets purchased by
a Fund in such a transaction will be valued in generally the same manner as they
would be valued for purposes of pricing the Fund's shares, if such assets were
included in the Fund's assets at the time of purchase. The Trust reserves the
right to amend or terminate this practice at any time.
Retirement Plans. Shares of the Funds are available for purchase by retirement
and savings plans, including Keogh plans, 401(k) plans, 403(b) custodial
accounts, and Individual Retirement Accounts. The administrator of a plan or
employee benefits office can provide participants or employees with detailed
information on how to participate in the plan and how to elect a Fund as an
investment option. Participants in a retirement or savings plan may be permitted
to elect different investment options, alter the amounts contributed to the
plan, or change how contributions are allocated among investment options in
accordance with the plan's specific provisions. The plan administrator or
employee benefits office should be consulted for details. For questions about
participant accounts, participants should contact their employee benefits
office, the plan administrator, or the organization that provides recordkeeping
services for the plan. Investors who purchase shares through retirement plans
should be aware that plan administrators may aggregate purchase and redemption
orders for participants in the plan. Therefore, there may be a delay between the
time the investor places an order with the plan administrator and the time the
order is forwarded to the Transfer Agent for execution.
Redeeming Shares
Redemptions by Mail. An investor may redeem (sell) Institutional Class and
Administrative Class shares by submitting a written request to PIMCO Funds at
840 Newport Center Drive, Suite 300, Newport Beach, California 92660. The
redemption
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<PAGE>
request should state the Fund from which the shares are to be redeemed, the
class of shares, the number or dollar amount of the shares to be redeemed and
the account number. The request must be signed exactly as the names of the
registered owners appear on the Trust's account records, and the request must be
signed by the minimum number of persons designated on the Client Registration
Application that are required to effect a redemption.
Redemptions by Telephone or Other Wire Communication. An investor that elects
this option on the Client Registration Application (or subsequently in writing)
may request redemptions of shares by calling the Trust at 1-800-927-4648, by
sending a facsimile to 1-949-725-6830, or by other means of wire communication.
Investors should state the Fund and class from which the shares are to be
redeemed, the number or dollar amount of the shares to be redeemed and the
account number. Redemption requests of an amount of $10 million or more may be
initiated by telephone, but must be confirmed in writing by an authorized party
prior to processing.
In electing a telephone redemption, the investor authorizes Pacific Investment
Management Company and the Transfer Agent to act on telephone instructions from
any person representing himself to be the investor, and reasonably believed by
Pacific Investment Management Company or the Transfer Agent to be genuine.
Neither the Trust nor the Transfer Agent may be liable for any loss, cost or
expense for acting on instructions (whether in writing or by telephone) believed
by the party receiving such instructions to be genuine and in accordance with
the procedures described in this Prospectus. Shareholders should realize that by
electing the telephone or wire redemption option, they may be giving up a
measure of security that they might have if they were to redeem their shares in
writing. Furthermore, interruptions in telephone service may mean that a
shareholder will be unable to effect a redemption by telephone when desired. The
Transfer Agent also provides written confirmation of transactions initiated by
telephone as a procedure designed to confirm that telephone instructions are
genuine (written confirmation is also provided for redemption requests received
in writing). All telephone transactions are recorded, and Pacific Investment
Management Company or the Transfer Agent may request certain information in
order to verify that the person giving instructions is authorized to do so. The
Trust or Transfer Agent may be liable for any losses due to unauthorized or
fraudulent telephone transactions if it fails to employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. All
redemptions, whether initiated by letter or telephone, will be processed in a
timely manner, and proceeds will be forwarded by wire in accordance with the
redemption policies of the Trust detailed below. See "Other Redemption
Information."
Shareholders may decline telephone exchange or redemption privileges after an
account is opened by instructing the Transfer Agent in writing at least seven
business days prior to the date the instruction is to be effective. Shareholders
may experience delays in exercising telephone redemption privileges during
periods of abnormal market activity. During periods of volatile economic or
market conditions, shareholders may wish to consider transmitting redemption
orders by telegram, facsimile or overnight courier.
Defined contribution plan participants may request redemptions by contacting the
employee benefits office, the plan administrator or the organization that
provides recordkeeping services for the plan.
Other Redemption Information. Redemption requests for Fund shares are effected
at the NAV per share next determined after receipt of a redemption request by
the Trust or its designee. The request must properly identify all relevant
information, such as account number, redemption amount (in dollars or shares)
and the Fund name, and must be executed or initialed by the appropriate
signatories. A redemption request received by the Trust or its designee prior to
the close of regular trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time), on a day the Trust is open for business, is effective on that
day. A redemption request received after that time becomes effective on the next
business day.
Redemption proceeds will ordinarily be wired to the investor's bank within three
business days after the redemption request, but may take up to seven business
days. Redemption proceeds will be sent by wire only to the bank name designated
on the Client Registration Application. The Trust may suspend the right of
redemption or postpone the payment date at times when the New York Stock
Exchange is closed, or during certain other periods as permitted under the
federal securities laws.
For shareholder protection, a request to change information contained in an
account registration (for example, a request to change the bank designated to
receive wire redemption proceeds) must be received in writing, signed by the
minimum number of persons designated on the Client Registration Application that
are required to effect a redemption, and accompanied by a signature guarantee
from any eligible guarantor institution, as determined in accordance with the
Trust's
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<PAGE>
procedures. Shareholders should inquire as to whether a particular institution
is an eligible guarantor institution. A signature guarantee cannot be provided
by a notary public. In addition, corporations, trusts, and other institutional
organizations are required to furnish evidence of the authority of the persons
designated on the Client Registration Application to effect transactions for the
organization.
Due to the relatively high cost of maintaining small accounts, the Trust
reserves the right to redeem Institutional Class and Administrative Class shares
in any account for their then-current value (which will be promptly paid to the
investor) if at any time, due to redemption by the investor, the shares in the
account do not have a value of at least $100,000. A shareholder will receive
advance notice of a mandatory redemption and will be given at least 30 days to
bring the value of its account up to at least $100,000. This mandatory
redemption policy does not apply to participants in PIMCO Advisors Portfolio
Strategies, a managed product sponsored by PIMCO Advisors.
The Trust agrees to redeem shares of each Fund solely in cash up to the lesser
of $250,000 or 1% of the Fund's net assets during any 90-day period for any one
shareholder. In consideration of the best interests of the remaining
shareholders, the Trust reserves the right to pay any redemption proceeds
exceeding this amount in whole or in part by a distribution in kind of
securities held by a Fund in lieu of cash. It is highly unlikely that shares
would ever be redeemed in kind. When shares are redeemed in kind, the redeeming
shareholder should expect to incur transaction costs upon the disposition of the
securities received in the distribution.
Redemptions of Fund shares may be suspended when trading on the New York Stock
Exchange is restricted or during an emergency which makes it impracticable for
the Funds to dispose of their securities or to determine fairly the value of
their net assets, or during any other period as permitted by the Securities and
Exchange Commission for the protection of investors. Under these and other
unusual circumstances, the Trust may suspend redemptions or postpone payment for
more than seven days, as permitted by law.
Exchange Privilege
Except as provided below, an investor may exchange Institutional Class or
Administrative Class shares of a Fund for shares of the same class of any other
Fund or other series of the Trust that offers that class based on the respective
NAVs of the shares involved. An exchange may be made by following the redemption
procedure described above under "Redemptions by Mail" or, if the investor has
elected the telephone redemption option, by calling the Trust at 1-800-927-4648.
An investor may also exchange shares of a Fund for shares of the same class of a
series of PIMCO Funds: Pacific Investment Management Series, an affiliated
mutual fund family composed primarily of fixed income portfolios managed by
Pacific Investment Management Company, subject to any restrictions on exchanges
set forth in the applicable series' prospectus(es). Shareholders interested in
such an exchange may request a prospectus for these other series by contacting
PIMCO Funds: Pacific Investment Management Series at the same address and
telephone number as the Trust.
An investor may exchange shares only with respect to Funds or other eligible
series that are registered in the investor's state of residence or where an
exemption from registration is available. In addition, an exchange is generally
a taxable event which will generate capital gains or losses, and special rules
may apply in computing tax basis when determining gain or loss. See "Tax
Consequences" in this Prospectus and "Taxation" in the Statement of
Additional Information.
The Trust reserves the right to refuse exchange purchases if, in the judgment of
PIMCO Advisors, the purchase would adversely affect a Fund and its shareholders.
In particular, a pattern of exchanges characteristic of "market-timing"
strategies may be deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. Currently, the Trust limits the number of "round trip"
exchanges investors may make. An investor makes a "round trip" exchange when
the investor purchases shares of a particular Fund, subsequently exchanges those
shares for shares of a different PIMCO Fund, and then exchanges back into the
originally purchased Fund. The Trust has the right to refuse any exchange for
any investor who completes (by making the exchange back into the shares of the
originally purchased Fund) more than six round trip exchanges in any twelve-
month period. The Trust reserves the right to impose additional restrictions on
exchanges at any time, although it will attempt to give shareholders 30 days'
prior notice whenever it is reasonably able to do so.
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<PAGE>
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Institutional and Administrative Class
shares is determined by dividing the total value of a Fund's portfolio
investments and other assets attributable to that class, less any liabilities,
by the total number of shares outstanding of that class.
For purposes of calculating the NAV, portfolio securities and other assets for
which market quotes are available are stated at market value. Market value is
generally determined on the basis of last reported sales prices, or if no sales
are reported, based on quotes obtained from a quotation reporting system,
established market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily available may be
valued, pursuant to guidelines established by the Board of Trustees, with
reference to other securities or indices. Short-term investments having a
maturity of 60 days or less are generally valued at amortized cost. Exchange
traded options, futures and options on futures are valued at the settlement
price determined by the exchange. Other securities for which market quotes are
not readily available are valued at fair value as determined in good faith by
the Board of Trustees or persons acting at their direction.
Investments initially valued in currencies other than the U.S. dollar are
converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of a Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of securities traded in
markets outside the United States or denominated in currencies other than the
U.S. dollar may be affected significantly on a day that the New York Stock
Exchange is closed and an investor is not able to purchase, redeem or exchange
shares. In particular, calculation of the NAV of the New Asia, Europe Growth,
Select World and Emerging Markets Funds may not take place contemporaneously
with the determination of the prices of foreign securities used in NAV
calculations.
Fund shares are valued at the close of regular trading (normally 4:00 p.m.,
Eastern time) (the "NYSE Close") on each day that the New York Stock Exchange
is open. For purposes of calculating the NAV, the Funds normally use pricing
data for domestic equity securities received shortly after the NYSE Close and do
not normally take into account trading, clearances or settlements that take
place after the NYSE Close. Domestic fixed income and foreign securities are
normally priced using data reflecting the earlier closing of the principal
markets for those securities. Information that becomes known to the Funds or
their agents after the NAV has been calculated on a particular day will not
generally be used to retroactively adjust the price of a security or the NAV
determined earlier that day.
In unusual circumstances, instead of valuing securities in the usual manner, the
Funds may value securities at fair value or estimate their value as determined
in good faith by the Board of Trustees pursuant to procedures approved by the
Board of Trustees. Fair valuation may also be used by the Board of Trustees if
extraordinary events occur after the close of the relevant market but prior to
the NYSE Close.
Under certain circumstances, the per share NAV of the Administrative Class
shares of the Funds may be lower than the per share NAV of the Institutional
Class shares as a result of the daily expense accruals of the service and/or
distribution fees paid by Administrative Class shares. Generally, for Funds that
pay income dividends, those dividends are expected to differ over time by
approximately the amount of the expense accrual differential between the two
classes.
Fund Distributions
Each Fund distributes substantially all of its net investment income to
shareholders in the form of dividends. A shareholder begins earning dividends on
Fund shares the day after the Trust receives the shareholder's purchase payment.
Dividends paid by each Fund with respect to each class of shares are calculated
in the same manner and at the same time, but dividends on Administrative Class
shares are expected to be lower than dividends on Institutional Class shares as
a result of the service and/or distribution fees applicable to Administrative
Class shares. The following shows when each Fund intends to declare and
distribute income dividends to shareholders of record.
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<PAGE>
<TABLE>
<CAPTION>
Fund At Least Annually Quarterly
<S> <C> <C>
Healthcare Innovation, Internet Innovation, Small-Cap Technology, *
Telecom Innovation and Electronics Innovation Funds
New Asia, Europe Growth, Select World and Emerging Markets Funds *
</TABLE>
In addition, each Fund distributes any net capital gains it earns from the sale
of portfolio securities to shareholders no less frequently than annually. Net
short-term capital gains may be paid more frequently.
A Fund's dividend and capital gain distributions with respect to a particular
class of shares will automatically be reinvested in additional shares of the
same class of the Fund at NAV unless the shareholder elects to have the
distributions paid in cash. A shareholder may elect to have distributions paid
in cash on the Client Registration Application or by submitting a written
request, signed by the appropriate signatories, indicating the account number,
Fund name(s) and wiring instructions.
For further information on distribution options, please contact the Trust at
1-800-927-4648.
Tax Consequences
Taxes on Fund Distributions. A shareholder subject to U.S. federal income tax
will be subject to tax on Fund distributions whether they are paid in cash or
reinvested in additional shares of the Funds. For federal income tax purposes,
Fund distributions will be taxable to the shareholder as either ordinary income
or capital gains.
Fund dividends (i.e., distributions of investment income) are taxable to
shareholders as ordinary income. Federal taxes on Fund distributions of gains
are determined by how long the Fund owned the investments that generated the
gains, rather than how long the shareholder owned the shares. Distributions of
gains from investments that a Fund owned for more than 12 months will generally
be taxable to shareholders as capital gains. Distributions of gains from
investments that the Fund owned for 12 months or less will generally be taxable
as ordinary income.
Fund distributions are taxable to shareholders even if they are paid from income
or gains earned by a Fund prior to the shareholder's investment and thus were
included in the price paid for the shares. For example, a shareholder who
purchases shares on or just before the record date of a Fund distribution will
pay full price for the shares and may receive a portion of his or her investment
back as a taxable distribution.
Taxes on Redemptions or Exchanges of Shares. Any gain resulting from the sale of
Fund shares will generally be subject to federal income tax. When a shareholder
exchanges shares of a Fund for shares of another series, the transaction
generally will be treated as a sale of the Fund shares for these purposes, and
any gain on those shares will generally be subject to federal income tax.
A Note on Foreign Investments. A Fund's investment in foreign securities may be
subject to foreign withholding taxes. In that case, the Fund's yield on those
securities would be decreased. In addition, a Fund's investments in foreign
securities or foreign currencies may increase or accelerate the Fund's
recognition of ordinary income and may affect the timing or amount of the Fund's
distributions. Shareholders of the New Asia, Europe Growth, Select World and
Emerging Markets Funds may be entitled to claim a credit or deduction with
respect to foreign taxes.
This section relates only to federal income tax; the consequences under other
tax laws may differ. Shareholders should consult their tax advisors as to the
possible application of foreign, state and local income tax laws to Fund
dividends and capital distributions. Please see the Statement of Additional
Information for additional information regarding the tax aspects of investing in
the Funds.
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<PAGE>
Characteristics and Risks of Securities
and Investment Techniques
This section provides additional information about some of the principal
investments and related risks of the Funds identified under "Summary
Information" above. It also describes characteristics and risks of additional
securities and investment techniques that are not necessarily principal
investments or strategies but may be used by the Funds from time to time. Most
of these securities and investment techniques are discretionary, which means
that the portfolio managers can decide whether to use them or not. This
Prospectus does not attempt to disclose all of the various types of securities
and investment techniques that may be used by the Funds. As with any mutual
fund, investors in the Funds must rely on the professional investment judgment
and skill of PIMCO Advisors, the Sub-Advisers and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the Statement of
Additional Information for more detailed information about the securities and
investment techniques described in this section and about other strategies and
techniques that may be used by the Funds.
Fixed Income Securities and Defensive Strategies
Fixed income securities are obligations of the issuer to make payments of
principal and/or interest on future dates, and include corporate and government
bonds, notes, certificates of deposit, commercial paper, convertible securities
and mortgage-backed and other asset-backed securities.
The Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
Innovation, Electronics Innovation, New Asia, Europe Growth, Select World and
Emerging Markets Funds will each invest primarily in common stocks, and may also
invest in other kinds of equity securities, including preferred stocks and
securities (including fixed income securities and warrants) convertible into or
exercisable for common stocks. Each of these Funds may invest a portion of their
assets in fixed income securities. The Funds may temporarily hold up to 100% of
their assets in short-term U.S. Government securities and other money market
instruments for defensive purposes in response to unfavorable market and other
conditions. The New Asia, Europe Growth, Select World and Emerging Markets Funds
may also hold up to 100% of their assets in other domestic fixed income, foreign
fixed income and equity securities principally traded in the U.S., including
obligations issued or guaranteed by a foreign government or its agencies,
authorities or instrumentalities, corporate bonds and American Depository
Receipts, for temporary defensive purposes.
The temporary defensive strategies described in this section would be
inconsistent with the investment objective and principal investment strategies
of each of the noted Funds and may adversely affect the Fund's ability to
achieve its investment objective.
Companies With Smaller Market Capitalizations
Each of the Funds may invest in securities of companies with market
capitalizations that are small compared to other publicly traded companies. The
Small-Cap Technology Fund invests primarily in smaller companies and is
especially sensitive to the risks described below. In addition, the Healthcare
Innovation, Internet Innovation, Telecom Innovation, Electronics Innovation, New
Asia, Europe Growth, Select World and Emerging Markets Funds generally have
significant exposure to these risks.
Companies which are smaller and less well-known or seasoned than larger, more
widely held companies may offer greater opportunities for capital appreciation,
but may also involve risks different from, or greater than, risks normally
associated with larger companies. Larger companies generally have greater
financial resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater depth of
management and technical personnel than smaller companies. Smaller companies may
have limited product lines, markets or financial resources or may depend on a
small, inexperienced management group. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held securities and their
values may fluctuate more abruptly or erratically than securities of larger
companies. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. These securities may
therefore be more vulnerable to adverse market developments than securities of
larger companies. Also, there may be less publicly available information about
smaller companies or less market
37
<PAGE>
interest in their securities as compared to larger companies, and it may take
longer for the prices of the securities to reflect the full value of a company's
earnings potential or assets.
Because securities of smaller companies may have limited liquidity, a Fund may
have difficulty establishing or closing out its positions in smaller companies
at prevailing market prices. As a result of owning large positions in this type
of security, a Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if redemptions require
the Fund to liquidate its securities positions. For these reasons, it may be
prudent for a Fund with a relatively large asset size to limit the number of
relatively small positions it holds in securities having limited liquidity in
order to minimize its exposure to such risks, to minimize transaction costs, and
to maximize the benefits of research. As a consequence, as a Fund's asset size
increases, the Fund may reduce its exposure to illiquid smaller capitalization
securities, which could adversely affect performance.
The Funds may purchase securities in initial public offerings (IPOs). These
securities are subject to many of the same risks of investing in companies with
smaller market capitalizations. Securities issued in IPOs have no trading
history, and information about the companies may be available for very limited
periods. In addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in IPOs to the
extent desired because, for example, only a small portion of the securities
being offered in an IPO may be made available to the Fund or because under
certain market conditions few companies may issue securities in IPOs.
Foreign Securities
The New Asia, Europe Growth, Select World and Emerging Markets Funds normally
invest principally in securities of foreign issuers, securities traded
principally in securities markets outside the United States and/or securities
denominated in foreign currencies (together, "foreign securities"). The
Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
Innovation and Electronics Innovation Funds may invest up to 15% of their
respective assets in foreign securities.
All of the Funds may invest in American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs"). ADRs are
dollar-denominated receipts issued generally by domestic banks and representing
the deposit with the bank of a security of a foreign issuer, and are publicly
traded on exchanges or over-the-counter in the United States. EDRs are receipts
similar to ADRs and are issued and traded in Europe. GDRs may be offered
privately in the United States and also traded in public or private markets in
other countries.
Investing in foreign securities involves special risks and considerations not
typically associated with investing in U.S. securities and shareholders should
consider carefully the substantial risks involved for Funds that invest in these
securities. These risks include: differences in accounting, auditing and
financial reporting standards; generally higher commission rates on foreign
portfolio transactions; the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position. The securities markets,
values of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign securities and
dividends and interest payable on those securities may be subject to foreign
taxes, including taxes withheld from payments on those securities. Foreign
securities often trade with less frequency and volume than domestic securities
and therefore may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic investments and
additional transaction costs with respect to foreign currency conversions.
Changes in foreign exchange rates also will affect the value of securities
denominated or quoted in foreign currencies.
Emerging Market Securities
The Funds may invest in securities of issuers based in or that trade principally
in countries with developing (or "emerging market") economies. The Emerging
Markets Fund is particularly susceptible to these risks because it invests
principally in companies located in emerging market countries. The New Asia and
Select World Funds also have substantial exposure to these risks because these
Funds may invest significant portions of their assets in emerging market
securities. Investing in emerging market securities imposes risks different
from, or greater than, risks of investing in domestic securities or in foreign,
developed countries. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative illiquidity;
significant price volatility; restrictions on foreign investment; and possible
repatriation of investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales, and future
38
<PAGE>
economic or political crises could lead to price controls, forced mergers,
expropriation or confiscatory taxation, seizure, nationalization or the creation
of government monopolies. The currencies of emerging market countries may
experience significant declines against the U.S. dollar, and devaluation may
occur subsequent to investments in these currencies by a Fund. Inflation and
rapid fluctuations in inflation rates have had, and may continue to have,
negative effects on the economies and securities markets of certain emerging
market countries.
Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause a
Fund to miss attractive investment opportunities, hold a portion of its assets
in cash pending investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of the security.
Special Risks of Investing in Russian and Other Eastern European Securities. The
Select World and Emerging Markets Funds may invest a portion of their assets in
securities of issuers located in Russia and in other Eastern European countries.
While investments in securities of such issuers are subject generally to the
same risks associated with investments in other emerging market countries
described above, the political, legal and operational risks of investing in
Russian and other Eastern European issuers, and of having assets custodied
within these countries, may be particularly acute. A risk of particular note
with respect to direct investment in Russian securities is the way in which
ownership of shares of companies is normally recorded. When a Fund invests in a
Russian issuer, it will normally receive a "share extract," but that extract
is not legally determinative of ownership. The official record of ownership of a
company's share is maintained by the company's share registrar. Such share
registrars are completely under the control of the issuer, and investors are
provided with few legal rights against such registrars.
Foreign Currencies
A Fund that invests directly in foreign currencies or in securities that trade
in, and receive revenues in, foreign currencies will be subject to currency
risk. The New Asia, Europe Growth, Select World and Emerging Markets Funds are
particularly sensitive to this risk.
Foreign currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by supply and demand and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors. Currency exchange rates also can be
affected unpredictably by intervention (or the failure to intervene) by U.S. or
foreign governments or central banks, or by currency controls or political
developments. For example, significant uncertainty surrounds the recent
introduction of the euro (a common currency unit for the European Union) in
January 1999 and the effect it may have on the value of securities denominated
in local European currencies. The Europe Growth Fund is especially susceptible
to risks associated with the introduction of the Euro because it invests
principally in European companies, many of which are located in European
Monetary Union countries. The Euro and other currencies in which the Funds'
assets are denominated may be devalued against the U.S. dollar, resulting in a
loss to the Funds.
Foreign Currency Transactions. The Funds may enter into forward foreign currency
exchange contracts to reduce the risks of adverse changes in foreign exchange
rates. In addition, the Funds may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency futures. A
forward foreign currency exchange contract, which involves an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract, reduces a Fund's exposure to changes in the value of the
currency it will deliver and increases its exposure to changes in the value of
the currency it will receive for the duration of the contract. The effect on the
value of a Fund is similar to selling securities denominated in one currency and
purchasing securities denominated in another currency. Contracts to sell foreign
currency would limit any potential gain which might be realized by a Fund if the
value of the hedged currency increases. A Fund may enter into these contracts to
hedge against foreign exchange risk arising from the Fund's investment or
anticipated investment in securities denominated in foreign currencies. Suitable
hedging transactions may not be available in all circumstances and there can be
no assurance that a Fund will engage in such transactions at any given time or
from time to time. Also, such
39
<PAGE>
transactions may not be successful and may eliminate any chance for a Fund to
benefit from favorable fluctuations in relevant foreign currencies.
The New Asia, Europe Growth, Select World and Emerging Markets Funds may also
enter into these contracts for purposes of increasing exposure to a foreign
currency or to shift exposure to foreign currency fluctuations from one currency
to another. To the extent that it does so, a Fund will be subject to the
additional risk that the relative value of currencies will be different than
anticipated by the Fund's portfolio manager. The Funds may use one currency (or
a basket of currencies) to hedge against adverse changes in the value of another
currency (or a basket of currencies) when exchange rates between the two
currencies are positively correlated. Each Fund will segregate assets determined
to be liquid by PIMCO Advisors or a Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations under forward
foreign currency exchange contracts entered into for non-hedging purposes.
Corporate Debt Securities
Corporate debt securities are subject to the risk of the issuer's inability to
meet principal and interest payments on the obligation and may also be subject
to price volatility due to such factors as interest rate sensitivity, market
perception of the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities can be expected
to decline. Debt securities with longer durations tend to be more sensitive to
interest rate movements than those with shorter durations.
Convertible Securities
Each Fund may invest in convertible securities. Convertible securities are
generally preferred stocks and other securities, including fixed income
securities and warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a convertible
security will normally vary in some proportion to changes in the price of the
underlying common stock because of this conversion or exercise feature. However,
the value of a convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally also provide
income and is subject to interest rate risk. While convertible securities
generally offer lower interest or dividend yields than non-convertible fixed
income securities of similar quality, their value tends to increase as the
market value of the underlying stock increases and to decrease when the value of
the underlying stock decreases. Also, a Fund may be forced to convert a security
before it would otherwise choose, which may have an adverse effect on the Fund's
ability to achieve its investment objective.
Derivatives
Each Fund may, but is not required to, use a number of derivative instruments
for risk management purposes or as part of its investment strategies. Generally,
derivatives are financial contracts whose value depends upon, or is derived
from, the value of an underlying asset, reference rate or index, and may relate
to stocks, bonds, interest rates, currencies or currency exchange rates,
commodities, and related indexes. A portfolio manager may decide not to employ
any of these strategies and there is no assurance that any derivatives strategy
used by a Fund will succeed.
Examples of derivative instruments include options contracts, futures contracts,
options on futures contracts and swap agreements. The Funds may purchase and
sell (write) call and put options on securities, securities indexes and foreign
currencies. Each Fund may purchase and sell futures contracts and options
thereon with respect to securities, securities indexes and foreign currencies.
A description of these and other derivative instruments that the Funds may use
are described under "Investment Objectives and Policies" in the Statement of
Additional Information.
A Fund's use of derivative instruments involves risks different from, or greater
than, the risks associated with investing directly in securities and other more
traditional investments. A description of various risks associated with
particular derivative instruments is included in "Investment Objectives and
Policies" in the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all derivative
instruments that may be used by the Funds.
Management Risk Derivative products are highly specialized instruments that
require investment techniques and risk analyses different from those associated
with stocks and bonds. The use of a derivative requires an understanding not
only of the underlying instrument but also of the derivative itself, without the
benefit of observing the performance of the derivative under all possible market
conditions.
40
<PAGE>
Credit Risk The use of a derivative instrument involves the risk that a loss may
be sustained as a result of the failure of another party to the contract
(usually referred to as a "counterparty") to make required payments or
otherwise comply with the contract's terms.
Liquidity Risk Liquidity risk exists when a particular derivative instrument is
difficult to purchase or sell. If a derivative transaction is particularly large
or if the relevant market is illiquid (as is the case with many privately
negotiated derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage component, adverse
changes in the value or level of the underlying asset, reference rate or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. When a Fund uses derivatives
for leverage, investments in that Fund will tend to be more volatile, resulting
in larger gains or losses in response to market changes. To limit leverage risk,
each Fund will segregate assets determined to be liquid by PIMCO Advisors or a
Sub-Adviser in accordance with procedures established by the Board of Trustees
(or, as permitted by applicable regulation, enter into certain offsetting
positions) to cover its obligations under derivative instruments.
Lack of Availability Because the markets for certain derivative instruments
(including markets located in foreign countries) are relatively new and still
developing, suitable derivatives transactions may not be available in all
circumstances for risk management or other purposes. There is no assurance that
a Fund will engage in derivatives transactions at any time or from time to time.
A Fund's ability to use derivatives may also be limited by certain regulatory
and tax considerations.
Market and Other Risks Like most other investments, derivative instruments are
subject to the risk that the market value of the instrument will change in a way
detrimental to a Fund's interest. If a portfolio manager incorrectly forecasts
the values of securities, currencies or interest rates or other economic factors
in using derivatives for a Fund, the Fund might have been in a better position
if it had not entered into the transaction at all. While some strategies
involving derivative instruments can reduce the risk of loss, they can also
reduce the opportunity for gain or even result in losses by offsetting favorable
price movements in other Fund investments. A Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is legally required
to maintain offsetting positions or asset coverage in connection with certain
derivatives transactions.
Other risks in using derivatives include the risk of mispricing or improper
valuation of derivatives and the inability of derivatives to correlate perfectly
with underlying assets, rates and indexes. Many derivatives, in particular
privately negotiated derivatives, are complex and often valued subjectively.
Improper valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Fund. Also, the value of derivatives may
not correlate perfectly, or at all, with the value of the assets, reference
rates or indexes they are designed to closely track. In addition, a Fund's use
of derivatives may cause the Fund to realize higher amounts of short-term
capital gains (taxed at ordinary income tax rates when distributed to
shareholders who are individuals) than if the Fund had not used such
instruments.
Equity-Linked Securities
The Funds may invest in equity-linked securities. Equity-linked securities are
privately issued securities whose investment results are designed to correspond
generally to the performance of a specified stock index or "basket" of stocks,
or sometimes a single stock. To the extent that a Fund invests in equity-linked
securities whose return corresponds to the performance of a foreign securities
index or one or more of foreign stocks, investing in equity-linked securities
will involve risks similar to the risks of investing in foreign equity
securities. See "Foreign Securities" above. In addition, an investing Fund
bears the risk that the issuer of an equity-linked security may default on its
obligations under the security. Equity-linked securities may be considered
illiquid and thus subject to the Funds' restrictions on investments in illiquid
securities.
Credit Ratings and Unrated Securities
The Funds may invest in securities based on their credit ratings assigned by
rating agencies such as Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Services ("S&P"). Moody's, S&P and other rating
agencies are private services that provide ratings of the credit quality of
fixed income securities, including convertible securities. The Appendix to the
Statement of Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a rating agency
are not absolute standards of credit quality and do not evaluate
41
<PAGE>
market risk. Rating agencies may fail to make timely changes in credit ratings
and an issuer's current financial condition may be better or worse than a rating
indicates. A Fund will not necessarily sell a security when its rating is
reduced below its rating at the time of purchase. PIMCO Advisors and the Sub-
Advisers do not rely solely on credit ratings, and develop their own analysis of
issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a rating agency)
if its portfolio manager determines that the security is of comparable quality
to a rated security that the Fund may purchase. Unrated securities may be less
liquid than comparable rated securities and involve the risk that the portfolio
manager may not accurately evaluate the security's comparative credit rating.
High Yield Securities
Securities rated lower than Baa by Moody's or lower than BBB by S&P are
sometimes referred to as "high yield" or "junk" bonds. The Funds may invest in
these securities. Investing in high yield securities involves special risks in
addition to the risks associated with investments in higher-rated fixed income
securities. While offering a greater potential opportunity for capital
appreciation and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-rated securities.
High yield securities may be regarded as predominately speculative with respect
to the issuer's continuing ability to meet principal and interest payments. They
may also be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities.
Loans of Portfolio Securities
For the purpose of achieving income, each Fund may lend its portfolio securities
to brokers, dealers, and other financial institutions provided a number of
conditions are satisfied, including that the loan is fully collateralized.
Please see "Investment Objectives and Policies" in the Statement of Additional
Information for details. When a Fund lends portfolio securities, its investment
performance will continue to reflect changes in the value of the securities
loaned, and the Fund will also receive a fee or interest on the collateral.
Securities lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to return the security
loaned or becomes insolvent. A Fund may pay lending fees to the party arranging
the loan.
Short Sales
Each Fund may make short sales as part of its overall portfolio management
strategies or to offset a potential decline in the value of a security. A short
sale involves the sale of a security that is borrowed from a broker or other
institution to complete the sale. A Fund may only enter into short selling
transactions if the security sold short is held in the Fund's portfolio or if
the Fund has the right to acquire the security without the payment of further
consideration. For these purposes, a Fund may also hold or have the right to
acquire securities which, without the payment of any further consideration, are
convertible into or exchangeable for the securities sold short. Short sales
expose a Fund to the risk that it will be required to acquire, convert or
exchange securities to replace the borrowed securities (also known as
"covering" the short position) at a time when the securities sold short have
appreciated in value, thus resulting in a loss to the Fund.
When-Issued, Delayed Delivery and Forward Commitment Transactions
Each Fund may purchase securities which it is eligible to purchase on a when-
issued basis, may purchase and sell such securities for delayed delivery and may
make contracts to purchase such securities for a fixed price at a future date
beyond normal settlement time (forward commitments). When-issued transactions,
delayed delivery purchases and forward commitments involve a risk of loss if the
value of the securities declines prior to the settlement date. This risk is in
addition to the risk that the Fund's other assets will decline in value.
Therefore, these transactions may result in a form of leverage and increase a
Fund's overall investment exposure. Typically, no income accrues on securities a
Fund has committed to purchase prior to the time delivery of the securities is
made, although a Fund may earn income on securities it has segregated to cover
these positions.
Repurchase Agreements
Each Fund may enter into repurchase agreements, in which the Fund purchases a
security from a bank or broker-dealer that agrees to repurchase the security at
the Fund's cost plus interest within a specified time. If the party agreeing to
repurchase should default, the Fund will seek to sell the securities which it
holds. This could involve procedural costs or delays in addition to a loss on
the securities if their value should fall below their repurchase price. Those
Funds whose investment objectives do not include the earning of income will
invest in repurchase agreements only as a cash management technique
42
<PAGE>
with respect to that portion of its portfolio maintained in cash. Repurchase
agreements maturing in more than seven days are considered illiquid securities.
Reverse Repurchase Agreements and Other Borrowings
Each Fund may enter into reverse repurchase agreements, subject to the Fund's
limitations on borrowings. A reverse repurchase agreement involves the sale of a
security by a Fund and its agreement to repurchase the instrument at a specified
time and price, and may be considered a form of borrowing for some purposes. A
Fund will segregate assets determined to be liquid by PIMCO Advisors or a Sub-
Adviser in accordance with procedures established by the Board of Trustees to
cover its obligations under reverse repurchase agreements. A Fund also may
borrow money for investment purposes subject to any policies of the Fund
currently described in this Prospectus or in the Statement of Additional
Information. Reverse repurchase agreements and other forms of borrowings may
create leveraging risk for a Fund.
Illiquid Securities
Each Fund may invest in securities that are illiquid so long as not more than
15% of the value of the Fund's net assets (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by the Fund, and
transactions in illiquid securities may entail registration expenses and other
transaction costs that are higher than those for transactions in liquid
securities. The term "illiquid securities" for this purpose means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which a Fund has valued the securities. Please
see "Investment Objectives and Policies" in the Statement of Additional
Information for a listing of various securities that are generally considered to
be illiquid for these purposes. Restricted securities, i.e., securities subject
to legal or contractual restrictions on resale, may be illiquid. However, some
restricted securities (such as securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper) may be treated as liquid,
although they may be less liquid than registered securities traded on
established secondary markets.
Investment in Other Investment Companies
The New Asia, Europe Growth, Select World and Emerging Markets Funds may invest
up to [10%] of their assets in securities of other investment companies, such as
closed-end management investment companies, or in pooled accounts or other
investment vehicles which invest in foreign markets. The Healthcare Innovation,
Internet Innovation, Small-Cap Technology, Telecom Innovation and Electronics
Innovation Funds may invest up to 5% of their assets in such securities. As a
shareholder of an investment company, a Fund may indirectly bear service and
other fees which are in addition to the fees the Fund pays its service
providers.
Portfolio Turnover
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities held by a Fund
is known as "portfolio turnover." Each Fund may engage in active and frequent
trading of portfolio securities to achieve its investment objective and
principal investment strategies, particularly during periods of volatile market
movements. High portfolio turnover (e.g., over 100%) involves correspondingly
greater expenses to a Fund, including brokerage commissions or dealer mark-ups
and other transaction costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable capital gains,
including short-term capital gains (which are taxed at ordinary income tax rates
when distributed to shareholders who are individuals). The trading costs and tax
effects associated with portfolio turnover may adversely affect a Fund's
performance.
Changes in Investment Objectives and Policies
The investment objective of each Fund described in this Prospectus may be
changed by the Board of Trustees without shareholder approval. Unless otherwise
stated in the Statement of Additional Information, all investment policies of
the Funds may be changed by the Board of Trustees without shareholder approval.
If there is a change in a Fund's investment objective or policies, including a
change approved by shareholder vote, shareholders should consider whether the
Fund remains an appropriate investment in light of their then current financial
position and needs.
New Funds
In addition to the risks described under "Summary of Principal Risks" above
and in this section, the Funds are newly formed and therefore have no history
upon which investors can evaluate their likely performance. Accordingly, there
can be no
43
<PAGE>
assurance that the Funds will achieve their investment objective. Also, it is
possible that the Funds may invest in securities offered in initial public
offerings and other similar transactions which, because of each Fund's size, may
have a disproportionate impact on each Fund's performance results. The Funds
would not necessarily have achieved the same performance results if their
aggregate net assets had been greater.
Percentage Investment Limitations
Unless otherwise stated, all percentage limitations on Fund investments listed
in this Prospectus will apply at the time of investment. A Fund would not
violate these limitations unless an excess or deficiency occurs or exists
immediately after and as a result of an investment.
Other Investments and Techniques
The Funds may invest in other types of securities and use a variety of
investment techniques and strategies which are not described in this Prospectus.
These securities and techniques may subject the Funds to additional risks.
Please see the Statement of Additional Information for additional information
about the securities and investment techniques described in this Prospectus and
about additional securities and techniques that may be used by the Funds.
44
<PAGE>
PIMCO Funds:
Multi-Manager Series
INVESTMENT ADVISER AND ADMINISTRATOR
PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA 92660
CUSTODIAN
State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
TRANSFER AGENT
National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City,
MO 64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
45
<PAGE>
The Trust's Statement of Additional Information ("SAI") and annual and semi-
annual reports to shareholders include additional information about the Funds.
The SAI and the financial statements included in the Funds? most recent annual
report to shareholders are incorporated by reference into this Prospectus, which
means they are part of this Prospectus for legal purposes. The Funds? annual
report discusses the market conditions and investment strategies that
significantly affected each Fund's performance during its last fiscal year.
You may get free copies of any of these materials, request other information
about a Fund, or make shareholder inquiries by calling the Trust at 1-800-927-
4648 or PIMCO Infolink Audio Response Network at 1-800-987-4626, or by writing
to:
PIMCO Funds: Multi-Manager Series 840
Newport Center Drive Suite 300 Newport
Beach, CA 92660
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust on the EDGAR database on the Commission's Web site
at www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or by electronic request at the following e-mail
address: [email protected]. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-6161
File No. 811-6161
[LOGO OF PIMCO FUNDS]
PIMCO Funds
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
46
<PAGE>
PIMCO Funds Prospectus
PIMCO Funds:
Multi-Manager Series
[ ] 2000
Share Class D
This Prospectus describes 9 mutual funds offered by PIMCO Funds: Multi-Manager
Series. The Funds provide access to the professional investment advisory
services offered by PIMCO Advisors L.P. and its investment management
affiliates. As of March 31, 2000, PIMCO Advisors and its affiliates managed
approximately $264 billion in assets. PIMCO Advisors' institutional heritage is
reflected in the PIMCO Funds offered in this Prospectus.
This Prospectus explains what you should know about the Funds before you invest.
Please read it carefully.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
1
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Summary Information 3
Fund Summaries
Healthcare Innovation Fund 5
Internet Innovation Fund 7
Small-Cap Technology Fund 9
Telecom Innovation Fund 11
Electronics Innovation Fund 13
New Asia Fund 15
Europe Growth Fund 17
Select World Fund 19
Emerging Markets Fund 21
Summary of Principal Risks 23
Management of the Funds 27
How Fund Shares Are Priced 31
How to Buy and Sell Shares 31
Fund Distributions 34
Tax Consequences 35
Characteristics and Risks of Securities and Investment Techniques 36
</TABLE>
2
<PAGE>
Summary Information
The table below lists the investment objectives and certain investment
characteristics of the Funds. Other important characteristics are described in
the individual Fund Summaries beginning on page 5.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Approximate
PIMCO Investment Main Number of Capitalization
Fund Objective Investments Holdings Range
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sector-Related Healthcare Capital appreciation; no Common stocks of health 30-60 More than $200
Stock Funds Innovation consideration is given to care-related companies with market million
income capitalizations of more than $200
million
-----------------------------------------------------------------------------------------------------------------------------------
Internet Innovation Capital appreciation; no Common stocks of Internet and 20-60 More than $200
consideration is given to Internet-related companies with million
income market capitalizations of more than
$200 million
-----------------------------------------------------------------------------------------------------------------------------------
Small-Cap Technology Capital appreciation; no Common stocks of technology-related 30-60 Between $100
consideration is given to companies with market million and
income capitalizations of between $100 $2 billion
million and $2 billion
-----------------------------------------------------------------------------------------------------------------------------------
Telecom Innovation Capital appreciation; no Common stocks of 20-60 More than $200
consideration is given to telecommunications-related million
income companies with market
capitalizations of more than $200
million
-----------------------------------------------------------------------------------------------------------------------------------
Electronics Capital appreciation; no Common stock of companies in the 20-60 More than $200
Innovation consideration is given to electronics industry with market million
income capitalization of more than $200
-----------------------------------------------------------------------------------------------------------------------------------
International PIMCO/Allianz Capital appreciation through Common stocks of companies located 80 More than $250
Stock Funds New Asia investment in an in Asia with market capitalizations million
international portfolio of more than $250 million
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of European companies 80 More than $1
Europe Growth investment in an with market capitalizations of more billion
international portfolio than $1 billion
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of companies located 50-60 More than $1
Select World investment in a global both within and outside of the billion
portfolio United States with market
capitalizations of more than $1 billion
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO/Allianz Capital appreciation through Common stocks of companies located 80 More than $250
Emerging Markets investment in an in emerging market countries within million
international portfolio Europe, Asia, Latin America and
Africa with market capitalizations
of more than $250 million
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Summary Information (continued)
Fund Descriptions, Performance and Fees
The Funds provide a broad range of investment choices. The following Fund
Summaries identify each Fund's investment objective, principal investments and
strategies, principal risks, performance information and fees and expenses. A
more detailed "Summary of Principal Risks" describing principal risks of
investing in the Funds begins after the Fund Summaries.
It is possible to lose money on investments in the Funds. An investment in a
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
4
<PAGE>
PIMCO Healthcare Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization Range
Strategies Seeks capital appreciation; no Common stocks of health More than $200 million
consideration is given to income care-related companies
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 30-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in securities of companies principally engaged in the
design, manufacture or sale of new, creative or different, or " innovative,"
products or services used for or in connection with health care or medicine.
These companies may include, for example, pharmaceutical companies, companies
involved in biotechnology, medical diagnostic, biochemical or other health care
research and development, companies involved in the operation of health care
facilities, and other companies involved in the design, manufacture or sale of
health care-related products or services such as medical, dental and optical
products, hardware or services. Although the Fund emphasizes companies which
utilize health care technologies, it is not required to invest exclusively in a
particular business sector or industry, and at any time may not be invested in
any of the industry sectors listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify health care-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
<TABLE>
<CAPTION>
Principal Risks Among the principal risks of investing in the Fund, which could adversely affect its net asset value, yield and
total return, are:
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
Please see "Summary of Principal Risks" following the Fund Summaries for a description of these and
other risks of investing in the Fund.
</TABLE>
5
<PAGE>
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or Average
Annual Total Returns table is included for the Fund.
Fees and
Expenses of
the Fund
These tables describe the fees and expenses you may pay if you buy
and hold Institutional Class or Administrative Class shares of the
Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1)Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.70% 0.25% [0.54%] [1.49%] [0.04%] 1.45%
</TABLE>
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of [0.85%] per year under the administration
agreement regardless of whether a portion or none of the
[0.25%] authorized under the plan is paid under the plan.
Please see "Management of the Funds - Administrative Fees"
for details. The Fund intends to treat any fees paid under
the plan as "service fees" for purposes of applicable rules
of the National Association of Securities Dealers, Inc. (the
"NASD"). To the extent that such fees are deemed not to be
"service fees", Class D shareholders may, depending on the
length of time the shares are held, pay more than the
economic equivalent of the maximum front-end sales charges
permitted by relevant rules of the NASD.
(2) Other Expenses, which is based on estimated amounts for the
Fund's initial fiscal year, reflects the portion of the
Administrative Fee paid by the class that is not reflected
under Distribution and/or Service (12b-1) Fees, and [0.04%]
representing the Fund's organizational expenses as attributed
to the class ("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual agreement by
PIMCO Advisors to waive, reduce or reimburse its
Administrative Fee for Class D shares in an amount that, in
essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational Expenses
will all be accounted for in the Fund's initial fiscal year,
the Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal year
ending June 30, 2001.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, the Examples show what your costs would
be based on these assumptions./(1)/
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
6
<PAGE>
PIMCO Internet Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of Internet-related Range
consideration is given to income companies More than $200 million
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies that derive at least 50%
of their revenues, expenses or profits from the research, design, development,
manufacturing or distribution of new, creative or different, or "innovative,"
products, processes or services for use with Internet- or Internet-related
businesses. Some examples of these companies may include, for example,
providers of broad-band Internet access, web site content, Internet software and
electronic commerce. Although the Fund emphasizes Internet-related companies,
it is not required to invest exclusively in a particular business sector or
industry, and at any time may not be invested in any of the industry sectors
listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify Internet-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
7
<PAGE>
Fees and
Expenses of
the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Institutional Class or Administrative Class shares
of the Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.80% 0.25% [0.54%] [1.59%] [0.04%] 1.55%
</TABLE>
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of [0.85%] per year under the administration
agreement regardless of whether a portion or none of the
[0.25%] authorized under the plan is paid under the plan.
Please see "Management of the Funds - Administrative Fees"
for details. The Fund intends to treat any fees paid under
the plan as "service fees" for purposes of applicable rules
of the National Association of Securities Dealers, Inc. (the
"NASD"). To the extent that such fees are deemed not to be
"service fees", Class D shareholders may, depending on the
length of time the shares are held, pay more than the
economic equivalent of the maximum front-end sales charges
permitted by relevant rules of the NASD.
(2) Other Expenses, which is based on estimated amounts for the
Fund's initial fiscal year, reflects the portion of the
Administrative Fee paid by the class that is not reflected
under Distribution and/or Service (12b-1) Fees, and [0.04%]
representing the Fund's organizational expenses as attributed
to the class ("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual agreement by
PIMCO Advisors to waive, reduce or reimburse its
Administrative Fee for Class D shares in an amount that, in
essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational Expenses
will all be accounted for in the Fund's initial fiscal year,
the Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal year
ending June 30, 2001.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, the Examples show what your costs would
be based on these assumptions./(1)/
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
8
<PAGE>
PIMCO Small-Cap Technology Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of technology-related Range Between $100 million
consideration is given to income companies with smaller market and $2 billion
capitalizations
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 30-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of technology and technology-related
companies with market capitalizations of between $100 million and $2 billion at
the time of investment. The Fund identifies its investment universe of
technology-related companies primarily by reference to classifications made by
independent firms, such as Standard & Poor's (for example, companies classified
as "Information Technology" companies), and by identifying companies that
derive a substantial portion of their revenues from the manufacture, sale and/or
service of technological products. Although the Fund emphasizes companies which
utilize technologies, it is not required to invest exclusively in a particular
business sector or industry.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify companies with well-defined "wealth
creating" characteristics, including superior earnings growth (relative to
companies in the same industry or the market as a whole), high profitability and
consistent, predictable earnings. In addition, through fundamental research, the
portfolio manager seeks to identify companies that are gaining market share,
have superior management and possess a sustainable competitive advantage, such
as superior or innovative products, personnel and distribution systems. The Fund
looks to sell a stock when the portfolio manager believes that earnings or
market sentiment are disappointing, if the company does not meet or exceed
consensus estimates on revenues and/or earnings or if an alternative investment
is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Focused Investment Risk
.Smaller Company Risk .Leveraging Risk
.Liquidity Risk .Credit Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
9
<PAGE>
Fees and
Expenses of
the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Institutional Class or Administrative Class shares
of the Fund:
Shareholder Fees (fees paid directly from your investmenT) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.80% 0.25% [0.54%] [1.59%] [0.04%] 1.55%
</TABLE>
(1) The Fund's administration agreement includes a plan for Class
D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of [0.85%] per year under the administration
agreement regardless of whether a portion or none of the
[0.25%] authorized under the plan is paid under the plan.
Please see "Management of the Funds - Administrative Fees"
for details. The Fund intends to treat any fees paid under
the plan as "service fees" for purposes of applicable rules
of the National Association of Securities Dealers, Inc. (the
"NASD"). To the extent that such fees are deemed not to be
"service fees", Class D shareholders may, depending on the
length of time the shares are held, pay more than the
economic equivalent of the maximum front-end sales charges
permitted by relevant rules of the NASD.
(2) Other Expenses, which is based on estimated amounts for the
Fund's initial fiscal year, reflects the portion of the
Administrative Fee paid by the class that is not reflected
under Distribution and/or Service (12b-1) Fees, and [0.04%]
representing the Fund's organizational expenses as attributed
to the class ("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual agreement by
PIMCO Advisors to waive, reduce or reimburse its
Administrative Fee for Class D shares in an amount that, in
essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational Expenses
will all be accounted for in the Fund's initial fiscal year,
the Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal year
ending June 30, 2001.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, the Examples show what your costs would
be based on these assumptions./(1)/
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class D [ ] [ ] [ ] [ ]
-------------------------------------------------------------------------------
</TABLE>
(1) The Examples are based on the Net Expenses shown in the
preceding table.
10
<PAGE>
PIMCO Telecom Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of Range
consideration is given to income telecommunications-related More than $200 million
companies
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies principally engaged in the
development, manufacture or sale of new, creative or different, or "innovative,"
communications services or communications equipment. These companies may
include, for example, companies that provide traditional local and long-distance
telephone service or equipment, companies that provide cellular, paging, local
and wide area product networks or equipment, companies that provide satellite,
microwave and cable television or equipment, and companies involved in new
technologies such as fiber optics, semiconductors and data transmission.
Although the Fund emphasizes telecommunications-related companies, it is not
required to invest exclusively in a particular business sector or industry, and
at any time may not be invested in any of the industry sectors listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify telecommunications-related companies
with well-defined "wealth creating" characteristics, including superior earnings
growth (relative to companies in the same industry or the market as a whole),
high profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund,
which could adversely affect its net asset value, yield and
total return, are:
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Leveraging Risk
.Smaller Company Risk .Credit Risk
.Liquidity Risk .Focused Investment Risk
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
11
<PAGE>
Fees and
Expenses of
the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Institutional Class or Administrative Class shares
of the Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.70% 0.25% [0.54%] [1.49%] [0.04%] 1.45%
</TABLE>
(1) The Fund's administration agreement includes a plan for
Class D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of [0.85%] per year under the
administration agreement regardless of whether a portion or
none of the [0.25%] authorized under the plan is paid under
the plan. Please see "Management of the Funds -
Administrative Fees" for details. The Fund intends to treat
any fees paid under the plan as "service fees" for purposes
of applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). To the extent that
such fees are deemed not to be "service fees", Class D
shareholders may, depending on the length of time the shares
are held, pay more than the economic equivalent of the
maximum front-end sales charges permitted by relevant rules
of the NASD.
(2) Other Expenses, which is based on estimated amounts for the
Fund's initial fiscal year, reflects the portion of the
Administrative Fee paid by the class that is not reflected
under Distribution and/or Service (12b-1) Fees, and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual agreement
by PIMCO Advisors to waive, reduce or reimburse its
Administrative Fee for Class D shares in an amount that, in
essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational Expenses
will all be accounted for in the Fund's initial fiscal year,
the Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal year
ending June 30, 2001.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, the Examples show what your costs would
be based on these assumptions./(1)/
-----------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------
Class D [ ] [ ] [ ] [ ]
-----------------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
12
<PAGE>
PIMCO Electronics Innovation Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation; no Common stocks of companies Range
consideration is given to income in the electronics industry More than $200 million
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 20-60
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in common stocks of companies principally engaged in the
development, manufacture or sale of new, creative or different, or "innovative,"
electronics products and services. These companies may include, for example,
companies engaged in the development, manufacture, sale or service of electronic
components, equipment vendors to electronics manufacturers, electronic component
distributors, electronic instruments and systems vendors, and companies that
provide electronics-related services. Although the Fund emphasizes companies in
the electronics industry, it is not required to invest exclusively in a
particular business sector or industry, and at any time may not be invested in
any of the types of companies listed above.
The portfolio manager selects stocks for the Fund using a "growth" style.
The portfolio manager seeks to identify electronics-related companies with well-
defined "wealth creating" characteristics, including superior earnings growth
(relative to companies in the same industry or the market as a whole), high
profitability and consistent, predictable earnings. In addition, through
fundamental research, the portfolio manager seeks to identify companies that are
gaining market share, have superior management and possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The Fund looks to sell a stock when the portfolio manager
believes that earnings or market sentiment are disappointing, if the company
does not meet or exceed consensus estimates on revenues and/or earnings or if an
alternative investment is more attractive.
Although the Fund invests principally in common stocks, the Fund may also
invest in other types of equity securities, including preferred stocks and
convertible securities. The Fund may invest up to 15% of its assets in foreign
securities, usually in the form of American Depository Receipts.
In response to unfavorable market and other conditions, the Fund may make
temporary investments of some or all of its assets in high-quality fixed income
securities. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund,
which could adversely affect its net asset value, yield and
total return, are:
<TABLE>
<S> <C> <C>
.Market Risk .Foreign Investment Risk .Management Risk
.Issuer Risk .Currency Risk
.Growth Securities Risk .Leveraging Risk
.Smaller Company Risk .Credit Risk
.Liquidity Risk .Focused Investment Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a full
Information calendar year of performance. Thus, no bar chart or Average Annual
Total Returns table is included for the Fund.
13
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Institutional Class or Administrative Class shares
of the Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.80% 0.25% [0.54%] [1.59%] [0.04%] 1.55%
</TABLE>
(1) The Fund's administration agreement includes a plan for
Class D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of [0.85%] per year under the
administration agreement regardless of whether a portion or
none of the [0.25%] authorized under the plan is paid under
the plan. Please see "Management of the Funds -
Administrative Fees" for details. The Fund intends to treat
any fees paid under the plan as "service fees" for purposes
of applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). To the extent that
such fees are deemed not to be "service fees", Class D
shareholders may, depending on the length of time the shares
are held, pay more than the economic equivalent of the
maximum front-end sales charges permitted by relevant rules
of the NASD.
(2) Other Expenses, which is based on estimated amounts for the
Fund's initial fiscal year, reflects the portion of the
Administrative Fee paid by the class that is not reflected
under Distribution and/or Service (12b-1) Fees, and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual agreement
by PIMCO Advisors to waive, reduce or reimburse its
Administrative Fee for Class D shares in an amount that, in
essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational Expenses
will all be accounted for in the Fund's initial fiscal year,
the Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal year
ending June 30, 2001.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, the Examples show what your costs would
be based on these assumptions./(1)/
-----------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------
Class D [ ] [ ] [ ] [ ]
-----------------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
14
<PAGE>
PIMCO/Allianz New Asia Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation through Common stocks of foreign Range
investment in an international (non-U.S.) issuers More than $250 million
portfolio; income is an incidental
consideration Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of companies located in Asia. The Fund will primarily invest
in securities of companies located in the Far East, including Australia, China,
Hong Kong, Japan, Indonesia, India, Malaysia, New Zealand, the Philippines,
Singapore, South Korea, Taiwan and Thailand, although the Fund will not
necessarily be invested in all of these countries at any time. The Fund may also
invest in securities of foreign issuers traded on U.S. securities markets, but
will normally not invest in U.S. issuers. However, the Fund has no prescribed
limits on geographic asset distribution and may invest in any foreign securities
market in the world. The Fund invests most of its assets in foreign securities
which trade in currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
Principal Risks Among the principal risks of investing in the Fund,
which could adversely affect its net asset value, yield and
total return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Smaller Companies Risk .Leveraging Risk
.Currency Risk .Liquidity Risk .Credit Risk
.Market Risk .Derivatives Risk .Management Risk
.Issuer Risk .Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
15
<PAGE>
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or Average
Annual Total Returns table is included for the Fund.
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if you
buy and hold Institutional Class or Administrative Class shares
of the Fund:
Shareholder Fees (fees paid directly from your investment) None
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 1.00% 0.25% [0.74%] [1.99%] [0.04%] 1.95%
</TABLE>
(1) The Fund's administration agreement includes a plan for
Class D shares that has been adopted in conformity with the
requirements set forth in Rule 12b-1 under the Investment
Company Act of 1940. Up to 0.25% per year of the total
Administrative Fee paid under the administration agreement
may be Distribution and/or Service (12b-1) Fees. The Fund
will pay a total of [0.85%] per year under the
administration agreement regardless of whether a portion or
none of the [0.25%] authorized under the plan is paid under
the plan. Please see "Management of the Funds -
Administrative Fees" for details. The Fund intends to treat
any fees paid under the plan as "service fees" for purposes
of applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). To the extent that
such fees are deemed not to be "service fees", Class D
shareholders may, depending on the length of time the shares
are held, pay more than the economic equivalent of the
maximum front-end sales charges permitted by relevant rules
of the NASD.
(2) Other Expenses, which is based on estimated amounts for the
Fund's initial fiscal year, reflects the portion of the
Administrative Fee paid by the class that is not reflected
under Distribution and/or Service (12b-1) Fees, and [0.04%]
representing the Fund's organizational expenses as
attributed to the class ("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual agreement
by PIMCO Advisors to waive, reduce or reimburse its
Administrative Fee for Class D shares in an amount that, in
essence, is equal to the Fund's Organizational Expenses
attributed to the class. Because the Organizational Expenses
will all be accounted for in the Fund's initial fiscal year,
the Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal year
ending June 30, 2001.
Examples. The Examples below are intended to help you compare the
cost of investing in Institutional Class or Administrative Class
shares of the Fund with the costs of investing in other mutual
funds. The Examples assume that you invest $10,000 in the noted
class of shares for the time periods indicated, and then redeem
all your shares at the end of those periods. The Examples also
assume that your investment has a 5% return each year, the
reinvestment of all dividends and distributions, and the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, the Examples show what your costs would
be based on these assumptions./(1)/
-----------------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
-----------------------------------------------------------------
Class D [ ] [ ] [ ] [ ]
-----------------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
16
<PAGE>
PIMCO/Allianz Europe Growth Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments and Investment Objective Fund Focus Approximate Capitalization
Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in an international U.S.) issuers More than $1 billion
portfolio
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
Sector-Related Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally investing at
least 65% of its assets in an international portfolio of common stocks and other
equity securities of European companies with medium and large market
capitalizations. The Fund may also invest in securities of foreign issuers
traded on U.S. securities markets, but will normally not invest in U.S. issuers.
However, the Fund has no prescribed limits on geographic asset distribution and
may invest in any foreign securities market in the world. The Fund invests most
of its assets in foreign securities which trade in currencies other than the
U.S. dollar (e.g., the euro) and may invest directly in foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and derivative
instruments (such as stock index futures contracts) primarily for portfolio
management and hedging purposes. The Fund may also invest in equity securities
other than common stocks (such as equity-linked securities, preferred stocks and
convertible securities) and may invest up to 10% of its assets in other
investment companies. In response to unfavorable market and other conditions,
the Fund may make temporary investments of some or all of its assets in foreign
and domestic fixed income securities and in equity securities of U.S. issuers.
This would be inconsistent with the Fund's investment objective and principal
strategies.
Principal Risks Among the principal risks of investing in the Fund,
which could adversely affect its net asset value, yield and
total return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Currency Risk .Smaller Companies Risk .Leveraging Risk
.Market Risk .Liquidity Risk .Credit Risk
.Issuer Risk .Derivatives Risk .Management Risk
.Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a full
Information calendar year of performance. Thus, no bar chart or Average Annual
Total Returns table is included for the Fund.
17
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.75% 0.25% [0.74%] [1.74%] [0.04%] 1.70%
</TABLE>
(1) The Fund's administration agreement includes a plan for
Class D shares that has been adopted in conformity with
the requirements set forth in Rule 12b-1 under the
Investment Company Act of 1940. Up to 0.25% per year of
the total Administrative Fee paid under the
administration agreement may be Distribution and/or
Service (12b-1) Fees. The Fund will pay a total of
[0.85%] per year under the administration agreement
regardless of whether a portion or none of the [0.25%]
authorized under the plan is paid under the plan.
Please see "Management of the Funds - Administrative
Fees" for details. The Fund intends to treat any fees
paid under the plan as "service fees" for purposes of
applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). To the extent
that such fees are deemed not to be "service fees,"
Class D shareholders may, depending on the length of
time the shares are held, pay more than the economic
equivalent of the maximum front-end sales charges
permitted by relevant rules of the NASD.
(2) Other Expenses, which is based on estimated amounts for
the Fund's initial fiscal year, reflects the portion of
the Administrative Fee paid by the class that is not
reflected under Distribution and/or Service (12b-1)
Fees, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fee for Class D shares in
an amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions.(1)
---------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
---------------------------------------------------------
Class D [_] [_] [_] [_]
---------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
18
<PAGE>
PIMCO/Allianz Select World Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in a global portfolio U.S) issuers More than $1 billion
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 50-60
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio of common
stocks and other equity securities of companies located throughout the world.
Although the Fund normally invests in issuers from at least five different
countries, including the United States, it may at times invest in fewer than
five countries, or even a single country. The Fund typically invests in
approximately 50 to 60 stocks, with each stock usually constituting from 1.25%
to 2.5% of the Fund's portfolio. The Fund may invest in both developed and
developing, or "emerging," markets. The Fund has no prescribed limits on
geographic asset distribution and may invest in any foreign securities market in
the world. The Fund invests most of its assets in foreign securities which trade
in currencies other than the U.S. dollar and may invest directly in foreign
currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Best Research" investment style. The Best Research style uses a
research-driven "bottom-up" approach that seeks to utilize the Sub-Adviser's
global research capabilities to identify companies with above-average long-term
growth prospects and attractive valuations and that possess a sustainable
competitive advantage, such as superior or innovative products, personnel and
distribution systems. The portfolio manager seeks to select those stocks with
the best long-term performance expectations, using a broad range of company
fundamentals, such as long-term growth prospects, price-to-earnings ratios and
other valuation measures, dividend and profit growth, balance sheet strength and
return on assets. The portfolio managers sell stocks in order to adjust or
rebalance the Fund's portfolio and to replace companies with weakening
fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts) primarily for
portfolio management and hedging purposes. The Fund may also invest in equity
securities other than common stocks (such as equity-linked securities, preferred
stocks and convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all of its assets
in foreign and domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Emerging Markets Risk .Smaller Companies Risk .Leveraging Risk
.Currency Risk .Liquidity Risk .Credit Risk
.Market Risk .Derivatives Risk .Management Risk
.Issuer Risk .Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have a
Information full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
19
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class D 0.75% 0.25% [0.74%] [1.74%] [0.04%] 1.70%
</TABLE>
(1) The Fund's administration agreement includes a plan for
Class D shares that has been adopted in conformity with
the requirements set forth in Rule 12b-1 under the
Investment Company Act of 1940. Up to 0.25% per year of
the total Administrative Fee paid under the
administration agreement may be Distribution and/or
Service (12b-1) Fees. The Fund will pay a total of
[0.85%] per year under the administration agreement
regardless of whether a portion or none of the [0.25%]
authorized under the plan is paid under the plan.
Please see "Management of the Funds - Administrative
Fees" for details. The Fund intends to treat any fees
paid under the plan as "service fees" for purposes of
applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). To the extent
that such fees are deemed not to be "service fees,"
Class D shareholders may, depending on the length of
time the shares are held, pay more than the economic
equivalent of the maximum front-end sales charges
permitted by relevant rules of the NASD.
(2) Other Expenses, which is based on estimated amounts for
the Fund's initial fiscal year, reflects the portion of
the Administrative Fee paid by the class that is not
reflected under Distribution and/or Service (12b-1)
Fees, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fee for Class D shares in
an amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions.(1)
---------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
---------------------------------------------------------
Class D [_] [_] [_] [_]
---------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
20
<PAGE>
PIMCO/Allianz Emerging Markets Fund
<TABLE>
<S> <C> <C> <C>
Principal Investments Investment Objective Fund Focus Approximate Capitalization
and Strategies Seeks capital appreciation through Common stocks of foreign (non- Range
investment in a global portfolio U.S) issuers More than $250 million
Dividend Frequency
At least annually
Fund Category Approximate Number of Holdings
International Stocks 80
</TABLE>
The Fund seeks to achieve its investment objective by normally
investing at least 65% of its assets in an international portfolio of common
stocks and equity securities of companies located in emerging market countries
within Europe, Asia, Latin America and Africa. The Fund may also invest in
securities of foreign issuers traded on U.S. securities markets, but will
normally not invest in U.S. issuers. However, the Fund has no prescribed limits
on geographic asset distribution and may invest in any foreign securities market
in the world. The Fund invests most of its assets in foreign securities which
trade in currencies other than the U.S. dollar and may invest directly in
foreign currencies.
The portfolio manager selects securities for the Fund using the Sub-
Adviser's "Growth at a Reasonable Price" (GARP) investment style. The GARP style
uses a research-driven "bottom-up" approach that seeks to identify companies
with above-average long-term growth prospects and attractive valuations and that
possess a sustainable competitive advantage, such as superior or innovative
products, personnel and distribution systems. In selecting stocks, the portfolio
manager analyzes a broad range of company fundamentals, such as long-term growth
prospects, price-to-earnings ratios and other valuation measures, dividend and
profit growth, balance sheet strength and return on assets. A stock's liquidity
and volatility are also considered. The portfolio manager sells stocks in order
to adjust or rebalance the Fund's portfolio and to replace companies with
weakening fundamentals.
The Fund may utilize foreign currency exchange contracts and
derivative instruments (such as stock index futures contracts) primarily for
portfolio management and hedging purposes. The Fund may also invest in equity
securities other than common stocks (such as equity-linked securities, preferred
stocks and convertible securities) and may invest up to 10% of its assets in
other investment companies. In response to unfavorable market and other
conditions, the Fund may make temporary investments of some or all of its assets
in foreign and domestic fixed income securities and in equity securities of U.S.
issuers. This would be inconsistent with the Fund's investment objective and
principal strategies.
Principal Risks Among the principal risks of investing in the Fund, which
could adversely affect its net asset value, yield and total
return, are:
<TABLE>
<S> <C> <C>
.Foreign Investment Risk .Growth Securities Risk .Focused Investment Risk
.Emerging Markets Risks .Smaller Companies Risk .Leveraging Risk
.Currency Risk .Liquidity Risk .Credit Risk
.Market Risk .Derivatives Risk .Management Risk
.Issuer Risk .Value Securities Risk
</TABLE>
Please see "Summary of Principal Risks" following the Fund
Summaries for a description of these and other risks of
investing in the Fund.
Performance The Fund recently commenced operations and does not yet have
Information a full calendar year of performance. Thus, no bar chart or
Average Annual Total Returns table is included for the Fund.
21
<PAGE>
Fees and Expenses
of the Fund
These tables describe the fees and expenses you may pay if
you buy and hold Institutional Class or Administrative Class
shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
None
Annual Fund Operating Expenses (expenses that are deducted
from Fund assets)
<TABLE>
<CAPTION>
Distribution Total Annual
Advisory and/or Service Other Fund Operating Fee Net
Fees (12b-1) Fees/(1)/ Expenses/(2)/ Expenses Waiver/(3)/ Expenses/(3)/
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Class D 1.00% 0.25% [0.74%] [1.99%] [0.04%] 1.95%
</TABLE>
(1) The Fund's administration agreement includes a plan for
Class D shares that has been adopted in conformity with
the requirements set forth in Rule 12b-1 under the
Investment Company Act of 1940. Up to 0.25% per year of
the total Administrative Fee paid under the
administration agreement may be Distribution and/or
Service (12b-1) Fees. The Fund will pay a total of
[0.85%] per year under the administration agreement
regardless of whether a portion or none of the [0.25%]
authorized under the plan is paid under the plan.
Please see "Management of the Funds - Administrative
Fees" for details. The Fund intends to treat any fees
paid under the plan as "service fees" for purposes of
applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). To the extent
that such fees are deemed not to be "service fees,"
Class D shareholders may, depending on the length of
time the shares are held, pay more than the economic
equivalent of the maximum front-end sales charges
permitted by relevant rules of the NASD.
(2) Other Expenses, which is based on estimated amounts for
the Fund's initial fiscal year, reflects the portion of
the Administrative Fee paid by the class that is not
reflected under Distribution and/or Service (12b-1)
Fees, and [0.04%] representing the Fund's
organizational expenses as attributed to the class
("Organizational Expenses").
(3) Net Expenses reflect the effect of a contractual
agreement by PIMCO Advisors to waive, reduce or
reimburse its Administrative Fee for Class D shares in
an amount that, in essence, is equal to the Fund's
Organizational Expenses attributed to the class.
Because the Organizational Expenses will all be
accounted for in the Fund's initial fiscal year, the
Fund's reasonable expectation is that the relevant
conditions will not continue after the Fund's fiscal
year ending June 30, 2001.
Examples. The Examples below are intended to help you
compare the cost of investing in Institutional Class or
Administrative Class shares of the Fund with the costs of
investing in other mutual funds. The Examples assume that
you invest $10,000 in the noted class of shares for the time
periods indicated, and then redeem all your shares at the
end of those periods. The Examples also assume that your
investment has a 5% return each year, the reinvestment of
all dividends and distributions, and the Fund's operating
expenses remain the same. Although your actual costs may be
higher or lower, the Examples show what your costs would be
based on these assumptions.(1)
---------------------------------------------------------
Year 1 Year 3 Year 5 Year 10
---------------------------------------------------------
Class D [_] [_] [_] [_]
---------------------------------------------------------
(1) The Examples are based on the Net Expenses shown in the
preceding table.
22
<PAGE>
Summary of Principal Risks
The value of your investment in a Fund changes with the values of that Fund's
investments. Many factors can affect those values. The factors that are most
likely to have a material effect on a particular Fund's portfolio as a whole are
called "principal risks." The principal risks of each Fund are identified in the
Fund Summaries and are summarized in this section. Each Fund may be subject to
additional principal risks and risks other than those described below because
the types of investments made by each Fund can change over time. Securities and
investment techniques mentioned in this summary and described in greater detail
under "Characteristics and Risks of Securities and Investment Techniques" appear
in bold type. That section and "Investment Objectives and Policies" in the
Statement of Additional Information also include more information about the
Funds, their investments and the related risks. There is no guarantee that a
Fund will be able to achieve its investment objective.
Market Risk
The market price of securities owned by a Fund may go up or down, sometimes
rapidly or unpredictably. Each of the Funds normally invests most of its assets
in common stocks and/or other equity securities. A principal risk of investing
in each Fund is that the equity securities in its portfolio will decline in
value due to factors affecting equity securities markets generally or particular
industries represented in those markets. The values of equity securities may
decline due to general market conditions which are not specifically related to a
particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may also decline
due to factors which affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. Equity securities generally have greater price volatility than fixed
income securities.
Issuer Risk
The value of a security may also decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer's goods or services.
Growth Securities Risk
Each Fund emphasizes investments in equity securities of companies that its
portfolio manager believes will experience relatively rapid earnings growth. The
Funds place particular emphasis on growth securities. Growth securities
typically trade at higher multiples of current earnings than other securities.
Therefore, the values of growth securities may be more sensitive to changes in
current or expected earnings than the values of other securities.
Value Securities Risk
The Funds may invest in companies that may not be expected to experience
significant earnings growth, but whose securities its portfolio manager believes
are selling at a price lower than their true value. The New Asia, Europe Growth
and Emerging Markets Funds place particular emphasis on value securities.
Companies that issue value securities may have experienced adverse business
developments or may be subject to special risks that have caused their
securities to be out of favor. If a portfolio manager's assessment of a
company's prospects is wrong, or if the market does not recognize the value of
the company, the price of its securities may decline or may not approach the
value that the portfolio manager anticipates.
Smaller Company Risk
The general risks associated with equity securities and liquidity risk are
particularly pronounced for securities of companies with smaller market
capitalizations. These companies may have limited product lines, markets or
financial resources or they may depend on a few key employees. Securities of
smaller companies may trade less frequently and in lesser volume than more
widely held securities and their values may fluctuate more sharply than other
securities. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. The Small-Cap Technology Fund
has substantial exposure to this risk because it invests primarily in the
securities of companies with market capitalizations below $200 million. The
Healthcare Innovation, Internet Innovation, Telecom Innovation, Electronics
Innovation, New Asia, Europe Growth, Select World and Emerging Markets Funds
also have significant exposure to this risk because they invest substantial
assets
23
<PAGE>
in companies with medium-sized market capitalizations, which are smaller and
generally less-seasoned than the largest companies.
Liquidity Risk
All of the Funds are subject to liquidity risk. Liquidity risk exists when
particular investments are difficult to purchase or sell, possibly preventing a
Fund from selling such illiquid securities at an advantageous time or price.
Funds with principal investment strategies that involve securities of companies
with smaller market capitalizations, foreign securities, derivatives or
securities with substantial market and/or credit risk tend to have the greatest
exposure to liquidity risk.
Derivatives Risk
All of the Funds may use derivatives, which are financial contracts whose value
depends on, or is derived from, the value of an underlying asset, reference rate
or index. The various derivative instruments that the Funds may use are
referenced under "Characteristics and Risks of Securities and Investment
Techniques--Derivatives" in this Prospectus and described in more detail under
"Investment Objectives and Policies" in the Statement of Additional
Information. The Funds may sometimes use derivatives as part of a strategy
designed to reduce exposure to other risks, such as interest rate or currency
risk. The Funds may also use derivatives for leverage, which increases
opportunities for gain but also involves greater risk of loss due to leveraging
risk. A Fund's use of derivative instruments involves risks different from, or
possibly greater than, the risks associated with investing directly in
securities and other traditional investments. Derivatives are subject to a
number of risks described elsewhere in this section, such as liquidity risk,
market risk, credit risk and management risk. They also involve the risk of
mispricing or improper valuation and the risk that changes in the value of the
derivative may not correlate perfectly with the underlying asset, rate or index.
In addition, a Fund's use of derivatives may increase or accelerate the amount
of taxes payable by shareholders. A Fund investing in a derivative instrument
could lose more than the principal amount invested. Also, suitable derivative
transactions may not be available in all circumstances and there can be no
assurance that a Fund will engage in these transactions to reduce exposure to
other risks when that would be beneficial.
Foreign (non-U.S.) Investment Risk
A Fund that invests in foreign securities, and particularly the New Asia, Europe
Growth, Select World and Emerging Markets Funds, may experience more rapid and
extreme changes in value than Funds that invest exclusively in securities of
U.S. issuers or securities that trade exclusively in U.S. markets. The
securities markets of many foreign countries are relatively small, with a
limited number of companies representing a small number of industries.
Additionally, issuers of foreign securities are usually not subject to the same
degree of regulation as U.S. issuers. Reporting, accounting and auditing
standards of foreign countries differ, in some cases significantly, from U.S.
standards. Also, nationalization, expropriation or confiscatory taxation,
currency blockage, political changes or diplomatic developments could adversely
affect a Fund's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Fund could lose its
entire investment in foreign securities. To the extent that a Fund, such as New
Asia, Europe Growth, Select World and Emerging Markets Funds, invests a
significant portion of its assets in a narrowly defined geographic area such as
Europe, Asia or South America, the Fund will generally have more exposure to
regional economic risks associated with foreign investments. Adverse conditions
in certain regions (such as Southeast Asia) can also adversely affect securities
of other countries whose economies appear to be unrelated. In addition, special
U.S. tax considerations may apply to a Fund's investment in foreign securities.
Emerging Markets Risk
Foreign investment risk may be particularly high to the extent that a Fund
invests in emerging market securities of issuers based in countries with
developing economies. These securities may present market, credit, currency,
liquidity, legal, political and other risks different from, or greater than, the
risks of investing in developed foreign countries. The Emerging Markets Fund is
particularly susceptible to these risks because it invests principally in
companies located in emerging markets countries. The New Asia and Select World
Funds also have substantial exposure to these risks because these Funds may
invest a significant portion of their assets in emerging market securities. In
addition, the risks associated with investing in a narrowly defined geographic
area (discussed above under "Foreign (non-U.S.) Investment Risk") are more
pronounced for the Funds that invest in emerging markets.
24
<PAGE>
Currency Risk
Funds that invest directly in foreign currencies or in securities that trade in,
and receive revenues in, foreign currencies are subject to the risk that those
currencies will decline in value relative to the U.S. Dollar, or, in the case of
hedging positions, that the U.S. Dollar will decline in value relative to the
currency being hedged. The New Asia, Europe Growth, Select World and Emerging
Markets Funds are particularly sensitive to currency risk. Currency rates in
foreign countries may fluctuate significantly over short periods of time for a
number of reasons, including changes in interest rates, intervention (or the
failure to intervene) by U.S. or foreign governments, central banks or
supranational entities such as the International Monetary Fund, or by the
imposition of currency controls or other political developments in the U.S. or
abroad.
Focused Investment Risk
Focusing Fund investments in a small number of issuers, industries or foreign
currencies increases risk. Funds, such as the Select World Fund, that invest in
a relatively small number of issuers may have more risk because changes in the
value of a single security or the impact of a single economic, political or
regulatory occurrence may have a greater adverse impact on the Fund's net asset
value. Some of those issuers also may present substantial credit or other risks.
The New Asia, Europe Growth, Select World and Emerging Markets Funds may be
subject to increased risk to the extent that they focus their investments in
securities denominated in a particular foreign currency or in a narrowly defined
geographic area outside the U.S. The Internet Innovation, Electronics Innovation
and Small-Cap Technology Funds are subject to risks prevalent in the Internet,
electronics and technology sectors respectively, such as the risks of rapid
obsolescence of products and services, significant losses, increased volatility
of these companies' securities and limited operating histories, because they
"concentrate" their investments in these sectors. Similarly, the Telecom
Innovation and Healthcare Innovation Funds "concentrate" their investments in
the telecommunications and health care industries, respectively, and therefore
are subject to the risks particular to those industries, such as the risks
associated with additional government regulation of the telecommunications and
health care industries and changes to existing regulations and government
subsidy levels. Also, the Funds may from time to time have greater risk to the
extent they invest a substantial portion of their assets in related industries
such as "technology" or "financial and business services", which may share
common characteristics and react similarly to market developments.
Leveraging Risk
The Funds may engage in transactions or purchase instruments that give rise to
forms of leverage. Such transactions and instruments may include, among others,
the use of reverse repurchase agreements and other borrowings, the investment of
collateral from loans of portfolio securities, or the use of when-issued,
delayed-delivery or forward commitment transactions. The use of derivatives may
also involve leverage. Leverage, including borrowing, will cause the value of a
Fund's shares to be more volatile than if the Fund did not use leverage. This is
because leverage tends to exaggerate the effect of any increase or decrease in
the value of a Fund's portfolio securities. The use of leverage may also cause a
Fund to liquidate portfolio positions when it would not be advantageous to do so
in order to satisfy its obligations or to meet segregation requirements.
Interest Rate Risk
To the extent that Funds purchase fixed income securities for investment or
defensive purposes, they will be subject to interest rate risk, a market risk
relating to investments in fixed income securities such as bonds and notes. As
interest rates rise, the value of fixed income securities in a Fund's portfolio
are likely to decrease. Securities with longer "durations" (defined below) tend
to be more sensitive to changes in interest rates, usually making them more
volatile than securities with shorter durations. Duration is a measure of the
expected life of a fixed income security that is used to determine the
sensitivity of a security's price to changes in interest rates. A Fund with a
longer average portfolio duration will be more sensitive to changes in interest
rates than a Fund with a shorter average portfolio duration.
Credit Risk
All of the Funds are subject to credit risk. This is the risk that the issuer or
the guarantor of a fixed income security, or the counterparty to a derivatives
contract, repurchase agreement or a loan of portfolio securities, is unable or
unwilling to make timely principal and/or interest payments, or to otherwise
honor its obligations. Securities are subject to varying degrees of credit risk,
which are often reflected in their credit ratings.
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<PAGE>
Management Risk
Each Fund is subject to management risk because it is an actively managed
investment portfolio. PIMCO Advisors, the Sub-Advisers and each individual
portfolio manager will apply investment techniques and risk analyses in making
investment decisions for the Funds, but there can be no guarantee that these
will produce the desired results.
26
<PAGE>
Management of the Funds
Investment Adviser and Administrator
PIMCO Advisors serves as the investment adviser and the administrator (serving
in its capacity as administrator, the "Administrator") for the Funds. Subject
to the supervision of the Board of Trustees, PIMCO Advisors is responsible for
managing, either directly or through others selected by it, the investment
activities of the Funds and the Funds' business affairs and other administrative
matters.
PIMCO Advisors is located at 800 Newport Center Drive, Newport Beach, California
92660. Organized in 1987, PIMCO Advisors provides investment management and
advisory services to private accounts of institutional and individual clients
and to mutual funds. As of March 31, 2000, PIMCO Advisors and its subsidiary
partnerships had more than $264 billion in assets under management.
PIMCO Advisors has retained its subsidiary PIMCO/Allianz International Advisors
LLC to manage the investments of the New Asia, Europe Growth, Select World and
Emerging Markets Funds. The PIMCO Equity Advisors division of PIMCO Advisors
manages the investments of the Healthcare Innovation, Internet Innovation,
Small-Cap Technology, Telecom Innovation and Electronics Innovation Funds (PIMCO
Equity Advisors and PIMCO/Allianz International Advisors LLC are each referred
to as a "Sub-Adviser" in this prospectus). See "Sub-Advisers" below.
PIMCO Advisors has retained its affiliate, Pacific Investment Management
Company, to provide various administrative and other services required by the
Funds in its capacity as sub-administrator. PIMCO Advisors and the sub-
administrator may retain other affiliates to provide certain of these services.
Advisory Fees
Each Fund pays PIMCO Advisors fees in return for providing or arranging for the
provision of investment advisory services. In the case of Funds for which PIMCO
Advisors has retained PIMCO/Allianz International Advisors LLC, PIMCO Advisors
(and not the Fund) pays a portion of the advisory fees it receives to the Sub-
Adviser in return for its services.
The Funds will pay monthly advisory fees to PIMCO Advisors at the following
annual rates (stated as a percentage of the average daily net assets of each
Fund taken separately):
Fund Advisory Fees
Healthcare Innovation and Telecom Innovation Funds 0.70%
Europe Growth and Select World Funds 0.75%
Internet Innovation, Small-Cap Technology and 0.80%
Electronics Innovation Funds
New Asia and Emerging Markets Funds 1.00%
Administrative Fees
Each Fund pays for the administrative services it requires under a fee structure
which is essentially fixed. Class D shareholders of each Fund pay an
administrative fee to PIMCO Advisors, computed as a percentage of the Fund's
assets attributable in the aggregate to Class D shares. PIMCO Advisors, in turn,
provides or procures administrative services for Class D shareholders and also
bears the costs of various third-party services required by the Funds, including
audit, custodial, portfolio accounting, legal, transfer agency and printing
costs. The result of this fee structure is an expense level for Class D
shareholders of each Fund that, with limited exceptions, is precise and
predictable under ordinary circumstances.
27
<PAGE>
Class D shareholders of the Funds will pay PIMCO Advisors monthly administrative
fees at the following annual rates (stated as a percentage of the average daily
net assets attributable in the aggregate to the Fund's Class D shares):
Fund Administrative Fees
Healthcare Innovation, Internet Innovation, Small-Cap [0.50]%
Technology, Telecom Innovation and Electronics
Innovation Funds
New Asia, Europe Growth, Select World and [0.70]%
Emerging Markets Funds
12b-1 Plan for Class D Shares
The Funds' administration agreement includes a plan for Class D shares that has
been adopted in conformity with the requirements set forth in Rule 12b-1 under
the 1940 Act. The plan provides that up to 0.25% per annum of the Class D
administrative fees paid under the administration agreement may represent
reimbursement for expenses in respect of activities that may be deemed to be
primarily intended to result in the sale of Class D shares. The principal types
of activities for which such payments may be made are services in connection
with the distribution of Class D shares and/or the provision of shareholder
services. Because 12b-1 fees would be paid out of a Fund's Class D share assets
on an ongoing basis, over time these fees would increase the cost of your
investment in Class D shares and may cost you more than other types of sales
charges.
Sub-Advisers
Each Sub-Adviser has full investment discretion and makes all determinations
with respect to the investment of a Fund's assets. The following provides
summary information about each Sub-Adviser, including the Fund(s) it manages.
<TABLE>
<CAPTION>
Sub-Adviser* Funds
<S> <C>
PIMCO Equity Advisors Healthcare Innovation, Internet Innovation, Small-Cap Technology,
1345 Avenue of the Americas, 50th Floor Telecom Innovation and Electronics Innovation Funds
New York, NY 10105
PIMCO/Allianz International Advisors LLC New Asia, Europe Growth, Select World and Emerging Markets Funds
1345 Avenue of the Americas, 50th Floor
New York, NY 10105
</TABLE>
* PIMCO Equity Advisors is a division of PIMCO Advisors. PIMCO/Allianz
International Advisors LLC is a wholly-owned subsidiary of PIMCO Advisors.
The following provides additional information about each Sub-Adviser and the
individual portfolio managers who have or share primary responsibility for
managing the Funds' investments.
PIMCO Equity Advisors
A division of PIMCO Advisors, PIMCO Equity Advisors provides equity-related
advisory services to mutual funds and institutional accounts. See "Investment
Adviser and Administrator" above for additional information about PIMCO
Advisors.
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<PAGE>
The following individuals at PIMCO Equity Advisors have primary responsibility
for the noted Funds.
<TABLE>
<CAPTION>
Fund Portfolio Managers Since Recent Professional Experience
<S> <C> <C> <C>
Healthcare Innovation Dennis P. McKechnie 2000 (Inception) Portfolio Manager of PIMCO Equity Advisors. Prior to
joining PIMCO Advisors, he was with Columbus Circle
Investors from 1991 to 1999, where he managed equity
accounts and served in various capacities including as
Portfolio Manager for the Innovation Fund.
Jiyoung Kim 2000 (Inception) Senior Research Analyst for PIMCO Innovation Fund, where
she covers biotechnology, telecommunications equipment,
semiconductors and networking. Prior to joining PIMCO
Equity Advisors in [ ], she worked as a Senior Research
Analyst at Fred Alger Management from [ ] to [ ]. Prior to
that, she worked as a Senior Research Technician at
Repligen.
Internet Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
Small-Cap Technology Thomas Keyes 2000 (Inception) Senior Research Analyst for PIMCO Equity Advisors. Prior
to joining PIMCO Equity Advisors, he was a research
analyst at Alliance Capital in its Small-Cap Program from
1997 to 1999, where he focused on small-cap technology
stocks. He was a Vice President at Bankers Trust from 1994
to 1997, where he focused on equity research of technology
stocks.
Telecom Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
Electronics Innovation Mr. McKechnie 2000 (Inception) See above.
Ms. Kim 2000 (Inception) See above.
</TABLE>
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<PAGE>
PIMCO/Allianz International Advisors LLC
"PIMCO/Allianz International Advisors LLC" is a wholly-owned subsidiary of PIMCO
Advisors. Additional information about PIMCO/Allianz International Advisors
LLC will be provided in a subsequent filing.
The following individuals at PIMCO/Allianz International Advisors LLC
share primary responsibility for each of the noted Funds.
<TABLE>
<CAPTION>
Portfolio
Fund Managers Since Recent Professional Experience
<S> <C> <C> <C>
New Asia Ian Lui 2000 (Inception) Chief Investment Officer of Allianz Asset Management (HK)
Limited. From 1997 to 1999, he served as a Managing
Director with Indocam Singapore Limited. From 1994 to 1997
he served in various capacities with Dresdner RCM Hong
Kong, Dresdner (SEA) Thornton Asset Management Singapore,
CMS Dresdner Thornton Asset Management Malaysia and
Dresdner RCM Global Investors.
Europe Growth Wolfram Gerdes 2000 (Inception) Managing director of Equity Portfolio Management at Allianz
Asset Advisory and Management GmbH ("Allianz AAM") since
1998. Prior to joining Allianz AAM, he held various
positions, including head of Portfolio Management, with
Allianz Lebensversicherungs AG from 1992 to 1998.
Select World Udo Frank 2000 (Inception) Managing Director and Chief Investment Officer of Allianz
Asset Advisory and Management GmbH, responsible for the
entire investment area (since 1997). Previously, Mr. Frank
served as the Chief Investment Officer of Allianz KAG (since
1994).
Gerd Wolfgang Hintz 2000 (Inception) Managing Director of the Equity Research Department at
Allianz AAM since 1998. In addition, Mr. Hintz has been
responsible for Allianz AAM's trading department since
January 2000. Previously, he was the head of Research and
Investor Relations of Allianz Lebensversicherungs AG.
Emerging Markets Norbert Kaldun 2000 (Inception) Portfolio Manager for Allianz AAM, where he has been
responsible for Eastern European equity research and
management. From 1997 to 1998, he served as a Portfolio
Manager with Allianz Lebensverischerungs AG.
</TABLE>
Distributor The Trust's Distributor is PIMCO Funds Distributors LLC, a
wholly owned subsidiary of PIMCO Advisors. The
Distributor, located at 2187 Atlantic Street, Stamford,
Connecticut 06902, is a broker-dealer registered with the
Securities and Exchange Commission.
30
<PAGE>
How Fund Shares Are Priced
The net asset value ("NAV") of a Fund's Class D shares is determined by dividing
the total value of a Fund's portfolio investments and other assets attributable
to that class, less any liabilities, by the total number of shares outstanding
of that class.
For purposes of calculating NAV, portfolio securities and other assets for which
market quotes are available are stated at market value. Market value is
generally determined on the basis of last reported sales prices, or if no sales
are reported, based on quotes obtained from a quotation reporting system,
established market makers, or pricing services. Certain securities or
investments for which daily market quotes are not readily available may be
valued, pursuant to guidelines established by the Board of Trustees, with
reference to other securities or indices. Short-term investments having a
maturity of 60 days or less are generally valued at amortized cost. Exchange
traded options, futures and options on futures are valued at the settlement
price determined by the exchange. Other securities for which market quotes are
not readily available are valued at fair value as determined in good faith by
the Board of Trustees or persons acting at their direction.
Investments initially valued in currencies other than the U.S. dollar are
converted to U.S. dollars using exchange rates obtained from pricing services.
As a result, the NAV of a Fund's shares may be affected by changes in the value
of currencies in relation to the U.S. dollar. The value of securities traded in
markets outside the United States or denominated in currencies other than the
U.S. dollar may be affected significantly on a day that the New York Stock
Exchange is closed and an investor is not able to purchase, redeem or exchange
shares. In particular, the calculation of the NAV of the New Asia, Europe
Growth, Select World and Emerging Markets Funds may not take place
contemporaneously with the determination of the prices of foreign securities
used in the NAV calculations.
Fund shares are valued at the close of regular trading (normally 4:00 p.m.,
Eastern time) (the "NYSE Close") on each day that the New York Stock Exchange is
open. For purposes of calculating the NAV, the Funds normally use pricing data
for domestic equity securities received shortly after the NYSE Close and do not
normally take into account trading, clearances or settlements that take place
after the NYSE Close. Domestic fixed income and foreign securities are normally
priced using data reflecting the earlier closing of the principal markets for
those securities. Information that becomes known to the Funds or their agents
after the NAV has been calculated on a particular day will not generally be used
to retroactively adjust the price of a security or the NAV determined earlier
that day.
In unusual circumstances, instead of valuing securities in the usual manner, the
Funds may value securities at fair value or estimate their value as determined
in good faith by the Board of Trustees pursuant to procedures approved by the
Board of Trustees. Fair valuation may also be used by the Board of Trustees if
extraordinary events occur after the close of the relevant market but prior to
the NYSE Close.
How to Buy and Sell Shares
The following section provides basic information about how to buy, sell (redeem)
and exchange Class D shares of the Funds.
General Information
. Financial Service Firms. Broker-dealers, registered investment advisers and
other financial service firms provide varying investment products, programs or
accounts, pursuant to arrangements with the Distributor, through which their
clients may purchase and redeem Class D shares of the Funds. Firms will
generally provide or arrange for the provision of some or all of the shareholder
servicing and account maintenance services required by your account, including,
without limitation, transfers of registration and dividend payee changes. Firms
may also perform other functions, including generating confirmation statements
and disbursing cash dividends, and may arrange with their clients for other
investment or administrative services. Your firm may independently establish and
charge you
31
<PAGE>
transaction fees and/or other additional amounts for such services, which may
change over time. These fees and additional amounts could reduce your investment
returns on Class D shares of the Funds.
Your financial service firm may have omnibus accounts and similar arrangements
with the Trust and may be paid for providing sub-transfer agency and other
services. A firm may be paid for its services directly or indirectly by the
Funds, PIMCO Advisors or an affiliate (normally not to exceed an annual rate of
0.35% of a Fund's average daily net assets attributable to its Class D shares
and purchased through such firm for its clients). Your firm may establish
various minimum investment requirements for Class D shares of the Funds and may
also establish certain privileges with respect to purchases, redemptions and
exchanges of Class D shares or the reinvestment of dividends. Please contact
your firm for information.
This Prospectus should be read in connection with your firm's materials
regarding its fees and services.
. Calculation of Share Price and Redemption Payments. When you buy or sell
(redeem) Class D shares of the Funds, you pay or receive a price equal to the
NAV of the shares. NAVs are determined at the close of regular trading
(normally, 4:00 p.m., Eastern time) on each day the New York Stock Exchange is
open. See ''How Fund Shares Are Priced'' above for details. Generally, purchase
and redemption orders for Fund shares are processed at the NAV next calculated
after your order is received by the Distributor. In addition, orders received by
the Distributor from financial service firms after NAV is determined that day
will be processed at that day's NAV if the orders were received by the firm from
its customer prior to such determination and were transmitted to and received by
the Distributor prior to its close of business that day (normally 7:00 p.m.,
Eastern time).
The Trust does not calculate NAVs or process orders on days when the New York
Stock Exchange is closed. If your purchase or redemption order is received by
the Distributor on a day when the New York Stock Exchange is closed, it will be
processed on the next succeeding day when the New York Stock Exchange is open
(according to the succeeding day's NAV).
Buying Shares
Class D shares of each Fund are continuously offered through financial service
firms, such as broker-dealers or registered investment advisers, with which the
Distributor has an agreement for the use of the Funds in particular investment
products, programs or accounts for which a fee may be charged. See "Financial
Service Firms" above.
You may purchase Class D shares only through your financial service firm. In
connection with purchases, your financial service firm is responsible for
forwarding all necessary documentation to the Distributor, and may charge you
for such services. If you wish to purchase shares of the Funds directly from the
Trust or the Distributor, you should inquire about the other classes of shares
offered by the Trust. Please call the Distributor at 1-888-87-PIMCO for
information about other investment options.
Class D shares of the Funds will be held in your account with your financial
service firm and, generally, your firm will hold your Class D shares in nominee
or street name as your agent. In most cases, the Trust's transfer agent, PFPC,
Inc., will have no information with respect to or control over accounts of
specific Class D shareholders and you may obtain information about your accounts
only through your financial service firm. In certain circumstances, your firm
may arrange to have your shares held in your own name or you may subsequently
become a holder of record for some other reason (for instance, if you terminate
your relationship with your firm). In such circumstances, please contact the
Distributor at 1-888-87-PIMCO for information about your account. In the
interest of economy and convenience, certificates for Class D shares will not be
issued.
The Distributor, in its sole discretion, may accept or reject any order for
purchase of Fund shares. The sale of shares will be suspended during any period
in which the New York Stock Exchange is closed for other than weekends or
holidays, or if permitted by the rules of the Securities and Exchange
Commission, when trading on the New York Stock Exchange is restricted or during
an emergency which makes it impracticable for the Funds to dispose of their
securities or to determine fairly the value of their net assets, or during any
other period as permitted by the Securities and Exchange Commission for the
protection of investors.
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<PAGE>
Investment Minimums
The following investment minimums apply for purchases of Class D shares.
Initial Investment Subsequent Investments
$2,500 per Fund $100 per Fund
Your financial service firm may impose different investment minimums than the
Trust. For example, if your firm maintains an omnibus account with a particular
Fund, the firm may impose higher or lower investment minimums than the Trust
when you invest in Class D shares of the Fund through your firm. Please contact
your firm for information.
Exchanging Shares
Except as provided below or in the applicable Fund's or series' prospectus(es),
you may exchange your Class D shares of any Fund for Class D shares of any other
Fund or series of PIMCO Funds: Pacific Investment Management Series that offers
Class D shares. Shares are exchanged on the basis of their respective NAVs next
calculated after your exchange order is received by the Distributor. Currently,
the Trust does not charge any exchange fees or charges. Your financial service
firm may impose various fees and charges, investment minimums and other
requirements with respect to exchanges. In addition, an exchange is generally a
taxable event which will generate capital gains or losses, and special rules may
apply in computing tax basis when determining gain or loss. Please contact your
financial service firm to exchange your shares and for additional information
about the exchange privilege.
The Trust reserves the right to refuse exchange purchases if, in the judgment of
PIMCO Advisors, the purchase would adversely affect a Fund and its shareholders.
In particular, a pattern of exchanges characteristic of "market-timing"
strategies may be deemed by PIMCO Advisors to be detrimental to the Trust or a
particular Fund. Currently, the Trust limits the number of "round trip"
exchanges an investor may make. An investor makes a "round trip" exchange when
the investor purchases shares of a particular Fund, subsequently exchanges those
shares for shares of a different PIMCO Fund and then exchanges back into the
originally purchased Fund. The Trust has the right to refuse any exchange for
any investor who completes (by making the exchange back into the shares of the
originally purchased Fund) more than six round trip exchanges in any twelve-
month period. Although the Trust has no current intention of terminating or
modifying the exchange privilege other than as set forth in the preceding
sentence, it reserves the right to do so at any time. Except as otherwise
permitted by Securities and Exchange Commission regulations, the Trust will give
60 days' advance notice to your financial service firm of any termination or
material modification of the exchange privilege with respect to Class D shares.
Selling Shares
You can sell (redeem) Class D shares through your financial service firm on any
day the New York Stock Exchange is open. You do not pay any fees or other
charges to the Trust or the Distributor when you sell your shares, although your
financial service firm may charge you for its services in processing your
redemption request. Please contact your firm for details. If you are the holder
of record of your Class D shares, you may contact the Distributor at 1-888-87-
PIMCO for information regarding how to sell your shares directly to the Trust.
Your financial service firm is obligated to transmit your redemption orders to
the Distributor promptly and is responsible for ensuring that your redemption
request is in proper form. Your financial service firm will be responsible for
furnishing all necessary documentation to the Distributor or the Trust's
transfer agent and may charge you for its services. Redemption proceeds will be
forwarded to your financial service firm as promptly as possible and in any
event within seven days after the redemption request is received by the
Distributor in good order.
Redemptions of Fund shares may be suspended when trading on the Exchange is
restricted or during an emergency which makes it impracticable for the Funds to
dispose of their securities or to determine fairly the value of their net
33
<PAGE>
assets, or during any other period as permitted by the Securities and Exchange
Commission for the protection of investors. Under these and other unusual
circumstances, the Trust may suspend redemptions or postpone payment for more
than seven days, as permitted by law.
Redemptions In Kind
The Trust had agreed to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the Fund's net assets during any 90-day period for
any one shareholder. In consideration of the best interests of the remaining
shareholders, the Trust may pay any redemption proceeds exceeding this amount in
whole or in part by a distribution in kind of securities held by a Fund in lieu
of cash. It is highly unlikely that your shares would ever be redeemed in kind.
If your shares are redeemed in kind, you should expect to incur transaction
costs upon the disposition of the securities received in the distribution.
Fund Distributions
Each Fund distributes substantially all of its net investment income to
shareholders in the form of dividends. You begin earning dividends on Fund
shares the day after the Trust receives your purchase payment. Dividends paid by
each Fund with respect to its Class D shares are calculated in the same manner
and at the same time. The following shows when each Fund intends to declare and
distribute income dividends to shareholders of record.
<TABLE>
<CAPTION>
Fund At Least Annually Quarterly
<S> <C> <C>
Healthcare Innovation, Internet Innovation, Small-Cap Technology, *
Telecom Innovation and Electronics Innovation Funds
New Asia, Europe Growth, Select World and Emerging Markets Funds *
</TABLE>
In addition, each Fund distributes any net capital gains it earns from the sale
of portfolio securities to shareholders no less frequently than annually. Net
short-term capital gains may be paid more frequently.
You can choose from the following distribution options:
. Reinvest all distributions in additional Class D shares of your Fund at
NAV. This will be done unless you elect another option.
. Invest all distributions in Class D shares of any other Fund or another
series of the Trust or PIMCO Funds: Pacific Investment Management Series which
offers Class D shares at NAV. You must have an account existing in the Fund or
series selected for investment with the identical registered name. This option
must be elected when your account is set up.
. Receive all distributions in cash (either paid directly to you or credited
to your account with your financial service firm). This option must be elected
when your account is set up.
Your financial service firm may offer additional distribution reinvestment
programs or options. Please contact your firm for details.
You do not pay any sales charges on shares you receive through the reinvestment
of Fund distributions. If you elect to receive Fund distributions in cash and
the postal or other delivery service is unable to deliver checks to your address
of record, the Trust's Transfer Agent will hold the returned checks for your
benefit in a non-interest bearing account.
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<PAGE>
For further information on distribution options, please contact your financial
service firm or call the Distributor at 1-888-87-PIMCO.
Tax Consequences
Taxes on Fund distributions. If you are subject to U.S. federal income tax, you
will be subject to tax on Fund distributions whether you received them in cash
or reinvested them in additional shares of the Funds. For federal income tax
purposes, Fund distributions will be taxable to you as either ordinary income or
capital gains.
Fund dividends (i.e., distributions of investment income) are taxable to you as
ordinary income. Federal taxes on Fund distributions of gains are determined by
how long the Fund owned the investments that generated the gains, rather than
how long you have owned your shares. Distributions of gains from investments
that a Fund owned for more than 12 months will generally be taxable to you as
capital gains. Distributions of gains from investments that the Fund owned for
12 months or less will generally be taxable to you as ordinary income.
Fund distributions are taxable to you even if they are paid from income or gains
earned by a Fund prior to your investment and thus were included in the price
you paid for your shares. For example, if you purchase shares on or just before
the record date of a Fund distribution, you will pay full price for the shares
and may receive a portion of your investment back as a taxable distribution.
Taxes when you sell (redeem) or exchange your shares. Any gain resulting from
the sale of Fund shares will generally be subject to federal income tax. When
you exchange shares of a Fund for shares of another series, the transaction will
generally be treated as a sale of the Fund shares for these purposes, and any
gain on those shares will generally be subject to federal income tax.
A Note on Foreign Investments. A Fund's investment in foreign securities may be
subject to foreign withholding taxes. In that case, the Fund's yield on those
securities would be decreased. In addition, a Fund's investments in foreign
securities or foreign currencies may increase or accelerate the Fund's
recognition of ordinary income and may affect the timing or amount of the Fund's
distributions.
This section relates only to federal income tax consequences of investing in the
Funds; the consequences under other tax laws may differ. You should consult your
tax advisor as to the possible application of foreign, state and local income
tax laws to Fund dividends and capital distributions. Please see the Statement
of Additional Information for additional information regarding the tax aspects
of investing in the Funds.
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<PAGE>
Characteristics and Risks of Securities
and Investment Techniques
This section provides additional information about some of the principal
investments and related risks of the Funds identified under "Summary
Information" above. It also describes characteristics and risks of additional
securities and investment techniques that are not necessarily principal
investments or strategies but may be used by the Funds from time to time. Most
of these securities and investment techniques are discretionary, which means
that the portfolio managers can decide whether to use them or not. This
Prospectus does not attempt to disclose all of the various types of securities
and investment techniques that may be used by the Funds. As with any mutual
fund, investors in the Funds must rely on the professional investment judgment
and skill of PIMCO Advisors, the Sub-Advisers and the individual portfolio
managers. Please see "Investment Objectives and Policies" in the Statement of
Additional Information for more detailed information about the securities and
investment techniques described in this section and about other strategies and
techniques that may be used by the Funds.
Fixed Income Securities and Defensive Strategies
Fixed income securities are obligations of the issuer to make payments of
principal and/or interest on future dates, and include corporate and government
bonds, notes, certificates of deposit, commercial paper, convertible securities
and mortgage-backed and other asset-backed securities.
The Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
Innovation, Electronics Innovation, New Asia, Europe Growth, Select World and
Emerging Markets Funds will each invest primarily in common stocks, and may also
invest in other kinds of equity securities, including preferred stocks and
securities (including fixed income securities and warrants) convertible into or
exercisable for common stocks. Each of these Funds may invest a portion of their
assets in fixed income securities. The Funds may temporarily hold up to 100% of
their assets in short-term U.S. Government securities and other money market
instruments for defensive purposes in response to unfavorable market and other
conditions. The New Asia, Europe Growth, Select World and Emerging Markets Funds
may also hold up to 100% of their assets in other domestic fixed income, foreign
fixed income and equity securities principally traded in the U.S., including
obligations issued or guaranteed by a foreign government or its agencies,
authorities or instrumentalities, corporate bonds and American Depository
Receipts, for temporary defensive purposes.
The temporary defensive strategies described in this section would be
inconsistent with the investment objective and principal investment strategies
of each of the noted Funds and may adversely affect the Fund's ability to
achieve its investment objective.
Companies With Smaller Market Capitalizations
Each of the Funds may invest in securities of companies with market
capitalizations that are small compared to other publicly traded companies. The
Small-Cap Technology Fund invests primarily in smaller companies and is
especially sensitive to the risks described below. In addition, the Healthcare
Innovation, Internet Innovation, Telecom Innovation, Electronics Innovation, New
Asia, Europe Growth, Select World and Emerging Markets Funds generally have
significant exposure to these risks.
Companies which are smaller and less well-known or seasoned than larger, more
widely held companies may offer greater opportunities for capital appreciation,
but may also involve risks different from, or greater than, risks normally
associated with larger companies. Larger companies generally have greater
financial resources, more extensive research and development, manufacturing,
marketing and service capabilities, and more stability and greater depth of
management and technical personnel than smaller companies. Smaller companies may
have limited product lines, markets or financial resources or may depend on a
small, inexperienced management group. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held securities and their
values may fluctuate more abruptly or erratically than securities of larger
companies. They may also trade in the over-the-counter market or on a regional
exchange, or may otherwise have limited liquidity. These securities
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may therefore be more vulnerable to adverse market developments than securities
of larger companies. Also, there may be less publicly available information
about smaller companies or less market interest in their securities as compared
to larger companies, and it may take longer for the prices of the securities to
reflect the full value of a company's earnings potential or assets.
Because securities of smaller companies may have limited liquidity, a Fund may
have difficulty establishing or closing out its positions in smaller companies
at prevailing market prices. As a result of owning large positions in this type
of security, a Fund is subject to the additional risk of possibly having to sell
portfolio securities at disadvantageous times and prices if redemptions require
the Fund to liquidate its securities positions. For these reasons, it may be
prudent for a Fund with a relatively large asset size to limit the number of
relatively small positions it holds in securities having limited liquidity in
order to minimize its exposure to such risks, to minimize transaction costs, and
to maximize the benefits of research. As a consequence, as a Fund's asset size
increases, the Fund may reduce its exposure to illiquid smaller capitalization
securities, which could adversely affect performance.
The Funds may purchase securities in initial public offerings (IPOs). These
securities are subject to many of the same risks of investing in companies with
smaller market capitalizations. Securities issued in IPOs have no trading
history, and information about the companies may be available for very limited
periods. In addition, the prices of securities sold in IPOs may be highly
volatile. A Fund may not be able to invest in securities issued in IPOs to the
extent desired because, for example, only a small portion of the securities
being offered in an IPO may be made available to the Fund or because under
certain market conditions few companies may issue securities in IPOs.
Foreign Securities
The New Asia, Europe Growth, Select World and Emerging Markets Funds normally
invest principally in securities of foreign issuers, securities traded
principally in securities markets outside the United States and/or securities
denominated in foreign currencies (together, "foreign securities"). The
Healthcare Innovation, Internet Innovation, Small-Cap Technology, Telecom
Innovation and Electronics Innovation Funds may invest up to 15% of their
respective assets in foreign securities.
All of the Funds may invest in American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs"). ADRs are
dollar-denominated receipts issued generally by domestic banks and representing
the deposit with the bank of a security of a foreign issuer, and are publicly
traded on exchanges or over-the-counter in the United States. EDRs are receipts
similar to ADRs and are issued and traded in Europe. GDRs may be offered
privately in the United States and also traded in public or private markets in
other countries.
Investing in foreign securities involves special risks and considerations not
typically associated with investing in U.S. securities and shareholders should
consider carefully the substantial risks involved for Funds that invest in these
securities. These risks include: differences in accounting, auditing and
financial reporting standards; generally higher commission rates on foreign
portfolio transactions; the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or exchange control
regulations; and political instability. Individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position. The securities markets,
values of securities, yields and risks associated with foreign securities
markets may change independently of each other. Also, foreign securities and
dividends and interest payable on those securities may be subject to foreign
taxes, including taxes withheld from payments on those securities. Foreign
securities often trade with less frequency and volume than domestic securities
and therefore may exhibit greater price volatility. Investments in foreign
securities may also involve higher custodial costs than domestic investments and
additional transaction costs with respect to foreign currency conversions.
Changes in foreign exchange rates also will affect the value of securities
denominated or quoted in foreign currencies.
Emerging Market Securities
The Funds may invest in securities of issuers based in or that trade principally
in countries with developing (or "emerging market") economies. The Emerging
Markets Fund is particularly susceptible to these risks because it invests
principally in companies located in emerging markets countries. The New Asia
and Select World Funds also
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have substantial exposure to these risks because these Funds may invest
significant portions of their assets in emerging market securities. Investing in
emerging market securities imposes risks different from, or greater than, risks
of investing in domestic securities or in foreign, developed countries. These
risks include: smaller market capitalization of securities markets, which may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; and possible repatriation of investment
income and capital. In addition, foreign investors may be required to register
the proceeds of sales, and future economic or political crises could lead to
price controls, forced mergers, expropriation or confiscatory taxation, seizure,
nationalization or the creation of government monopolies. The currencies of
emerging market countries may experience significant declines against the U.S.
dollar, and devaluation may occur subsequent to investments in these currencies
by a Fund. Inflation and rapid fluctuations in inflation rates have had, and may
continue to have, negative effects on the economies and securities markets of
certain emerging market countries.
Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise make
it difficult to engage in such transactions. Settlement problems may cause a
Fund to miss attractive investment opportunities, hold a portion of its assets
in cash pending investment, or be delayed in disposing of a portfolio security.
Such a delay could result in possible liability to a purchaser of the security.
Special Risks of Investing in Russian and Other Eastern European Securities.
The Select World and Emerging Markets Funds may invest a portion of their assets
in securities of issuers located in Russia and in other Eastern European
countries. While investments in securities of such issuers are subject generally
to the same risks associated with investments in other emerging market countries
described above, the political, legal and operational risks of investing in
Russian and other Eastern European issuers, and of having assets custodied
within these countries, may be particularly acute. A risk of particular note
with respect to direct investment in Russian securities is the way in which
ownership of shares of companies is normally recorded. When a Fund invests in a
Russian issuer, it will normally receive a "share extract," but that extract
is not legally determinative of ownership. The official record of ownership of a
company's share is maintained by the company's share registrar. Such share
registrars are completely under the control of the issuer, and investors are
provided with few legal rights against such registrars.
Foreign Currencies
A Fund that invests directly in foreign currencies or in securities that trade
in, and receive revenues in, foreign currencies will be subject to currency
risk. The New Asia, Europe Growth, Select World and Emerging Markets Funds are
particularly sensitive to this risk.
Foreign currency exchange rates may fluctuate significantly over short periods
of time. They generally are determined by supply and demand and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors. Currency exchange rates also can be
affected unpredictably by intervention (or the failure to intervene) by U.S. or
foreign governments or central banks, or by currency controls or political
developments. For example, significant uncertainty surrounds the recent
introduction of the euro (a common currency unit for the European Union) in
January 1999 and the effect it may have on the value of securities denominated
in local European currencies. The Europe Growth Fund is especially susceptible
to risks associated with the introduction of the euro because it invests
principally in European companies, many of which are located in European
Monetary Union countries. The euro and other currencies in which the Funds'
assets are denominated may be devalued against the U.S. dollar, resulting in a
loss to the Funds.
Foreign Currency Transactions. The Funds may enter into forward foreign
currency exchange contracts to reduce the risks of adverse changes in foreign
exchange rates. In addition, the Funds may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency futures. A
forward foreign currency exchange contract, which involves an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract, reduces a Fund's exposure to changes in the value of the
currency it will deliver and
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increases its exposure to changes in the value of the currency it will receive
for the duration of the contract. The effect on the value of a Fund is similar
to selling securities denominated in one currency and purchasing securities
denominated in another currency. Contracts to sell foreign currency would limit
any potential gain which might be realized by a Fund if the value of the hedged
currency increases. A Fund may enter into these contracts to hedge against
foreign exchange risk arising from the Fund's investment or anticipated
investment in securities denominated in foreign currencies. Suitable hedging
transactions may not be available in all circumstances and there can be no
assurance that a Fund will engage in such transactions at any given time or from
time to time. Also, such transactions may not be successful and may eliminate
any chance for a Fund to benefit from favorable fluctuations in relevant foreign
currencies.
The New Asia, Europe Growth, Select World and Emerging Markets Funds may also
enter into these contracts for purposes of increasing exposure to a foreign
currency or to shift exposure to foreign currency fluctuations from one currency
to another. To the extent that it does so, a Fund will be subject to the
additional risk that the relative value of currencies will be different than
anticipated by the Fund's portfolio manager. The Funds may use one currency (or
a basket of currencies) to hedge against adverse changes in the value of another
currency (or a basket of currencies) when exchange rates between the two
currencies are positively correlated. Each Fund will segregate assets determined
to be liquid by PIMCO Advisors or a Sub-Adviser in accordance with procedures
established by the Board of Trustees to cover its obligations under forward
foreign currency exchange contracts entered into for non-hedging purposes.
Corporate Debt Securities
Corporate debt securities are subject to the risk of the issuer's inability to
meet principal and interest payments on the obligation and may also be subject
to price volatility due to such factors as interest rate sensitivity, market
perception of the creditworthiness of the issuer and general market liquidity.
When interest rates rise, the value of corporate debt securities can be expected
to decline. Debt securities with longer durations tend to be more sensitive to
interest rate movements than those with shorter durations.
Convertible Securities
Each Fund may invest in convertible securities. Convertible securities are
generally preferred stocks and other securities, including fixed income
securities and warrants, that are convertible into or exercisable for common
stock at either a stated price or a stated rate. The price of a convertible
security will normally vary in some proportion to changes in the price of the
underlying common stock because of this conversion or exercise feature. However,
the value of a convertible security may not increase or decrease as rapidly as
the underlying common stock. A convertible security will normally also provide
income and is subject to interest rate risk. While convertible securities
generally offer lower interest or dividend yields than non-convertible fixed
income securities of similar quality, their value tends to increase as the
market value of the underlying stock increases and to decrease when the value of
the underlying stock decreases. Also, a Fund may be forced to convert a security
before it would otherwise choose, which may have an adverse effect on the Fund's
ability to achieve its investment objective.
Derivatives
Each Fund may, but is not required to, use a number of derivative instruments
for risk management purposes or as part of its investment strategies. Generally,
derivatives are financial contracts whose value depends upon, or is derived
from, the value of an underlying asset, reference rate or index, and may relate
to stocks, bonds, interest rates, currencies or currency exchange rates,
commodities, and related indexes. A portfolio manager may decide not to employ
any of these strategies and there is no assurance that any derivatives strategy
used by a Fund will succeed.
Examples of derivative instruments include options contracts, futures contracts,
options on futures contracts and swap agreements. The Funds may purchase and
sell (write) call and put options on securities, securities indexes and foreign
currencies. Each Fund may purchase and sell futures contracts and options
thereon with respect to securities, securities indexes and foreign currencies.
A description of these and other derivative instruments that the Funds may use
are described under "Investment Objectives and Policies" in the Statement of
Additional Information.
A Fund's use of derivative instruments involves risks different from, or greater
than, the risks associated with investing directly in securities and other more
traditional investments. A description of various risks associated with
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particular derivative instruments is included in "Investment Objectives and
Policies" in the Statement of Additional Information. The following provides a
more general discussion of important risk factors relating to all derivative
instruments that may be used by the Funds.
Management Risk Derivative products are highly specialized instruments that
require investment techniques and risk analyses different from those associated
with stocks and bonds. The use of a derivative requires an understanding not
only of the underlying instrument but also of the derivative itself, without the
benefit of observing the performance of the derivative under all possible market
conditions.
Credit Risk The use of a derivative instrument involves the risk that a loss
may be sustained as a result of the failure of another party to the contract
(usually referred to as a "counterparty") to make required payments or
otherwise comply with the contract's terms.
Liquidity Risk Liquidity risk exists when a particular derivative instrument is
difficult to purchase or sell. If a derivative transaction is particularly large
or if the relevant market is illiquid (as is the case with many privately
negotiated derivatives), it may not be possible to initiate a transaction or
liquidate a position at an advantageous time or price.
Leveraging Risk Because many derivatives have a leverage component, adverse
changes in the value or level of the underlying asset, reference rate or index
can result in a loss substantially greater than the amount invested in the
derivative itself. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment. When a Fund uses derivatives
for leverage, investments in that Fund will tend to be more volatile, resulting
in larger gains or losses in response to market changes. To limit leverage risk,
each Fund will segregate assets determined to be liquid by PIMCO Advisors or a
Sub-Adviser in accordance with procedures established by the Board of Trustees
(or, as permitted by applicable regulation, enter into certain offsetting
positions) to cover its obligations under derivative instruments.
Lack of Availability Because the markets for certain derivative instruments
(including markets located in foreign countries) are relatively new and still
developing, suitable derivatives transactions may not be available in all
circumstances for risk management or other purposes. There is no assurance that
a Fund will engage in derivatives transactions at any time or from time to time.
A Fund's ability to use derivatives may also be limited by certain regulatory
and tax considerations.
Market and Other Risks Like most other investments, derivative instruments are
subject to the risk that the market value of the instrument will change in a way
detrimental to a Fund's interest. If a portfolio manager incorrectly forecasts
the values of securities, currencies or interest rates or other economic factors
in using derivatives for a Fund, the Fund might have been in a better position
if it had not entered into the transaction at all. While some strategies
involving derivative instruments can reduce the risk of loss, they can also
reduce the opportunity for gain or even result in losses by offsetting favorable
price movements in other Fund investments. A Fund may also have to buy or sell a
security at a disadvantageous time or price because the Fund is legally required
to maintain offsetting positions or asset coverage in connection with certain
derivatives transactions.
Other risks in using derivatives include the risk of mispricing or improper
valuation of derivatives and the inability of derivatives to correlate perfectly
with underlying assets, rates and indexes. Many derivatives, in particular
privately negotiated derivatives, are complex and often valued subjectively.
Improper valuations can result in increased cash payment requirements to
counterparties or a loss of value to a Fund. Also, the value of derivatives may
not correlate perfectly, or at all, with the value of the assets, reference
rates or indexes they are designed to closely track. In addition, a Fund's use
of derivatives may cause the Fund to realize higher amounts of short-term
capital gains (taxed at ordinary income tax rates when distributed to
shareholders who are individuals) than if the Fund had not used such
instruments.
Equity-Linked Securities
The Funds may invest in equity-linked securities. Equity-linked securities are
privately issued securities whose investment results are designed to correspond
generally to the performance of a specified stock index or "basket" of
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stocks, or sometimes a single stock. To the extent that a Fund invests in
equity-linked securities whose return corresponds to the performance of a
foreign securities index or one or more of foreign stocks, investing in
equity-linked securities will involve risks similar to the risks of investing in
foreign equity securities. See "Foreign Securities" above. In addition, an
investing Fund bears the risk that the issuer of an equity-linked security may
default on its obligations under the security. Equity-linked securities may be
considered illiquid and thus subject to the Funds' restrictions on investments
in illiquid securities.
Credit Ratings and Unrated Securities
The Funds may invest in securities based on their credit ratings assigned by
rating agencies such as Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Services ("S&P"). Moody's, S&P and other rating
agencies are private services that provide ratings of the credit quality of
fixed income securities, including convertible securities. The Appendix to the
Statement of Additional Information describes the various ratings assigned to
fixed income securities by Moody's and S&P. Ratings assigned by a rating agency
are not absolute standards of credit quality and do not evaluate market risk.
Rating agencies may fail to make timely changes in credit ratings and an
issuer's current financial condition may be better or worse than a rating
indicates. A Fund will not necessarily sell a security when its rating is
reduced below its rating at the time of purchase. PIMCO Advisors and the Sub-
Advisers do not rely solely on credit ratings, and develop their own analysis of
issuer credit quality.
A Fund may purchase unrated securities (which are not rated by a rating agency)
if its portfolio manager determines that the security is of comparable quality
to a rated security that the Fund may purchase. Unrated securities may be less
liquid than comparable rated securities and involve the risk that the portfolio
manager may not accurately evaluate the security's comparative credit rating.
High Yield Securities
Securities rated lower than Baa by Moody's or lower than BBB by S&P are
sometimes referred to as "high yield" or "junk" bonds. The Funds may invest in
these securities. Investing in high yield securities involves special risks in
addition to the risks associated with investments in higher-rated fixed income
securities. While offering a greater potential opportunity for capital
appreciation and higher yields, high yield securities typically entail greater
potential price volatility and may be less liquid than higher-rated securities.
High yield securities may be regarded as predominately speculative with respect
to the issuer's continuing ability to meet principal and interest payments. They
may also be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher-rated securities.
Loans of Portfolio Securities
For the purpose of achieving income, each Fund may lend its portfolio securities
to brokers, dealers, and other financial institutions provided a number of
conditions are satisfied, including that the loan is fully collateralized.
Please see "Investment Objectives and Policies" in the Statement of Additional
Information for details. When a Fund lends portfolio securities, its investment
performance will continue to reflect changes in the value of the securities
loaned, and the Fund will also receive a fee or interest on the collateral.
Securities lending involves the risk of loss of rights in the collateral or
delay in recovery of the collateral if the borrower fails to return the security
loaned or becomes insolvent. A Fund may pay lending fees to the party arranging
the loan.
Short Sales
Each Fund may make short sales as part of its overall portfolio management
strategies or to offset a potential decline in the value of a security. A short
sale involves the sale of a security that is borrowed from a broker or other
institution to complete the sale. A Fund may only enter into short selling
transactions if the security sold short is held in the Fund's portfolio or if
the Fund has the right to acquire the security without the payment of further
consideration. For these purposes, a Fund may also hold or have the right to
acquire securities which, without the payment of any further consideration, are
convertible into or exchangeable for the securities sold short. Short sales
expose a Fund to the risk that it will be required to acquire, convert or
exchange securities to replace the borrowed securities (also known as
"covering" the short position) at a time when the securities sold short have
appreciated in value, thus resulting in a loss to the Fund.
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When-Issued, Delayed Delivery and Forward Commitment Transactions
Each Fund may purchase securities which it is eligible to purchase on a
when-issued basis, may purchase and sell such securities for delayed delivery
and may make contracts to purchase such securities for a fixed price at a future
date beyond normal settlement time (forward commitments). When-issued
transactions, delayed delivery purchases and forward commitments involve a risk
of loss if the value of the securities declines prior to the settlement date.
This risk is in addition to the risk that the Fund's other assets will decline
in value. Therefore, these transactions may result in a form of leverage and
increase a Fund's overall investment exposure. Typically, no income accrues on
securities a Fund has committed to purchase prior to the time delivery of the
securities is made, although a Fund may earn income on securities it has
segregated to cover these positions.
Repurchase Agreements
Each Fund may enter into repurchase agreements, in which the Fund purchases a
security from a bank or broker-dealer that agrees to repurchase the security at
the Fund's cost plus interest within a specified time. If the party agreeing to
repurchase should default, the Fund will seek to sell the securities which it
holds. This could involve procedural costs or delays in addition to a loss on
the securities if their value should fall below their repurchase price. Those
Funds whose investment objectives do not include the earning of income will
invest in repurchase agreements only as a cash management technique with respect
to that portion of its portfolio maintained in cash. Repurchase agreements
maturing in more than seven days are considered illiquid securities.
Reverse Repurchase Agreements and Other Borrowings
Each Fund may enter into reverse repurchase agreements, subject to the Fund's
limitations on borrowings. A reverse repurchase agreement involves the sale of a
security by a Fund and its agreement to repurchase the instrument at a specified
time and price, and may be considered a form of borrowing for some purposes. A
Fund will segregate assets determined to be liquid by PIMCO Advisors or a
Sub-Adviser in accordance with procedures established by the Board of Trustees
to cover its obligations under reverse repurchase agreements. A Fund also may
borrow money for investment purposes subject to any policies of the Fund
currently described in this Prospectus or in the Statement of Additional
Information. Reverse repurchase agreements and other forms of borrowings may
create leveraging risk for a Fund.
Illiquid Securities
Each Fund may invest in securities that are illiquid so long as not more than
15% of the value of the Fund's net assets (taken at market value at the time of
investment) would be invested in such securities. Certain illiquid securities
may require pricing at fair value as determined in good faith under the
supervision of the Board of Trustees. A portfolio manager may be subject to
significant delays in disposing of illiquid securities held by the Fund, and
transactions in illiquid securities may entail registration expenses and other
transaction costs that are higher than those for transactions in liquid
securities. The term "illiquid securities" for this purpose means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which a Fund has valued the securities. Please
see "Investment Objectives and Policies" in the Statement of Additional
Information for a listing of various securities that are generally considered to
be illiquid for these purposes. Restricted securities, i.e., securities subject
to legal or contractual restrictions on resale, may be illiquid. However, some
restricted securities (such as securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper) may be treated as liquid,
although they may be less liquid than registered securities traded on
established secondary markets.
Investment in Other Investment Companies
The New Asia, Europe Growth, Select World and Emerging Markets Funds may invest
up to [10%] of their assets in securities of other investment companies, such as
closed-end management investment companies, or in pooled accounts or other
investment vehicles which invest in foreign markets. The Healthcare Innovation,
Internet Innovation, Small-Cap Technology, Telecom Innovation and Electronics
Innovation Funds may invest up to 5% of their assets in such securities. As a
shareholder of an investment company, a Fund may indirectly bear service and
other fees which are in addition to the fees the Fund pays its service
providers.
Portfolio Turnover
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. A change in the securities held by a Fund
is known as "portfolio turnover." Each Fund may engage in active and
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frequent trading of portfolio securities to achieve its investment objective and
principal investment strategies, particularly during periods of volatile market
movements. High portfolio turnover (e.g., over 100%) involves correspondingly
greater expenses to a Fund, including brokerage commissions or dealer mark-ups
and other transaction costs on the sale of securities and reinvestments in other
securities. Such sales may also result in realization of taxable capital gains,
including short-term capital gains (which are taxed at ordinary income tax rates
when distributed to shareholders who are individuals). The trading costs and tax
effects associated with portfolio turnover may adversely affect a Fund's
performance.
Changes in Investment Objectives and Policies
The investment objective of each Fund described in this Prospectus may be
changed by the Board of Trustees without shareholder approval. Unless otherwise
stated in the Statement of Additional Information, all investment policies of
the Funds may be changed by the Board of Trustees without shareholder approval.
If there is a change in a Fund's investment objective or policies, including a
change approved by shareholder vote, shareholders should consider whether the
Fund remains an appropriate investment in light of their then current financial
position and needs.
New Funds
In addition to the risks described under "Summary of Principal Risks" above
and in this section, the Funds are newly formed and therefore have no history
upon which investors can evaluate their likely performance. Accordingly, there
can be no assurance that the Funds will achieve their investment objective.
Also, it is possible that the Funds may invest in securities offered in initial
public offerings and other similar transactions which, because of each Fund's
size, may have a disproportionate impact on each Fund's performance results. The
Funds would not necessarily have achieved the same performance results if their
aggregate net assets had been greater.
Percentage Investment Limitations
Unless otherwise stated, all percentage limitations on Fund investments listed
in this Prospectus will apply at the time of investment. A Fund would not
violate these limitations unless an excess or deficiency occurs or exists
immediately after and as a result of an investment.
Other Investments and Techniques
The Funds may invest in other types of securities and use a variety of
investment techniques and strategies which are not described in this Prospectus.
These securities and techniques may subject the Funds to additional risks.
Please see the Statement of Additional Information for additional information
about the securities and investment techniques described in this Prospectus and
about additional securities and techniques that may be used by the Funds.
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PIMCO Funds:
Multi-Manager Series
INVESTMENT ADVISER AND ADMINISTRATOR
PIMCO Advisors L.P., 800 Newport Center Drive, Newport Beach, CA 92660
SUB-ADVISERS
Pimco Equity Advisors division of PIMCO Advisors L.P., PIMCO/Allianz
International Advisors LLC
DISTRIBUTOR
PIMCO Funds Distributors LLC, 2187 Atlantic Street, Stamford, CT 06902
CUSTODIAN
State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
SHAREHOLDER SERVICING AND TRANSFER AGENT
PFPC, Inc., Box 9688, Providence, RI 02940
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
LEGAL COUNSEL
Ropes & Gray, One International Place, Boston, MA 02110
For further information about the PIMCO Funds, call 1-800-426-0107 or visit our
Web site at www.pimcofunds.com.
Not part of the Prospectus
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The Trust's Statement of Additional Information ("SAI") and annual and semi-
annual reports to shareholders include additional information about the Funds.
The SAI and the financial statements included in the Funds' most recent annual
report to shareholders are incorporated by reference into this Prospectus, which
means they are part of this Prospectus for legal purposes. The Funds' annual
report discusses the market conditions and investment strategies that
significantly affected each Fund's performance during its last fiscal year.
You may get free copies of any of these materials, request other information
about a Fund, or make shareholder inquiries by calling the Trust at
1-800-927-4648 or PIMCO Infolink Audio Response Network at 1-800-987-4626, or by
writing to:
PIMCO Funds: Multi-Manager
Series 840 Newport Center Drive
Suite 300 Newport Beach, CA
92660
You may review and copy information about the Trust, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-202-942-8090 for information about the
operation of the public reference room. You may also access reports and other
information about the Trust on the EDGAR database on the Commission's Web site
at www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or by electronic request at the following e-mail
address: [email protected]. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-6161
File No. 811-6161
[LOGO OF PIMCO FUNDS]
PIMCO Funds
Multi-Manager Series
840 Newport Center Drive
Suite 300
Newport Beach, CA 92660
45
<PAGE>
PIMCO FUNDS: MULTI-MANAGER SERIES
Supplement Dated June [ ], 2000
to the
Statement of Additional Information Dated April 3, 2000
Disclosure relating to:
Nine new series of the Trust:
Healthcare Innovation Fund
Internet Innovation Fund
Small-Cap Technology Fund
Telecom Innovation Fund
Electronics Innovation Fund
PIMCO/Allianz New Asia Fund
PIMCO/Allianz Europe Growth Fund
PIMCO/Allianz Select World Fund
PIMCO/Allianz Emerging Markets Fund
--------------------------------------------------------------------------------
Note: This document supplements the PIMCO Funds: Multi-Manager Series (the
"Trust") Statement of Additional Information dated April 3, 2000 (the "Statement
of Additional Information").
--------------------------------------------------------------------------------
1. Date of the Statement of Additional Information.
The date of the Statement of Additional Information is hereby amended to
June [ ], 2000.
2. Nine New Series of the Trust
The Trust intends to offer Class A, Class B, Class C, Class D,
Institutional Class and Administrative Class shares of nine new series:
Healthcare Innovation Fund, Internet Innovation Fund, Small-Cap Technology Fund,
Telecom Innovation Fund, Electronics Innovation Fund, PIMCO/Allianz New Asia
Fund, PIMCO/Allianz Europe Growth Fund, PIMCO/Allianz Select World Fund and
PIMCO/Allianz Emerging Markets Fund (each a "Fund", and collectively, the
"Funds").
<PAGE>
3. Investment Objectives and Policies.
In addition to the principal investment strategies and the principal risks
of the Funds described in the Prospectuses, each Fund may employ other
investment practices and may be subject to additional risks. The Healthcare
Innovation, Internet Innovation, Small-Cap Technology, Telecom Innovation and
Electronics Innovation Funds may invest in the same securities and other
instruments and use the same investment techniques as the Innovation Fund. Such
securities, instruments and investment techniques are described under
"Investment Objectives and Policies" in the Trust's Statement of Additional
Information.
The PIMCO/Allianz New Asia, PIMCO/Allianz Europe Growth, PIMCO/Allianz
Select World and PIMCO/Allianz Emerging Markets Funds may invest in the same
securities and other instruments and use the same investment techniques as the
International Growth Fund. Such securities, instruments and investment
techniques are described under "Investment Objectives and Policies" in the
Trust's Statement of Additional Information.
4. Investment Restrictions.
Fundamental Policies
--------------------
The investment restrictions set forth below are fundamental policies of
each Fund and may not be changed with respect to any such Fund without
shareholder approval by vote of a majority of the outstanding voting securities
of that Fund. Under these restrictions:
a. each Fund may borrow money to the maximum extent permitted by law,
----
including without limitation (i) borrowing from banks or entering into reverse
repurchase agreements, or employing similar investment techniques, and pledging
its assets in connection therewith, if immediately after each borrowing and
continuing thereafter, there is asset coverage of 300%, and (ii) entering into
reverse repurchase agreements and transactions in options, futures, options on
futures, and forward foreign currency contracts;
b. none of the Funds may pledge, hypothecate, mortgage or otherwise
----
encumber its assets in excess of 10% of such Fund's total assets (taken at cost)
and then only to secure borrowings permitted by Restriction (a) above. (The
deposit of securities or cash or cash equivalents in escrow in connection with
the writing of covered call or put options, respectively, is not deemed to be
pledges or other encumbrances.) (For the purpose of this restriction, collateral
arrangements with respect to the writing of options, futures contracts, options
on futures contracts, and collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge of assets and neither such
arrangements nor the purchase or sale of futures or related options are deemed
to be the issuance of a senior security.);
-2-
<PAGE>
c. none of the Funds may underwrite securities issued by other persons
----
except to the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal securities
laws;
d. none of the Funds may purchase or sell real estate, although it may
----
purchase securities of issuers which deal in real estate, including securities
of real estate investment trusts, and may purchase securities which are secured
by interests in real estate;
e. none of the Funds may acquire more than 10% of the voting securities
----
of any issuer, both with respect to any such Fund and to the Funds to which this
policy relates, in the aggregate;
f. none of the Funds may concentrate more than 25% of the value of its
----
total assets in any one industry, except that the Healthcare Innovation,
Internet Innovation, Small-Cap Technology, Telecom Innovation and Electronics
Innovation Funds will each concentrate more than 25% of its assets in companies
in the health care, internet, technology, telecommunications and electronics
industries, respectively;
g. none of the Funds may purchase or sell commodities or commodity
----
contracts except that the Funds may purchase and sell financial futures
contracts and related options;
h. none of the Funds may make loans, except by purchase of debt
----
obligations or by entering into repurchase agreements or through the lending of
the Fund's portfolio securities with respect to not more than 25% of its total
assets; and
i. none of the Funds may issue senior securities, except insofar as such
----
Fund may be deemed to have issued a senior security by reason of borrowing money
in accordance with the Fund's borrowing policies, and except that for purposes
of this investment restriction, collateral, escrow, or margin or other deposits
with respect to the making of short sales, the purchase or sale of futures
contracts or related options, purchase or sale of forward foreign currency
contracts, and the writing of options on securities are not deemed to be an
issuance of a senior security.
Notwithstanding the provisions of fundamental investment restrictions (a)
and (i) above, each of the Funds may borrow money for temporary administrative
purposes. To the extent that borrowings for temporary administrative purposes
exceed 5% of the total assets of a Fund, such excess shall be subject to the
300% asset coverage requirements set forth above.
Non-Fundamental Policies
------------------------
The non-fundamental investment restrictions of the Funds are set out in the
Trust's Statement of Additional Information under "Non-Fundamental Investment
Restrictions".
-3-
<PAGE>
5. Management of the Trust.
The disclosure under the subheadings "Trustee", "Officers", "Trustees'
Compensation", "Investment Adviser", and "Fund Administrator" under "Management
of the Trust" in the Statement of Additional Information applies to the Funds.
The disclosure under the subheading "Portfolio Management Agreements" is
amended to add the following:
PIMCO/Allianz International Advisors LLC, a wholly-owned subsidiary of
PIMCO Advisors, acts as the Sub-Adviser and provides investment advisory
services to the PIMCO/Allianz New Asia, PIMCO/Allianz Europe Growth,
PIMCO/Allianz Select World and PIMCO/Allianz Emerging Markets Funds.
PIMCO/Allianz International Advisors LLC's address is 1345 Avenue of the
Americas, 50/th/ Floor, New York, New York 10105. PIMCO/Allianz
International Advisors LLC is organized as a limited liability company with
PIMCO Advisors as its only member.
The Advisory Fees and Administrative Fees payable by the Funds are set
forth in each Fund's Prospectus.
6. Distribution of Trust Shares, Portfolio Transactions and Brokerage, Net
Asset Value, Taxation and Other Information.
The Sections "Distribution of Trust Shares," "Portfolio Transactions and
Brokerage," "Net Asset Value," "Taxation" and "Other Information" in the
Statement of Additional Information apply to the Funds.
-4-
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
The letter of each exhibit relates to the exhibit
designation in Form N-1A:
(a) Form of Second Amendment and Restated Agreement and
Declaration of Trust (2)
(b) (1) Form of First Amended and Restated Bylaws (4)
(2) Amendment to First Amended and Restated Bylaws (15)
(c) (1) Article III (Shares) and Article V (Shareholders' Voting
Powers and Meetings) of the Second Amended and Restated
Agreement and Declaration of Trust (2)
(2) Article 9 (Issuance of Shares Certificates) and Article 11
(Shareholders' Voting Powers and Meetings) of the First
Amended and Restated Bylaws (4)
<PAGE>
(d) (1) (i) Form of Amended and Restated Investment Advisory
Agreement (4)
(ii) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add PIMCO International Growth
Fund and PIMCO Tax-Efficient Structured Emerging
Markets Fund (6)
(iii) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add PIMCO Value 25 Fund, PIMCO
Hard Assets Fund, and PIMCO Tax-Efficient Equity Fund
(10)
(iv) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add PIMCO Funds Asset Allocation
Series - 90/10 Portfolio, PIMCO Funds Asset Allocation
Series - 60/40 Portfolio, and PIMCO Funds Asset
Allocation Series -30/70 Portfolio (9)
(v) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add PIMCO Mega-Cap Fund (13)
(vi) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add the PIMCO Global Innovation,
NFJ Value, NFJ Equity Income, Cadence Capital
Appreciation and Cadence Mid-Cap Growth Funds, to be
filed by amendment.
(vii) Form of Addendum to Amended and Restated Investment
Advisory Agreement to add the PIMCO Healthcare
Innovation, PIMCO Internet Innovation, PIMCO Small-Cap
Technology, PIMCO Telecom Innovation, PIMCO
Electronics Innovation, PIMCO/Allianz New Asia,
PIMCO/Allianz Europe Growth, PIMCO/Allianz Select
World and PIMCO/Allianz Emerging Markets Funds, to be
filed by amendment.
(2) (i) Form of Portfolio Management Agreement, as amended,
with NFJ Investment Group dated May 5, 2000, to be
filed by amendment.
(ii) Form of Portfolio Management Agreement, as amended,
with Cadence Capital Management dated May 5, 2000, to
be filed by amendment.
(iii) Form of Portfolio Management Agreement with
Parametric Portfolio Associates dated May 5, 2000, to
be filed by amendment.
-2-
<PAGE>
(iv) Form of Portfolio Management Agreement with
Blairlogie Capital Management, dated May 5,
2000, to be filed by amendment.
(v) Form of Portfolio Management Agreement with the
Sub-Adviser to the PIMCO/Allianz New Asia,
PIMCO/Allianz Europe Growth, PIMCO/Allianz
Select World and PIMCO/Allianz Emerging Markets
Funds, to be filed by amendment.
(e) (1) Amended Distribution Contract (4)
(2) Form of Amended and Restated Distribution Contract (to
add Class D shares) (7)
(3) Form of Addendum to Distribution Contract to add
PIMCO International Growth Fund and PIMCO Tax-Efficient
Structured Emerging Markets Fund (6)
(4) Form of Addendum to Distribution Contract to add
PIMCO Value 25 Fund, PIMCO Hard Assets Fund, and PIMCO
Tax-Efficient Equity Fund (10)
(5) Form of Addendum to Distribution Contract to add
PIMCO Funds Asset Allocation Series - 90/10 Portfolio,
PIMCO Funds Asset Allocation Series - 60/40 Portfolio
and PIMCO Funds Asset Allocation Series - 30/70
Portfolio (9)
(6) Form of Supplement to Distribution Contract to add PIMCO
Mega-Cap Fund (13)
(7) Form of Supplement to Distribution Contract to add the
PIMCO Global Innovation, NFJ Equity Income, NFJ Value,
Cadence Capital Appreciation and Cadence Mid-Cap Growth
Funds, to be filed by amendment.
(8) Form of Supplement to Distribution Contract to add the
PIMCO Healthcare Innovation, PIMCO Internet Innovation,
PIMCO Small-Cap Technology, PIMCO Telecom Innovation,
PIMCO Electronics Innovation, PIMCO/Allianz New Asia,
PIMCO/Allianz Europe Growth, PIMCO/Allianz Select World
and PIMCO/Allianz Emerging Markets Funds, to be filed by
amendment.
(f) Not Applicable
(g) (1) Form of Custody and Investment Accounting Agreement with
Investors Fiduciary Trust Company (13)
(h) (1) Form of Amended Administration Agreement between the
Trust and PIMCO Advisors L.P. (4)
-3-
<PAGE>
(2) Form of Amended and Restated Administration Agreement
(to include Class D shares ) between the Trust and PIMCO
Advisors L.P. (7)
(3) Form of Amendment No. 1 to Amended and Restated
Administration Agreement between the Trust and PIMCO
Advisors L.P. (14)
(4) Form of Administration Agreement between PIMCO Advisors
L.P. and Pacific Investment Management Company (4)
(5) Form of Amendment to Administration Agreement (to
include Class D shares) between PIMCO Advisors L.P. and
Pacific Investment Management Company (11)
(6) Form of Agency Agreement and Addenda (1)
(7) Form of Addendum to Agency Agreement (4)
(8) Form of Assignment of Agency Agreement (4)
(9) Form of Addendum to Agency Agreement (6)
(10) (i) Form of Transfer Agency and Services Agreement with
National Financial Data Services, to be filed by
amendment.
(i) Form of Transfer Agency and Services Agreement with
First Data Investor Services Group, Inc., filed
herewith.
(11) Form of Service Plan for Institutional Services Shares
(6)
(12) Form of Administrative Services Plan for Administrative
Class Shares (4)
(i) Opinion and Consent of Counsel (6)
(j) (1) Consents of PricewaterhouseCoopers LLP. (16) and
(17)
(i) Letter dated October 26, 1999 from
PricewaterhouseCooopers LLP to the Securities and
Exchange Commission. (14)
(2) Consent and Opinion of Coopers & Lybrand LLP (6)
(k) Not Applicable
(l) Initial Capital Agreement (6)
(m) (1) Form of Distribution and Servicing Plan (Class A) (4)
(2) Form of Distribution and Servicing Plan (Class B) (4)
(3) Form of Distribution and Servicing Plan (Class C) (4)
(4) Form of Distribution Plan for Administrative Class
Shares (4)
-4-
<PAGE>
(5) Form of Distribution Plan for Class D Shares included as
part of the Form of Amended and Restated Administration
Agreement included in Exhibit 9(b)
(n) (a) Financial Data Schedules for the period ended
6/30/98 (11)
(b) Financial Data Schedules for the period ended
12/31/98 (12)
(o) Form of Amended and Restated Multi-Class Plan (7)
(p) (1) Powers of Attorney and Certificate of Secretary (1)
(2) Power of Attorney for E. Philip Cannon, Donald P.
Carter, Gary A. Childress, William D. Cvengros, John P.
Hardaway, Joel Segall, W. Bryant Stooks, Gerald M.
Thorne, Richard L. Nelson, Lyman W. Porter and Alan
Richards (5)
(3) Power of Attorney for Kenneth M. Poovey (16)
--------------------
1 Included in Post-Effective Amendment No. 22 to the Trust's Registration
Statement on Form N-1A (File No. 33-36528), as filed on July 1, 1996.
2 Included in Definitive Proxy Statement of the Trust (File No. 811-06161),
as filed on November 7, 1996.
3 Included in Post-Effective Amendment No. 33 to the Trust's Registration
Statement on Form N-1A of PIMCO Advisors Funds (File No. 2-87203), as filed
on November 30, 1995.
4 Included in Post-Effective Amendment No. 25 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on January 13, 1997.
5 Included in Post-Effective Amendment No. 27 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 10, 1997.
6 Included in Post-Effective Amendment No.28 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 31, 1997.
7 Included in Post-Effective Amendment No. 30 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 13, 1998.
8 Included in Post-Effective Amendment No. 32 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on April 21, 1998.
9 Included in Post-Effective Amendment No. 33 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on June 30, 1998.
10. Included in Post-Effective Amendment No. 34 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on July 2, 1998.
11. Included in Post-Effective Amendment No. 36 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 30, 1998.
12. Included in Post-Effective Amendment No. 38 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 31, 1999.
13. Included in Post-Effective Amendment No. 39 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on May 25, 1999.
14. Included in Post-Effective Amendment No. 43 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on October 29, 1999.
15. Included in Post-Effective Amendment No. 44 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on December 14, 1999.
16. Included in Post-Effective Amendment No. 46 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 27, 2000.
17. Included in Post-Effective Amendment No. 47 to the Trust's Registration
Statement on Form N-1A (File 33-36528), as filed on March 31, 2000.
-5-
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. Indemnification
Reference is made to Article VIII, Section 1, of the Registrant's Second
Amended and Restated Agreement and Declaration of Trust, which is incorporated
by reference herein.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the Trust's
Second Amended and Restated Agreement and Declaration of Trust, its By-Laws or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers or controlling
persons of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustees, officers or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 27. Business and Other Connections of Investment Advisor and Portfolio
Managers.
Unless otherwise stated, the principal business address of each
organization listed in 800 Newport Center Drive, Newport Beach, CA 92660.
PIMCO Advisors L.P.
Name Position with Advisor Other Affiliations
Walter E. Auch, Sr. Member of Management Board Management Consultant;
Director, Fort Dearborn Fund,
Shearson VIP Fund, Shearson
Advisors Fund, Shearson TRAK
Fund, Banyan Land Trust,
Banyan Land Fund II, Banyan
Mortgage Fund, Allied
Healthcare Products, Inc.,
First Western Inc., DHR Group
and Geotech Industries.
William R. Benz Member of Management Board See Pacific Investment
Management Company.
-6-
<PAGE>
David B. Breed Member of Management Board Director, Managing Director
and Chief Executive Officer,
Cadence Capital Management,
Inc.; Managing Director and
Chief Executive Officer,
Cadence Capital Management.
Kenneth W. Corba Member of Management Board. None.
Managing Director and Chief
Investment Officer of
PIMCO Equity Advisors.
Walter B. Gerken Chairman and Member of Director, Mullin Consulting
Management Board Inc Director, Executive
Services Corps. of Southern
California.
Colin Glinsman Member of Management Managing Director,
Board Oppenheimer Capital.
William H. Gross Operating Board Director and Managing
and Equity Board Director, PIMCO Management,
Inc.; Managing Director,
Pacific Investment Management
Company; Senior Vice
President, PIMCO Funds:
Pacific Investment Management
Series, PIMCO Variable
Insurance Trust; Director and
Vice President, StocksPLUS
Management, Inc.; Member of
PIMCO Partners LLC.
Brent R. Harris Member of Management Board Director and Managing
Director, PIMCO Management,
Inc.; Managing Director,
Pacific Investment Management
Company; Director and Vice
President,
-7-
<PAGE>
StocksPLUS Management,
Inc.; Chairman of the
Board and Trustee,
PIMCO Funds: Pacific
Investment Management
Series, PIMCO Variable
Insurance Trust and
PIMCO Commercial
Mortgage Securities
Trust, Inc.; Member of
PIMCO Partners LLC.
Donald R. Kurtz Member of Management Board Donald R. Kurtz Member
of Management Board
Formerly, Vice
President of Internal
Asset Management,
General Motors
Investment Management
Corp.; Director,
Thomson Advisory Group
L.P.
George A. Long Member of Management Board Chairman and Chief
Executive Officer of
Oppenheimer Capital.
James McCaughan Member of Management Board Chief Executive
Officer, Oppenheimer
Capital
James F. McIntosh Member of Management Board Executive Director,
Allen Matkins, Leck,
Gamble & Mallory LLP.
Formerly, Director,
Pacific Investment
Management Company.
Kenneth H. Mortenson Member of Management Board Managing Director of
Oppenheimer Capital.
William F. Podlich, III Member of Management Board Director and Managing
Director, PIMCO
Management, Inc.;
Managing Director,
Pacific Investment
Management Company;
Vice President, PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of PIMCO
Partners LLC.
William C. Powers Member of Management See Pacific Investment
Board Management Company.
Glenn S. Schafer Member of Management Board President and
Board Director, Pacific
Mutual Holding Company,
Pacific LifeCorp,
Pacific Life Insurance
Company, Pacific
Financial Asset
Management Corp.,
PMRealty Advisors,
Inc.; Director, Pacific
Mutual Distributors,
Inc., Mutual Service
Corporation,
UnitedPlanners' Group,
Inc., Thomson Advisory
Group.
-8-
<PAGE>
Thomas C. Sutton Member of Management Board Chairman, Chief Executive
Officer and Director, Pacific
William S. Thomson, Jr.
Mutual Holding Company,
Pacific LifeCorp, Pacific
Life Insurance Company,
Pacific Financial Asset
Management Corp.; Director,
Pacific Mutual Distributors,
Inc., Mutual Service
Corporation, United Planners'
Group, Inc., PMRealty
Advisors, Inc.
William S. Thompson, Member of Management Board; Director, Managing Director
Jr. Chairman, Executive and Chief Executive Committee
Committee Fitzgerald Officer, PIMCO
Management, Inc.; Chief
Executive Officer and
Managing Director, Pacific
Investment Management
Company; Member, President
and Chief Executive Officer,
PIMCO Partners LLC; Director
and President, StocksPLUS
Management, Inc.; Vice
President, PIMCO Variable
Insurance Trust, PIMCO Funds:
Pacific Investment Management
Series, and PIMCO Commercial
Mortgage Securities Trust,
Inc.; Director, Thomson
Advisory Group, Inc.
Robert M. Fitzgerald Senior Vice President Chief Financial Officer and
and Chief Treasurer, PIMCO Funds
Financial Officer Distributors, LLC, Cadence
Capital Management, Inc., NFJ
Investment Group, NFJ
Management, Inc., Parametric
Portfolio Associates,
Parametric Management, Inc.,
PIMCO Management, Inc.,
Pacific
-9-
<PAGE>
Investment Management
Company, and StocksPLUS
Management, Inc.; Chief
Financial Officer and
Assistant Treasurer, Cadence
Capital Management; Senior
Vice President and Chief
Financial Officer, Value
Advisors LLC; Chief
Financial Officer and
Treasurer, PIMCO Funds
Advertising Agency; Senior
Vice President, Chief
Financial Officer and
Treasurer, Thomson Advisory
Group, Inc.
Benjamin L. Trosky Member of Management Board Managing Director, Pacific
Investment Management
Company; Director and
Managing Director, PIMCO
Management, Inc.; Senior Vice
President, PIMCO Commercial
Mortgage Securities Trust,
Inc.; Member of PIMCO
Partners LLC.
Bradley W. Paulson Vice President Vice President and Secretary,
PIMCO Global Advisors
(Europe) Limited, PIMCO
Global Advisors (Japan)
Limited; Vice President,
Pacific Investment Management
Company.
Kenneth M. Poovey Chief Operating Officer Executive Vice President and
and General Counsel General Counsel, Value
Advisors LLC and Thomson
Advisory Group, Inc. Trustee
of the Trust.
Stephen J. Treadway Executive Vice President Chairman, President, and
Chief Executive Officer,
PIMCO Funds Advertising
Agency, Inc., PIMCO Funds
Distributors LLC, and
Trustee, President and Chief
Executive Officer of the
Trust.
-10-
<PAGE>
Robert S. Venable Vice President None
James G. Ward Senior Vice President, Senior Vice President, Human
Human Resources Resources, Value Advisors
LLC; Senior Vice President,
Thomson Advisory Group, Inc.
Richard M. Weil Senior Vice President - Senior Vice President,
Legal, Secretary Assistant Secretary, PIMCO
Management, Inc.; Secretary,
Cadence Capital Management,
Inc., NFJ Investment Group,
NFJ Management, Inc.,
Parametric Portfolio
Associates, Parametric
Management, Inc., and
StocksPLUS Management, Inc.;
Assistant Secretary, Cadence
Capital Management, PIMCO
Funds Advertising Agency,
Inc. and Pacific Management
Investment Company; and
Senior Vice President, Legal,
Secretary Value Advisors LLC,
Thomson Advisors LLC, Thomson
Advisory Group, Inc.
Frank C. Poli Vice President, Director of Compliance Officer,
Compliance PIMCO Funds Distributors LLC
Vinh T. Nguyen Vice President, Controller Vice President, Controller,
Columbus Circle Investors
Management, Inc., Cadence
Capital Management, Inc., NFJ
Management, Inc., Parametric
Management, Inc., StocksPLUS
Management, Inc., PIMCO Funds
Advertising Agency, Inc.,
PIMCO
-11-
<PAGE>
Funds Distributors LLC,
and Value Advisors LLC;
Controller, Pacific
Investment Management Company
and PIMCO Management, Inc.
Timothy R. Clark Vice President, Mutual Senior Vice President, PIMCO
Funds Division Funds Distributors LLC
Newton B. Schott, Senior Vice President, Director, Executive Vice
Jr. Mutual Funds Division President, Chief
Administrative Officer,
General Counsel and
Secretary, PIMCO Funds
Distributors LLC and PIMCO
Funds Advertising Agency,
Inc.; Vice President and
Secretary, the Trust;
Vice President,
PIMCO Advisors Mutual Fund
Division
Diane P. Dubois Vice President, Finance None.
Ernest L. Schmider Senior Vice President See Pacific Investment
Management Company
Cadence Capital Management
Exchange Place, 53 State Street
Boston, Massachusetts 02109
Name Position with Portfolio Other Affiliations
Manager
William B. Bannick Managing Director and Director and Managing
Executive Vice President Director,
Cadence Capital Management,
Inc.
David B. Breed Managing Director and Member of Management Board,
Chief Executive Officer PIMCO Advisors L.P.;
Director, Managing Director
and Chief Executive Officer,
Cadence Capital Management,
Inc.
-12-
<PAGE>
Katherine A. Burdon Managing Director None.
Mary Ellen Melendez Secretary None.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Assistant Treasurer
Barbara M. Green Treasurer None.
Richard M. Weil Assistant Secretary See PIMCO Advisors L.P.
NFJ Investment Group
2121 San Jacinto, Suite 1440
Dallas, Texas 75201
Name Position with Portfolio Other Affiliations
Manager
Benno J. Fischer Managing Director Director, Managing
Director, and Co-Chairman,
NFJ Management, Inc.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Treasurer
John L. Johnson Managing Director Director, and Co-Chairman
Managing Director, NFJ
Management, Inc.
Jack C. Najork Managing Director Director, Managing
Director, Co-Chairman, NFJ
Management, Inc.
Richard M. Weil Secretary See PIMCO Advisors L.P.
-13-
<PAGE>
Parametric Portfolio Associates
7310 Columbia Center, 701 Fifth Avenue,
Seattle, Washington 98104-7090
Name Position with Portfolio Other Affiliations
Manager
William E. Cornelius, Managing Director Director, Managing
Jr. Chief Executive Officer
Parametric Management,
Inc.
David M. Stein Managing Director Director and Managing
Director, Parametric
Management, Inc.
Brian Langstraat Managing Director None.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Treasurer
Richard M. Weil Secretary See PIMCO Advisors L.P.
Pacific Investment Management Company ("PIMCO")
840 Newport Center Drive, Suite 300
Newport Beach, California 92660
Name Position with Portfolio Other Affiliations
Manager
George C. Allan Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Tamara J. Arnold Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Michael R. Asay Vice President Vice President, PIMCO
Management, Inc.
Leslie A. Barbi Senior Vice President Senior Vice President,
PIMCO Management, Inc.
William R. Benz, II Managing Director Director and Managing
Director, PIMCO
Management, Inc.; Member
of PIMCO Partners
LLC. Member of Management
Board, PIMCO Advisors L.P.
-14-
<PAGE>
Gregory A. Bishop Vice President None.
Andrew Brick Senior Vice President Senior Vice President,
PIMCO Management, Inc.
John B. Brynjolfsson Vice President Vice President, PIMCO
Management, Inc.
R. Welsley Burns Managing Director Executive Vice President,
PIMCO Management, Inc.;
President, PIMCO Funds:
Pacific Investment
Management Series; President
and Director, PIMCO
Commercial Mortgage
Securities Trust, Inc.;
President and Trustee, PIMCO
Variable Insurance Trust;
Director, PIMCO Global
Advisors (Ireland) Limited
and PIMCO Advisors Funds
plc.
Carl J. Cohen Vice President Vice President, PIMCO
Management, Inc.
Jerry L. Coleman Vice President Vice President, PIMCO
Management, Inc.
Doug Cummings Vice President Vice President, PIMCO
Management, Inc.
Wendy W. Cupps Vice President Vice President, PIMCO
Management, Inc.
Chris Dialynas Director Managing Director, PIMCO
Management, Inc.
David J. Dorff Vice President
Michael Dow Vice President Vice President, PIMCO
Management, Inc. and PIMCO
Funds: Pacific Investment
Management Series.
-15-
<PAGE>
Anita Dunn Vice President Vice President, PIMCO
Management, Inc.
A. Benjamin Ehlert Executive Vice President Executive Vice President,
PIMCO Management, Inc.
Robert A. Ettl Senior Vice President and Vice President, PIMCO
Chief Operations Officer Management, Inc.
Anthony L. Faillace Vice President Vice President, PIMCO
Management, Inc.
Robert M. Fitzgerald Chief Financial Officer See PIMCO Advisors L.P.
and Treasurer
Ursula T. Frisch Vice President Vice President, PIMCO
Management, Inc. and PIMCO
Funds: Pacific Investment
Management Series.
William H. Gross Managing Director See PIMCO Advisors L.P.
John L. Hague Managing Director Director, PIMCO Management,
Inc., Member of PIMCO
Partners LLC.
Gordon C. Hally Executive Vice President Executive Vice President,
PIMCO Management, Inc.
Pasi M. Hamalainen Executive Vice President Executive Vice President,
PIMCO Management, Inc.
John P. Hardaway Senior Vice President Vice President, PIMCO
Management, Inc.; Treasurer
of the Trust, PIMCO Funds:
Pacific Investment
Management Series, PIMCO
Commercial Mortgage
Securities Trust, Inc., and
PIMCO Variable Insurance
Trust.
Brent R. Harris Managing Director See PIMCO Advisors L.P.
Joseph Hattesohl Vice President and Manager Vice President, PIMCO
of Fund Taxation Management, Inc.; Assistant
Treasurer, the Trust, PIMCO
Funds: Pacific Investment
Management Series, PIMCO
Variable Insurance Trust,
and PIMCO Commercial
Mortgage Securities Trust,
Inc.
-16-
<PAGE>
Raymond C. Hayes Vice President Vice President, PIMCO Robert
G. Herin Management, Inc.
and PIMCO Funds: Pacific
Investment Management
Series.
Robert G. Herin Vice President Vice President, PIMCO
Management, Inc.
David C. Hinman Vice President Vice President, PIMCO
Management, Inc.
Liza Hocson Vice President Vice President, PIMCO
Management, Inc.
Douglas M. Hodge Executive Vice President Executive Vice President,
PIMCO Management, Inc.
Brent L. Holden Executive Vice President Executive Vice President,
PIMCO Management, Inc.
Dwight F. Holloway, Vice President Vice President, PIMCO
Jr. Management, Inc.
Jane T. Howe Vice President Vice President, PIMCO
Management, Inc.
Mark Hudoff Vice President Vice President, PIMCO
Management, Inc.
Margaret E. Isberg Executive Vice President Executive Vice President,
PIMCO Management, Inc.;
Senior Vice President, PIMCO
Funds: Pacific Investment
Management Series.
James M. Keller Vice President Vice President, PIMCO
Management, Inc.
-17-
<PAGE>
Sharon K. Kilmer Executive Vice President None.
Thomas J. Kelleher Vice President Vice President, PIMCO
Management, Inc.
Raymond G. Kennedy Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Mark R. Kiesel Vice President Vice President, PIMCO
Management, Inc.
Steven P. Kirkbaumer Vice President None.
John S. Loftus Executive Vice President Executive Vice President,
PIMCO Management, Inc.; Vice
President and Assistant
Secretary, StocksPLUS
Management, Inc.
David Lown Vice President Vice President, PIMCO
Management, Inc.
Andre J. Mallegol Vice President Vice President, PIMCO
Management, Inc.
Michael E. Martini Vice President Vice President, PIMCO
Management, Inc.
Dean S. Meiling Managing Director Director and Managing
Director, PIMCO Management,
Inc.; Vice President, PIMCO
Funds: Pacific Investment
Management Series and PIMCO
Commercial Mortgage
Securities Trust, Inc.;
Member of PIMCO Partners
LLC.
Joseph V. McDevitt Executive Vice President Vice President, PIMCO
Management, Inc.
-18-
<PAGE>
James F. Muzzy Managing Director Director and Managing
Director, PIMCO Management,
Inc.; Vice President, PIMCO
Funds: Pacific Investment
Management Series; Director
and Vice President,
StocksPLUS Management, Inc.;
Member of PIMCO Partners
LLC.
Doris S. Nakamura Vice President
Vinh T. Nguyen Controller See PIMCO Advisors L.P.
Douglas J. Ongaro Vice President Vice President, PIMCO
Management, Inc. and PIMCO
Funds: Pacific Investment
Management Series.
Thomas J. Otterbein Vice President Vice President, PIMCO
Management, Inc.
Victoria M. Paradis Vice President Vice President, PIMCO
Management, Inc.
Bradley W. Paulson Vice President Vice President and
Secretary, Vice President
PIMCO Global Advisors
(Europe) Limited, PIMCO
Global Advisors (Japan)
Limited.
Elizabeth M. Philipp Vice President Vice President, PIMCO
Management, Inc.
David J. Pittman Vice President None.
William F. Podlich,
III Managing Director See PIMCO Advisors L.P.
William C. Powers Managing Director Director and Managing
Director, PIMCO Management,
Inc.; Senior Vice President
PIMCO Commercial Mortgage
Securities Trust, Inc.;
Member of PIMCO Partners
LLC. Member of Management
Board, PIMCO Advisors L.P.
Edward P. Rennie Senior Vice President Senior Vice President, PIMCO
Management, Inc.
-19-
<PAGE>
Terry A. Randall Vice President
Scott L. Roney Vice President Vice President, PIMCO
Management, Inc.
Michael J. Rosborough Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Seth R. Ruthen Vice President Vice President, PIMCO
Management, Inc.
Jeffrey M. Sargent Vice President and Manager Vice President of the Trust,
Shareholder Services and PIMCO Management, Inc.;
Senior Vice President,
Fund Administration PIMCO Funds: Pacific
Investment Management
Series, PIMCO Variable
Insurance Trust, and
PIMCO Commercial Mortgage
Securities Trust, Inc.
Ernest L. Schmider Executive Vice President, Executive Vice President,
Secretary, Chief Secretary, Chief
Administrative and Legal Administrative
Officer and Legal Officer, PIMCO
Management, Inc.; Director,
Assistant Secretary,
Assistant Treasurer,
StocksPLUS
Management, Inc.;
Secretary, PIMCO
Partners LLC.
Leland T. Scholey Senior Vice President Senior Vice President, PIMCO
Management, Inc., and PIMCO
Funds: Pacific Investment
Management Series.
Richard W. Selby Senior Vice President None.
and Chief Technology
Officer
Denise C. Seliga Vice President Vice President, PIMCO
Management, Inc.
Rita J. Seymour Vice President Vice President, PIMCO
Management, Inc.
Christopher Sullivan Vice President Vice President, PIMCO
Management, Inc.
-20-
<PAGE>
Cheryl L. Sylwester Vice President Vice President, PIMCO
Management, Inc.
Lee R. Thomas, III Managing Director Director and Managing
Director, PIMCO Management,
Inc.; Member of PIMCO
Partners LLC.
William S. Thompson, Director, Managing See PIMCO Advisors L.P.
Jr. Director, Chief
Executive Officer
Benjamin L. Trosky Managing Director See PIMCO Advisors L.P.
Richard E. Tyson Vice President Vice President, PIMCO
Management, Inc.
Peter A. Van de Zilver Vice President Vice President, PIMCO
Management, Inc.
Marilyn Wegener Vice President Vice President, PIMCO
Management, Inc.
Richard M. Weil Assistant Secretary See PIMCO Advisors L.P.
Paul C. Westhead Vice President Vice President, PIMCO
Management, Inc.
Kristen M. Wilsey Vice President Vice President, PIMCO
Management, Inc. and PIMCO
Funds: Pacific Investment
Management Series.
George H. Wood Senior Vice President Senior Vice President,
PIMCO Management, Inc.
Michael A. Yetter Vice President Vice President, PIMCO
Management, Inc.
David Young Vice President Vice President, PIMCO
Management, Inc.
-21-
<PAGE>
Blairlogie Capital Management, Limited
4th Floor, 125 Princes Street
Edinburgh EH2 4AD, Scotland
Name Position with Portfolio Other Affiliations
Manager
Gavin R. Dobson Chief Executive Officer Director and Chief Executive
and Managing Director Officer, Blairlogie Holdings
Limited (U.K.).
James G. S. Smith Chief Investment Officer Director and Chief
and Managing Director Investment Officer,
Blairlogie Holdings
Limited (U.K.).
-22-
<PAGE>
Item 27. Principal Underwriters.
(a) PIMCO Funds Distributors LLC (the "Distributor") serves as
Distributor of shares for the Registrant and also of PIMCO Funds:
Pacific Investment Management Series. The Distributor is a wholly
owned subsidiary of PIMCO Advisors L.P., the Registrant's Adviser.
(b)
Positions and Positions
Name and Principal Offices with and Offices
Business Address* Underwriter with Registrant
Jeffrey L. Booth Vice President Vice President, PIMCO
Funds Advertising
Agency, Inc.
James D. Bosch Regional Vice President None
Deborah P. Brennan Vice President None
Timothy R. Clark Senior Vice President None
Jonathan P. Fessel Vice President None
Robert M. Fitzgerald Chief Financial Officer None
and Treasurer
Michael J. Gallagher Vice President None
David S. Goldsmith Vice President None
Ronald H. Gray Vice President None
John B. Hussey Vice President None
Stephen R. Jobe Vice President Vice President, PIMCO
Funds Advertising
Agency, Inc.
Jonathan C. Jones Vice President None
Raymond Lazcano Vice President None
-23-
<PAGE>
William E. Lynch Senior Vice President None
Kevin D. Maloney Compliance Officer None
Jacqueline A. McCarthy Vice President None
Andrew J. Meyers Executive Vice President Executive Vice
President,
PIMCO Funds
Advertising Agency, Inc.
Fiora N. Moyer Regional Vice President None
Philip J. Neugebauer Vice President Vice President, PIMCO
Funds Advertising Agency
Vinh T. Nguyen Vice President, Controller None
Joffrey H. Pearlman Regional Vice President None
Glynne P. Pisapia Regional Vice President None
Francis C. Poli Compliance Officer Vice President, Director
of Compliance, PIMCO
Advisors L.P.
Mark J. Porterfield Vice President, Vice President,
Compliance Officer Compliance Officer,
PIMCO Advisors L.P.
Newton B. Schott, Jr. Executive Vice President, Vice President and
Chief Administrative Secretary
Officer, General Counsel
and Secretary
Robert M. Smith Vice President None
Ellen Z. Spear Vice President Vice President, PIMCO
Funds Advertising
Agency, Inc.
Daniel W. Sullivan Vice President None
William H. Thomas, Jr. Regional Vice President None
-24-
<PAGE>
Stephen J. Treadway Chairman, President and Executive Vice
Chief Executive Officer President,
PIMCO Advisors L.P.
and Trustee
Paul H. Troyer Senior Vice President None
Brian F. Trumbore Executive Vice President None
Richard M. Weil Assistant Secretary None
Glen A. Zimmerman Vice President None
-----------------------
Principal business address for all individuals listed is 2187 Atlantic
Street, Stamford, CT 06902, except for Messrs. Fitzgerald, Maloney, Nguyen, Poli
and Weil, for whom the address is 800 Newport Center Drive, Newport Beach, CA
92660.
(c) The Registrant has no principal underwriter that is not an affiliated
person of the Registrant or an affiliated person of such an
affiliated person.
Item 28. Location of Accounts and Records.
The account books and other documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder will be maintained at the offices of Investors Fiduciary
Trust Company, 21 West 10th Street, Kansas City, Missouri 64105, National
Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, Missouri
64105, and/or First Data Investor Services Group, Inc., PO Box 9688, Providence,
Rhode Island 02940.
Item 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
-25-
<PAGE>
NOTICE
------
A copy of the Agreement and Declaration of Trust of PIMCO Funds: Multi-
Manager Series (the "Trust"), together with all amendments thereto, is on file
with the Secretary of State of The Commonwealth of Massachusetts and notice is
hereby given that this instrument is executed on behalf of the Trust by an
officer of the Trust as an officer and not individually and that the obligations
of or arising out of this instrument are not binding upon any of the Trustees of
the Trust or shareholders of any series of the Trust individually but are
binding only upon the assets and property of the Trust or the respective series.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Post-Effective Amendment No. 49 to its Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of
Stamford, and the State of Connecticut on the 7th day of June, 2000.
PIMCO FUNDS: MULTI-MANAGER SERIES
By: /s/ Stephen J. Treadway
______________________________
Stephen J. Treadway,
President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 49 has been signed below by the following persons in the
capacities and on the dates indicated.
Name Capacity Date
----- -------- ----
/s/ Stephen J. Treadway Trustee and President June 7, 2000
----------------------------
Stephen J. Treadway
* Treasurer and Principal
---------------------------- Financial and Accounting
John P. Hardaway Officer
* Trustee
----------------------------
Donald P. Carter
* Trustee
----------------------------
E. Philip Cannon
* Trustee
----------------------------
Gary A. Childress
* Trustee
----------------------------
Richard L. Nelson
* Trustee
----------------------------
Kenneth M. Poovey
* Trustee
----------------------------
Lyman W. Porter
* Trustee
----------------------------
Alan Richards
* Trustee
----------------------------
W. Bryant Stooks
* Trustee
----------------------------
Gerald M. Thorne
* By: /s/ Stephen J. Treadway
--------------------------
Stephen J. Treadway,
Attorney-In-Fact
Date: June 7, 2000
