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PACIFIC ADVISORS FUND INC.
SUPPLEMENT DATED DECEMBER 9, 1997
TO THE
PROSPECTUS DATED SEPTEMBER 9, 1997
This Supplement updates certain information contained in the prospectus
of Pacific Advisors Fund Inc. (the "Prospectus"), and supersedes the Supplement
dated October 22, 1997. You should affix this supplement to your Prospectus and
retain both the Supplement and Prospectus for future reference. You may obtain
an additional copy of the Prospectus, free of charge, if you write to Pacific
Advisors Fund Inc. (the "Company") at 206 North Jackson Street, Suite 201,
Glendale, California 91206, or call 1-800-282-6693.
REPLACE THE ENTRIES FOR THE ANNUAL FUND OPERATING EXPENSES OF THE BALANCED FUND
AND THE SMALL CAP FUND IN THE EXPENSE TABLE ON PAGE 2 WITH THE FOLLOWING:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
* * *
BALANCED FUND
Management Fees 0.75%(3)
Rule 12b-1 Fees (Service Fees) 0.08%(3)
Other Expenses 3.53%(3)
Total Fund Operating Expenses (after fee waiver 4.36%(3)
or the assumption of expenses)
SMALL CAP FUND
Management Fees 0.75%(3)
Rule 12b-1 Fees (Service Fees) 0.23%(3)
Other Expenses 2.26%(3)
Total Fund Operating Expenses 3.24%(3)
REPLACE NOTE (3) ON PAGE 2 WITH THE FOLLOWING:
(3) During the 1996 fiscal year, the Manager agreed to reduce its investment
management fee when Fund Operating Expenses exceeded the lowest applicable limit
actually enforced by any state and to reimburse each Fund for any additional
expenses that exceeded such limit. In addition, the Adviser voluntarily agreed
to waive additional fees and/or reimburse additional expenses to reduce the
annual Fund Operating Expenses for the Government Securities Fund, the Income
and Equity Fund, and the Balanced Fund. Pursuant to legislation enacted in
October 1996, state expense limitations on Fund Operating Expenses are no longer
enforceable; accordingly, the Manager may determine that the reduction of its
fees or reimbursement of expenses is not necessary. Nonetheless, the Manager,
Co-Manager and the Advisers have voluntarily entered into Expense Limitation
Agreements with each Fund, pursuant to which they may waive their management and
advisory fees, respectively, and/or absorb certain expenses for each Fund.
Pursuant to these Agreements, the Manager currently (a) will waive its
management
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fee and/or absorb expenses to the extent necessary to maintain the total Fund
Operating Expenses of the Government Securities Fund and the Income and Equity
Fund at 1.65% and 1.85%, respectively, of average net assets, (b) will waive its
management fee for the Balanced Fund by 0.40% of average net assets, and (c)
will not waive its fee or absorb expenses of the Small Cap Fund. Effective
January 1, 1998, the Manager no longer will waive its management fee for the
Balanced Fund. The Co-Manager of the Income and Equity Fund also has agreed to
waive its management fee to the extent necessary to enable that Fund to meet the
expense limitations set forth above. The Manager may discontinue or change these
fee waiver and expense reimbursement arrangements at any time upon 90 days
notice to the relevant Fund. In 1996, absent the voluntary waiver of fees and
the assumption of expenses by the Manager and the Advisers, the management fees
for the Government Securities Fund, the Income and Equity Fund, the Balanced
Fund and the Small Cap Fund would have been 0.65%, 0.75%, 0.75%, and 0.75%,
respectively, and the Other Expenses for the Government Securities Fund, the
Income and Equity Fund, the Balanced Fund and the Small Cap Fund would have been
2.19%, 6.31%, 3.53% and 2.26%, respectively. For more information regarding the
service fees under the Rule 12b-1 Plan, see "DISTRIBUTION PLANS".
REPLACE THE ENTRIES FOR THE EXPENSE EXAMPLES FOR THE BALANCED FUND AND THE
SMALL CAP FUND IN THE TABLE ON PAGE 3 WITH THE FOLLOWING:
<TABLE>
<CAPTION>
================================================================================
Fund 1 Year 3 Years 5 Years 10 Years
================================================================================
<S> <C> <C> <C> <C>
* * *
- --------------------------------------------------------------------------------
BALANCED FUND $98 $182 $266 $480
- --------------------------------------------------------------------------------
SMALL CAP FUND $88 $151 $216 $388
================================================================================
</TABLE>
REPLACE THE SECOND SENTENCE OF THE NEXT TO THE LAST PARAGRAPH ON PAGE 3 WITH THE
FOLLOWING:
The figures for the Government Securities Fund and the Income and Equity Fund
shown reflect all of the fees and expenses incurred by those two Funds for the
fiscal year ended December 31, 1996, adjusted to reflect fee waivers and
expense reimbursements during that year. The figures for the Balanced Fund and
Small Cap Fund reflect all of the fees and expenses incurred by those two Funds
for the fiscal year ended December 31, 1996, restated to reflect those Fund's
current fee waiver and expense reimbursement arrangements effective as of
January 1, 1998, as described in note (3) above.
ADD THE FOLLOWING SENTENCE TO THE END OF THE FOURTH PARAGRAPH ON PAGE 15:
For a description of the current fee waiver and expense reimbursement
arrangements between the Fund and the Manager, see "EXPENSES".
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REPLACE INSTRUCTION 1 ON PAGE 18 WITH THE FOLLOWING:
1. Instruct your bank to wire federal funds to
Bank Name: UMB Bank, N.A.
ABA #: 101000695
Further Credit to: Pacific Advisors Funds
A/C #9870609932
(Your bank may charge you a fee for this service.)
REPLACE THE SECOND PARAGRAPH ON PAGE 35 WITH THE FOLLOWING:
Prior to 1997, the Manager agreed to assume the expenses of each Fund
that exceeded the lowest applicable limit actually enforced by any state. In
addition, the Adviser voluntarily agreed to waive additional fees and/or
reimburse additional expenses to reduce the annual Fund Operating Expenses for
the Government Securities Fund, the Income and Equity Fund, and the Balanced
Fund. For the fiscal year ended December 31, 1996, the ratios of operating
expenses (net of the Manager's expense reimbursements) to average net assets
for the Government Securities Fund, Income and Equity Fund, Balanced Fund, and
Small Cap Fund were 1.66%, 1.85%, 2.48%, and 2.91%, respectively.
As of October 1996, state expense limitations on Fund Operating
Expenses are no longer enforceable; accordingly, the Manager may determine that
the reduction of its fees or reimbursement of expenses is not necessary.
Nonetheless, the Manager, Co-Manager and the Advisers have voluntarily entered
into Expense Limitation Agreements with each Fund, pursuant to which they may
waive their management and advisory fees, respectively, and/or absorb certain
expenses for each Fund. Pursuant to these Agreements, the Manager currently (a)
will waive its management fee and/or absorb expenses to the extent necessary to
maintain the total Fund Operating Expenses of Government Securities Fund and
the Income and Equity Fund at 1.65% and 1.85%, respectively, of average net
assets, (b) it will waive its management fee for the Balanced Fund by 0.40% of
average net assets, and (c) will not waive its fee or absorb expenses of the
Small Cap Fund. Effective January 1, 1998, the Manager no longer will waive its
management fee for the Balanced Fund. The Co-Manager of the Income and Equity
Fund also has agreed to waive its management fee to the extent necessary to
enable that Fund to meet the expense limitations set forth above. The Manager
may discontinue or change these fee waiver and expense reimbursement
arrangements at any time upon 90 days notice to the relevant Fund.
The Company may reimburse the Manager for fees so waived and expenses
so assumed at such time as such Fund's expenses do not exceed 2.5% of average
net assets, the assets of such Fund are $20 million or greater, and the payment
of such reimbursement would not cause such Fund's expenses to exceed 2.5% of
average net assets. Any such reimbursement payments to the Manager will cause
the relevant's Fund's operating expenses and expense ratio to be higher than
they would otherwise be.
