Fund Profile
PIMCO Convertible Bond Fund
Institutional Class Shares
February __, 2000
This profile summarizes key information about the Fund that
is included in the Fund's Prospectus. The Fund's Prospectus includes
additional information about the Fund, including a more detailed
description of the risks associated with investing in the Fund that you
may want to consider before you invest. You may obtain
the Prospectus and other information about the Fund at no cost by
calling us at 1-800-927-4648, visiting our Web site at www.pimco.com,
or by contacting your Financial intermediary.
[INSERT PIMCO FUNDS LOGO.]
<PAGE>
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund seeks maximum total return, consistent with prudent investment
management.
WHAT IS THE FUND'S PRINCIPAL INVESTMENT STRATEGY?
The Fund seeks to achieve its investment objective by investing under normal
circumstances at least 65% of its assets in a diversified portfolio of
convertible securities. Convertible securities include, but are not limited
to: corporate bonds, debentures, notes or preferred stocks and their hybrids
that can be converted into (exchanged for) common stock or other securities,
such as warrants or options, which provide an opportunity for equity
participation.
The Fund invests primarily in investment grade debt securities, but may
invest up to 35% of its assets in high yield securities ("junk bonds") rated
Caa or higher by Moody's or CCC or higher by S&P or, if unrated, determined
by PIMCO to be of comparable quality. The Fund may only invest up to 10% of
its assets in convertible securities rated Caa or CCC or, if unrated,
determined by PIMCO to be of comparable quality. The Fund may also invest up
to 20% of its assets in securities denominated in foreign currencies, and
may invest beyond this limit in U.S. dollar-denominated securities of
foreign issuers. In addition, the Fund may invest up to 35% of its assets in
common stocks or in other fixed income instruments.
The Fund may invest all of its assets in derivative instruments, such as
options, futures contracts or swap agreements, or in mortgage- or
asset-backed securities. The Fund typically uses derivatives as a substitute
for taking a position in the underlying asset and/or as part of a strategy
designed to reduce exposure to other risks, such as interest rate or
currency risk. Rather than investing directly in the securities in which it
primarily invests, the Fund may use other investment techniques to gain
exposure to market movements related to such securities, such as entering
into a series of contracts to buy or sell such securities. The "total
return" sought by the Fund consists of income earned on the Fund's
investments, plus capital appreciation, if any, which generally arises from
decreases in interest rates or improving credit fundamentals for a
particular sector or security.
Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its
past fiscal year. You may obtain these reports at no cost by calling us at
1-800-927-4648.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
You could lose money on an investment in the Fund. The principal risks of
investing in the Fund are:
o Market Risk: The value of securities owned by the Fund may go up or
down, sometimes rapidly or unpredictably. Securities may decline in
value due to factors affecting securities markets generally or
particular industries.
o Issuer Risk: The value of a security may 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.
o Interest Rate Risk: As interest rates rise, the value of fixed income
securities in the Fund's portfolio is likely to decrease. Securities
with longer durations tend to be more sensitive to changes in interest
rates. Credit Risk: The Fund could lose money if the issuer or
guarantor of a fixed income security, or the counterparty to a
derivative contract, is unable or unwilling to meet its financial
obligations.
o High Yield Risk: Because the Fund invests in high yield securities
(commonly known as "junk bonds"), it may be subject to greater levels
of interest rate, credit and liquidity risk than Funds that do not
invest in such securities. High yield securities are considered
predominately speculative with respect to the issuer's continuing
ability to make principal and interest payments. An economic downturn
or period of rising interest rates could adversely affect the market
for high yield securities and reduce the Fund's ability to sell its
high yield securities (liquidity risk). o Derivatives Risk: When the
Fund invests in a derivative instrument, it could lose more than the
principal amount invested. Derivatives are subject to a number of
risks, such as liquidity, interest rate, market, credit and management
risk. They also involve the risk of improper valuation. Changes in the
value of a derivative may not correlate perfectly with the underlying
asset, rate or index.
<PAGE>
o Liquidity Risk: Liquidity risk exists when particular investments are
difficult to purchase or sell. The Fund's investments in illiquid
securities may reduce the returns of the Fund because it may be unable
to sell the illiquid securities at an advantageous time or price.
o Smaller Company Risk: The general risks associated with fixed income
securities are particularly pronounced for securities issued by
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. As a result, they may be subject to
greater levels of credit, market and issuer risk. Securities of
smaller companies may trade less frequently and in lesser volumes than
more widely held securities and their values may fluctuate more
sharply than other securities.
o Foreign Investment Risk: When the Fund invests in foreign securities,
it may experience more rapid and extreme changes in value than if it
invested exclusively in U.S. securities. The securities markets of
many foreign countries are relatively small. Reporting, accounting and
auditing standards of foreign countries differ from U.S. standards.
Also, nationalization, expropriation, taxation, political changes or
diplomatic developments could adversely affect the Fund's investments
in a foreign country.
o Emerging Markets Risk: Foreign investment risk may be particularly
high to the extent that the Fund invests in emerging market securities
of issuers based in countries with developing markets. 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.
o Currency Risk: When the Fund invests in securities denominated in
foreign currencies, it is 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. Currency rates in foreign countries may
fluctuate significantly over short periods of time for reasons such as
changes in interest rates, government intervention or political
developments. As a result, the Fund's investments in foreign
currency-denominated securities may reduce the returns of the Fund.
o Leveraging Risk: The Fund may engage in transactions that give rise to
a form of leverage. Leverage may cause the Fund to sell holdings when
it may not be advantageous to do so. Leverage, including borrowing,
will cause the Fund to be more volatile than if the Fund had not been
leveraged.
o Management Risk: There is no guarantee that the investment techniques
and risk analyses applied by PIMCO will produce the desired results.
HOW HAS THE FUND PERFORMED?
As the Fund commenced operations on March 31, 1999, it does not yet have a
full calendar year of performance. Thus, no bar chart is included for the
Fund. The table below provides some indication of the risks of investing in
the Fund by showing how the Fund's returns since its inception compare with
the returns of a broad-based securities market index and an index of similar
funds. The table shows performance of the Fund's Institutional Class shares
net of fees. Past performance is no guarantee of future results.
[Note: Performance figures below are current as of the quarter-ended
9/31/99. The figures will be updated with December 31, 1999 data prior to
printing.]
Total Returns Since Inception
for the periods ended December 31,1999
Since Inception (1)
Convertible Bond Fund,
Institutional Class ------%
First Boston
Convertible Bond Index (2) ------%
Lipper Convertible Securities
Fund Average (3) ------%
(1) The Fund began operations on 3/31/99.
(2) The First Boston Convertible Bond Index is an unmanaged index
representative of the convertible bond universe. It is not possible to
invest directly in the index.
(3) The Lipper Convertible Securities Fund Average is a total return
performance average of Funds tracked by Lipper Analytical Services,
Inc. that invest primarily in convertible bonds and convertible
preferred shares. It does not take into account sales charges.
During the period since the Fund's inception on 3/31/99, the highest
quarterly return was 12.50% (2nd Quarter 1999) and the lowest quarterly
return was 1.07% (3rd Quarter 1999).
WHAT ARE THE FUND'S FEES AND EXPENSES?
These tables describe the fees and expenses you may pay if you buy and hold
Institutional 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, shown as a percentage of
average daily net assets) Advisory Fee 0.40% Distribution (12b-1) and/or
Service Fees None
Other Expenses (1) 0.25%
Total Annual Operating Expenses 0.65%
1 Other Expenses reflects a 0.25% Administrative Fee paid by the class.
Example: The Example is intended to help you compare the cost of investing
in the Fund with the costs of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated,
and then redeem all your shares at the end of those periods. The Example
also assumes a 5% return each year, the reinvestment of all dividends and
distributions, and that the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the Example shows what
your costs would be based on these assumptions.
1 year 3 years 5 years 10 years
Convertible Bond Fund,
Institutional Class $66 $208 $362 $810
WHO IS THE FUND'S INVESTMENT ADVISER?
Pacific Investment Management Company ("PIMCO"), a subsidiary of PIMCO
Advisors L.P., serves as investment adviser to the Fund. PIMCO is an
investment management company founded in 1971, and had over $181 billion in
assets under management as of September 30, 1999. PIMCO manages the
investment and reinvestment of the assets of the Fund and is responsible
for placing orders for the purchase and sale of the Fund's investments.
PIMCO is located at 840 Newport Center Drive, Newport Beach, CA 92660.
[Insert photo of Ms. Durn.]
Sandra K. Durn, a PIMCO Vice President and Portfolio Manager, manages the
Fund's portfolio. Prior to joining PIMCO in 1999, she was associated with
Nicholas-Applegate Capital Management where she was a Convertible
Securities Manager from 1995 to 1999, and a Quantitative Analyst since
1994.
HOW DO I BUY FUND SHARES?
The minimum initial investment to open an account directly with the Fund is
$5 million. The minimum initial investment for a registered investment
adviser purchasing Institutional Class shares for its clients through omnibus
accounts is $250,000. You may purchase Fund shares in one of the following
ways:
o Opening an account by completing and signing a Client Registration
Application, mailing it to us at the address shown below, and wiring
funds. Wiring instructions can be obtained by calling us at
1-800-927-4648.
o Exchanging Institutional Class shares in any amount from another PIMCO
Funds account.
o Additional purchases in any amount can be made by calling us at
1-800-927-4648 and wiring funds.
HOW DO I SELL (REDEEM) FUND SHARES?
You may sell (redeem) all or part of your Fund shares on any business day.
You may sell by:
o Sending a written request by mail to PIMCO Funds.
o Telephone us at 1-800-927-4648 and a Shareholder Services associate
will assist you.
o By sending a fax to our Shareholder Services department at
1-949-725-6830.
HOW ARE FUND DISTRIBUTIONS MADE AND TAXED?
The Fund pays dividends to shareholders monthly and pays realized capital
gains, if any, annually. Dividend and capital gain distributions will be
reinvested in additional shares of the Fund unless you elect to have them
paid in cash. A shareholder may elect to have distributions paid in cash by
calling 1-800-927-4648. Distributions may be taxable as ordinary income,
capital gains, or a combination of the two. The rate you pay on capital
gains distributions may vary depending on how long the Fund held the
securities that generated the gains. The Fund will advise shareholders
annually of the amount and nature of the dividends paid to them.
Shareholders should also bear in mind that the sale or exchange of shares
may give rise to a taxable event.
<PAGE>
WHAT OTHER SERVICES ARE AVAILABLE FROM THE FUND?
The Fund and PIMCO's Shareholder Services offer several programs to
investors:
o The ability to exchange shares of the Fund for the same class of
shares of any other PIMCO Fund (except PIMCO International Bond and
Emerging Markets Bond II Funds).
o Account and Fund information is available 24 hours every day through
Infolink, PIMCO Funds' audio response system, by calling
1-800-987-4626.
o Information about PIMCO Funds can be obtained on PIMCO's Institutional
Web site at www.pimco.com.
[Insert PIMCO Funds logo.]
840 Newport Center Drive, Suite 300
Newport Beach, CA 92660
Phone: 1-800-927-4648
Fax: 1-949-725-6830
PIMCO Infolink Audio Response Network:
1-800-987-4626
Web Site: www.pimco.com
