February 3, 2000
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-6009
Re: PIMCO Funds: Pacific Investment Management Series
File Nos. 33-12113 and 811-5028
On behalf of PIMCO Funds: Pacific Investment Management
Series (the "Trust"), enclosed for filing via the EDGAR
System pursuant to Rule 497(k)(1)(iii)(B) under the
Securities Act of 1933 are nine fund profiles for
Institutional Class and Administrative Class Shares of eight
series of the Trust. These profiles, which were previously
reviewed by the staff, update certain performance
information through the end of the last quarter of 1999. In
addition, certain non-material changes have been made.
No fees are required in connection with this filing. Please
call Robert Helm at (202) 261-3356 or the undersigned at
(202) 261-3328 with any questions or comments regarding the
attached.
Very truly yours,
/s/ David J. Lekich
David J. Lekich
Attachments
Office of Disclosure and Review
PIMCO Foreign Bond Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks maximum total return, consistent with
preservation of capital and 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 85% of its
assets in fixed income instruments of issuers located
outside the United States, representing at least three
foreign countries, which may be represented by futures
contracts (including related options) with respect to such
securities, and options on such securities. Such securities
normally are denominated in major foreign currencies or
baskets of foreign currencies (such as the euro). The Fund
will normally hedge at least 75% of its exposure to foreign
currency to reduce the risk of loss due to fluctuations in
currency exchange rates.
PIMCO selects the Fund's foreign country and currency
compositions based on an evaluation of relative interest
rates, exchange rates, monetary and fiscal policies, trade
and current account balances, and any other factors PIMCO
believes to be relevant. The average portfolio duration of
the Fund normally varies within a three- to seven-year time
frame. Duration is a measure of the expected life of a fixed
income security that is used to determine the sensitivity of
the security's price to changes in interest rates. The Fund
invests primarily in investment grade debt securities, but
may invest up to 10% of its assets in high yield securities
("junk bonds") rated B or higher by Moody's or S&P, or, if
unrated, determined by PIMCO to be of comparable quality.
The Fund is non-diversified, which means that it may
concentrate its assets in a smaller number of issuers than a
diversified Fund.
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. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions to earn income. 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:
. 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.
. 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.
. 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.
. Foreign Investment Risk: The Fund may experience more
rapid and extreme changes in value than a Fund that invests
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.
. 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.
. Concentration Risk: Concentration of investments in a
small number of issuers, industries or foreign currencies
increases risk. Because the Fund is non-diversified, it may
be more susceptible to risks associated with a single
economic, political or regulatory occurrence than a more
diversified portfolio might be.
. 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.
. Mortgage Risk: Rising interest rates tend to extend the duration of
mortgage-related securities, making them more sensitive to
changes in interest rates. When interest rates decline, borrowers may
pay off their mortgages sooner than expected. This can
reduce the returns of a Fund because the Fund will have to
reinvest that money at the lower prevailing interest rates.
. 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.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1993 16.40%
1994 -7.30%
1995 21.22%
1996 18.89%
1997 9.60%
1998 10.03%
1999 1.57%
During the period shown in the bar chart, the highest
quarterly return was 7.23% (4th Quarter 1995) and the lowest
quarterly return was -4.22% (1st Quarter 1994). As of
December 31, 1999, the end of the most recent calendar
quarter, the Fund's year-to-date return was 1.57%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year 5 years Since
Inception3
Foreign Bond Fund,
Institutional Class 1.57% 12.04% 9.76%
J.P. Morgan Non-U.S.
Index (Hedged)1 2.48% 11.14% 9.11%
Lipper International
Income Fund Avg.2 -4.60% 6.45% 6.06%
1 The J.P. Morgan Non-U.S. Index (Hedged) in an unmanaged
index representative of the total return performance in U.S.
dollars of major non-U.S. bond markets. It is not possible
to invest directly in the index.
2 The Lipper International Income Fund Average is a total
return performance average of Funds tracked by Lipper
Analytical Services, Inc. that invest primarily in U.S.
dollar
and non-U.S. dollar debt securities of issuers located in at
least three countries, excluding the United States, except
in periods of market weakness. It does not take into account
sales charges.
3 The Fund began operations on 12/3/92. Index comparisons
began on 11/30/92.
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 0.25%
Distribution (12b-1) and/or Service Fees None
Other Expenses1 0.25%
Total Annual Operating Expenses 0.50%
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
Foreign Bond Fund,
Institutional Class $51 $160 $280
$628
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by Lee R. Thomas, III. Mr.
Thomas is a Managing Director and Senior International
Portfolio Manager of PIMCO. He joined PIMCO as a portfolio
manager in 1995, and has managed fixed income accounts for
various institutional clients and funds since that time. He
has managed the Foreign Bond Fund since July 13, 1995. Prior
to joining PIMCO, he was associated with Investcorp as a
member of the management committee responsible for global
securities and foreign exchange trading.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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
PIMCO High Yield Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks maximum total return, consistent with
preservation of capital and 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 high yield securities
("junk bonds") rated below investment grade but rated at
least B by Moody's or S&P, or, if unrated, determined by
PIMCO to be of comparable quality. The remainder of the
Fund's assets may be invested in investment grade fixed
income instruments. The average portfolio duration of this
Fund normally varies within a two- to six-year time frame
based on PIMCO's forecast for interest rates. Duration is a
measure of the expected life of a fixed income security that
is used to determine the sensitivity of the security's price
to changes in interest rates. The Fund may not invest in
securities denominated in foreign currencies, but may invest
without limit in U.S. dollar-denominated securities of
foreign issuers.
The Fund may invest up to 15% 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. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions to earn income. 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:
. 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.
. 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).
. 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.
. 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.
. 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.
. 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.
. Mortgage Risk: Rising interest rates tend to extend
the
duration of mortgage-related securities, making them more
sensitive
to changes in interest rates. When interest rates decline,
borrowers
may pay off their mortgages sooner than expected. This can
reduce the returns
of a Fund because the Fund will have to reinvest that money
at the lower prevailing interest rates.
. 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.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1993 18.70%
1994 2.39%
1995 20.68%
1996 11.68%
1997 13.21%
1998 6.54%
1999 2.82%
During the period shown in the bar chart, the highest
quarterly return was 6.27% (1st Quarter 1993) and the lowest
quarterly return was -1.76% (3rd Quarter 1998). As of
December 31, 1999, the Fund's year-to-date return was 2.82%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year 5 years Since
Inception3
High Yield Fund,
Institutional Class 2.82% 10.82% 10.63%
Lehman Intermediate BB
rated Corporate Index1 2.20% 9.38% 8.85%
Lipper High Current
Yield Fund Avg.2 4.53% 8.84% 8.67%
1 The Lehman Brothers Intermediate BB rated Corporate Index
is an unmanaged index comprised of various fixed income
securities rated BB. It is not possible to invest directly
in the index.
2 The Lipper High Current Yield Fund Average
is a total return performance average of Funds tracked by
Lipper Analytical Services, Inc. that aim at high (relative)
current yield from fixed income securities, have no quality
or maturity restrictions, and tend to invest in lower grade
debt issues. It does not take into account sales charges.
3 The Fund began operations on 12/16/92. Index comparisons
began on 12/31/92.
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 0.25%
Distribution (12b-1) and/or Service Fees None
Other Expenses1 0.25%
Total Annual Operating Expenses 0.50%
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
High Yield Fund,
Institutional Class $51 $160 $280
$628
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by Benjamin Trosky. Mr.
Trosky is a Managing Director of PIMCO. He joined PIMCO as a
Portfolio Manager in 1990, and has managed fixed income
accounts for various institutional clients and funds since
that time. He has managed the High Yield Fund since December
1992.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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
PIMCO Low Duration Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks maximum total return, consistent with
preservation of capital and 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 fixed income
instruments of varying maturities. The average portfolio
duration of this Fund normally varies within a one- to
three-year time frame based on PIMCO's forecast for interest
rates. Duration is a measure of the expected life of a
fixed income security that is used to determine the
sensitivity of the security's price to changes in interest
rates.
The Fund invests primarily in investment grade debt
securities, but may invest up to 10% of its assets in high
yield securities ("junk bonds") rated B or higher by
Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. The Fund may 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. The Fund will normally hedge
at least 75% of its exposure to foreign currency to reduce
the risk of loss due to fluctuations in currency exchange
rates.
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. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions to earn income. 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:
. 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.
. 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.
. 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.
. 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.
. 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.
. Mortgage Risk: Rising interest rates tend to extend
the
duration of mortgage-related securities, making them more
sensitive to
changes in interest rates. When interest rates decline,
borrowers may pay off their mortgages sooner than expected.
This can reduce the returns of a Fund because the Fund will
have to reinvest that money at the lower prevailing interest
rates.
. 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.
. 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.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1990 9.05%
1991 13.46%
1992 7.69%
1993 7.76%
1994 0.63%
1995 11.93%
1996 6.14%
1997 8.24%
1998 7.16%
1999 2.97%
During the period shown in the bar chart, the highest
quarterly return was 5.52% (2nd Quarter 1989) and the lowest
quarterly return was -0.32% (1st Quarter 1994). As of
December 31, 1999, the Fund's year-to-date return was 2.97%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year 5 years 10 years
Low Duration Fund,
Institutional Class 2.97% 7.25% 7.44%
Merrill Lynch 1-3 Year
Treasury Index1 3.06% 6.51% 6.59%
Lipper Short Investment
Grade Debt Fund Avg.2 2.81% 5.95% 6.36%
1 The Merrill Lynch 1-3 Year Treasury Index is an unmanaged
index of U.S Treasury obligations having maturities from one
to 2.99 years. It is not possible to invest directly in the
index.
2 The Lipper Short Investment Grade Debt Fund Average is a
total return performance average of Funds tracked by Lipper
Analytical Services, Inc. that invest at least 65% of their
assets in investment-grade debt issues with dollar-
weighted average maturities of less than three years. It
does not take into account sales charges.
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 0.25%
Distribution (12b-1) and/or Service Fees None
Other Expenses1 0.18%
Total Annual Operating Expenses 0.43%
1 Other Expenses reflects a 0.18% 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
Low Duration Fund,
Institutional Class $44 $138 $241
$542
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by William H. Gross. A Fixed
Income Portfolio Manager, Mr. Gross is a Managing Director,
Chief Investment Officer and one of the founders of PIMCO.
He has managed the Low Duration Fund since its inception in
May 1987.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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
PIMCO Municipal Bond Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks high current income exempt from federal
income tax, consistent with preservation of capital. Capital
appreciation is a secondary objective.
What is the Fund's principal investment strategy?
The Fund seeks to achieve its investment objective by
investing under normal circumstances at least 80% of its net
assets in debt securities whose interest is, in the opinion
of bond counsel for the issuer at the time of issuance,
exempt from federal income tax ("Municipal Bonds").
Municipal Bonds generally are issued by states and local
governments and their agencies, authorities and other
instrumentalities. The average portfolio duration of the
Fund normally varies within a three- to ten-year time frame,
based on PIMCO's forecast for interest rates. Duration is a
measure of the expected life of a fixed income security that
is used to determine the sensitivity of the security's price
to changes in interest rates.
The Fund may invest up to 20% of its net assets in U.S. Government
securities, money market instruments and/or "private activity" bonds. For
shareholders subject to the federal alternative minimum tax
("AMT"), distributions derived from "private activity" bonds
must be included in their AMT calculations, and as such may
be subject to federal income tax. The Fund invests primarily
in investment grade debt securities, but may invest up to
10% of its net assets in Municipal Bonds or "private
activity" bonds which are high yield securities ("junk
bonds") rated at least Ba by Moody's or BB by S&P, or, if
unrated, determined by PIMCO to be of comparable quality.
The Fund may purchase and write call and put options,
futures and options on futures on U.S. Government securities
and municipal bonds, and invest in mortgage- or asset-backed
securities. The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions to earn
income. 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. Capital
appreciation, if any, generally arises from decreases in
interest rates or improving credit fundamentals for a
particular state, municipality or issuer.
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:
. 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.
. 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.
. 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.
. 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.
. 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 illiquid
securities at an advantageous time or price.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1998 6.07%
1999 -3.72%
During the period shown in the bar chart, the highest
quarterly return was 3.33% (3rd Quarter 1998) and the lowest
quarterly return was -1.18% (4th Quarter 1999). As of
December 31, 1999, the Fund's year-to-date return was -
3.72%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year Since
Inception3
Municipal Bond Fund,
Institutional Class -3.72% 1.05%
Lehman General Municipal
Bond Index1 -2.07% 2.12%
Lipper General Municipal
Fund Avg.2 -4.63% 0.23%
1 The Lehman General Municipal Bond Index is an unmanaged
index of municipal bonds. It is not possible to invest
directly in the index.
2 The Lipper General Municipal Debt Fund Average is a total
return performance average of Funds tracked by Lipper
Analytical Services, Inc. that invest at least 65% of their
assets in municipal debt issues in the top four credit
ratings.
It does not take into account sales charges.
3 The Fund began operations on 12/31/97.
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 0.25%
Distribution (12b-1) and/or Service Fees None
Other Expenses1 0.25%
Total Annual Operating Expenses 0.50%
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
Municipal Bond Fund,
Institutional Class $51 $160 $280
$628
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by Benjamin Ehlert. Mr.
Ehlert is an Executive Vice President of PIMCO. He has been
a Portfolio Manager for PIMCO since 1986, and has managed
fixed income accounts for various institutional clients and
funds since that time. He has managed the Municipal Bond
Fund since its inception in December 1997.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
Dividends paid to shareholders of the Fund and derived from
Municipal Bond interest are expected to be designated by the
Fund as "exempt-interest dividends" and shareholders may
generally exclude such dividends from gross income for
federal income tax purposes. The federal tax exemption for
"exempt-interest dividends" from Municipal Bonds does not
necessarily result in the exemption of such dividends from
state and local taxes. The interest on "private activity"
bonds is a tax-preference item for purposes of the federal
alternative minimum tax. As a result, for shareholders that
are subject to the alternative minimum tax, income derived
from "private activity" bonds will not be exempt from
federal income tax.
Dividends derived from taxable interest or capital gains
will be subject to federal income tax. 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com. 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
PIMCO Strategic Balanced Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks maximum total return, consistent with
preservation of capital and prudent investment management.
What is the Fund's principal investment strategy?
The Fund seeks to achieve its investment objective by
normally investing in a combination of fixed income
securities and equity securities or derivatives on equity
securities. The percentage of the Fund's assets invested in
equities and equity derivatives or in fixed income
securities will be determined based on methodology,
developed by PIMCO, that forecasts stages in the business
cycle and considers the risk and reward potential of equity
and fixed income securities within specific phases of the
business cycle. The Fund's equity exposure will vary between
45% and 75% of assets, and its fixed income exposure will
range from a minimum of 25% to a maximum of 55%.
The Fund's equity exposure normally consists of S&P 500
derivatives, backed by a portfolio of short-term fixed
income instruments. PIMCO uses S&P 500 derivatives in
addition to or in place of S&P 500 stocks to attempt to
equal or exceed the performance of the S&P 500. The value of
S&P 500 derivatives closely track changes in the value of
the index. However, S&P 500 derivatives may be purchased
with a fraction of the assets that would be needed to
purchase the equity securities directly, so that the
remainder of the assets may be invested in fixed income
instruments. PIMCO will actively manage the fixed income
assets serving as cover for derivatives, as well as any
other fixed income assets held by the Fund, with a view
toward enhancing the Fund's total return investment
performance. Though the Fund does not normally invest
directly in S&P 500 securities, when S&P 500 derivatives
appear to be overvalued relative to the S&P 500, the Fund
may invest the equity portion of its assets in a "basket" of
S&P 500 stocks.
The Fund's fixed income exposure will normally consist of a
diversified portfolio of fixed income instruments of varying
maturities. The securities may be of any maturity. The
average portfolio duration of the fixed income portion of
the Fund's assets will normally vary within a three- to six-
year time frame. Duration is a measure of the expected life
of a fixed income security that is used to determine the
sensitivity of the security's price to changes in interest
rates.
The fixed income instruments in which the Fund
invests are primarily investment grade, but the Fund may
invest up to 10% of its assets in high yield securities
("junk bonds") rated B or higher by Moody's or S&P, or, if
unrated, determined by PIMCO to be of comparable quality.
The Fund may 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. The Fund will normally hedge at least 75% of its
exposure to foreign currency to reduce the risk of loss due
to fluctuations in currency exchange rates.
The Fund may invest all of its assets in derivative
instruments, such as options, futures contracts or swap
agreements. 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. The
Fund may lend its portfolio securities to brokers, dealers
and other financial institutions to earn income. 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 net 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:
. 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.
Equity securities generally have greater price volatility
than fixed income securities.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. Mortgage Risk: Rising interest rates tend to extend
the duration of mortgage-related securities, making them
more sensitive to changes in interest rates. When interest
rates decline, borrowers may pay off their mortgages sooner
than expected. This can reduce the returns of a Fund because
the Fund will have to reinvest that money at the lower
prevailing interest rates.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1997 24.17%
1998 19.66%
1999 11.56%
During the period shown in the bar chart, the highest
quarterly return was 12.23% (2nd Quarter 1997) and the
lowest quarterly return was -4.60% (3rd Quarter 1998). As of
December 31, 1999, the end of the most recent calendar
quarter, the Fund's year-to-date return was 11.56%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year Since Inception4
Strategic Balanced Fund,
Institutional Class 11.56% 18.77%
S&P 500 Index1 21.04% 27.15%
S&P 500 and Lehman Aggregate
Bond Index Blend2 12.00% 18.77%
Lipper Balanced Fund Avg3 8.72% 14.35%
1 The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of common stocks. It is not possible to
invest directly in the index.
2 This index is a static self-blended index consisting 60%
of the S&P 500 Composite Stock Price Index and 40% of the
Lehman Brothers Aggregate Bond Index. The Fund believes this
self-blended index reflects the Fund's investment strategy
more
accurately than the S&P 500 Index. It is not possible to
invest
directly in the index.
3 The Lipper Balanced Fund Average is a total return
performance average of Funds tracked by Lipper Analytical
Services, Inc., whose primary objective is to conserve
principal by maintaining at all times a balanced portfolio
of both stocks and bonds. It does not take into account
sales charges.
4 The Fund began operations on 6/28/96. Index comparisons
began on 6/30/96.
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 Expenses1 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
Strategic Balanced 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 $186 billion in assets
under management as of December 31 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.
The Fund's portfolio is managed by a team led by William H.
Gross. Mr. Gross is a Managing Director, Chief Investment
Officer and one of the founders of PIMCO and he has managed
fixed income accounts for various institutional clients and
funds for over 25 years. He has led the team managing the
Strategic Balanced Fund since January 1998.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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 quarterly 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com. 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
PIMCO Total Return Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks maximum total return, consistent with
preservation of capital and 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 fixed income
instruments of varying maturities. The average portfolio
duration of this Fund normally varies within a three- to
six-year time frame based on PIMCO's forecast for interest
rates. Duration is a measure of the expected life of a fixed
income security that is used to determine the sensitivity of
the security's price to changes in interest rates.
The Fund invests primarily in investment grade debt securities, but
may invest up to 10% of its assets in high yield securities
("junk bonds") rated B or higher by Moody's or S&P, or, if
unrated, determined by PIMCO to be of comparable quality.
The Fund may 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. The Fund will normally hedge at least 75% of its
exposure to foreign currency to reduce the risk of loss due
to fluctuations in currency exchange rates.
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. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions to earn income. 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:
. 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.
. 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.
. 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.
. 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.
. 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.
. Mortgage Risk: Rising interest rates tend to extend
the duration of mortgage-related securities, making them
more sensitive to changes in interest rates. When interest
rates decline, borrowers may pay off their mortgages sooner
than expected. This can reduce the returns of a Fund because
the Fund will have to reinvest that money at the lower
prevailing interest rates.
. 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.
. 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.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1990 8.05%
1991 19.55%
1992 9.73%
1993 12.51%
1994 -3.58%
1995 19.77%
1996 4.69%
1997 10.16%
1998 9.76%
1999 -0.28%
During the period shown in the bar chart, the highest
quarterly return was 8.26% (2nd Quarter 1989) and the lowest
quarterly return was -2.69% (1st Quarter 1994). As of
December 31, 1999, the Fund's year-to-date return was -
0.28%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year 5 years 10
years
Total Return Fund,
Institutional Class -0.28% 8.62% 8.81%
Lehman Brothers
Aggregate Bond Index1 -0.82% 7.73% 7.70%
Lipper Intermediate Investment
Grade Debt Fund Avg.2 -1.31% 6.79% 7.09%
1 The Lehman Brothers Aggregate Bond Index is an unmanaged
index of investment grade, U.S. dollar-denominated fixed
income securities of domestic issuers having a maturity of
two to ten years. It is not possible to invest directly in
the index.
2 The Lipper Intermediate Investment Grade Debt
Fund Average is a total return performance average of Funds
tracked by Lipper Analytical Services, Inc. that invest at
least 65% of their assets in investment-grade debt issues
with dollar-weighted average maturities of five to ten
years. It does not take into account sales charges.
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 0.25%
Distribution (12b-1) and/or Service Fees None
Other Expenses1 0.18%
Total Annual Operating Expenses 0.43%
1 Other Expenses reflects a 0.18% 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
Total Return Fund,
Institutional Class $44 $138 $241
$542
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by William H. Gross. A Fixed
Income Portfolio Manager, Mr. Gross is a Managing Director,
Chief Investment Officer and one of the founders of PIMCO.
He has managed the Total Return Fund since its inception on
May 11, 1987.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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
PIMCO StocksPLUS Fund
Institutional Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks total return which exceeds that of the S&P
500.
What is the Fund's principal investment strategy?
The Fund seeks to exceed the total return of the S&P 500 by
investing under normal circumstances substantially all of
its assets in S&P 500 derivatives, backed by a portfolio of
fixed income instruments. The Fund may invest in common
stocks, options, futures, options on futures and swaps. The
Fund uses S&P 500 derivatives in addition to or in place of
S&P 500 stocks to attempt to equal or exceed the performance
of the S&P 500. The value of S&P 500 derivatives closely
track changes in the value of the index. However, S&P 500
derivatives may be purchased with a fraction of the assets
that would be needed to purchase the equity securities
directly, so that the remainder of the assets may be
invested in fixed income instruments. PIMCO actively manages
the fixed income assets held by the Fund with a view toward
enhancing the Fund's total return, subject to an overall
portfolio duration which is normally not expected to exceed
one year. Duration is a measure of the expected life of a
fixed income security that is used to determine the
sensitivity of the security's price to changes in interest
rates.
The S&P 500 is composed of 500 selected common stocks that
represent approximately two-thirds of the total market value
of all U.S. common stocks. The Fund is neither sponsored by
nor affiliated with S&P. The Fund seeks to remain invested
in S&P 500 derivatives or S&P 500 stocks even when the S&P
500 is declining.
Though the Fund does not normally invest directly in S&P 500
securities, when S&P 500 derivatives appear to be overvalued
relative to the S&P 500, the Fund may invest all of its
assets in a "basket" of S&P 500 stocks. Individual stocks
are selected based on an analysis of the historical
correlation between the return of every S&P 500 stock and
the return on the S&P 500 itself. PIMCO may employ
fundamental analysis of factors such as earnings and
earnings growth, price to earnings ratio, dividend growth,
and cash flows to choose among stocks that satisfy the
correlation tests. Stocks chosen for the Fund are not
limited to those with any particular weighting in the S&P
500.
Assets not invested in equity securities or derivatives may
be invested in fixed income instruments. The Fund may invest
up to 10% of its assets in high yield securities ("junk
bonds") rated B or higher by Moody's or S&P, or, if
unrated, determined by PIMCO to be of comparable quality.
The Fund may 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. The Fund will normally hedge at least 75% of its
exposure to foreign currency to reduce the risk of loss due
to fluctuations in currency exchange rates. In addition, the
Fund may lend its portfolio securities to brokers, dealers
and other financial institutions to earn income.
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:
. 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.
Equity securities generally have greater price volatility
than fixed income securities. Under certain conditions,
generally in a market where the value of both S&P 500
derivatives and fixed income securities are declining, the
Fund may experience greater losses than would be the case if
it invested directly in a portfolio of S&P 500 stocks.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. 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.
. Mortgage Risk: Rising interest rates tend to extend
the duration of mortgage-related securities, making them
more sensitive to changes in interest rates. When interest
rates decline, borrowers may pay off their mortgages sooner
than expected. This can reduce the returns of a Fund because
the Fund will have to reinvest that money at the lower
prevailing interest rates.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1994 2.92%
1995 40.52%
1996 23.07%
1997 32.85%
1998 28.33%
1999 20.13%
During the period shown in the bar chart, the highest
quarterly return was 21.45% (4th Quarter 1998) and the
lowest quarterly return was -9.77% (3rd Quarter 1998). As of
December 31, 1999, the end of the most recent calendar
quarter, the Fund's year-to-date return was 20.13%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year 5 years Since
Inception3
StocksPLUS Fund,
Institutional Class 20.13% 28.78% 23.08%
S&P 500 Index1 21.04% 28.56% 22.39%
Lipper Large Cap Core
Fund Avg.2 22.29% 25.53% 19.90%
1 The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of common stocks. It is not possible to
invest directly in the index.
2 The Lipper Large Cap Core Fund Average is a total return
performance average of Funds tracked by Lipper Analytical
Services, Inc. that invest at least 75% of their equity
assets in companies with market capitalizations (on a
three year weighted basis) of greater than 300% of the
dollar weighted median market capitalization of the
S&P 400 Mid-Cap Index. It does not take into account
sales charges.
3 The Fund began operations on 5/13/93. Index comparisons
began on 4/30/93.
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 Expenses1 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
StocksPLUS 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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by a team led by William H.
Gross. Mr. Gross is a Managing Director, Chief Investment
Officer and one of the founders of PIMCO and he has managed
fixed income accounts for various institutional clients and
funds for over 25 years. He has led the team managing the
StocksPLUS Fund since January, 1998.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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 quarterly 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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
PIMCO Real Return Bond Fund
Institutional Class Shares
February 2, 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
What is the Fund's Investment Objective?
The Fund seeks maximum real return, consistent with
preservation of real capital and prudent investment
management.
What is the Fund's principal investment strategy?
The Fund seeks its investment objective by investing under
normal circumstances at least 65% of its assets in
inflation-indexed bonds of varying maturities issued by the
U.S. and non-U.S. governments, their agencies or
instrumentalities, and corporations. Inflation-indexed bonds
are fixed income securities that are structured to provide
protection against inflation. The value of the bond's
principal or the interest income paid on the bond is
adjusted to track changes in an official inflation measure.
The U.S. Treasury uses the Consumer Price Index for Urban
Consumers as the inflation measure. Inflation-indexed bonds
issued by a foreign government are generally adjusted to
reflect a comparable inflation index, calculated by that
government. "Real return" is a measure of the change in
purchasing power of money invested in a particular
instrument after adjusting for inflation. Duration is a measure
of the expected life of a fixed income security that is used
to determine the sensitivity of the security's price to changes
in interest rates. Because of the unique features of inflation-indexed
bonds, PIMCO uses a modified form of duration for the Fund
("real duration") which measures price changes as a result of changes in
"real" interest rates. A "real" interest rate is the market
interest rate minus expected inflation. There is no limit on
the real duration of the Fund, but it is expected that the
average real duration of the Fund will normally vary
approximately within the range of the average real duration
of all inflation-indexed bonds issued by the U.S. Treasury
in the aggregate, which as of July 20, 1999 was 9.2 years.
For point of reference, it is expected that the average
portfolio duration (as opposed to real duration) of the Fund
will generally vary within a one- to five-year time frame,
although this range is subject to change. The Fund may
invest in fixed income securities of any maturity.
The Fund invests primarily in investment grade securities,
but may invest up to 10% of its assets in high yield
securities ("junk bonds") rated B or higher by Moody's or
S&P, or, if unrated, determined by PIMCO to be of comparable
quality. The Fund may invest up to 35% of its assets in non-
inflation indexed fixed income instruments. The Fund also
may invest up to 35% of its assets in securities denominated
in foreign currencies, and may invest beyond this limit in
U.S. dollar denominated securities of foreign issuers. The
Fund will normally hedge at least 75% of its exposure to
foreign currency to reduce the risk of loss due to
fluctuations in currency exchange rates. The Fund is non-
diversified, which means that it may concentrate its assets
in a smaller number of issuers than a diversified Fund.
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. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions to earn income. 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.
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:
. 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.
. 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.
. 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.
. 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.
. 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.
. Concentration Risk: Concentration of investments in a
small number of issuers, industries or foreign currencies
increases risk. Because the Fund is non-diversified, it may
be more susceptible to risks associated with a single
economic, political or regulatory occurrence than a more
diversified portfolio might be.
. 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.
. 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.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Institutional Class shares net of fees. Past performance is
no guarantee of future results.
Calendar Year Total Returns
1998 5.21%
1999 5.72%
During the period shown in the bar chart, the highest
quarterly return was 3.19% (3rd Quarter 1998) and the lowest
quarterly return was -0.05% (4th Quarter 1998). As of
December 31, 1999, the Fund's year-
to-date return was 5.72%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year Since Inception3
Real Return Bond Fund,
Institutional Class 5.72% 5.14%
Lehman Brothers Inflation
Linked Treasury Index1 2.36% 2.99%
Lipper Short U.S.
Government Fund Avg.2 2.50% 4.57%
1 The Lehman Brothers Inflation Linked Treasury Index is an
unmanaged index consisting of the U.S. Treasury Inflation
Protected Securities market. It is not possible to invest
directly in the index.
2 The Lipper Short U.S. Government Fund Average is a total
return performance average of Funds tracked by Lipper
Analytical Services, Inc. that invest at least 65% of their
assets in securities issued or guaranteed by the U.S.
government,
its agencies, or its instrumentalities, with dollar-weighted
average maturities of less than three years. It does not
take
into account sales charges.
3 The Fund began operations on 1/29/97. Index
comparisons began on 1/31/97.
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 0.25%
Distribution (12b-1) and/or Service Fees None
Other Expenses1 0.27%
Total Annual Operating Expenses 0.52%
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
Real Return Bond Fund,
Institutional Class $53 $167 $291
$653
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by John Brynjolfsson. Mr.
Brynjolfsson is a Senior Vice President of PIMCO. He joined
PIMCO as a Portfolio Manager in 1989, and has managed fixed
income accounts for various institutional clients and funds
since that time. He has managed the Real Return Bond Fund
since its inception in January 1997.
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:
. 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.
. Exchanging Institutional Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
Investors should carefully consider the possible tax
consequences from investing in the Fund. Periodic
adjustments for inflation to the principal value of
inflation-indexed bonds held by the Fund may give rise to
original issue discount, which would be included in the
Fund's gross income. Accordingly, the Fund may be required
to make annual distributions to shareholders in excess of
the cash received by the Fund. Also, if the principal value
of an inflation-indexed bond is adjusted downward, amounts
previously distributed in the taxable year may be
characterized in some circumstances as a return of capital.
Shareholders should also bear in mind that the sale or
exchange of shares may give rise to a taxable event.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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.
PIMCO Total Return Fund
Administrative Class Shares
February 2, 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.
What is the Fund's Investment Objective?
The Fund seeks maximum total return, consistent with
preservation of capital and 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 fixed income
instruments of varying maturities. The average portfolio
duration of this Fund normally varies within a three- to
six-year time frame based on PIMCO's forecast for interest
rates. Duration is a measure of the expected life of a fixed
income security that is used to determine the sensitivity of
the security's price to changes in interest rates.
The Fund invests primarily in investment grade debt
securities, but may invest up to 10% of its assets in high
yield securities ("junk bonds") rated B or higher by
Moody's or S&P, or, if unrated, determined by PIMCO to be of
comparable quality. The Fund may 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. The Fund will normally hedge
at least 75% of its exposure to foreign currency to reduce
the risk of loss due to fluctuations in currency exchange
rates.
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. The Fund may lend its
portfolio securities to brokers, dealers and other financial
institutions to earn income. 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:
. 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.
. 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.
. 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.
. 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.
. 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.
. Mortgage Risk: Rising interest rates tend to extend
the duration of mortgage-related securities, making them
more sensitive to changes in interest rates. When interest
rates decline, borrowers may pay off their mortgages sooner
than expected. This can reduce the returns of a Fund because
the Fund will have to reinvest that money at the lower
prevailing interest rates.
. 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.
. 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.
. 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.
. 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?
The bar chart and table below provide some indication of the
risks of investing in the Fund by showing changes in its
performance from year to year and by showing how the Fund's
average annual returns compare with the returns of a broad-
based securities market index and an index of similar funds.
The bar chart and table show performance of the Fund's
Administrative Class shares net of fees. For periods prior
to the inception date of the Administrative Class (9/8/94),
performance information is based on the performance of the
Fund's Institutional Class shares. The prior Institutional
Class performance has been adjusted to reflect the actual
12b-1/service fees and other expenses paid by Administrative
Class shares. Past performance is no guarantee of future
results.
Calendar Year Total Returns
1990 7.77%
1991 19.29%
1992 9.49%
1993 12.27%
1994 -3.81%
1995 19.38%
1996 4.53%
1997 9.89%
1998 9.50%
1999 -0.53%
During the period shown in the bar chart, the highest
quarterly return was 8.19% (2nd Quarter 1989) and the lowest
quarterly return was -2.74% (1st Quarter 1994). As of
December 31, 1999, the Fund's year-to-date return was -
0.53%.
Average Annual Total Returns
for the periods ended December 31, 1999
1 year 5 years 10 years
Total Return Fund,
Administrative Class -0.53% 8.35% 8.55%
Lehman Brothers
Aggregate Bond Index1 -0.82% 7.73% 7.70%
Lipper Intermediate Investment
Grade Debt Fund Avg.2 -1.31% 6.79% 7.09%
1 The Lehman Brothers Aggregate Bond Index is an unmanaged
index of investment grade, U.S. dollar-denominated fixed
income securities of domestic issuers having a maturity of
two to ten years. It is not possible to invest directly in
the index.
2 The Lipper Intermediate Investment Grade Debt Fund Average
is a total return performance average of Funds tracked by
Lipper Analytical Services, Inc. that invest at least 65% of
their assets in investment-grade debt issues with dollar-
weighted average maturities of five to ten years. It does
not take into account sales charges.
What are the Fund's Fees and Expenses?
These tables describe the fees and expenses you may pay if
you buy and hold 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, shown as a
percentage of average daily net assets)
Advisory Fee 0.25%
Distribution (12b-1) and/or Service Fees 0.25%
Other Expenses1 0.18%
Total Annual Operating Expenses 0.68%
1 Other Expenses reflects a 0.18% 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
Total Return Fund,
Administrative Class $69 $218 $379 $847
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 $186 billion in assets
under management as of December 31, 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.
The Fund's portfolio is managed by William H. Gross. A Fixed
Income Portfolio Manager, Mr. Gross is a Managing Director,
Chief Investment Officer and one of the founders of PIMCO.
He has managed the Total Return Fund since its inception on
May 11, 1987.
How do I Buy Fund Shares?
The minimum initial investment to open an account directly
with the Fund is $5 million. You may purchase Fund shares in
one of the following ways:
. 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.
. Exchanging Administrative Class shares in any amount
from another PIMCO Funds account.
. 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:
. Sending a written request by mail to PIMCO Funds.
. Telephone us at 1-800-927-4648 and a Shareholder
Services associate will assist you.
. 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.
What other Services are Available from the Fund?
The Fund and PIMCO's Shareholder Services offer several
programs to investors:
. 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).
. Account and Fund information is available 24 hours
every day through Infolink, PIMCO Funds' audio response
system, by calling 1-800-987-4626.
. Information about PIMCO Funds can be obtained on
PIMCO's Institutional Web site at www.pimco.com.
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
