PIMCO Foreign Bond Fund
Institutional Class Shares
May 19, 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 various factors,
including, but not limited to relative interest rates, exchange
rates, monetary and fiscal policies, trade and current account
balances. 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. The Fund may
seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale
contracts or by using other investment techniques (such as
buybacks or dollar rolls). 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 or confiscatory
taxation, currency blockage, 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.
Issuer Non-Diversification Risk: Focusing 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, may 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 1994 1995 1996 1997 1998 1999
16.40% -7.30% 21.22% 18.89% 9.60% 10.03% 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 March 31, 2000, the
end of the most recent calendar quarter, the Fund's year-to-date
return was 2.08%.
Average Annual Total Returns
for the periods ended March 31, 2000
Since
1 year 5 years Inception3
Foreign Bond Fund,
Institutional Class 1.97% 12.18% 9.75%
J.P. Morgan Non-U.S.
Index (Hedged)1 2.94% 10.66% 9.11%
Lipper International
Income Fund Avg.2 -2.29% 4.52% 5.74%
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 with an average duration of 5.62
years as of 12/31/99. 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 $193 billion in assets under management as of March 31,
2000. 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.
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
May 19, 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
invest up to 15% of its assets in euro-denominated securities
and may invest without limit in U.S. dollar-denominated
securities of foreign issuers. The Fund normally will hedge at
least 75% of its exposure to the euro to reduce the risk of loss
due to fluctuations in currency exchange rates.
The Fund may invest up to 15% of its assets in derivative
instruments, such as options, futures contracts or swap
agreements. The Fund may invest all of its assets 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. The Fund may seek to
obtain market exposure to the securities in which it primarily
invests by entering into a series of purchase and sale contracts
or by using other investment techniques (such as buybacks or
dollar rolls). 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: The Fund invests in high yield securities
and unrated securities of similar credit quality (commonly known
as "junk bonds"), and 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 or confiscatory taxation, currency blockage,
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, may 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 1994 1995 1996 1997 1998 1999
18.70% 2.39% 20.68% 11.68% 13.21% 6.54% 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 March 31, 2000, the Fund's year-to-
date return was -2.19%.
Average Annual Total Returns
for the periods ended March 31, 2000
Since
1 year 5 years Inception3
High Yield Fund,
Institutional Class -0.74% 9.20% 9.94%
Lehman Intermediate BB
rated Corporate Index1 -0.30% 7.86% 8.31%
Lipper High Current Yield
Fund Avg.2 0.06% 7.70% 8.10%
1 The Lehman Brothers Intermediate BB rated Corporate Index is
an unmanaged index comprised of various fixed income securities
rated BB with an average duration of 4.40 years as of 12/31/99.
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 $193 billion in assets under management as of March 31,
2000. 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.
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
May 19, 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. The Fund may
seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale
contracts or by using other investment techniques (such as
buybacks or dollar rolls). 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 or confiscatory taxation, currency blockage,
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, may 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 1991 1992 1993 1994 1995 1996 1997 1998 1999
9.05% 13.46% 7.69% 7.76% 0.63% 11.93% 6.14% 8.24% 7.16% 2.97%
During the period shown in the bar chart, the highest quarterly
return was 3.90% (3rd Quarter 1991) and the lowest quarterly
return was -0.32% (1st Quarter 1994). As of March 31, 2000, the
Fund's year-to-date return was 1.35%.
Average Annual Total Returns
for the periods ended March 31, 1999
1 year 5 years 10 years
Low Duration Fund,
Institutional Class 3.55% 6.98% 7.46%
Merrill Lynch 1-3 Year
Treasury Index1 3.73% 6.07% 6.63%
Lipper Short Investment
Grade Debt Fund Avg.2 3.27% 5.64% 6.44%
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 (rated in the top four grades) 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 $193 billion in assets under management as of March 31,
2000. 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 a founding partner 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.
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
May 19, 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 or on behalf of states and local
governments and their agencies, authorities and other
instrumentalities.
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 a portion of the Fund's distribution
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 invest more than 25%
of its assets in bonds of issuers in California and New York. To
the extent that the Fund concentrates its investments in
California and New York, it will be subject to California and
New York State Specific Risk. The Fund will seek income that is
high relative to prevailing rates from Municipal Bonds. 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 in derivative instruments, such as options,
futures contracts, or swap agreements 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. The Fund may seek to obtain
market exposure to the securities in which it primarily invests
by entering into a series of purchase and sale contracts or by
using other investment techniques (such as buybacks or
dollar rolls). 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.
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.
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, may 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.
California State Specific Risk: To the extent that the
Fund concentrates its investments in California municipal bonds,
it may be affected significantly by economic, regulatory or
political developments affecting the ability of California
issuers to pay interest or repay principal. Provisions of the
California Constitution and State statutes limit the taxing and
spending authority of California governmental agencies. While
California's economy is broad, it may be sensitive to economic
problems affecting those industries concentrated in California.
New York State Specific Risk: To the extent that the Fund
concentrates its investments in New York municipal bonds, it may
be affected significantly by economic, regulatory or political
developments affecting the ability of New York issuers to pay
interest or repay principal. Certain issuers of New York
municipal bonds have experienced serious financial difficulties
in recent years. The financial health of New York City affects
that of the State, and when New York City experiences financial
difficulty it may have an adverse affect on New York municipal
bonds held by the Fund. The growth rate of New York has recently
been somewhat slower than the nation overall.
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 1999
6.07% -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 -2.36%
(2nd Quarter 1999). As of March 31, 2000, the Fund's year-to-
date return was 2.77%.
Average Annual Total Returns
for the periods ended March 31, 2000
Since
1 year Inception3
Municipal Bond Fund,
Institutional Class -1.81% 2.17%
Lehman General Municipal
Bond Index1 -0.08% 3.20%
Lipper General Municipal
Fund Avg.2 -2.40% 1.45%
1 The Lehman General Municipal Bond Index is an unmanaged index
of municipal bonds with an average duration of 7.68 years as of
12/31/99.
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 $193 billion in assets under management as of March 31,
2000. 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 Mark McCray. Mr. McCray is a
Senior Vice President of PIMCO. He joined PIMCO as a Portfolio
Manager in 2000. Prior to that, he was a bond trader from 1992-
1999 at Goldman Sachs & Co. where he was appointed Vice
President in 1996 and named co-head of municipal bond trading in
1997 with responsibility for the firm's proprietary account and
supervised municipal bond traders. He has managed the Municipal
Bond Fund since April 2000.
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.
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
May 19, 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" equals total return
less the estimated cost of inflation, which is typically
measured by the change in an official inflation measure.
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 March 7, 2000
was 9.0 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 also 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 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. The Fund may
seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale
contracts or by using other investment techniques (such as
buybacks or dollar rolls).
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.
Issuer Non-Diversification Risk: Focusing 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 or confiscatory taxation, currency blockage,
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, may 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 1999
5.21% 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 March 31, 2000, the Fund's year-to-
date return was 4.40%.
Average Annual Total Returns
for the periods ended March 31, 2000
Since
1 year Inception3
Real Return Bond Fund,
Institutional Class 8.38% 6.17%
Lehman Brothers Inflation
Linked Treasury Index1 6.36% 4.14%
Lipper Short U.S.
Government Fund Avg.2 3.27% 4.63%
1 The Lehman Brothers Inflation Linked Treasury Index is an
unmanaged index consisting of the U.S. Treasury Inflation
Protected Securities market with an average duration of 3.2
years as of 12/31/99. 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 $193 billion in assets under
management as of March 31, 2000. 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 an Executive 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 from 1992-1998. 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.
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
May 19, 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. The Fund
also may invest in exchange-traded funds based on the S&P 500,
such as Standard & Poor's Depository Receipts.
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 or confiscatory taxation, currency blockage,
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, may 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 1995 1996 1997 1998 1999
2.92% 40.52% 23.07% 32.85% 28.33% 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 March 31, 2000, the end of the most
recent
calendar quarter, the Fund's year-to-date return was 2.15%.
Average Annual Total Returns
for the periods ended March 31, 2000
Since
1 year 5 years Inception3
StocksPLUS Fund,
Institutional Class 17.83% 26.92% 22.60%
S&P 500 Index1 17.94% 26.76% 21.89%
Lipper Large Cap Core
Fund Avg.2 21.70% 24.42% 19.52%
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 $193 billion in assets under management as of March 31,
2000. 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 a founding partner 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.
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
May 19, 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. The Fund may seek to obtain market exposure to the
securities in which it primarily invests by entering into a
series of purchase and sale contracts or by using other
investment techniques (such as buybacks or dollar rolls). 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 or confiscatory taxation, currency blockage,
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, may 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 1998 1999
24.17% 19.66% 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 March 31, 2000, the
end of the most recent calendar quarter, the Fund's year-to-date
return was 0.95%.
Average Annual Total Returns
for the periods ended March 31, 2000
Since
1 year Inception4
Strategic Balanced Fund,
Institutional Class 10.05% 17.77%
S&P 500 Index1 17.94% 25.88%
S&P 500 and Lehman Aggregate
Bond Index Blend2 11.56% 18.15%
Lipper Balanced Fund Avg3 10.48% 14.12%
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 used for the Fund 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 $193 billion in assets under management as of March 31
2000. 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 a founding partner 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.
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
May 19, 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. The Fund may
seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale
contracts or by using other investment techniques (such as
buybacks or dollar rolls). 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 or confiscatory taxation, currency blockage,
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, may 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 1991 1992 1993 1994 1995 1996 1997 1998 1999
7.77% 19.29% 9.49% 12.27% -3.81% 19.38% 4.53% 9.89% 9.50% -0.53%
During the period shown in the bar chart, the highest quarterly
return was 6.50% (3rd Quarter 1991) and the lowest quarterly
return was -2.74%
(1st Quarter 1994). As of March 31, 2000, the Fund's year-to-
date return was 2.14%.
Average Annual Total Returns
for the periods ended March 31, 2000
1 year 5 years 10 years
Total Return Fund,
Administrative Class 2.07% 7.76% 8.95%
Lehman Brothers
Aggregate Bond Index1 1.87% 7.14% 8.02%
Lipper Intermediate Investment
Grade Debt Fund Avg.2 0.99% 6.25% 7.44%
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 greater than
one year. 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 (rated in the top four
grades) 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 $193 billion in assets under management as of March 31,
2000. 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 a founding partner 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.
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
May 19, 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. The Fund may
seek to obtain market exposure to the securities in which it
primarily invests by entering into a series of purchase and sale
contracts or by using other investment techniques (such as
buybacks or dollar rolls). 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 or confiscatory taxation,
currency blockage, 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, may 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 1991 1992 1993 1994 1995 1996 1997 1998 1999
8.05% 19.55% 9.73% 12.51% -3.58% 19.77% 4.69% 10.16% 9.76% -0.28%
During the period shown in the bar chart, the highest quarterly
return was 6.66% (3rd Quarter 1991) and the lowest quarterly
return was -2.69%
(1st Quarter 1994). As of March 31, 2000, the Fund's year-to-
date return was 2.21%.
Average Annual Total Returns
for the periods ended March 31, 2000
1 year 5 years 10 years
Total Return Fund,
Institutional Class 2.33% 8.00% 9.21%
Lehman Brothers
Aggregate Bond Index1 1.87% 7.14% 8.02%
Lipper Intermediate Investment
Grade Debt Fund Avg.2 0.99% 6.25% 7.44%
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 greater than
one year. 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 (rated in the top four
grades) 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 $193 billion in assets under management as of March 31,
2000. 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 a founding partner 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.
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
