Fund Profile
PIMCO Convertible Fund
Institutional Class Shares
June __, 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.
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WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund seeks maximum total return, consistent with prudent investment
management.
WHAT IS THE FUND'S PRINCIPAL INVESTMENT STRATEGY?
The Fund seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its assets in a diversified portfolio of
convertible securities. Convertible securities, which are typically issued by
small to mid-size capitalization companies, include, but are not limited to:
corporate bonds, debentures, notes or preferred stocks and their hybrids that
can be converted into (exchanged for) common stock or other securities,
such as warrants or options, which provide an opportunity for equity
participation.
The Fund invests primarily in investment grade debt securities, but may
invest up to 40% of its assets in high yield securities ("junk bonds") rated
Caa or higher by Moody's or CCC or higher by S&P or, if unrated,
determined by PIMCO to be of comparable quality. The Fund may only
invest up to 10% of its assets in convertible securities rated Caa or CCC or,
if unrated, determined by PIMCO to be of comparable quality. The Fund
may also invest up to 20% of its assets in securities denominated in foreign
currencies, and may invest beyond this limit in U.S. dollar-denominated
securities of foreign issuers. In addition, the Fund may invest up to 35% of
its assets in common stocks or in other fixed income instruments.
The Fund may invest all of its assets in derivative instruments, such as
options, futures contracts or swap agreements, and may invest 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 buy backs and 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:
* 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.
* 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).
* 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.
* Smaller Company Risk: The general risks associated with fixed income
securities are particularly pronounced for securities issued by companies
with smaller market capitalizations. These companies may have limited
product lines, markets or financial resources or they may depend on a few
key employees. As a result, they may be subject to greater levels of credit,
market and issuer risk. Securities of smaller companies may trade less
frequently and in lesser volumes than more widely held securities and their
values may fluctuate more sharply than other securities.
* 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?
As the Fund commenced operations on March 31, 1999, it does not yet
have a full calendar year of performance. Thus, no bar chart is included for
the Fund. The table below provides some indication of the risks of
investing in the Fund by showing how the Fund's average annual return
compare with the returns of a broad-based securities market index and an
index of similar funds. The table shows performance of the Fund's
Institutional Class shares net of fees. Past performance is no guarantee of
future results.
Average Annual Total Returns
for the period ended March 31, 2000
Since Inception (3)
Convertible Fund,
Institutional Class 60.66%
First Boston
Convertible Bond Index (1) 45.84%
Lipper Convertible Securities
Fund Average (2) 40.26%
(1) The First Boston Convertible Bond Index is an unmanaged index
representative of the convertible bond universe. It is not possible to invest
directly in the index.
(2) The Lipper Convertible Securities Fund Average is a total return
performance average of Funds tracked by Lipper Analytical Services, Inc.
that invest primarily in convertible bonds and convertible preferred shares.
It does not take into account sales charges.
(3) The Fund began operations on 3/31/99. Index comparisons began on
4/1/99.
During the period since the Fund's inception on 3/31/99, the highest
quarterly return was 25.06% (4th Quarter 1999) and the lowest quarterly
return was 1.07% (3rd Quarter 1999). As of March 31, 2000, the Fund's
year-to-date return was 12.98%.
WHAT ARE THE FUND'S FEES AND EXPENSES?
These tables describe the fees and expenses you may pay if you buy and
hold Institutional Class shares of the Fund:
Shareholder Fees
(fees paid directly from your investment) None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets, shown as a percentage of
average daily net assets)
Advisory Fee 0.40%
Distribution (12b-1) and/or Service Fees None
Other Expenses (1) 0.25%
Total Annual Operating Expenses 0.65%
(1) Other Expenses reflects a 0.25% Administrative Fee paid by the class.
Example: The Example is intended to help you compare the cost of
investing in the Fund with the costs of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated, and then redeem all your shares at the end of those periods. The
Example also assumes a 5% return each year, the reinvestment of all
dividends and distributions, and that the Fund's operating expenses remain
the same. Although your actual costs may be higher or lower, the Example
shows what your costs would be based on these assumptions.
1 year 3 years 5 years 10 years
Convertible 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.
[Insert photo of Ms. Durn.]
The Fund's portfolio is managed by Sandra K.
Durn. Ms. Durn is a Senior Vice President of PIMCO. She joined PIMCO
as a Portfolio Manager in 1999 and has managed the Convertible Fund
since its inception in March 1999. Prior to joining PIMCO, she was
associated with Nicholas-Applegate Capital Management where she was a
Convertible Securities Portfolio Manager from 1995 to 1999, and a
Quantitative Analyst since 1994.
HOW DO I BUY FUND SHARES?
The minimum initial investment to open an account directly with the Fund
is $5 million. The minimum initial investment for a registered investment
adviser purchasing Institutional Class shares for its clients through omnibus
accounts is $250,000. You may purchase Fund shares in one of the
following ways:
* 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.
[Insert PIMCO Funds logo.]
840 Newport Center Drive, Suite 300
Newport Beach, CA 92660
Phone: 1-800-927-4648
Fax: 1-949-725-6830
PIMCO Infolink Audio Response Network:
1-800-987-4626
Web Site: www.pimco.com
