PIMCO Convertible Fund
Institutional Class Shares
August 17, 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 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 issued by companies of all sizes and market capitalizations,
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 may invest in securities of any market capitalization, and
may from time to time invest a significant amount of its assets
in securities of smaller companies.
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 stock or in other fixed income
instruments (e.g., government and corporate debt securities, and
asset-backed securities).
The Fund may invest all of its assets in derivative instruments,
such as options, futures contracts or swap agreements, and may
invest in 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 OOtotal 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
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 in April 1999, it does not
yet have a full calendar year of performance. Thus, no bar
chart or annual returns table is included for the Fund.
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 0.29%
Total Annual Operating Expenses 0.69%
Expense Reduction2 (0.04)%
Net Portfolio Operating Expenses 0.65%
1 Other Expenses reflect a 0.25% Administrative Fee and 0.04%
organizational expense paid by the class.
2 PIMCO has contractually agreed, for the Fund's current
fiscal year, to reduce total annual fund operating expenses
to the extent they would exceed 0.65% due to the payment of
organizational expenses and Trustees fees. Under the Expense
Limitation Agreement, PIMCO may recoup these waivers and
reimbursements in future periods, not exceeding three years,
provided total expenses, including such recoupment,
do not exceed the annual expense limit.
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 $217 $380 $855
Who is the Fund's Investment Adviser?
Pacific Investment Management Company LLC ('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 $199 billion in assets under management as of June 30,
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 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.
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
